##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-Q


|  |  |                                                                                             
|- |  | --------------------------------------------------------------------------------------------
|þ |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 
|  |  | For the quarterly period ended September 25, 2005                                           
|  |  | OR                                                                                          
| 
|o |  | 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


þ o


þ o


o þ




|                    |  |                 
|------------------- |  | ----------------
|Title of Each Class |  | Number of Shares
|                    |  |                 
|Common Stock        |  | 120,115,459     









---










FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


INDEX


|                                                                         |                                                                                                             |                                                                                                                                             |  |    |   | 
|------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- |  | -- | - | 
|                                                                         |                                                                                                             | Page                                                                                                                                        | 
|                                                                         |                                                                                                             |                                                                                                                                             | 
|PART I. FINANCIAL
    INFORMATION                                        |                                                                                                             |                                                                                                                                             |  |   
|                                                                         | Item 1.  Financial
    Statements (Unaudited)                                                               |                                                                                                                                             |  |    |  
|                                                                         |                                                                                                             | CONSOLIDATED BALANCE SHEETSas of September 25, 2005 and December 26, 2004                                                                   |  |    | 3 | 
|                                                                         |                                                                                                             | CONSOLIDATED STATEMENTS OF OPERATIONSfor the Three and Nine Months Ended September 25, 2005
    and September 26, 2004                      |  |    | 4 | 
|                                                                         |                                                                                                             | CONSOLIDATED STATEMENTS OF COMPREHENSIVE
    INCOME (LOSS)for the Three and Nine Months Ended September 25, 2005
    and September 26, 2004 |  |    | 5 | 
|                                                                         |                                                                                                             | CONSOLIDATED STATEMENTS OF CASH FLOWSfor the Nine Months Ended September 25, 2005 and
    September 26, 2004                                |  |    | 6 | 
|                                                                         |                                                                                                             | NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS (Unaudited)                                                                                  |  |    | 7 | 
|                                                                         | Item 2.       Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations |                                                                                                                                             |  | 28 |  
|                                                                         | Item 3.       Quantitative
    and Qualitative Disclosures about Market Risk                                |                                                                                                                                             |  | 48 |  
|                                                                         | Item 4.       Controls
    and Procedures                                                                   |                                                                                                                                             |  | 48 |  
|PART II. OTHER INFORMATION                                               |                                                                                                             |                                                                                                                                             |  |   
|                                                                         | Item 1.       Legal
    Proceedings                                                                         |                                                                                                                                             |  | 49 |  
|                                                                         | Item 2.       Unregistered
    Sales of Equity Securities and Use of Proceeds                               |                                                                                                                                             |  | 50 |  
|                                                                         | Item 6.       Exhibits                                                                                      |                                                                                                                                             |  | 50 |  
|                                                                         | SIGNATURE                                                                                                   |                                                                                                                                             |  | 52 |  
|EX-10.1 FORM OF PERFORMANCE UNIT AWARD AGREEMENT                        
|EX-10.2 NON-QUALIFIED STOCK OPTION AGREEMENT                            
|EX-10.3 PERFORMANCE UNIT AWARD AGREEMENT (THOMPSON)                     
|EX-10.4 DEFERRED STOCK UNIT AWARD AGREEMENT (THOMPSON)                  
|EX-10.5 PERFORMANCE UNIT AWARD AGREEMENT (POND)                         
|EX-10.6 PERFORMANCE UNIT AWARD AGREEMENT (MARTIN)                       
|EX-31.1 SECTION 302 CERTIFICATION OF C.E.O.                             
|EX-31.2 SECTION 302 CERTIFICATION OF INTERIM PRINCIPAL FINANCIAL OFFICER
|EX-32.1 SECTION 906 CERTIFICATION OF C.E.O.                             
|EX-32.2 SECTION 906 CERTIFICATION OF INTERIM PRINCIPAL FINANCIAL OFFICER



2



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##### Table of Contents






PART I. FINANCIAL INFORMATION







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

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES





CONSOLIDATED BALANCE SHEETS


|                                                                                                                          |                                                                                                                         |                                            |       |         |              |  |       |         |         | 
|------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ----- | ------- | ------------ |  | ----- | ------- | ------- | 
|                                                                                                                          |                                                                                                                         | September 25,                              |       |         | December 26, | 
|                                                                                                                          |                                                                                                                         | 2005                                       |       |         | 2004         | 
|                                                                                                                          |                                                                                                                         |                                            |       |         |              | 
|                                                                                                                          |                                                                                                                         | (In millions)                              |      
|                                                                                                                          |                                                                                                                         | (Unaudited)                                |      
|ASSETS                                                                                                                   
|Current assets:                                                                                                           |                                                                                                                         |                                            |       |         |              |  |       |        
|                                                                                                                          | Cash and cash equivalents                                                                                               |                                            | $     | 334.2   |              |  | $     | 146.3   |        
|                                                                                                                          | Short-term marketable securities                                                                                        |                                            |       | 106.4   |              |  |       | 422.1   |        
|                                                                                                                          | Accounts receivable, net of allowances of $34.3 and $22.5 at
    September 25, 2005 and December 26, 2004, respectively |                                            |       | 140.6   |              |  |       | 154.0   |        
|                                                                                                                          | Inventories                                                                                                             |                                            |       | 216.3   |              |  |       | 253.9   |        
|                                                                                                                          | Deferred income taxes, net of allowances of $20.7 and $0 at
    September 25, 2005 and December 26, 2004, respectively  |                                            |       | 5.0     |              |  |       | 25.7    |        
|                                                                                                                          | Other current assets                                                                                                    |                                            |       | 32.9    |              |  |       | 30.4    |        
|                                                                                                                          |                                                                                                                         |                                            |       |         |              | 
|                                                                                                                          |                                                                                                                         | Total current assets                       |       |         | 835.4        |  |       |         | 1,032.4 | 
|Property, plant and equipment, net                                                                                        |                                                                                                                         |                                            | 635.1 |         |              |  | 664.1 |        
|Deferred income taxes, net of allowances of $189.7 and $6.1 at
    September 25, 2005 and December 26, 2004, respectively |                                                                                                                         |                                            |      |         |              |  | 129.3 |        
|Intangible assets, net                                                                                                    |                                                                                                                         |                                            | 131.9 |         |              |  | 151.6 |        
|Goodwill                                                                                                                  |                                                                                                                         |                                            | 229.9 |         |              |  | 229.9 |        
|Long-term marketable securities                                                                                           |                                                                                                                         |                                            | 64.0  |         |              |  | 124.0 |        
|Other assets                                                                                                              |                                                                                                                         |                                            | 31.8  |         |              |  | 45.2  |        
|                                                                                                                          |                                                                                                                         |                                            |       |         |              | 
|                                                                                                                          |                                                                                                                         | Total assets                               |       | $       | 1,928.1      |  |       | $       | 2,376.5 | 
|                                                                                                                          |                                                                                                                         |                                            |       |         |              | 
|                                                                                                                         
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                     
|Current liabilities:                                                                                                      |                                                                                                                         |                                            |       |         |              |  |       |        
|                                                                                                                          | Current portion of long-term debt                                                                                       |                                            | $     | 4.5     |              |  | $     | 3.3     |        
|                                                                                                                          | Accounts payable                                                                                                        |                                            |       | 96.2    |              |  |       | 118.2   |        
|                                                                                                                          | Accrued expenses and other current liabilities                                                                          |                                            |       | 131.1   |              |  |       | 165.1   |        
|                                                                                                                          |                                                                                                                         |                                            |       |         |              | 
|                                                                                                                          |                                                                                                                         | Total current liabilities                  |       |         | 231.8        |  |       |         | 286.6   | 
|Long-term debt, less current portion                                                                                      |                                                                                                                         |                                            | 643.2 |         |              |  | 845.2 |        
|Deferred income taxes                                                                                                     |                                                                                                                         |                                            | 28.6  |         |              |  |      |        
|Other liabilities                                                                                                         |                                                                                                                         |                                            | 15.8  |         |              |  | 15.6  |        
|                                                                                                                          |                                                                                                                         |                                            |       |         |              | 
|                                                                                                                          |                                                                                                                         | Total liabilities                          |       |         | 919.4        |  |       |         | 1,147.4 | 
|Commitments and contingencies                                                                                             |                                                                                                                         |                                            |       |         |              |  |       |        
|Stockholders equity:                                                                                                     |                                                                                                                         |                                            |       |         |              |  |       |        
|                                                                                                                          | Common stock                                                                                                            |                                            |       | 1.2     |              |  |       | 1.2     |        
|                                                                                                                          | Additional paid-in capital                                                                                              |                                            |       | 1,270.1 |              |  |       | 1,259.2 |        
|                                                                                                                          | Accumulated deficit                                                                                                     |                                            |       | (261.2  | )            |  |       | (24.7   | )      
|                                                                                                                          | Accumulated other comprehensive income (loss)                                                                           |                                            |       | 3.3     |              |  |       | (2.5    | )      
|                                                                                                                          | Less treasury stock (at cost)                                                                                           |                                            |       | (4.7    | )            |  |       | (4.1    | )      
|                                                                                                                          |                                                                                                                         |                                            |       |         |              | 
|                                                                                                                          |                                                                                                                         | Total stockholders equity                 |       |         | 1,008.7      |  |       |         | 1,229.1 | 
|                                                                                                                          |                                                                                                                         |                                            |       |         |              | 
|                                                                                                                          |                                                                                                                         | Total liabilities and stockholders equity |       | $       | 1,928.1      |  |       | $       | 2,376.5 | 
|                                                                                                                          |                                                                                                                         |                                            |       |         |              | 



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##### Table of Contents



FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES





CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                |                          |                                      |       |       |                   |   |       |               |  |   |               |       |   |   |         |       | 
|----------------------------------------------- | ------------------------ | ------------------------------------ | ----- | ----- | ----------------- | - | ----- | ------------- |  | - | ------------- | ----- | - | - | ------- | ----- | 
|                                                |                          | Three Months Ended                   |       |       | Nine Months Ended |  
|                                                |                          |                                      |       |       |                   |  
|                                                |                          | September 25,                        |       |       | September 26,     |   |       | September 25, |  |   | September 26, |      
|                                                |                          | 2005                                 |       |       | 2004              |   |       | 2005          |  |   | 2004          |      
|                                                |                          |                                      |       |       |                   |   |       |               |  |   |               |      
|                                                |                          | (In millions, except per share data) |      
|                                                |                          | (Unaudited)                          |      
|Total revenue                                   |                          | $                                    | 345.5 |       |                   | $ | 409.7 |               |  | $ | 1,054.3       |       |   | $ | 1,223.7 |      
|Cost of sales                                   |                          |                                      | 273.8 |       |                   |   | 285.4 |               |  |   | 829.9         |       |   |   | 872.7   |      
|                                                |                          |                                      |       |       |                   |   |       |               |  |   |               |      
|                                                | Gross profit             |                                      |       | 71.7  |                   |   |       | 124.3         |  |   |               | 224.4 |   |   |         | 351.0 | 
|                                                |                          |                                      |       |       |                   |   |       |               |  |   |               |      
|Operating expenses:                             |                          |                                      |       |       |                   |   |       |               |  |   |               |       |   |   |         |      
|Research and development                        |                          |                                      | 19.7  |       |                   |   | 20.6  |               |  |   | 58.2          |       |   |   | 62.3    |      
|Selling, general and administrative             |                          |                                      | 51.8  |       |                   |   | 46.1  |               |  |   | 146.7         |       |   |   | 131.9   |      
|Amortization of acquisition-related intangibles |                          |                                      | 5.9   |       |                   |   | 6.1   |               |  |   | 18.1          |       |   |   | 19.9    |      
|Restructuring and impairments                   |                          |                                      | 4.2   |       |                   |   | 8.2   |               |  |   | 12.2          |       |   |   | 16.4    |      
|Reserve for potential settlement losses         |                          |                                      |      |       |                   |   |      |               |  |   |              |       |   |   | 11.0    |      
|                                                |                          |                                      |       |       |                   |   |       |               |  |   |               |      
|                                                | Total operating expenses |                                      |       | 81.6  |                   |   |       | 81.0          |  |   |               | 235.2 |   |   |         | 241.5 | 
|                                                |                          |                                      |       |       |                   |   |       |               |  |   |               |      
|Operating income (loss)                         |                          |                                      | (9.9  | )     |                   |   | 43.3  |               |  |   | (10.8         | )     |   |   | 109.5   |      
|Interest expense                                |                          |                                      | 9.5   |       |                   |   | 16.1  |               |  |   | 31.5          |       |   |   | 47.7    |      
|Interest income                                 |                          |                                      | (3.4  | )     |                   |   | (2.6  | )             |  |   | (9.4          | )     |   |   | (6.9    | )    
|Other (income) expense                          |                          |                                      | (3.4  | )     |                   |   | 8.4   |               |  |   | 20.5          |       |   |   | 8.4     |      
|                                                |                          |                                      |       |       |                   |   |       |               |  |   |               |      
|Income (loss) before income taxes               |                          |                                      | (12.6 | )     |                   |   | 21.4  |               |  |   | (53.4         | )     |   |   | 60.3    |      
|Provision for income taxes                      |                          |                                      | 8.2   |       |                   |   | 8.0   |               |  |   | 183.1         |       |   |   | 16.9    |      
|                                                |                          |                                      |       |       |                   |   |       |               |  |   |               |      
|Net income (loss)                               |                          | $                                    | (20.8 | )     |                   | $ | 13.4  |               |  | $ | (236.5        | )     |   | $ | 43.4    |      
|                                                |                          |                                      |       |       |                   |   |       |               |  |   |               |      
|Net income (loss) per common share:             |                          |                                      |       |       |                   |   |       |               |  |   |               |       |   |   |         |      
|                                                | Basic                    |                                      | $     | (0.17 | )                 |   | $     | 0.11          |  |   | $             | (1.97 | ) |   | $       | 0.36  | 
|                                                |                          |                                      |       |       |                   |   |       |               |  |   |               |      
|                                                | Diluted                  |                                      | $     | (0.17 | )                 |   | $     | 0.11          |  |   | $             | (1.97 | ) |   | $       | 0.35  | 
|                                                |                          |                                      |       |       |                   |   |       |               |  |   |               |      
|Weighted average common shares:                 |                          |                                      |       |       |                   |   |       |               |  |   |               |       |   |   |         |      
|                                                | Basic                    |                                      |       | 120.0 |                   |   |       | 119.5         |  |   |               | 119.9 |   |   |         | 119.4 | 
|                                                |                          |                                      |       |       |                   |   |       |               |  |   |               |      
|                                                | Diluted                  |                                      |       | 120.0 |                   |   |       | 121.7         |  |   |               | 119.9 |   |   |         | 123.8 | 
|                                                |                          |                                      |       |       |                   |   |       |               |  |   |               |      



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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES





CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


|                                               |                                                                                                         |                    |       |      |                   |   |      |               |  |   |               |     |  |   |      |      |  
|---------------------------------------------- | ------------------------------------------------------------------------------------------------------- | ------------------ | ----- | ---- | ----------------- | - | ---- | ------------- |  | - | ------------- | --- |  | - | ---- | ---- | -
|                                               |                                                                                                         | Three Months Ended |       |      | Nine Months Ended |  
|                                               |                                                                                                         |                    |       |      |                   |  
|                                               |                                                                                                         | September 25,      |       |      | September 26,     |   |      | September 25, |  |   | September 26, |    
|                                               |                                                                                                         | 2005               |       |      | 2004              |   |      | 2005          |  |   | 2004          |    
|                                               |                                                                                                         |                    |       |      |                   |   |      |               |  |   |               |    
|                                               |                                                                                                         | (In millions)      |      
|                                               |                                                                                                         | (Unaudited)        |      
|Net income (loss)                              |                                                                                                         | $                  | (20.8 | )    |                   | $ | 13.4 |               |  | $ | (236.5        | )   |  | $ | 43.4 |     
|Other comprehensive income (loss), net of tax: |                                                                                                         |                    |       |      |                   |   |      |               |  |   |               |     |  |   |      |     
|                                               | Net change associated with hedging transactions                                                         |                    |       |     |                   |   |      | 0.4           |  |   |               | 2.1 |  |   |      | 1.1  |  
|                                               | Net amount reclassified to earnings for hedging                                                         |                    |       | (0.1 | )                 |   |      |              |  |   |               | 0.2 |  |   |      | 1.1  |  
|                                               | Net change associated with unrealized holding gain (loss) on
    marketable securities and investments. |                    |       | 3.7  |                   |   |      | 0.7           |  |   |               | 3.4 |  |   |      | (0.9 | )
|                                               | Net amount reclassified to earnings for marketable securities                                           |                    |       |     |                   |   |      |              |  |   |               | 0.1 |  |   |      | 0.1  |  
|                                               |                                                                                                         |                    |       |      |                   |   |      |               |  |   |               |    
|Comprehensive income (loss)                    |                                                                                                         | $                  | (17.2 | )    |                   | $ | 14.5 |               |  | $ | (230.7        | )   |  | $ | 44.8 |     
|                                               |                                                                                                         |                    |       |      |                   |   |      |               |  |   |               |    



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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                 |                                                                                          |                                                 |        |        |               |   |       |        |        |  
|------------------------------------------------ | ---------------------------------------------------------------------------------------- | ----------------------------------------------- | ------ | ------ | ------------- | - | ----- | ------ | ------ | -
|                                                 |                                                                                          | Nine Months Ended                               |       
|                                                 |                                                                                          |                                                 |       
|                                                 |                                                                                          | September 25,                                   |        |        | September 26, |  
|                                                 |                                                                                          | 2005                                            |        |        | 2004          |  
|                                                 |                                                                                          |                                                 |        |        |               |  
|                                                 |                                                                                          | (In millions)                                   |       
|                                                 |                                                                                          | (Unaudited)                                     |       
|Cash flows from operating activities:            |                                                                                          |                                                 |        |        |               |   |       |       
|Net income (loss)                                |                                                                                          | $                                               | (236.5 | )      |               | $ | 43.4  |       
|                                                 | Adjustments to reconcile net income (loss) to cash provided by
    operating activities: |                                                 |        |        |               |   |       |        |       
|                                                 | Depreciation and amortization                                                            |                                                 |        | 119.4  |               |   |       | 128.3  |       
|                                                 | Amortization of deferred compensation                                                    |                                                 |        | 1.6    |               |   |       | 2.3    |       
|                                                 | Non-cash restructuring and impairment expense                                            |                                                 |        | 4.2    |               |   |       | 0.3    |       
|                                                 | (Gain) loss on disposal of property, plant, and equipment                                |                                                 |        | 0.3    |               |   |       | (0.8   | )     
|                                                 | Non-cash vesting of equity awards                                                        |                                                 |        | 3.8    |               |   |       |       |       
|                                                 | Non-cash financing expense                                                               |                                                 |        | 1.9    |               |   |       | 2.9    |       
|                                                 | Deferred income taxes, net                                                               |                                                 |        | 177.1  |               |   |       | 5.3    |       
|                                                 | Non-cash write off of deferred financing fees                                            |                                                 |        | 5.4    |               |   |       |       |       
|Changes in operating assets and liabilities:     |                                                                                          |                                                 |        |        |               |   |       |       
|                                                 | Accounts receivable, net                                                                 |                                                 |        | 13.4   |               |   |       | (18.5  | )     
|                                                 | Inventories                                                                              |                                                 |        | 37.6   |               |   |       | (24.9  | )     
|                                                 | Other current assets                                                                     |                                                 |        | 11.0   |               |   |       | (0.3   | )     
|                                                 | Current liabilities                                                                      |                                                 |        | (56.0  | )             |   |       | 24.9   |       
|                                                 | Other assets and liabilities, net                                                        |                                                 |        | 1.9    |               |   |       | (3.7   | )     
|                                                 |                                                                                          |                                                 |        |        |               |  
|                                                 |                                                                                          | Cash provided by operating activities           |        |        | 85.1          |   |       |        | 159.2  |  
|                                                 |                                                                                          |                                                 |        |        |               |  
|Cash flows from investing activities:            |                                                                                          |                                                 |        |        |               |   |       |       
|                                                 | Purchase of marketable securities                                                        |                                                 |        | (472.1 | )             |   |       | (720.5 | )     
|                                                 | Sale of marketable securities                                                            |                                                 |        | 825.4  |               |   |       | 577.0  |       
|                                                 | Maturity of marketable securities                                                        |                                                 |        | 20.6   |               |   |       | 51.7   |       
|                                                 | Capital expenditures                                                                     |                                                 |        | (71.9  | )             |   |       | (144.6 | )     
|                                                 | Proceeds from sale of property, plant and equipment                                      |                                                 |        |       |               |   |       | 6.7    |       
|                                                 | Purchase of molds and tooling                                                            |                                                 |        | (1.8   | )             |   |       | (2.9   | )     
|                                                 |                                                                                          |                                                 |        |        |               |  
|                                                 |                                                                                          | Cash provided by (used in) investing activities |        |        | 300.2         |   |       |        | (232.6 | )
|                                                 |                                                                                          |                                                 |        |        |               |  
|Cash flows from financing activities:            |                                                                                          |                                                 |        |        |               |   |       |       
|                                                 | Repayment of long-term debt                                                              |                                                 |        | (355.3 | )             |   |       | (2.5   | )     
|                                                 | Issuance of long-term debt                                                               |                                                 |        | 154.5  |               |   |       |       |       
|                                                 | Proceeds from issuance of common stock and from exercise of
    stock options, net       |                                                 |        | 10.4   |               |   |       | 21.6   |       
|                                                 | Purchase of treasury stock                                                               |                                                 |        | (6.0   | )             |   |       | (6.6   | )     
|                                                 | Debt issuance costs                                                                      |                                                 |        | (1.0   | )             |   |       | (0.4   | )     
|                                                 |                                                                                          |                                                 |        |        |               |  
|                                                 |                                                                                          | Cash provided by (used in) financing activities |        |        | (197.4        | ) |       |        | 12.1   |  
|                                                 |                                                                                          |                                                 |        |        |               |  
|Net change in cash and cash equivalents          |                                                                                          |                                                 | 187.9  |        |               |   | (61.3 | )     
|Cash and cash equivalents at beginning of period |                                                                                          |                                                 | 146.3  |        |               |   | 169.5 |       
|                                                 |                                                                                          |                                                 |        |        |               |  
|Cash and cash equivalents at end of period       |                                                                                          | $                                               | 334.2  |        |               | $ | 108.2 |       
|                                                 |                                                                                          |                                                 |        |        |               |  



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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


Note 1  Basis of Presentation




Note 2  Financial Statement Details


|                              |                               |                                     |       |         |              |   |       |         |         | 
|----------------------------- | ----------------------------- | ----------------------------------- | ----- | ------- | ------------ | - | ----- | ------- | ------- | 
|                              |                               | September 25,                       |       |         | December 26, |  
|                              |                               | 2005                                |       |         | 2004         |  
|                              |                               |                                     |       |         |              |  
|                              |                               | (In millions)                       |      
|Inventories                   |                               |                                     |       |         |              |   |       |        
|Raw materials                 |                               | $                                   | 27.3  |         |              | $ | 30.9  |        
|Work in process               |                               |                                     | 135.4 |         |              |   | 162.5 |        
|Finished goods                |                               |                                     | 53.6  |         |              |   | 60.5  |        
|                              |                               |                                     |       |         |              |  
|                              |                               | $                                   | 216.3 |         |              | $ | 253.9 |        
|                              |                               |                                     |       |         |              |  
|Property, plant and equipment |                               |                                     |       |         |              |   |       |        
|                              | Land                          |                                     | $     | 32.0    |              |   | $     | 32.1    |        
|                              | Buildings and improvements    |                                     |       | 304.4   |              |   |       | 299.5   |        
|                              | Machinery and equipment       |                                     |       | 1,314.1 |              |   |       | 1,273.9 |        
|                              | Construction in progress      |                                     |       | 99.7    |              |   |       | 109.8   |        
|                              |                               |                                     |       |         |              |  
|                              |                               | Total property, plant and equipment |       |         | 1,750.2      |   |       |         | 1,715.3 | 
|                              | Less accumulated depreciation |                                     |       | 1,115.1 |              |   |       | 1,051.2 |        
|                              |                               |                                     |       |         |              |  
|                              |                               | $                                   | 635.1 |         |              | $ | 664.1 |        
|                              |                               |                                     |       |         |              |  





|         |                                           
|-------- | ------------------------------------------
|Note 3  | Computation of Net Income (Loss) Per Share

Earnings Per Share.


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##### Table of Contents



FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                                                                                    |  |                    |       |  |                   |  |       |               |  |  |               |  |  |  |       | 
|------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----- |  | ----------------- |  | ----- | ------------- |  |  | ------------- |  |  |  | ----- | 
|                                                                                                                    |  | Three Months Ended |       |  | Nine Months Ended | 
|                                                                                                                    |  |                    |       |  |                   | 
|                                                                                                                    |  | September 25,      |       |  | September 26,     |  |       | September 25, |  |  | September 26, | 
|                                                                                                                    |  | 2005               |       |  | 2004              |  |       | 2005          |  |  | 2004          | 
|                                                                                                                    |  |                    |       |  |                   |  |       |               |  |  |               | 
|                                                                                                                    |  | (In millions)      |      
|Basic weighted average common shares outstanding                                                                    |  |                    | 120.0 |  |                   |  | 119.5 |               |  |  | 119.9         |  |  |  | 119.4 | 
|Net effect of dilutive stock options and DSUs based on the
    treasury stock method using the average market price |  |                    |      |  |                   |  | 2.2   |               |  |  |              |  |  |  | 4.4   | 
|                                                                                                                    |  |                    |       |  |                   |  |       |               |  |  |               | 
|Diluted weighted average common shares outstanding                                                                  |  |                    | 120.0 |  |                   |  | 121.7 |               |  |  | 119.9         |  |  |  | 123.8 | 
|                                                                                                                    |  |                    |       |  |                   |  |       |               |  |  |               | 





Note 4  Supplemental Cash Flow Information


|                    |              |                   |   |      |               |  |   |      | 
|------------------- | ------------ | ----------------- | - | ---- | ------------- |  | - | ---- | 
|                    |              | Nine Months Ended |  
|                    |              |                   |  
|                    |              | September 25,     |   |      | September 26, | 
|                    |              | 2005              |   |      | 2004          | 
|                    |              |                   |   |      |               | 
|                    |              | (In millions)     |  
|Cash paid, net for: |              |                   |   |      |               |  |   |     
|                    | Income taxes |                   | $ | 6.6  |               |  | $ | 4.5  | 
|                    |              |                   |   |      |               | 
|                    | Interest     |                   | $ | 38.0 |               |  | $ | 51.8 | 
|                    |              |                   |   |      |               | 



|         |                      
|-------- | ---------------------
|Note 5  | Marketable Securities



8



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##### Table of Contents



FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Accounting for Certain Investments in
Debt and Equity Securities




|                                       |  |               |       |  |        |   |       | 
|-------------------------------------- |  | ------------- | ----- |  | ------ | - | ----- | 
|                                       |  | Amortized     |       |  | Market |  
|                                       |  | Cost          |       |  | Value  |  
|                                       |  |               |       |  |        |  
|                                       |  | (In millions) |      
|Due in one year or less                |  | $             | 50.6  |  |        | $ | 50.0  | 
|Due after one year through three years |  |               | 65.0  |  |        |   | 64.0  | 
|Due after ten years                    |  |               | 56.5  |  |        |   | 56.4  | 
|                                       |  |               |       |  |        |  
|                                       |  | $             | 172.1 |  |        | $ | 170.4 | 
|                                       |  |               |       |  |        |  



|         |            
|-------- | -----------
|Note 6  | Investments









|         |                         
|-------- | ------------------------
|Note 7  | Stock Based Compensation

Accounting for Stock Issued
to Employees


9



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##### Table of Contents



FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Accounting for Stock-Based
Compensation


|                                                                                                                                    |                       |                                         |       |       |                   |   |       |               |  |   |               |       |   |   |       |      | 
|----------------------------------------------------------------------------------------------------------------------------------- | --------------------- | --------------------------------------- | ----- | ----- | ----------------- | - | ----- | ------------- |  | - | ------------- | ----- | - | - | ----- | ---- | 
|                                                                                                                                    |                       | Three Months Ended                      |       |       | Nine Months Ended |  
|                                                                                                                                    |                       |                                         |       |       |                   |  
|                                                                                                                                    |                       | September 25,                           |       |       | September 26,     |   |       | September 25, |  |   | September 26, |      
|                                                                                                                                    |                       | 2005                                    |       |       | 2004              |   |       | 2005          |  |   | 2004          |      
|                                                                                                                                    |                       |                                         |       |       |                   |   |       |               |  |   |               |      
|                                                                                                                                    |                       | (In millions, except per share amounts) |      
|Net income (loss), as reported                                                                                                      |                       | $                                       | (20.8 | )     |                   | $ | 13.4  |               |  | $ | (236.5        | )     |   | $ | 43.4  |     
|Add: Stock compensation charge included in net income (loss)
    determined under the intrinsic value method, net of tax            |                       |                                         | 0.4   |       |                   |   | 0.5   |               |  |   | 5.4           |       |   |   | 1.4   |     
|Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    tax |                       |                                         | (4.2  | )     |                   |   | (11.4 | )             |  |   | (57.0         | )     |   |   | (35.4 | )   
|                                                                                                                                    |                       |                                         |       |       |                   |   |       |               |  |   |               |      
|Pro forma net income (loss)                                                                                                         |                       | $                                       | (24.6 | )     |                   | $ | 2.5   |               |  | $ | (288.1        | )     |   | $ | 9.4   |     
|                                                                                                                                    |                       |                                         |       |       |                   |   |       |               |  |   |               |      
|Income (loss) per share:                                                                                                            |                       |                                         |       |       |                   |   |       |               |  |   |               |       |   |   |       |     
|                                                                                                                                    | Basic  as reported   |                                         | $     | (0.17 | )                 |   | $     | 0.11          |  |   | $             | (1.97 | ) |   | $     | 0.36 | 
|                                                                                                                                    |                       |                                         |       |       |                   |   |       |               |  |   |               |      
|                                                                                                                                    | Basic  pro forma     |                                         | $     | (0.21 | )                 |   | $     | 0.02          |  |   | $             | (2.40 | ) |   | $     | 0.08 | 
|                                                                                                                                    |                       |                                         |       |       |                   |   |       |               |  |   |               |      
|                                                                                                                                    | Diluted  as reported |                                         | $     | (0.17 | )                 |   | $     | 0.11          |  |   | $             | (1.97 | ) |   | $     | 0.35 | 
|                                                                                                                                    |                       |                                         |       |       |                   |   |       |               |  |   |               |      
|                                                                                                                                    | Diluted  pro forma   |                                         | $     | (0.21 | )                 |   | $     | 0.02          |  |   | $             | (2.40 | ) |   | $     | 0.08 | 
|                                                                                                                                    |                       |                                         |       |       |                   |   |       |               |  |   |               |      





|                        |  |                    |      |   |                   |  |      |               |  |  |               |   |  |  |      |  
|----------------------- |  | ------------------ | ---- | - | ----------------- |  | ---- | ------------- |  |  | ------------- | - |  |  | ---- | -
|                        |  | Three Months Ended |      |   | Nine Months Ended | 
|                        |  |                    |      |   |                   | 
|                        |  | September 25,      |      |   | September 26,     |  |      | September 25, |  |  | September 26, |  
|                        |  | 2005               |      |   | 2004              |  |      | 2005          |  |  | 2004          |  
|                        |  |                    |      |   |                   |  |      |               |  |  |               |  
|Expected volatility     |  |                    | 53.3 | % |                   |  | 67.0 | %             |  |  | 53.7          | % |  |  | 68.0 | %
|Dividend yield          |  |                    |     |   |                   |  |     |               |  |  |              |   |  |  |     |  
|Risk-free interest rate |  |                    | 4.0  | % |                   |  | 3.6  | %             |  |  | 4.0           | % |  |  | 3.8  | %
|Expected life, in years |  |                    | 3.9  |   |                   |  | 6.0  |               |  |  | 4.0           |   |  |  | 6.0  |  

