1036960--3/10/2006--FAIRCHILD_SEMICONDUCTOR_INTERNATIONAL

related topics

{customer, product, revenue}

{debt, indebtedness, cash}

{operation, international, foreign}

{regulation, change, law}

{acquisition, growth, future}

{property, intellectual, protect}

{product, market, service}

{product, liability, claim}

{competitive, industry, competition}

{personnel, key, retain}

{condition, economic, financial}

{cost, operation, labor}

{cost, regulation, environmental}

We may not be able to develop new products to satisfy changing demands from customers. If some original equipment manufacturers do not design our products into their equipment, our revenue may be adversely affected. We depend on demand from the consumer, original equipment manufacturer, contract manufacturing, industrial, automotive and other markets we serve for the end market applications which incorporate our products. Reduced consumer or corporate spending due to increased oil prices or other economic factors could affect our revenues. Our failure to protect our intellectual property rights could adversely affect our future performance and growth. Our failure to obtain or maintain the right to use some technologies may negatively affect our financial results. We may not be able to consummate future acquisitions or successfully integrate acquisitions into our business. 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. Approximately 66% 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. New stock option accounting rules will reduce our earnings as reflected on the face of our consolidated statement of operations, and as a result our stock price could be adversely affected. If we must reduce our use of options as a result of the accounting rule s impact, our competitiveness in the employee marketplace could be adversely affected. We may face product warranty or product liability claims that are disproportionately higher than the value of the products involved. Our international operations subject our company to risks not faced by domestic competitors. We acquired significant operations and revenues when we acquired a business from Samsung Electronics and, as a result, are subject to risks inherent in doing business in Korea, including political risk, labor risk and currency risk. 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. We are subject to many environmental laws and regulations that could affect our operations or result in significant expenses. We are a leveraged company with a ratio of debt to equity at December 25, 2005 of approximately 0.6 to 1, which could adversely affect our financial health and limit our ability to grow and compete. 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.

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1036960--3/10/2006--FAIRCHILD_SEMICONDUCTOR_INTERNATIONAL_INC