Share-Based Payment


10



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##### Table of Contents



FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








: Accounting for Stock Appreciation Rights and
Other Variable Stock Option or Award Plans








|         |                               
|-------- | ------------------------------
|Note 8  | Goodwill and Intangible Assets



|                                |                           |              |  |                          |                |  |                         |              |       |  |                |        |        |              |   |       |       |  |   |       |        |  
|------------------------------- | ------------------------- | ------------ |  | ------------------------ | -------------- |  | ----------------------- | ------------ | ----- |  | -------------- | ------ | ------ | ------------ | - | ----- | ----- |  | - | ----- | ------ | -
|                                |                           |              |  | As of September 25, 2005 |                |  | As of December 26, 2004 |             
|                                |                           |              |  |                          |                |  |                         |             
|                                |                           | Period of    |  |                          | Gross Carrying |  |                         | Accumulated  |       |  | Gross Carrying |        |        | Accumulated  |  
|                                |                           | Amortization |  |                          | Amount         |  |                         | Amortization |       |  | Amount         |        |        | Amortization |  
|                                |                           |              |  |                          |                |  |                         |              |       |  |                |        |        |              |  
|                                |                           |              |  | (In millions)            |               
|Identifiable intangible assets: |                           |              |  |                          |                |  |                         |              |       |  |                |        |        |              |   |       |       |  |   |      
|                                | Developed technology      |              |  | 5 - 15 years             |                |  | $                       | 225.6        |       |  | $              | (103.9 | )      |              | $ | 225.6 |       |  | $ | (89.5 | )     
|                                | Customer base             |              |  | 8 years                  |                |  |                         | 55.8         |       |  |                | (45.9  | )      |              |   | 55.8  |       |  |   | (40.7 | )     
|                                | Covenant not to compete   |              |  | 5 years                  |                |  |                         | 30.4         |       |  |                | (30.4  | )      |              |   | 30.4  |       |  |   | (30.4 | )     
|                                | Trademarks and tradenames |              |  | 4 years                  |                |  |                         | 24.9         |       |  |                | (24.9  | )      |              |   | 24.9  |       |  |   | (24.9 | )     
|                                | Patents                   |              |  | 4 years                  |                |  |                         | 5.4          |       |  |                | (5.1   | )      |              |   | 5.4   |       |  |   | (5.0  | )     
|                                |                           |              |  |                          |                |  |                         |              |       |  |                |        |        |              |  
|                                |                           | Subtotal     |  |                          |                |  |                         |              | 342.1 |  |                |        | (210.2 | )            |   |       | 342.1 |  |   |       | (190.5 | )
|                                | Goodwill                  |              |  |                          |                |  |                         | 229.9        |       |  |                |       |        |              |   | 229.9 |       |  |   |      |       
|                                |                           |              |  |                          |                |  |                         |              |       |  |                |        |        |              |  
|                                |                           | Total        |  |                          |                |  |                         | $            | 572.0 |  |                | $      | (210.2 | )            |   | $     | 572.0 |  |   | $     | (190.5 | )
|                                |                           |              |  |                          |                |  |                         |              |       |  |                |        |        |              |  



11



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##### Table of Contents



FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Disclosures
about Segments of an Enterprise and Related Information


|                                                           |  |               |      |  |          |   |       |          |  |   |       |  |  |   |       | 
|---------------------------------------------------------- |  | ------------- | ---- |  | -------- | - | ----- | -------- |  | - | ----- |  |  | - | ----- | 
|                                                           |  | Power         |      |  | Power    |   |       | Standard |  |   |      
|                                                           |  | Analog        |      |  | Discrete |   |       | Products |  |   | Total | 
|                                                           |  |               |      |  |          |   |       |          |  |   |       | 
|                                                           |  | (In millions) |     
|Balance as of September 25, 2005
    and December 26, 2004 |  | $             | 15.5 |  |          | $ | 159.9 |          |  | $ | 54.5  |  |  | $ | 229.9 | 





|                                |  |               |      | 
|------------------------------- |  | ------------- | ---- | 
|                                |  | (In millions) |     
|                                |  |               |     
|Estimated Amortization Expense: |  |               |      | 
|Remainder of 2005               |  | $             | 5.9  | 
|2006                            |  |               | 23.4 | 
|2007                            |  |               | 18.3 | 
|2008                            |  |               | 16.5 | 
|2009                            |  |               | 16.4 | 
|2010                            |  |               | 16.4 | 

Note 9  Segment Information




12



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##### Table of Contents



FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                     |                         |                    |   |       |                   |  |   |               |   |  |               |         |   |  |   |         |  
|------------------------------------ | ----------------------- | ------------------ | - | ----- | ----------------- |  | - | ------------- | - |  | ------------- | ------- | - |  | - | ------- | -
|                                     |                         | Three Months Ended |   |       | Nine Months Ended | 
|                                     |                         |                    |   |       |                   | 
|                                     |                         | September 25,      |   |       | September 26,     |  |   | September 25, |   |  | September 26, |        
|                                     |                         | 2005               |   |       | 2004              |  |   | 2005          |   |  | 2004          |        
|                                     |                         |                    |   |       |                   |  |   |               |   |  |               |        
|                                     |                         | (In millions)      |  
|Revenue and Operating Income (Loss): |                         |                    |   |       |                   |  |   |               |   |  |               |         |   |  |   |        
|Power Discrete                       |                         |                    |   |       |                   |  |   |               |   |  |               |         |   |  |   |        
|                                     | Total revenue           |                    | $ | 195.0 |                   |  | $ | 220.3         |   |  | $             | 592.7   |   |  | $ | 644.0   |  
|                                     | Operating income        |                    |   | 6.1   |                   |  |   | 39.0          |   |  |               | 27.1    |   |  |   | 94.3    |  
|                                     |                         |                    |   |       |                   |  |   |               |   |  |               |        
|Power Analog                         |                         |                    |   |       |                   |  |   |               |   |  |               |         |   |  |   |        
|                                     | Total revenue           |                    |   | 62.0  |                   |  |   | 80.4          |   |  |               | 199.0   |   |  |   | 236.8   |  
|                                     | Operating income (loss) |                    |   | (14.8 | )                 |  |   | 4.9           |   |  |               | (30.6   | ) |  |   | 19.2    |  
|                                     |                         |                    |   |       |                   |  |   |               |   |  |               |        
|Standard Products                    |                         |                    |   |       |                   |  |   |               |   |  |               |         |   |  |   |        
|                                     | Total revenue           |                    |   | 88.5  |                   |  |   | 109.0         |   |  |               | 262.6   |   |  |   | 342.9   |  
|                                     | Operating income        |                    |   | 3.0   |                   |  |   | 7.6           |   |  |               | 4.9     |   |  |   | 23.4    |  
|                                     |                         |                    |   |       |                   |  |   |               |   |  |               |        
|Other                                |                         |                    |   |       |                   |  |   |               |   |  |               |         |   |  |   |        
|                                     | Operating loss(1)       |                    |   | (4.2  | )                 |  |   | (8.2          | ) |  |               | (12.2   | ) |  |   | (27.4   | )
|                                     |                         |                    |   |       |                   |  |   |               |   |  |               |        
|Total Consolidated                   |                         |                    |   |       |                   |  |   |               |   |  |               |         |   |  |   |        
|                                     | Total revenue           |                    | $ | 345.5 |                   |  | $ | 409.7         |   |  | $             | 1,054.3 |   |  | $ | 1,223.7 |  
|                                     | Operating income (loss) |                    | $ | (9.9  | )                 |  | $ | 43.3          |   |  | $             | (10.8   | ) |  | $ | 109.5   |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes $4.2 million and $12.2 million of
    restructuring in the three and nine months ended
    September 25, 2005, respectively, and $8.2 million and
    $16.4 million of restructuring in the three and nine months
    ended September 26, 2004, respectively. Also includes
    $11.0 million for the nine months ended September 26,
    2004 for a reserve for potential settlement losses stemming from
    customer claims related to products manufactured with a
    defective mold compound purchased from Sumitomo Bakelite
    Singapore Pte. Ltd and affiliated companies (see Note 13
    and 16).

Note 10  Restructuring and Impairments






13



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##### Table of Contents



FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                                           |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |            |   |   |   |   |  |   |     |     | 
|------------------------------------------ | -------------------------------------------------------------- | ---------- | --- | --- | ------- | - | --- | ---- |  | - | ------- | ---- | ------- | -------- | ---- | ---------- | - | - | - | - |  | - | --- | --- | 
|                                           |                                                                | Accrual    |     |     |         |   |     |      |  |   |         |      | Accrual |         
|                                           |                                                                | Balance at |     |     | New     |   |     | Cash |  |   | Reserve |      |         | Non-Cash |      | Balance at |  
|                                           |                                                                | 12/26/2004 |     |     | Charges |   |     | Paid |  |   | Release |      |         | Items    |      | 3/27/2005  |  
|                                           |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |            |  
|First Quarter 2003 Restructuring Program:  |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |            |   |   |   |   |  |   |     |    
|                                           | Mountaintop, PA 6 Inch Closure Employee Separation Costs       |            | $   | 0.1 |         |   | $   |     |  |   | $       | (0.1 | )       |          | $    |           |   |   | $ |  |  |   | $   |    | 
|Second Quarter 2003 Restructuring Program: |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |            |   |   |   |   |  |   |     |    
|                                           | Employee Separation Costs                                      |            |     | 0.1 |         |   |     |     |  |   |         | (0.1 | )       |          |      |           |   |   |   |  |  |   |     |    | 
|                                           | South Portland, ME 4 Inch Closure Employee Separation Costs    |            |     | 0.7 |         |   |     |     |  |   |         | (0.1 | )       |          |      |           |   |   |   |  |  |   |     | 0.6 | 
|                                           | Kuala Lumpur, Malaysia Plant Closure Employee Separation Costs |            |     | 0.5 |         |   |     |     |  |   |         | (0.3 | )       |          |      |           |   |   |   |  |  |   |     | 0.2 | 
|2004 Infrastructure Realignment Program:   |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |            |   |   |   |   |  |   |     |    
|                                           | Employee Separation Costs                                      |            |     | 3.2 |         |   |     |     |  |   |         | (1.0 | )       |          |      | (0.3       | ) |   |   |  |  |   |     | 1.9 | 
|2005 Infrastructure Realignment Program:   |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |            |   |   |   |   |  |   |     |    
|                                           | Employee Separation Costs                                      |            |     |    |         |   |     | 3.9  |  |   |         | (0.9 | )       |          |      |           |   |   |   |  |  |   |     | 3.0 | 
|                                           | Office Closure Costs                                           |            |     |    |         |   |     | 0.5  |  |   |         |     |         |          |      |           |   |   |   |  |  |   |     | 0.5 | 
|                                           |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |            |   |  
|                                           |                                                                | $          | 4.6 |     |         | $ | 4.4 |      |  | $ | (2.5    | )    |         | $        | (0.3 | )          |   | $ |  |   |  | $ | 6.2 |    
|                                           |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |            |   |  

14



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##### Table of Contents



FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                           |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |      |            |   |      |      |   |   |     |     | 
|------------------------------------------ | -------------------------------------------------------------- | ---------- | --- | --- | ------- | - | --- | ---- |  | - | ------- | ---- | ------- | -------- | ---- | ---- | ---------- | - | ---- | ---- | - | - | --- | --- | 
|                                           |                                                                | Accrual    |     |     |         |   |     |      |  |   |         |      | Accrual |         
|                                           |                                                                | Balance at |     |     | New     |   |     | Cash |  |   | Reserve |      |         | Non-Cash |      |      | Balance at |  
|                                           |                                                                | 3/27/2005  |     |     | Charges |   |     | Paid |  |   | Release |      |         | Items    |      |      | 6/26/2005  |  
|                                           |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |      |            |  
|Second Quarter 2003 Restructuring Program: |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |      |            |   |      |      |   |   |     |    
|                                           | South Portland, ME 4 Inch Closure Employee Separation Costs    |            | $   | 0.6 |         |   | $   |     |  |   | $       | (0.1 | )       |          | $    |     |            |   | $    |     |   |   | $   | 0.5 | 
|                                           | Kuala Lumpur, Malaysia Plant Closure Employee Separation Costs |            |     | 0.2 |         |   |     |     |  |   |         |     |         |          |      |     |            |   |      |     |   |   |     | 0.2 | 
|2004 Infrastructure Realignment Program:   |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |      |            |   |      |      |   |   |     |    
|                                           | Employee Separation Costs                                      |            |     | 1.9 |         |   |     |     |  |   |         | (0.4 | )       |          |      |     |            |   |      |     |   |   |     | 1.5 | 
|2005 Infrastructure Realignment Program:   |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |      |            |   |      |      |   |   |     |    
|                                           | Employee Separation Costs                                      |            |     | 3.0 |         |   |     | 1.8  |  |   |         | (3.0 | )       |          |      | (0.2 | )          |   |      |     |   |   |     | 1.6 | 
|                                           | Office Closure Costs                                           |            |     | 0.5 |         |   |     |     |  |   |         | (0.1 | )       |          |      |     |            |   |      |     |   |   |     | 0.4 | 
|                                           | Asset Impairment                                               |            |     |    |         |   |     | 2.1  |  |   |         |     |         |          |      |     |            |   |      | (2.1 | ) |   |     |    | 
|                                           | Transfer Costs                                                 |            |     |    |         |   |     | 0.2  |  |   |         | (0.2 | )       |          |      |     |            |   |      |     |   |   |     |    | 
|                                           |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |      |            |  
|                                           |                                                                | $          | 6.2 |     |         | $ | 4.1 |      |  | $ | (3.8    | )    |         | $        | (0.2 | )    |            | $ | (2.1 | )    |   | $ | 4.2 |    
|                                           |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |      |            |  

|                                           |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |      |            |   |      |      |   |   |     |     | 
|------------------------------------------ | -------------------------------------------------------------- | ---------- | --- | --- | ------- | - | --- | ---- |  | - | ------- | ---- | ------- | -------- | ---- | ---- | ---------- | - | ---- | ---- | - | - | --- | --- | 
|                                           |                                                                | Accrual    |     |     |         |   |     |      |  |   |         |      | Accrual |         
|                                           |                                                                | Balance at |     |     | New     |   |     | Cash |  |   | Reserve |      |         | Non-Cash |      |      | Balance at |  
|                                           |                                                                | 6/26/2005  |     |     | Charges |   |     | Paid |  |   | Release |      |         | Items    |      |      | 9/25/2005  |  
|                                           |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |      |            |  
|Second Quarter 2003 Restructuring Program: |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |      |            |   |      |      |   |   |     |    
|                                           | South Portland, ME 4 Inch Closure Employee Separation Costs    |            | $   | 0.5 |         |   | $   |     |  |   | $       |     |         |          | $    | (0.3 | )          |   | $    |     |   |   | $   | 0.2 | 
|                                           | Kuala Lumpur, Malaysia Plant Closure Employee Separation Costs |            |     | 0.2 |         |   |     |     |  |   |         |     |         |          |      |     |            |   |      |     |   |   |     | 0.2 | 
|2004 Infrastructure Realignment Program:   |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |      |            |   |      |      |   |   |     |    
|                                           | Employee Separation Costs                                      |            |     | 1.5 |         |   |     |     |  |   |         | (0.4 | )       |          |      |     |            |   |      |     |   |   |     | 1.1 | 
|2005 Infrastructure Realignment Program:   |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |      |            |   |      |      |   |   |     |    
|                                           | Employee Separation Costs                                      |            |     | 1.6 |         |   |     | 2.9  |  |   |         | (0.7 | )       |          |      |     |            |   |      | (0.7 | ) |   |     | 3.1 | 
|                                           | Office Closure Costs                                           |            |     | 0.4 |         |   |     |     |  |   |         | (0.3 | )       |          |      |     |            |   |      |     |   |   |     | 0.1 | 
|                                           | Asset Impairment                                               |            |     |    |         |   |     | 1.6  |  |   |         |     |         |          |      |     |            |   |      | (1.6 | ) |   |     |    | 
|                                           |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |      |            |  
|                                           |                                                                | $          | 4.2 |     |         | $ | 4.5 |      |  | $ | (1.4    | )    |         | $        | (0.3 | )    |            | $ | (2.3 | )    |   | $ | 4.7 |    
|                                           |                                                                |            |     |     |         |   |     |      |  |   |         |      |         |          |      |      |            |  





|          |                                      
|--------- | -------------------------------------
|Note 11  | Refinancing of Senior Credit Facility

1 2


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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|          |            
|--------- | -----------
|Note 12  | Derivatives

Accounting for Certain Derivative Instruments and Certain
Hedging Activities


Accounting for Certain Derivative Instruments and Certain
Hedging Activities  an amendment of FASB Statement
No. 133






|          |              
|--------- | -------------
|Note 13  | Contingencies





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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












Note 14  Income Taxes






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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Accounting for Income
Taxes






|          |                                             
|--------- | --------------------------------------------
|Note 15  | Condensed Consolidating Financial Statements



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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


CONDENSED CONSOLIDATING BALANCE SHEET


|                                      |                                                |                                            |         |         |                |  |       |              |         |              |              |       |       |              |           |               |                     |  |          |          |          |   |       |         |         | 
|------------------------------------- | ---------------------------------------------- | ------------------------------------------ | ------- | ------- | -------------- |  | ----- | ------------ | ------- | ------------ | ------------ | ----- | ----- | ------------ | --------- | ------------- | ------------------- |  | -------- | -------- | -------- | - | ----- | ------- | ------- | 
|                                      |                                                | September 25, 2005                         |        
|                                      |                                                |                                            |        
|                                      |                                                | Unconsolidated                             |         |         | Unconsolidated |  |       |              |         | Consolidated |             
|                                      |                                                | Fairchild                                  |         |         | Fairchild      |  |       |              |         | Non-         |              |       |       |              | Fairchild |              
|                                      |                                                | Semiconductor                              |         |         | Semiconductor  |  |       | Guarantor    |         |              | Guarantor    |       |       |              |           | Semiconductor |                    
|                                      |                                                | International, Inc.                        |         |         | Corporation    |  |       | Subsidiaries |         |              | Subsidiaries |       |       | Eliminations |           |               | International, Inc. | 
|                                      |                                                |                                            |         |         |                |  |       |              |         |              |              |       |       |              |           |               |                     | 
|                                      |                                                | (In millions)                              |        
|                                      |                                                | (Unaudited)                                |        
|ASSETS                               
|Current assets:                       |                                                |                                            |         |         |                |  |       |              |         |              |              |       |       |              |           |               |                     |  |          |          |          |   |       |        
|                                      | Cash and cash equivalents                      |                                            | $       |        |                |  | $     | 85.0         |         |              | $            |      |       |              | $         | 249.2         |                     |  | $        |         |          |   | $     | 334.2   |        
|                                      | Short-term marketable securities               |                                            |         |        |                |  |       | 106.4        |         |              |              |      |       |              |           |              |                     |  |          |         |          |   |       | 106.4   |        
|                                      | Accounts receivable, net                       |                                            |         |        |                |  |       | 17.9         |         |              |              |      |       |              |           | 122.7         |                     |  |          |         |          |   |       | 140.6   |        
|                                      | Inventories                                    |                                            |         |        |                |  |       | 109.8        |         |              |              | 4.9   |       |              |           | 101.6         |                     |  |          |         |          |   |       | 216.3   |        
|                                      | Deferred income taxes, net                     |                                            |         |        |                |  |       |             |         |              |              |      |       |              |           | 5.0           |                     |  |          |         |          |   |       | 5.0     |        
|                                      | Other current assets                           |                                            |         |        |                |  |       | 20.0         |         |              |              |      |       |              |           | 12.9          |                     |  |          |         |          |   |       | 32.9    |        
|                                      |                                                |                                            |         |         |                |  |       |              |         |              |              |       |       |              |           |               |                     | 
|                                      |                                                | Total current assets                       |         |         |               |  |       |              | 339.1   |              |              |       | 4.9   |              |           |               | 491.4               |  |          |          |         |   |       |         | 835.4   | 
|Property, plant and equipment, net    |                                                |                                            |        |         |                |  | 293.3 |              |         |              | 1.5          |       |       |              | 340.3     |               |                     |  |         |          |          |   | 635.1 |        
|Intangible assets, net                |                                                |                                            |        |         |                |  | 32.1  |              |         |              | 14.2         |       |       |              | 85.6      |               |                     |  |         |          |          |   | 131.9 |        
|Goodwill                              |                                                |                                            |        |         |                |  | 167.7 |              |         |              | 61.8         |       |       |              | 0.4       |               |                     |  |         |          |          |   | 229.9 |        
|Long-term marketable securities       |                                                |                                            |        |         |                |  | 64.0  |              |         |              |             |       |       |              |          |               |                     |  |         |          |          |   | 64.0  |        
|Investment in subsidiary              |                                                |                                            | 1,005.4 |         |                |  | 874.7 |              |         |              | 263.3        |       |       |              | 89.4      |               |                     |  | (2,232.8 | )        |          |   |      |        
|Other assets                          |                                                |                                            |        |         |                |  | 15.8  |              |         |              | 1.8          |       |       |              | 14.2      |               |                     |  |         |          |          |   | 31.8  |        
|                                      |                                                |                                            |         |         |                |  |       |              |         |              |              |       |       |              |           |               |                     | 
|                                      |                                                | Total assets                               |         | $       | 1,005.4        |  |       | $            | 1,786.7 |              |              | $     | 347.5 |              |           | $             | 1,021.3             |  |          | $        | (2,232.8 | ) |       | $       | 1,928.1 | 
|                                      |                                                |                                            |         |         |                |  |       |              |         |              |              |       |       |              |           |               |                     | 
|                                     
|LIABILITIES AND STOCKHOLDERS EQUITY 
|Current liabilities:                  |                                                |                                            |         |         |                |  |       |              |         |              |              |       |       |              |           |               |                     |  |          |          |          |   |       |        
|                                      | Current portion of long-term debt              |                                            | $       |        |                |  | $     | 4.5          |         |              | $            |      |       |              | $         |              |                     |  | $        |         |          |   | $     | 4.5     |        
|                                      | Accounts payable                               |                                            |         |        |                |  |       | 63.8         |         |              |              | 0.2   |       |              |           | 32.2          |                     |  |          |         |          |   |       | 96.2    |        
|                                      | Accrued expenses and other current liabilities |                                            |         |        |                |  |       | 77.2         |         |              |              | 0.9   |       |              |           | 53.0          |                     |  |          |         |          |   |       | 131.1   |        
|                                      |                                                |                                            |         |         |                |  |       |              |         |              |              |       |       |              |           |               |                     | 
|                                      |                                                | Total current liabilities                  |         |         |               |  |       |              | 145.5   |              |              |       | 1.1   |              |           |               | 85.2                |  |          |          |         |   |       |         | 231.8   | 
|Long-term debt, less current portion  |                                                |                                            |        |         |                |  | 643.2 |              |         |              |             |       |       |              |          |               |                     |  |         |          |          |   | 643.2 |        
|Net intercompany (receivable) payable |                                                |                                            |        |         |                |  | (29.3 | )            |         |              | (15.5        | )     |       |              | 44.8      |               |                     |  |         |          |          |   |      |        
|Deferred income taxes                 |                                                |                                            |        |         |                |  | 18.1  |              |         |              |             |       |       |              | 10.5      |               |                     |  |         |          |          |   | 28.6  |        
|Other liabilities                     |                                                |                                            |        |         |                |  | 0.5   |              |         |              |             |       |       |              | 15.3      |               |                     |  |         |          |          |   | 15.8  |        
|                                      |                                                |                                            |         |         |                |  |       |              |         |              |              |       |       |              |           |               |                     | 
|                                      |                                                | Total liabilities                          |         |         |               |  |       |              | 778.0   |              |              |       | (14.4 | )            |           |               | 155.8               |  |          |          |         |   |       |         | 919.4   | 
|                                      |                                                |                                            |         |         |                |  |       |              |         |              |              |       |       |              |           |               |                     | 
|Commitments and contingencies         |                                                |                                            |         |         |                |  |       |              |         |              |              |       |       |              |           |               |                     |  |          |          |          |   |       |        
|Stockholders equity:                 |                                                |                                            |         |         |                |  |       |              |         |              |              |       |       |              |           |               |                     |  |          |          |          |   |       |        
|                                      | Common stock                                   |                                            |         | 1.2     |                |  |       |             |         |              |              |      |       |              |           |              |                     |  |          |         |          |   |       | 1.2     |        
|                                      | Additional paid-in capital                     |                                            |         | 1,270.1 |                |  |       |             |         |              |              |      |       |              |           |              |                     |  |          |         |          |   |       | 1,270.1 |        
|                                      | Retained earnings (deficit)                    |                                            |         | (261.2  | )              |  |       | 1,005.4      |         |              |              | 361.9 |       |              |           | 865.5         |                     |  |          | (2,232.8 | )        |   |       | (261.2  | )      
|                                      | Accumulated other comprehensive loss           |                                            |         |        |                |  |       | 3.3          |         |              |              |      |       |              |           |              |                     |  |          |         |          |   |       | 3.3     |        
|                                      | Less treasury stock (at cost)                  |                                            |         | (4.7    | )              |  |       |             |         |              |              |      |       |              |           |              |                     |  |          |         |          |   |       | (4.7    | )      
|                                      |                                                |                                            |         |         |                |  |       |              |         |              |              |       |       |              |           |               |                     | 
|                                      |                                                | Total stockholders equity                 |         |         | 1,005.4        |  |       |              | 1,008.7 |              |              |       | 361.9 |              |           |               | 865.5               |  |          |          | (2,232.8 | ) |       |         | 1,008.7 | 
|                                      |                                                |                                            |         |         |                |  |       |              |         |              |              |       |       |              |           |               |                     | 
|                                      |                                                | Total liabilities and stockholders equity |         | $       | 1,005.4        |  |       | $            | 1,786.7 |              |              | $     | 347.5 |              |           | $             | 1,021.3             |  |          | $        | (2,232.8 | ) |       | $       | 1,928.1 | 
|                                      |                                                |                                            |         |         |                |  |       |              |         |              |              |       |       |              |           |               |                     | 

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##### Table of Contents



FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS


|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |   |              |           |               |                     |   |        |   |  |   |       |      | 
|----------------------------------------------- | ------------------------ | ------------------------------------- | ----- | - | -------------- | - | ----- | ------------ |  | ------------ | ------------ | ---- | - | ------------ | --------- | ------------- | ------------------- | - | ------ | - |  | - | ----- | ---- | 
|                                                |                          | Three Months Ended September 25, 2005 |      
|                                                |                          |                                       |      
|                                                |                          | Unconsolidated                        |       |   | Unconsolidated |   |       |              |  | Consolidated |             
|                                                |                          | Fairchild                             |       |   | Fairchild      |   |       |              |  | Non-         |              |      |   |              | Fairchild |              
|                                                |                          | Semiconductor                         |       |   | Semiconductor  |   |       | Guarantor    |  |              | Guarantor    |      |   |              |           | Semiconductor |                    
|                                                |                          | International, Inc.                   |       |   | Corporation    |   |       | Subsidiaries |  |              | Subsidiaries |      |   | Eliminations |           |               | International, Inc. |  
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |   |              |           |               |                     |  
|                                                |                          | (In millions)                         |      
|                                                |                          | (Unaudited)                           |      
|Total revenue                                   |                          | $                                     |      |   |                | $ | 324.2 |              |  | $            | 1.1          |      |   |              | 429.0     |               |                     | $ | (408.8 | ) |  | $ | 345.5 |     
|Cost of sales                                   |                          |                                       |      |   |                |   | 298.9 |              |  |              | 3.3          |      |   |              | 380.4     |               |                     |   | (408.8 | ) |  |   | 273.8 |     
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |   |              |           |               |                     |  
|                                                | Gross profit (loss)      |                                       |       |  |                |   |       | 25.3         |  |              |              | (2.2 | ) |              |           | 48.6          |                     |   |        |  |  |   |       | 71.7 | 
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |   |              |           |               |                     |  
|Operating Expenses:                             |                          |                                       |       |   |                |   |       |              |  |              |              |      |   |              |           |               |                     |   |        |   |  |   |       |     
|Research and development                        |                          |                                       |      |   |                |   | 11.5  |              |  |              | 2.6          |      |   |              | 5.6       |               |                     |   |       |   |  |   | 19.7  |     
|Selling, general and administrative             |                          |                                       |      |   |                |   | 35.5  |              |  |              | 1.1          |      |   |              | 15.2      |               |                     |   |       |   |  |   | 51.8  |     
|Amortization of acquisition-related intangibles |                          |                                       |      |   |                |   | 1.4   |              |  |              | 0.5          |      |   |              | 4.0       |               |                     |   |       |   |  |   | 5.9   |     
|Restructuring and impairments                   |                          |                                       |      |   |                |   | 3.9   |              |  |              | 0.1          |      |   |              | 0.2       |               |                     |   |       |   |  |   | 4.2   |     
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |   |              |           |               |                     |  
|                                                | Total operating expenses |                                       |       |  |                |   |       | 52.3         |  |              |              | 4.3  |   |              |           | 25.0          |                     |   |        |  |  |   |       | 81.6 | 
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |   |              |           |               |                     |  
|Operating income (loss)                         |                          |                                       |      |   |                |   | (27.0 | )            |  |              | (6.5         | )    |   |              | 23.6      |               |                     |   |       |   |  |   | (9.9  | )   
|Interest expense                                |                          |                                       |      |   |                |   | 9.5   |              |  |              |             |      |   |              |          |               |                     |   |       |   |  |   | 9.5   |     
|Interest income                                 |                          |                                       |      |   |                |   | (2.9  | )            |  |              | (0.1         | )    |   |              | (0.4      | )             |                     |   |       |   |  |   | (3.4  | )   
|Other income, net                               |                          |                                       |      |   |                |   | (3.4  | )            |  |              |             |      |   |              |          |               |                     |   |       |   |  |   | (3.4  | )   
|Equity in subsidiary (income) loss              |                          |                                       | 20.8  |   |                |   | (12.8 | )            |  |              | 7.1          |      |   |              |          |               |                     |   | (15.1  | ) |  |   |      |     
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |   |              |           |               |                     |  
|Income (loss) before income taxes               |                          |                                       | (20.8 | ) |                |   | (17.4 | )            |  |              | (13.5        | )    |   |              | 24.0      |               |                     |   | 15.1   |   |  |   | (12.6 | )   
|Provision for income taxes                      |                          |                                       |      |   |                |   | 3.4   |              |  |              | 0.1          |      |   |              | 4.7       |               |                     |   |       |   |  |   | 8.2   |     
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |   |              |           |               |                     |  
|Net income (loss)                               |                          | $                                     | (20.8 | ) |                | $ | (20.8 | )            |  | $            | (13.6        | )    |   | $            | 19.3      |               |                     | $ | 15.1   |   |  | $ | (20.8 | )   
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |   |              |           |               |                     |  

20



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##### Table of Contents



FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS


|                                                |                          |                                      |        |   |                |   |         |              |  |              |              |      |   |              |           |               |                     |   |          |   |  |   |         |       | 
|----------------------------------------------- | ------------------------ | ------------------------------------ | ------ | - | -------------- | - | ------- | ------------ |  | ------------ | ------------ | ---- | - | ------------ | --------- | ------------- | ------------------- | - | -------- | - |  | - | ------- | ----- | 
|                                                |                          | Nine Months Ended September 25, 2005 |       
|                                                |                          |                                      |       
|                                                |                          | Unconsolidated                       |        |   | Unconsolidated |   |         |              |  | Consolidated |             
|                                                |                          | Fairchild                            |        |   | Fairchild      |   |         |              |  | Non-         |              |      |   |              | Fairchild |              
|                                                |                          | Semiconductor                        |        |   | Semiconductor  |   |         | Guarantor    |  |              | Guarantor    |      |   |              |           | Semiconductor |                    
|                                                |                          | International, Inc.                  |        |   | Corporation    |   |         | Subsidiaries |  |              | Subsidiaries |      |   | Eliminations |           |               | International, Inc. |  
|                                                |                          |                                      |        |   |                |   |         |              |  |              |              |      |   |              |           |               |                     |  
|                                                |                          | (In millions)                        |       
|                                                |                          | (Unaudited)                          |       
|Total revenue                                   |                          | $                                    |       |   |                | $ | 1,007.6 |              |  | $            | 3.7          |      |   | $            | 1,312.0   |               |                     | $ | (1,269.0 | ) |  | $ | 1,054.3 |      
|Cost of sales                                   |                          |                                      |       |   |                |   | 929.6   |              |  |              | 8.1          |      |   |              | 1,161.2   |               |                     |   | (1,269.0 | ) |  |   | 829.9   |      
|                                                |                          |                                      |        |   |                |   |         |              |  |              |              |      |   |              |           |               |                     |  
|                                                | Gross profit (loss)      |                                      |        |  |                |   |         | 78.0         |  |              |              | (4.4 | ) |              |           | 150.8         |                     |   |          |  |  |   |         | 224.4 | 
|                                                |                          |                                      |        |   |                |   |         |              |  |              |              |      |   |              |           |               |                     |  
|Operating expenses:                             |                          |                                      |        |   |                |   |         |              |  |              |              |      |   |              |           |               |                     |   |          |   |  |   |         |      
|Research and development                        |                          |                                      |       |   |                |   | 32.7    |              |  |              | 8.0          |      |   |              | 17.5      |               |                     |   |         |   |  |   | 58.2    |      
|Selling, general and administrative             |                          |                                      |       |   |                |   | 99.1    |              |  |              | 3.1          |      |   |              | 44.5      |               |                     |   |         |   |  |   | 146.7   |      
|Amortization of acquisition-related intangibles |                          |                                      |       |   |                |   | 4.3     |              |  |              | 1.8          |      |   |              | 12.0      |               |                     |   |         |   |  |   | 18.1    |      
|Restructuring and impairments                   |                          |                                      |       |   |                |   | 10.8    |              |  |              | 0.1          |      |   |              | 1.3       |               |                     |   |         |   |  |   | 12.2    |      
|                                                |                          |                                      |        |   |                |   |         |              |  |              |              |      |   |              |           |               |                     |  
|                                                | Total operating expenses |                                      |        |  |                |   |         | 146.9        |  |              |              | 13.0 |   |              |           | 75.3          |                     |   |          |  |  |   |         | 235.2 | 
|                                                |                          |                                      |        |   |                |   |         |              |  |              |              |      |   |              |           |               |                     |  
|Operating income (loss)                         |                          |                                      |       |   |                |   | (68.9   | )            |  |              | (17.4        | )    |   |              | 75.5      |               |                     |   |         |   |  |   | (10.8   | )    
|Interest expense                                |                          |                                      |       |   |                |   | 31.5    |              |  |              |             |      |   |              |          |               |                     |   |         |   |  |   | 31.5    |      
|Interest income                                 |                          |                                      |       |   |                |   | (8.6    | )            |  |              | (0.1         | )    |   |              | (0.7      | )             |                     |   |         |   |  |   | (9.4    | )    
|Other expense, net                              |                          |                                      |       |   |                |   | 20.5    |              |  |              |             |      |   |              |          |               |                     |   |         |   |  |   | 20.5    |      
|Equity in subsidiary (income) loss              |                          |                                      | 230.6  |   |                |   | (38.9   | )            |  |              | (3.4         | )    |   |              |          |               |                     |   | (188.3   | ) |  |   |        |      
|                                                |                          |                                      |        |   |                |   |         |              |  |              |              |      |   |              |           |               |                     |  
|Income (loss) before income taxes               |                          |                                      | (230.6 | ) |                |   | (73.4   | )            |  |              | (13.9        | )    |   |              | 76.2      |               |                     |   | 188.3    |   |  |   | (53.4   | )    
|Provision for income taxes                      |                          |                                      | 5.9    |   |                |   | 157.2   |              |  |              | 12.5         |      |   |              | 7.5       |               |                     |   |         |   |  |   | 183.1   |      
|                                                |                          |                                      |        |   |                |   |         |              |  |              |              |      |   |              |           |               |                     |  
|Net income (loss)                               |                          | $                                    | (236.5 | ) |                | $ | (230.6  | )            |  | $            | (26.4        | )    |   | $            | 68.7      |               |                     | $ | 188.3    |   |  | $ | (236.5  | )    
|                                                |                          |                                      |        |   |                |   |         |              |  |              |              |      |   |              |           |               |                     |  

21



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##### Table of Contents



FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS


|                                                       |                                                                                    |                                                 |   |      |                |   |        |              |        |              |   |   |                     |   |       |       |       |   |       |        |        |  
|------------------------------------------------------ | ---------------------------------------------------------------------------------- | ----------------------------------------------- | - | ---- | -------------- | - | ------ | ------------ | ------ | ------------ | - | - | ------------------- | - | ----- | ----- | ----- | - | ----- | ------ | ------ | -
|                                                       |                                                                                    | Nine Months Ended September 25, 2005            |  
|                                                       |                                                                                    |                                                 |  
|                                                       |                                                                                    | Unconsolidated                                  |   |      | Unconsolidated |   |        |              |        | Consolidated |  
|                                                       |                                                                                    | Fairchild                                       |   |      | Fairchild      |   |        |              |        | Non-         |   |   | Fairchild           |  
|                                                       |                                                                                    | Semiconductor                                   |   |      | Semiconductor  |   |        | Guarantor    |        | Guarantor    |   |   | Semiconductor       |  
|                                                       |                                                                                    | International, Inc.                             |   |      | Corporation    |   |        | Subsidiaries |        | Subsidiaries |   |   | International, Inc. |  
|                                                       |                                                                                    |                                                 |   |      |                |   |        |              |        |              |   |   |                     |  
|                                                       |                                                                                    | (In millions)                                   |  
|                                                       |                                                                                    | (Unaudited)                                     |  
|Cash flows provided by (used in) operating activities: |                                                                                    | $                                               |  |      |                | $ | (161.7 | )            |        | $            |  |   |                     | $ | 246.8 |       |       | $ | 85.1  |       
|                                                       |                                                                                    |                                                 |   |      |                |   |        |              |        |              |   |   |                     |   |      
|Investing activities:                                  |                                                                                    |                                                 |   |      |                |   |        |              |        |              |   |   |                     |   |       |       |       |   |       |       
|                                                       | Purchase of marketable securities                                                  |                                                 |   |     |                |   |        | (472.1       | )      |              |   |  |                     |   |       |      |       |   |       | (472.1 | )     
|                                                       | Sale of marketable securities                                                      |                                                 |   |     |                |   |        | 825.4        |        |              |   |  |                     |   |       |      |       |   |       | 825.4  |       
|                                                       | Maturity of marketable securities                                                  |                                                 |   |     |                |   |        | 20.6         |        |              |   |  |                     |   |       |      |       |   |       | 20.6   |       
|                                                       | Capital expenditures                                                               |                                                 |   |     |                |   |        | (26.4        | )      |              |   |  |                     |   |       | (45.5 | )     |   |       | (71.9  | )     
|                                                       | Purchase of molds and tooling                                                      |                                                 |   |     |                |   |        |             |        |              |   |  |                     |   |       | (1.8  | )     |   |       | (1.8   | )     
|                                                       | Investment (in) from affiliate                                                     |                                                 |   | (4.4 | )              |   |        | 4.4          |        |              |   |  |                     |   |       |      |       |   |       |       |       
|                                                       |                                                                                    |                                                 |   |      |                |   |        |              |        |              |   |   |                     |   |      
|                                                       |                                                                                    | Cash provided by (used in) investing activities |   |      | (4.4           | ) |        |              | 351.9  |              |   |   |                    |   |       |       | (47.3 | ) |       |        | 300.2  |  
|                                                       |                                                                                    |                                                 |   |      |                |   |        |              |        |              |   |   |                     |   |      
|Financing activities:                                  |                                                                                    |                                                 |   |      |                |   |        |              |        |              |   |   |                     |   |       |       |       |   |       |       
|                                                       | Repayment of long-term debt                                                        |                                                 |   |     |                |   |        | (355.3       | )      |              |   |  |                     |   |       |      |       |   |       | (355.3 | )     
|                                                       | Issuance of long-term debt                                                         |                                                 |   |     |                |   |        | 154.5        |        |              |   |  |                     |   |       |      |       |   |       | 154.5  |       
|                                                       | Proceeds from issuance of common stock and from exercise of
    stock options, net |                                                 |   | 10.4 |                |   |        |             |        |              |   |  |                     |   |       |      |       |   |       | 10.4   |       
|                                                       | Purchase of treasury stock                                                         |                                                 |   | (6.0 | )              |   |        |             |        |              |   |  |                     |   |       |      |       |   |       | (6.0   | )     
|                                                       | Other                                                                              |                                                 |   |     |                |   |        | (1.0         | )      |              |   |  |                     |   |       |      |       |   |       | (1.0   | )     
|                                                       |                                                                                    |                                                 |   |      |                |   |        |              |        |              |   |   |                     |   |      
|                                                       |                                                                                    | Cash provided by (used in) financing activities |   |      | 4.4            |   |        |              | (201.8 | )            |   |   |                    |   |       |       |      |   |       |        | (197.4 | )
|                                                       |                                                                                    |                                                 |   |      |                |   |        |              |        |              |   |   |                     |   |      
|Net change in cash and cash equivalents                |                                                                                    |                                                 |  |      |                |   | (11.6  | )            |        |              |  |   |                     |   | 199.5 |       |       |   | 187.9 |       
|Cash and cash equivalents at beginning of period       |                                                                                    |                                                 |  |      |                |   | 96.6   |              |        |              |  |   |                     |   | 49.7  |       |       |   | 146.3 |       
|                                                       |                                                                                    |                                                 |   |      |                |   |        |              |        |              |   |   |                     |   |      
|Cash and cash equivalents at end of period             |                                                                                    | $                                               |  |      |                | $ | 85.0   |              |        | $            |  |   |                     | $ | 249.2 |       |       | $ | 334.2 |       
|                                                       |                                                                                    |                                                 |   |      |                |   |        |              |        |              |   |   |                     |   |      
|Supplemental Cash Flow Information:                    |                                                                                    |                                                 |   |      |                |   |        |              |        |              |   |   |                     |   |       |       |       |   |       |       
|                                                       | Cash paid during the period for:                                                   |                                                 |   |      |                |   |        |              |        |              |   |   |                     |   |       |       |       |   |       |        |       
|                                                       |                                                                                    | Income taxes                                    |   | $    |               |   |        | $            |       |              |   | $ |                    |   |       | $     | 6.6   |   |       | $      | 6.6    |  
|                                                       |                                                                                    |                                                 |   |      |                |   |        |              |        |              |   |   |                     |   |      
|                                                       |                                                                                    | Interest                                        |   | $    |               |   |        | $            | 38.0   |              |   | $ |                    |   |       | $     |      |   |       | $      | 38.0   |  
|                                                       |                                                                                    |                                                 |   |      |                |   |        |              |        |              |   |   |                     |   |      

22



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##### Table of Contents



FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


CONDENSED CONSOLIDATING BALANCE SHEET


|                                      |                                                |                                            |         |         |                |  |         |              |         |              |              |       |       |              |           |               |                     |   |          |          |          |   |       |         |         | 
|------------------------------------- | ---------------------------------------------- | ------------------------------------------ | ------- | ------- | -------------- |  | ------- | ------------ | ------- | ------------ | ------------ | ----- | ----- | ------------ | --------- | ------------- | ------------------- | - | -------- | -------- | -------- | - | ----- | ------- | ------- | 
|                                      |                                                | December 26, 2004                          |        
|                                      |                                                |                                            |        
|                                      |                                                | Unconsolidated                             |         |         | Unconsolidated |  |         |              |         | Consolidated |             
|                                      |                                                | Fairchild                                  |         |         | Fairchild      |  |         |              |         | Non-         |              |       |       |              | Fairchild |              
|                                      |                                                | Semiconductor                              |         |         | Semiconductor  |  |         | Guarantor    |         |              | Guarantor    |       |       |              |           | Semiconductor |                    
|                                      |                                                | International, Inc.                        |         |         | Corporation    |  |         | Subsidiaries |         |              | Subsidiaries |       |       | Eliminations |           |               | International, Inc. |  
|                                      |                                                |                                            |         |         |                |  |         |              |         |              |              |       |       |              |           |               |                     |  
|                                      |                                                | (In millions)                              |        
|                                      |                                                | (Unaudited)                                |        
|ASSETS                               
|Current assets:                       |                                                |                                            |         |         |                |  |         |              |         |              |              |       |       |              |           |               |                     |   |          |          |          |   |       |        
|                                      | Cash and cash equivalents                      |                                            | $       |        |                |  | $       | 96.6         |         |              | $            |      |       |              | $         | 49.7          |                     |   | $        |         |          |   | $     | 146.3   |        
|                                      | Short-term marketable securities               |                                            |         |        |                |  |         | 422.1        |         |              |              |      |       |              |           |              |                     |   |          |         |          |   |       | 422.1   |        
|                                      | Accounts receivable, net                       |                                            |         |        |                |  |         | 20.0         |         |              |              |      |       |              |           | 134.0         |                     |   |          |         |          |   |       | 154.0   |        
|                                      | Inventories                                    |                                            |         |        |                |  |         | 129.7        |         |              |              | 13.8  |       |              |           | 110.4         |                     |   |          |         |          |   |       | 253.9   |        
|                                      | Deferred income taxes, net                     |                                            |         |        |                |  |         | 22.7         |         |              |              | 0.8   |       |              |           | 2.2           |                     |   |          |         |          |   |       | 25.7    |        
|                                      | Other current assets                           |                                            |         |        |                |  |         | 18.0         |         |              |              | 0.5   |       |              |           | 11.9          |                     |   |          |         |          |   |       | 30.4    |        
|                                      |                                                |                                            |         |         |                |  |         |              |         |              |              |       |       |              |           |               |                     |  
|                                      |                                                | Total current assets                       |         |         |               |  |         |              | 709.1   |              |              |       | 15.1  |              |           |               | 308.2               |   |          |          |         |   |       |         | 1,032.4 | 
|Property, plant and equipment, net    |                                                |                                            |        |         |                |  | 232.6   |              |         |              | 91.2         |       |       |              | 340.3     |               |                     |   |         |          |          |   | 664.1 |        
|Deferred income taxes                 |                                                |                                            | 5.9     |         |                |  | 118.9   |              |         |              | 11.7         |       |       |              | (7.2      | )             |                     |   |         |          |          |   | 129.3 |        
|Intangible assets, net                |                                                |                                            |        |         |                |  | 5.8     |              |         |              | 48.7         |       |       |              | 97.1      |               |                     |   |         |          |          |   | 151.6 |        
|Goodwill                              |                                                |                                            |        |         |                |  | 8.0     |              |         |              | 221.5        |       |       |              | 0.4       |               |                     |   |         |          |          |   | 229.9 |        
|Long-term marketable securities       |                                                |                                            |        |         |                |  | 124.0   |              |         |              |             |       |       |              |          |               |                     |   |         |          |          |   | 124.0 |        
|Investment in subsidiary              |                                                |                                            | 1,225.7 |         |                |  | 1,158.6 |              |         |              | 262.9        |       |       |              | 84.6      |               |                     |   | (2,731.8 | )        |          |   |      |        
|Other assets                          |                                                |                                            |        |         |                |  | 27.6    |              |         |              | 1.7          |       |       |              | 15.9      |               |                     |   |         |          |          |   | 45.2  |        
|                                      |                                                |                                            |         |         |                |  |         |              |         |              |              |       |       |              |           |               |                     |  
|                                      |                                                | Total assets                               |         | $       | 1,231.6        |  |         | $            | 2,384.6 |              |              | $     | 652.8 |              |           | $             | 839.3               |   |          | $        | (2,731.8 | ) |       | $       | 2,376.5 | 
|                                      |                                                |                                            |         |         |                |  |         |              |         |              |              |       |       |              |           |               |                     |  
|                                     
|LIABILITIES AND STOCKHOLDERS EQUITY 
|Current liabilities:                  |                                                |                                            |         |         |                |  |         |              |         |              |              |       |       |              |           |               |                     |   |          |          |          |   |       |        
|                                      | Current portion of long-term debt              |                                            | $       |        |                |  | $       | 3.3          |         |              | $            |      |       |              | $         |              |                     |   | $        |         |          |   | $     | 3.3     |        
|                                      | Accounts payable                               |                                            |         |        |                |  |         | 62.0         |         |              |              | 4.3   |       |              |           | 51.9          |                     |   |          |         |          |   |       | 118.2   |        
|                                      | Accrued expenses and other current liabilities |                                            |         |        |                |  |         | 99.8         |         |              |              | 5.8   |       |              |           | 59.5          |                     |   |          |         |          |   |       | 165.1   |        
|                                      |                                                |                                            |         |         |                |  |         |              |         |              |              |       |       |              |           |               |                     |  
|                                      |                                                | Total current liabilities                  |         |         |               |  |         |              | 165.1   |              |              |       | 10.1  |              |           |               | 111.4               |   |          |          |         |   |       |         | 286.6   | 
|Long-term debt, less current portion  |                                                |                                            |        |         |                |  | 845.2   |              |         |              |             |       |       |              |          |               |                     |   |         |          |          |   | 845.2 |        
|Net intercompany (receivable) payable |                                                |                                            |        |         |                |  | 150.9   |              |         |              | (13.5        | )     |       |              | (137.4    | )             |                     |   |         |          |          |   |      |        
|Other liabilities                     |                                                |                                            |        |         |                |  | 0.2     |              |         |              |             |       |       |              | 15.4      |               |                     |   |         |          |          |   | 15.6  |        
|                                      |                                                |                                            |         |         |                |  |         |              |         |              |              |       |       |              |           |               |                     |  
|                                      |                                                | Total liabilities                          |         |         |               |  |         |              | 1,161.4 |              |              |       | (3.4  | )            |           |               | (10.6               | ) |          |          |         |   |       |         | 1,147.4 | 
|                                      |                                                |                                            |         |         |                |  |         |              |         |              |              |       |       |              |           |               |                     |  
|Commitments and contingencies         |                                                |                                            |         |         |                |  |         |              |         |              |              |       |       |              |           |               |                     |   |          |          |          |   |       |        
|Stockholders equity:                 |                                                |                                            |         |         |                |  |         |              |         |              |              |       |       |              |           |               |                     |   |          |          |          |   |       |        
|                                      | Common stock                                   |                                            |         | 1.2     |                |  |         |             |         |              |              |      |       |              |           |              |                     |   |          |         |          |   |       | 1.2     |        
|                                      | Additional paid-in capital                     |                                            |         | 1,259.2 |                |  |         |             |         |              |              |      |       |              |           |              |                     |   |          |         |          |   |       | 1,259.2 |        
|                                      | Retained earnings (deficit)                    |                                            |         | (24.7   | )              |  |         | 1,225.7      |         |              |              | 656.2 |       |              |           | 849.9         |                     |   |          | (2,731.8 | )        |   |       | (24.7   | )      
|                                      | Accumulated other comprehensive loss           |                                            |         |        |                |  |         | (2.5         | )       |              |              |      |       |              |           |              |                     |   |          |         |          |   |       | (2.5    | )      
|                                      | Less treasury stock (at cost)                  |                                            |         | (4.1    | )              |  |         |             |         |              |              |      |       |              |           |              |                     |   |          |         |          |   |       | (4.1    | )      
|                                      |                                                |                                            |         |         |                |  |         |              |         |              |              |       |       |              |           |               |                     |  
|                                      |                                                | Total stockholders equity                 |         |         | 1,231.6        |  |         |              | 1,223.2 |              |              |       | 656.2 |              |           |               | 849.9               |   |          |          | (2,731.8 | ) |       |         | 1,229.1 | 
|                                      |                                                |                                            |         |         |                |  |         |              |         |              |              |       |       |              |           |               |                     |  
|                                      |                                                | Total liabilities and stockholders equity |         | $       | 1,231.6        |  |         | $            | 2,384.6 |              |              | $     | 652.8 |              |           | $             | 839.3               |   |          | $        | (2,731.8 | ) |       | $       | 2,376.5 | 
|                                      |                                                |                                            |         |         |                |  |         |              |         |              |              |       |       |              |           |               |                     |  

23



---



##### Table of Contents



FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS


|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |  |              |           |               |                     |   |        |   |  |   |       |       | 
|----------------------------------------------- | ------------------------ | ------------------------------------- | ----- | - | -------------- | - | ----- | ------------ |  | ------------ | ------------ | ---- |  | ------------ | --------- | ------------- | ------------------- | - | ------ | - |  | - | ----- | ----- | 
|                                                |                          | Three Months Ended September 26, 2004 |      
|                                                |                          |                                       |      
|                                                |                          | Unconsolidated                        |       |   | Unconsolidated |   |       |              |  | Consolidated |             
|                                                |                          | Fairchild                             |       |   | Fairchild      |   |       |              |  | Non-         |              |      |  |              | Fairchild |              
|                                                |                          | Semiconductor                         |       |   | Semiconductor  |   |       | Guarantor    |  |              | Guarantor    |      |  |              |           | Semiconductor |                    
|                                                |                          | International, Inc.                   |       |   | Corporation    |   |       | Subsidiaries |  |              | Subsidiaries |      |  | Eliminations |           |               | International, Inc. |  
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |  |              |           |               |                     |  
|                                                |                          | (In millions)                         |      
|                                                |                          | (Unaudited)                           |      
|Total revenue                                   |                          | $                                     |      |   |                | $ | 356.5 |              |  | $            | 24.2         |      |  | $            | 467.7     |               |                     | $ | (438.7 | ) |  | $ | 409.7 |      
|Cost of sales                                   |                          |                                       |      |   |                |   | 321.1 |              |  |              | 22.9         |      |  |              | 380.1     |               |                     |   | (438.7 | ) |  |   | 285.4 |      
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |  |              |           |               |                     |  
|                                                | Gross profit             |                                       |       |  |                |   |       | 35.4         |  |              |              | 1.3  |  |              |           | 87.6          |                     |   |        |  |  |   |       | 124.3 | 
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |  |              |           |               |                     |  
|Operating Expenses:                             |                          |                                       |       |   |                |   |       |              |  |              |              |      |  |              |           |               |                     |   |        |   |  |   |       |      
|Research and development                        |                          |                                       |      |   |                |   | 8.3   |              |  |              | 6.2          |      |  |              | 6.1       |               |                     |   |       |   |  |   | 20.6  |      
|Selling, general and administrative             |                          |                                       |      |   |                |   | 29.9  |              |  |              | 2.2          |      |  |              | 14.0      |               |                     |   |       |   |  |   | 46.1  |      
|Amortization of acquisition-related intangibles |                          |                                       |      |   |                |   | 0.2   |              |  |              | 1.9          |      |  |              | 4.0       |               |                     |   |       |   |  |   | 6.1   |      
|Restructuring and impairments                   |                          |                                       |      |   |                |   | 5.0   |              |  |              | 2.9          |      |  |              | 0.3       |               |                     |   |       |   |  |   | 8.2   |      
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |  |              |           |               |                     |  
|                                                | Total operating expenses |                                       |       |  |                |   |       | 43.4         |  |              |              | 13.2 |  |              |           | 24.4          |                     |   |        |  |  |   |       | 81.0  | 
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |  |              |           |               |                     |  
|Operating income (loss)                         |                          |                                       |      |   |                |   | (8.0  | )            |  |              | (11.9        | )    |  |              | 63.2      |               |                     |   |       |   |  |   | 43.3  |      
|Interest expense                                |                          |                                       |      |   |                |   | 16.0  |              |  |              |             |      |  |              | 0.1       |               |                     |   |       |   |  |   | 16.1  |      
|Interest income                                 |                          |                                       |      |   |                |   | (2.4  | )            |  |              |             |      |  |              | (0.2      | )             |                     |   |       |   |  |   | (2.6  | )    
|Other expense                                   |                          |                                       |      |   |                |   | 8.4   |              |  |              |             |      |  |              |          |               |                     |   |       |   |  |   | 8.4   |      
|Equity in subsidiary income                     |                          |                                       | (13.4 | ) |                |   | (48.2 | )            |  |              | (12.3        | )    |  |              |          |               |                     |   | 73.9   |   |  |   |      |      
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |  |              |           |               |                     |  
|Income before income taxes                      |                          |                                       | 13.4  |   |                |   | 18.2  |              |  |              | 0.4          |      |  |              | 63.3      |               |                     |   | (73.9  | ) |  |   | 21.4  |      
|Provision for income taxes                      |                          |                                       |      |   |                |   | 4.8   |              |  |              |             |      |  |              | 3.2       |               |                     |   |       |   |  |   | 8.0   |      
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |  |              |           |               |                     |  
|Net income                                      |                          | $                                     | 13.4  |   |                | $ | 13.4  |              |  | $            | 0.4          |      |  | $            | 60.1      |               |                     | $ | (73.9  | ) |  | $ | 13.4  |      
|                                                |                          |                                       |       |   |                |   |       |              |  |              |              |      |  |              |           |               |                     |  

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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS


|                                                |                          |                                      |       |   |                |   |         |              |  |              |              |      |  |              |           |               |                     |   |          |   |  |   |         |       | 
|----------------------------------------------- | ------------------------ | ------------------------------------ | ----- | - | -------------- | - | ------- | ------------ |  | ------------ | ------------ | ---- |  | ------------ | --------- | ------------- | ------------------- | - | -------- | - |  | - | ------- | ----- | 
|                                                |                          | Nine Months Ended September 26, 2004 |      
|                                                |                          |                                      |      
|                                                |                          | Unconsolidated                       |       |   | Unconsolidated |   |         |              |  | Consolidated |             
|                                                |                          | Fairchild                            |       |   | Fairchild      |   |         |              |  | Non-         |              |      |  |              | Fairchild |              
|                                                |                          | Semiconductor                        |       |   | Semiconductor  |   |         | Guarantor    |  |              | Guarantor    |      |  |              |           | Semiconductor |                    
|                                                |                          | International, Inc.                  |       |   | Corporation    |   |         | Subsidiaries |  |              | Subsidiaries |      |  | Eliminations |           |               | International, Inc. |  
|                                                |                          |                                      |       |   |                |   |         |              |  |              |              |      |  |              |           |               |                     |  
|                                                |                          | (In millions)                        |      
|                                                |                          | (Unaudited)                          |      
|Total revenue                                   |                          | $                                    |      |   |                | $ | 1,031.8 |              |  | $            | 90.9         |      |  | $            | 1,385.4   |               |                     | $ | (1,284.4 | ) |  | $ | 1,223.7 |      
|Cost of sales                                   |                          |                                      |      |   |                |   | 918.3   |              |  |              | 86.6         |      |  |              | 1,152.2   |               |                     |   | (1,284.4 | ) |  |   | 872.7   |      
|                                                |                          |                                      |       |   |                |   |         |              |  |              |              |      |  |              |           |               |                     |  
|                                                | Gross profit             |                                      |       |  |                |   |         | 113.5        |  |              |              | 4.3  |  |              |           | 233.2         |                     |   |          |  |  |   |         | 351.0 | 
|                                                |                          |                                      |       |   |                |   |         |              |  |              |              |      |  |              |           |               |                     |  
|Operating expenses:                             |                          |                                      |       |   |                |   |         |              |  |              |              |      |  |              |           |               |                     |   |          |   |  |   |         |      
|Research and development                        |                          |                                      |      |   |                |   | 23.9    |              |  |              | 20.0         |      |  |              | 18.4      |               |                     |   |         |   |  |   | 62.3    |      
|Selling, general and administrative             |                          |                                      |      |   |                |   | 85.8    |              |  |              | 6.2          |      |  |              | 39.9      |               |                     |   |         |   |  |   | 131.9   |      
|Amortization of acquisition-related intangibles |                          |                                      |      |   |                |   | 0.5     |              |  |              | 5.9          |      |  |              | 13.5      |               |                     |   |         |   |  |   | 19.9    |      
|Restructuring and impairments                   |                          |                                      |      |   |                |   | 9.6     |              |  |              | 6.4          |      |  |              | 0.4       |               |                     |   |         |   |  |   | 16.4    |      
|Reserve for potential settlement losses         |                          |                                      |      |   |                |   | 11.0    |              |  |              |             |      |  |              |          |               |                     |   |         |   |  |   | 11.0    |      
|                                                |                          |                                      |       |   |                |   |         |              |  |              |              |      |  |              |           |               |                     |  
|                                                | Total operating expenses |                                      |       |  |                |   |         | 130.8        |  |              |              | 38.5 |  |              |           | 72.2          |                     |   |          |  |  |   |         | 241.5 | 
|                                                |                          |                                      |       |   |                |   |         |              |  |              |              |      |  |              |           |               |                     |  
|Operating income (loss)                         |                          |                                      |      |   |                |   | (17.3   | )            |  |              | (34.2        | )    |  |              | 161.0     |               |                     |   |         |   |  |   | 109.5   |      
|Interest expense                                |                          |                                      |      |   |                |   | 47.6    |              |  |              |             |      |  |              | 0.1       |               |                     |   |         |   |  |   | 47.7    |      
|Interest income                                 |                          |                                      |      |   |                |   | (6.5    | )            |  |              |             |      |  |              | (0.4      | )             |                     |   |         |   |  |   | (6.9    | )    
|Other expense                                   |                          |                                      |      |   |                |   | 8.4     |              |  |              |             |      |  |              |          |               |                     |   |         |   |  |   | 8.4     |      
|Equity in subsidiary income                     |                          |                                      | (43.4 | ) |                |   | (113.9  | )            |  |              | (35.3        | )    |  |              |          |               |                     |   | 192.6    |   |  |   |        |      
|                                                |                          |                                      |       |   |                |   |         |              |  |              |              |      |  |              |           |               |                     |  
|Income before income taxes                      |                          |                                      | 43.4  |   |                |   | 47.1    |              |  |              | 1.1          |      |  |              | 161.3     |               |                     |   | (192.6   | ) |  |   | 60.3    |      
|Provision for income taxes                      |                          |                                      |      |   |                |   | 3.7     |              |  |              | 0.9          |      |  |              | 12.3      |               |                     |   |         |   |  |   | 16.9    |      
|                                                |                          |                                      |       |   |                |   |         |              |  |              |              |      |  |              |           |               |                     |  
|Net income                                      |                          | $                                    | 43.4  |   |                | $ | 43.4    |              |  | $            | 0.2          |      |  | $            | 149.0     |               |                     | $ | (192.6   | ) |  | $ | 43.4    |      
|                                                |                          |                                      |       |   |                |   |         |              |  |              |              |      |  |              |           |               |                     |  

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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS


|                                                 |                                                                                    |                                                 |   |       |                |   |       |              |        |              |              |       |           |                     |      |       |       |   |       |        |        |  
|------------------------------------------------ | ---------------------------------------------------------------------------------- | ----------------------------------------------- | - | ----- | -------------- | - | ----- | ------------ | ------ | ------------ | ------------ | ----- | --------- | ------------------- | ---- | ----- | ----- | - | ----- | ------ | ------ | -
|                                                 |                                                                                    | Nine Months Ended September 26, 2004            |  
|                                                 |                                                                                    |                                                 |  
|                                                 |                                                                                    | Unconsolidated                                  |   |       | Unconsolidated |   |       |              |        | Consolidated |             
|                                                 |                                                                                    | Fairchild                                       |   |       | Fairchild      |   |       |              |        | Non-         |              |       | Fairchild |                    
|                                                 |                                                                                    | Semiconductor                                   |   |       | Semiconductor  |   |       | Guarantor    |        |              | Guarantor    |       |           | Semiconductor       |     
|                                                 |                                                                                    | International, Inc.                             |   |       | Corporation    |   |       | Subsidiaries |        |              | Subsidiaries |       |           | International, Inc. |     
|                                                 |                                                                                    |                                                 |   |       |                |   |       |              |        |              |              |       |           |                     |     
|                                                 |                                                                                    | (In millions)                                   |  
|                                                 |                                                                                    | (Unaudited)                                     |  
|Cash flows provided by operating activities:     |                                                                                    | $                                               |  |       |                | $ | 45.4  |              |        | $            | 26.9         |       |           | $                   | 86.9 |       |       | $ | 159.2 |       
|                                                 |                                                                                    |                                                 |   |       |                |   |       |              |        |              |              |       |           |                     |     
|Investing activities:                            |                                                                                    |                                                 |   |       |                |   |       |              |        |              |              |       |           |                     |      |       |       |   |       |       
|                                                 | Purchase of marketable securities                                                  |                                                 |   |      |                |   |       | (720.5       | )      |              |              |      |           |                     |      |      |       |   |       | (720.5 | )     
|                                                 | Sale of marketable securities                                                      |                                                 |   |      |                |   |       | 577.0        |        |              |              |      |           |                     |      |      |       |   |       | 577.0  |       
|                                                 | Maturity of marketable securities                                                  |                                                 |   |      |                |   |       | 51.7         |        |              |              |      |           |                     |      |      |       |   |       | 51.7   |       
|                                                 | Capital expenditures                                                               |                                                 |   |      |                |   |       | (36.5        | )      |              |              | (26.7 | )         |                     |      | (81.4 | )     |   |       | (144.6 | )     
|                                                 | Proceeds from sale of property, plant and equipment                                |                                                 |   |      |                |   |       |             |        |              |              |      |           |                     |      | 6.7   |       |   |       | 6.7    |       
|                                                 | Purchase of molds and tooling                                                      |                                                 |   |      |                |   |       |             |        |              |              | (0.2  | )         |                     |      | (2.7  | )     |   |       | (2.9   | )     
|                                                 | Investment (in) from affiliate                                                     |                                                 |   | (15.0 | )              |   |       | 15.0         |        |              |              |      |           |                     |      |      |       |   |       |       |       
|                                                 |                                                                                    |                                                 |   |       |                |   |       |              |        |              |              |       |           |                     |     
|                                                 |                                                                                    | Cash used in investing activities               |   |       | (15.0          | ) |       |              | (113.3 | )            |              |       | (26.9     | )                   |      |       | (77.4 | ) |       |        | (232.6 | )
|                                                 |                                                                                    |                                                 |   |       |                |   |       |              |        |              |              |       |           |                     |     
|Financing activities:                            |                                                                                    |                                                 |   |       |                |   |       |              |        |              |              |       |           |                     |      |       |       |   |       |       
|                                                 | Repayment of long-term debt                                                        |                                                 |   |      |                |   |       | (2.5         | )      |              |              |      |           |                     |      |      |       |   |       | (2.5   | )     
|                                                 | Proceeds from issuance of common stock and from exercise of
    stock options, net |                                                 |   | 21.6  |                |   |       |             |        |              |              |      |           |                     |      |      |       |   |       | 21.6   |       
|                                                 | Purchase of treasury stock                                                         |                                                 |   | (6.6  | )              |   |       |             |        |              |              |      |           |                     |      |      |       |   |       | (6.6   | )     
|                                                 | Debt issuance costs                                                                |                                                 |   |      |                |   |       | (0.4         | )      |              |              |      |           |                     |      |      |       |   |       | (0.4   | )     
|                                                 |                                                                                    |                                                 |   |       |                |   |       |              |        |              |              |       |           |                     |     
|                                                 |                                                                                    | Cash provided by (used in) financing activities |   |       | 15.0           |   |       |              | (2.9   | )            |              |       |          |                     |      |       |      |   |       |        | 12.1   |  
|                                                 |                                                                                    |                                                 |   |       |                |   |       |              |        |              |              |       |           |                     |     
|Net change in cash and cash equivalents          |                                                                                    |                                                 |  |       |                |   | (70.8 | )            |        |              |             |       |           |                     | 9.5  |       |       |   | (61.3 | )     
|Cash and cash equivalents at beginning of period |                                                                                    |                                                 |  |       |                |   | 141.7 |              |        |              |             |       |           |                     | 27.8 |       |       |   | 169.5 |       
|                                                 |                                                                                    |                                                 |   |       |                |   |       |              |        |              |              |       |           |                     |     
|Cash and cash equivalents at end of period       |                                                                                    | $                                               |  |       |                | $ | 70.9  |              |        | $            |             |       |           | $                   | 37.3 |       |       | $ | 108.2 |       
|                                                 |                                                                                    |                                                 |   |       |                |   |       |              |        |              |              |       |           |                     |     
|Supplemental Cash Flow Information:              |                                                                                    |                                                 |   |       |                |   |       |              |        |              |              |       |           |                     |      |       |       |   |       |       
|                                                 | Cash paid during the period for:                                                   |                                                 |   |       |                |   |       |              |        |              |              |       |           |                     |      |       |       |   |       |        |       
|                                                 |                                                                                    | Income taxes                                    |   | $     |               |   |       | $            | 0.1    |              |              | $     |          |                     |      | $     | 4.4   |   |       | $      | 4.5    |  
|                                                 |                                                                                    |                                                 |   |       |                |   |       |              |        |              |              |       |           |                     |     
|                                                 |                                                                                    | Interest                                        |   | $     |               |   |       | $            | 51.8   |              |              | $     |          |                     |      | $     |      |   |       | $      | 51.8   |  
|                                                 |                                                                                    |                                                 |   |       |                |   |       |              |        |              |              |       |           |                     |     

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FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|          |                  
|--------- | -----------------
|Note 16  | Subsequent Events



Recently Issued Financial Accounting
Standards


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



Overview














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Results of Operations




|                                                |                          |                       |       |      |                   |  |     |               |   |   |               |      |  |  |     |    |   |   |         |       |  |  |     |    |   |   |         |       |  |  |     |    |  
|----------------------------------------------- | ------------------------ | --------------------- | ----- | ---- | ----------------- |  | --- | ------------- | - | - | ------------- | ---- |  |  | --- | -- | - | - | ------- | ----- |  |  | --- | -- | - | - | ------- | ----- |  |  | --- | -- | -
|                                                |                          | Three Months Ended    |       |      | Nine Months Ended | 
|                                                |                          |                       |       |      |                   | 
|                                                |                          | September 25,         |       |      | September 26,     |  |     | September 25, |   |   | September 26, |     
|                                                |                          | 2005                  |       |      | 2004              |  |     | 2005          |   |   | 2004          |     
|                                                |                          |                       |       |      |                   |  |     |               |   |   |               |     
|                                                |                          | (Dollars in millions) |      
|Total revenues                                  |                          | $                     | 345.5 |      |                   |  | 100 | %             |   | $ | 409.7         |      |  |  | 100 | %  |   | $ | 1,054.3 |       |  |  | 100 | %  |   | $ | 1,223.7 |       |  |  | 100 | % 
|Gross profit                                    |                          |                       | 71.7  |      |                   |  | 21  | %             |   |   | 124.3         |      |  |  | 30  | %  |   |   | 224.4   |       |  |  | 21  | %  |   |   | 351.0   |       |  |  | 29  | % 
|Operating expenses:                             |                          |                       |       |      |                   |  |     |               |   |   |               |      |  |  |     |    |   |   |         |       |  |  |     |    |   |   |         |       |  |  |     |   
|Research and development                        |                          |                       | 19.7  |      |                   |  | 6   | %             |   |   | 20.6          |      |  |  | 5   | %  |   |   | 58.2    |       |  |  | 6   | %  |   |   | 62.3    |       |  |  | 5   | % 
|Selling, general and administrative             |                          |                       | 51.8  |      |                   |  | 15  | %             |   |   | 46.1          |      |  |  | 11  | %  |   |   | 146.7   |       |  |  | 14  | %  |   |   | 131.9   |       |  |  | 11  | % 
|Amortization of acquisition-related intangibles |                          |                       | 5.9   |      |                   |  | 2   | %             |   |   | 6.1           |      |  |  | 1   | %  |   |   | 18.1    |       |  |  | 2   | %  |   |   | 19.9    |       |  |  | 2   | % 
|Restructuring and impairments                   |                          |                       | 4.2   |      |                   |  | 1   | %             |   |   | 8.2           |      |  |  | 2   | %  |   |   | 12.2    |       |  |  | 1   | %  |   |   | 16.4    |       |  |  | 1   | % 
|Reserve for potential settlement losses         |                          |                       |      |      |                   |  | 0   | %             |   |   |              |      |  |  | 0   | %  |   |   |        |       |  |  | 0   | %  |   |   | 11.0    |       |  |  | 1   | % 
|                                                |                          |                       |       |      |                   |  |     |               |   |   |               |      |  |  |     |    |   |   |         |       |  |  |     |   
|                                                | Total operating expenses |                       |       | 81.6 |                   |  |     | 24            | % |   |               | 81.0 |  |  |     | 20 | % |   |         | 235.2 |  |  |     | 22 | % |   |         | 241.5 |  |  |     | 20 | %
|Operating income (loss)                         |                          |                       | (9.9  | )    |                   |  | (3  | )%            |   |   | 43.3          |      |  |  | 11  | %  |   |   | (10.8   | )     |  |  | (1  | )% |   |   | 109.5   |       |  |  | 9   | % 
|Interest expense                                |                          |                       | 9.5   |      |                   |  | 3   | %             |   |   | 16.1          |      |  |  | 4   | %  |   |   | 31.5    |       |  |  | 3   | %  |   |   | 47.7    |       |  |  | 4   | % 
|Interest income                                 |                          |                       | (3.4  | )    |                   |  | (1  | )%            |   |   | (2.6          | )    |  |  | (1  | )% |   |   | (9.4    | )     |  |  | (1  | )% |   |   | (6.9    | )     |  |  | (1  | )%
|Other (income) expense                          |                          |                       | (3.4  | )    |                   |  | (1  | )%            |   |   | 8.4           |      |  |  | 2   | %  |   |   | 20.5    |       |  |  | 2   | %  |   |   | 8.4     |       |  |  | 1   | % 
|                                                |                          |                       |       |      |                   |  |     |               |   |   |               |      |  |  |     |    |   |   |         |       |  |  |     |   
|Income (loss) before income taxes               |                          |                       | (12.6 | )    |                   |  | (4  | )%            |   |   | 21.4          |      |  |  | 5   | %  |   |   | (53.4   | )     |  |  | (5  | )% |   |   | 60.3    |       |  |  | 5   | % 
|Provision for income taxes                      |                          |                       | 8.2   |      |                   |  | 2   | %             |   |   | 8.0           |      |  |  | 2   | %  |   |   | 183.1   |       |  |  | 17  | %  |   |   | 16.9    |       |  |  | 1   | % 
|                                                |                          |                       |       |      |                   |  |     |               |   |   |               |      |  |  |     |    |   |   |         |       |  |  |     |   
|Net income (loss)                               |                          | $                     | (20.8 | )    |                   |  | (6  | )%            |   | $ | 13.4          |      |  |  | 3   | %  |   | $ | (236.5  | )     |  |  | (22 | )% |   | $ | 43.4    |       |  |  | 4   | % 
|                                                |                          |                       |       |      |                   |  |     |               |   |   |               |      |  |  |     |    |   |   |         |       |  |  |     |   

Total Revenues.




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|                    |  |                    |     |   |                   |  |     |               |  |  |               |   |  |  |     |  
|------------------- |  | ------------------ | --- | - | ----------------- |  | --- | ------------- |  |  | ------------- | - |  |  | --- | -
|                    |  | Three Months Ended |     |   | Nine Months Ended | 
|                    |  |                    |     |   |                   | 
|                    |  | September 25,      |     |   | September 26,     |  |     | September 25, |  |  | September 26, |  
|                    |  | 2005               |     |   | 2004              |  |     | 2005          |  |  | 2004          |  
|                    |  |                    |     |   |                   |  |     |               |  |  |               |  
|United States       |  |                    | 10  | % |                   |  | 11  | %             |  |  | 10            | % |  |  | 12  | %
|Other Americas      |  |                    | 2   |   |                   |  | 2   |               |  |  | 2             |   |  |  | 2   |  
|Europe              |  |                    | 11  |   |                   |  | 11  |               |  |  | 11            |   |  |  | 11  |  
|China               |  |                    | 25  |   |                   |  | 21  |               |  |  | 25            |   |  |  | 20  |  
|Taiwan              |  |                    | 20  |   |                   |  | 21  |               |  |  | 20            |   |  |  | 22  |  
|Korea               |  |                    | 16  |   |                   |  | 18  |               |  |  | 16            |   |  |  | 18  |  
|Other Asia/ Pacific |  |                    | 16  |   |                   |  | 16  |               |  |  | 16            |   |  |  | 15  |  
|                    |  |                    |     |   |                   |  |     |               |  |  |               |  
|Total               |  |                    | 100 | % |                   |  | 100 | %             |  |  | 100           | % |  |  | 100 | %
|                    |  |                    |     |   |                   |  |     |               |  |  |               |  



Gross Profit.


Operating Expenses.






30



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31



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Share-Based Payment


Interest Expense. 1 2


Interest Income.


Other (Income) Expense. 1 2


Income Taxes.


32



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| |                     
| | --------------------
| | Reportable Segments.



|                  |  |                       |       |       |               |  |       |          |       |  |         |   |  |            |       |  |          |  |       |   |  |  |      |  
|----------------- |  | --------------------- | ----- | ----- | ------------- |  | ----- | -------- | ----- |  | ------- | - |  | ---------- | ----- |  | -------- |  | ----- | - |  |  | ---- | -
|                  |  | Three Months Ended    |      
|                  |  |                       |      
|                  |  | September 25,         |       |       | September 26, | 
|                  |  | 2005                  |       |       | 2004          | 
|                  |  |                       |       |       |               | 
|                  |  |                       |       | Gross |               |  |       |          | Gross | 
|                  |  | Revenue               |       |       | % of Total    |  |       | Profit % |       |  | Revenue |   |  | % of Total |       |  | Profit % | 
|                  |  |                       |       |       |               |  |       |          |       |  |         |   |  |            |       |  |          | 
|                  |  | (Dollars in millions) |      
|Power Discrete    |  | $                     | 195.0 |       |               |  | 56.5  | %        |       |  | 23.5    | % |  | $          | 220.3 |  |          |  | 53.8  | % |  |  | 33.7 | %
|Power Analog      |  |                       | 62.0  |       |               |  | 17.9  | %        |       |  | 14.8    | % |  |            | 80.4  |  |          |  | 19.6  | % |  |  | 32.5 | %
|Standard Products |  |                       | 88.5  |       |               |  | 25.6  | %        |       |  | 18.8    | % |  |            | 109.0 |  |          |  | 26.6  | % |  |  | 22.0 | %
|                  |  |                       |       |       |               |  |       |          |       |  |         |   |  |            |       |  |          | 
|Total             |  | $                     | 345.5 |       |               |  | 100.0 | %        |       |  | 20.8    | % |  | $          | 409.7 |  |          |  | 100.0 | % |  |  | 30.3 | %
|                  |  |                       |       |       |               |  |       |          |       |  |         |   |  |            |       |  |          | 

|                  |  |                       |         |       |               |  |       |          |       |  |         |   |  |            |         |  |          |  |       |   |  |  |      |  
|----------------- |  | --------------------- | ------- | ----- | ------------- |  | ----- | -------- | ----- |  | ------- | - |  | ---------- | ------- |  | -------- |  | ----- | - |  |  | ---- | -
|                  |  | Nine Months Ended     |        
|                  |  |                       |        
|                  |  | September 25,         |         |       | September 26, | 
|                  |  | 2005                  |         |       | 2004          | 
|                  |  |                       |         |       |               | 
|                  |  |                       |         | Gross |               |  |       |          | Gross | 
|                  |  | Revenue               |         |       | % of Total    |  |       | Profit % |       |  | Revenue |   |  | % of Total |         |  | Profit % | 
|                  |  |                       |         |       |               |  |       |          |       |  |         |   |  |            |         |  |          | 
|                  |  | (Dollars in millions) |        
|Power Discrete    |  | $                     | 592.7   |       |               |  | 56.2  | %        |       |  | 23.8    | % |  | $          | 644.0   |  |          |  | 52.6  | % |  |  | 30.8 | %
|Power Analog      |  |                       | 199.0   |       |               |  | 18.9  | %        |       |  | 19.4    | % |  |            | 236.8   |  |          |  | 19.4  | % |  |  | 34.5 | %
|Standard Products |  |                       | 262.6   |       |               |  | 24.9  | %        |       |  | 17.0    | % |  |            | 342.9   |  |          |  | 28.0  | % |  |  | 20.6 | %
|                  |  |                       |         |       |               |  |       |          |       |  |         |   |  |            |         |  |          | 
|Total             |  | $                     | 1,054.3 |       |               |  | 100.0 | %        |       |  | 21.3    | % |  | $          | 1,223.7 |  |          |  | 100.0 | % |  |  | 28.7 | %
|                  |  |                       |         |       |               |  |       |          |       |  |         |   |  |            |         |  |          | 



| |                     
| | --------------------
| | Power Discrete Group





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| |                   
| | ------------------
| | Power Analog Group







| |                        
| | -----------------------
| | Standard Products Group





34



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Liquidity and Capital Resources












35



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1 2




1 2


Liquidity and Capital Resources of Fairchild International,
Excluding Subsidiaries




Forward Looking Statements




Policy on Business Outlook Disclosure and Quiet Periods


http://investor.fairchildsemi.com


36



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Outlook








Legal Proceedings,


10b5-1 Trading Plans




Recently Issued Financial Accounting Standards


Accounting Changes and Error Corrections.


Accounting for
Conditional Asset Retirement Obligations. Accounting for Asset
Retirement Obligations


37



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The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments.


Application of FASB Statement No. 109, Accounting for
Income Taxes, to the Deduction on Qualified Production
Activities Provided by the American Jobs Creation Act of
2004.


Accounting and Disclosure Guidance for the Foreign Earnings
Repatriation Provision within the American Jobs Creation Act of
2004


Share Based Payment.


Exchanges of Nonmonetary Assets.


Inventory Costs. Inventory Pricing


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Business Risks






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





| |                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.





| |                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.



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| |                                                                                       
| | --------------------------------------------------------------------------------------
| | We may not be able to develop new products to satisfy
    changes in consumer demands.





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





| |   |                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                     







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



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| |   |                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 may not be able to consummate future acquisitions or
    successfully integrate acquisitions into our business.









| |   |                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------
| |  | 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;                                              

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| |   |                                                                                 
| | - | --------------------------------------------------------------------------------
| |  | negotiating with labor unions; and                                              
|
| |  | increasing the scope, geographic diversity and complexity of our
    operations.







| |                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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
    a primary supplier increased the prices of 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.





| |                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Delays in beginning production at new facilities,
    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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| |                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Almost 70% of our sales are made by 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.





| |                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.





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





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



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





| |   |                                    
| | - | -----------------------------------
| |  | economic and political instability;
|
| |  | foreign currency fluctuations;     

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| |   |                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------
| |  | transportation delays;                                                                                                            
|
| |  | trade restrictions;                                                                                                               
|
| |  | work stoppages; and                                                                                                               
|
| |  | the laws of, including tax laws, and the policies of the United
    States toward, countries in which we manufacture our products.



| |                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our power device business subjects our company to risks
    inherent in doing business in Korea, including political risk,
    labor risk and currency 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 the benefits we
    anticipated in connection with the transaction structure used to
    consummate the acquisition of the power device business.





| |                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.



45



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





| |   |                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.





| |                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are a leveraged company with a ratio of debt-to-equity
    at September 25, 2005 of approximately 0.6 to 1, which
    could adversely affect our financial health and limit our
    ability to grow and compete.

3 8 1 2


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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 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 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.



47



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








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

Evaluation of Disclosure Controls and Procedures




Inherent Limitations on Effectiveness of Controls




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Changes in Internal Control over Financial Reporting







PART II. OTHER INFORMATION







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







49



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



|                                         |  |                   |         |  |               |                  |       |                     |                           |  |                           |  |  |  |   | 
|---------------------------------------- |  | ----------------- | ------- |  | ------------- | ---------------- | ----- | ------------------- | ------------------------- |  | ------------------------- |  |  |  | - | 
|                                         |  |                   |         |  |               | Total Number of  |       |                     | Maximum Number (or        | 
|                                         |  |                   |         |  |               | Shares Purchased |       |                     | Approximate Dollar Value) | 
|                                         |  | Total Number of   |         |  | Average Price |                  |       | as Part of Publicly |                           |  | of Shares That May yet be | 
|                                         |  | Shares (or Units) |         |  | Paid per      |                  |       | Announced Plans     |                           |  | Purchased Under the Plans | 
|Period                                   |  | Purchased(1)      |         |  | Share ($)     |                  |       | or Programs         |                           |  | or Programs               | 
|                                         |  |                   |         |  |               |                  |       |                     |                           |  |                           | 
|June 27, 2005 -
    July 24, 2005        |  |                   |        |  |               |                  |      |                     |                           |  |                          |  |  |  |  | 
|July 25, 2005 -
    August 21, 2005      |  |                   | 125,000 |  |               |                  | 15.90 |                     |                           |  |                          |  |  |  |  | 
|August 22, 2005 -
    September 25, 2005 |  |                   |        |  |               |                  |      |                     |                           |  |                          |  |  |  |  | 
|Total                                    |  |                   | 125,000 |  |               |                  | 15.90 |                     |                           |  |                          |  |  |  |  | 






|    |                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | All of these shares were purchased by the company in open-market
    transactions to satisfy its obligations to deliver shares under
    the companys employee stock purchase plan. The purchase of
    these shares satisfied the conditions of the safe harbor
    provided by the Securities Exchange Act of 1934.






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

|        |    |             |  |                                                                                                                                                                                         
|------- | -- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 3  | .1          |  | Bylaws, as amended through August 23, 2005 (incorporated by
    reference from our current report on Form 8-K filed on
    August 29, 2005).                                            
|       
|        | 10 | .1          |  | Form of Performance Unit Award Agreement under the Fairchild
    Semiconductor Stock Plan.                                                                                              
|       
|        | 10 | .2          |  | Non-Qualified Stock Option Agreement under the Fairchild
    Semiconductor Stock Plan dated July 15, 2005, between
    Fairchild Semiconductor International, Inc. and Mark S. Thompson.
|       
|        | 10 | .3          |  | Performance Unit Award Agreement under the Fairchild
    Semiconductor Stock Plan dated July 15, 2005, between
    Fairchild Semiconductor International, Inc. and Mark S. Thompson.    
|       
|        | 10 | .4          |  | Deferred Stock Unit Award Agreement under the Fairchild
    Semiconductor Stock Plan dated July 18, 2005, between
    Fairchild Semiconductor International, Inc. and Mark S. Thompson. 

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|        |    |             |  |                                                                                                                                                                                     
|------- | -- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|       
|        | 10 | .5          |  | Performance Unit Award Agreement under the Fairchild
    Semiconductor Stock Plan dated July 15, 2005, between
    Fairchild Semiconductor International, Inc. and Kirk P. Pond.    
|       
|        | 10 | .6          |  | Performance Unit Award Agreement under the Fairchild
    Semiconductor Stock Plan dated July 15, 2005, between
    Fairchild Semiconductor International, Inc. and Joseph R. Martin.
|       
|        | 31 | .1          |  | Section 302 Certification of the Chief Executive Officer.                                                                                                                           
|       
|        | 31 | .2          |  | Section 302 Certification of the Interim Principal
    Financial Officer.                                                                                                           
|       
|        | 32 | .1          |  | 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 | .2          |  | Certification, pursuant to 18 U.S.C. 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
    by Robin A. Sawyer.                                        

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


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SIGNATURE






| |                                            
| | -------------------------------------------
| | Fairchild Semiconductor International, Inc.

|                       |  |                                                                                                                       
|---------------------- |  | ----------------------------------------------------------------------------------------------------------------------
|Date: November 4, 2005 |  | By: /s/ Robin A. SawyerRobin
    A. Sawyer
    Vice President, Corporate Controller
    (Principal Accounting Officer)

52