<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 2, 2000
[ ] 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)
<TABLE>
<CAPTION>
<S> <C>
DELAWARE 04-3363001
(STATE OR OTHER JURISDICTION OF (I.R.S.EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
82 RUNNING HILL ROAD
SOUTH PORTLAND, MAINE 04106
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (207) 775-8100
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
The number of shares outstanding of the issuer's classes of common stock as
of the close of business on July 31, 2000:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NUMBER OF SHARES
------------------- ----------------
<S> <C>
Class A Common Stock, par value $.01 per share 82,165,412
Class B Common Stock, par value $.01 per share 17,281,000
</TABLE>
================================================================================
<PAGE> 2
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. -- FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations
(Unaudited) for the Three and Six Months Ended July
2, 2000 and June 27, 1999........................... 3
Condensed Consolidated Balance Sheets as of July 2,
2000 (Unaudited) and December 26, 1999.............. 4
Condensed Consolidated Statements of Cash Flows
(Unaudited) for the Six Months Ended July 2, 2000
and June 27, 1999................................... 5
Notes to Condensed Consolidated Financial Statements
(Unaudited)......................................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 10
Item 3. Quantitative and Qualitative Disclosures about
Market Risk............................................... 17
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.................................. 18
Item 6. Exhibits and Reports on Form 8-K................... 19
Signature................................................... 20
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------- -------------------
JULY 2, JUNE 27, JULY 2, JUNE 27,
2000 1999 2000 1999
------- -------- ------- --------
<S> <C> <C> <C> <C>
Revenue:
Net sales--trade..................................... $410.0 $255.6 $778.9 $408.0
Contract manufacturing............................... 26.7 29.1 59.5 54.0
------ ------ ------ ------
Total revenue................................ 436.7 284.7 838.4 462.0
Operating expenses:
Cost of sales--trade................................. 259.4 207.0 503.9 322.6
Cost of contract manufacturing....................... 16.7 21.3 36.7 39.4
Research and development............................. 18.8 13.1 36.6 22.6
Selling, general and administrative.................. 54.6 38.9 108.0 62.2
Purchased in-process research and development........ 3.2 34.0 3.2 34.0
Restructuring and impairments........................ -- 14.1 (5.6) 16.8
------ ------ ------ ------
Total operating expenses..................... 352.7 328.4 682.8 497.6
------ ------ ------ ------
Operating income (loss)................................ 84.0 (43.7) 155.6 (35.6)
Interest expense....................................... 22.9 31.0 43.7 46.4
Interest income........................................ 6.0 0.5 10.0 0.5
------ ------ ------ ------
Income (loss) before income taxes...................... 67.1 (74.2) 121.9 (81.5)
Provision (benefit) for income taxes................... 7.4 (4.5) 12.2 (5.1)
------ ------ ------ ------
Net income (loss)...................................... $ 59.7 $(69.7) $109.7 $(76.4)
====== ====== ====== ======
Net income (loss) applicable to common stockholders.... $ 59.7 $(72.4) $109.7 $(81.7)
====== ====== ====== ======
Net income (loss) per common share:
Basic................................................ $ 0.61 $(1.15) $ 1.15 $(1.30)
====== ====== ====== ======
Diluted.............................................. $ 0.59 $(1.15) $ 1.09 $(1.30)
====== ====== ====== ======
Weighted average common shares:
Basic................................................ 97.6 63.0 95.8 63.0
====== ====== ====== ======
Diluted.............................................. 102.0 63.0 100.2 63.0
====== ====== ====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
<TABLE>
<CAPTION>
JULY 2, DECEMBER 26,
2000 1999
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 403.5 $ 138.7
Receivables, net.......................................... 188.6 140.3
Inventories............................................... 177.6 166.3
Other current assets...................................... 16.9 13.7
-------- --------
Total current assets................................... 786.6 459.0
Property, plant and equipment, net.......................... 457.6 375.8
Intangible assets, net...................................... 313.7 261.4
Other assets................................................ 49.4 41.4
-------- --------
Total assets........................................... $1,607.3 $1,137.6
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt......................... $ -- $ 1.4
Accounts payable.......................................... 123.1 109.3
Accrued expenses and other current liabilities............ 113.9 94.5
-------- --------
Total current liabilities.............................. 237.0 205.2
Long-term debt, less current portion........................ 720.2 717.2
Other liabilities........................................... 2.9 2.0
-------- --------
Total liabilities...................................... 960.1 924.4
Commitments and contingencies
Stockholders' equity:
Class A common stock...................................... 0.7 0.6
Class B common stock...................................... 0.3 0.3
Additional paid-in capital................................ 773.1 449.5
Accumulated deficit....................................... (121.6) (231.3)
Less treasury stock at cost............................... (5.3) (5.9)
-------- --------
Total stockholders' equity............................. 647.2 213.2
-------- --------
Total liabilities and stockholders' equity............. $1,607.3 $1,137.6
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------
JULY 2, JUNE 27,
2000 1999
------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $109.7 $(76.4)
Adjustments to reconcile net income (loss) to cash
provided by operating activities:
Depreciation and amortization............................. 72.9 59.4
Amortization of deferred compensation..................... 2.0 0.1
Restructuring (gains) charges, net of cash expended....... (2.3) 15.6
Non-cash interest expense................................. 5.7 7.4
Purchased in-process research and development............. 3.2 34.0
Loss on disposal of property, plant and equipment......... 1.2 0.3
Deferred income taxes..................................... (0.1) 4.2
Changes in operating assets and liabilities, net:
Receivables............................................... (36.8) (43.1)
Inventories............................................... (1.4) 6.3
Other current assets...................................... (1.8) (7.1)
Current liabilities....................................... 18.6 46.1
Other assets and liabilities.............................. (7.1) 3.1
------ ------
Cash provided by operating activities................ 163.8 49.9
------ ------
Cash flows from investing activities:
Capital expenditures...................................... (109.9) (29.7)
Proceeds from sale of property, plant and equipment....... -- 30.2
Purchase of molds and tooling............................. (1.5) (1.9)
Purchase of long-term investments......................... (7.2) --
Acquisitions, net of cash acquired........................ (22.7) (414.9)
------ ------
Cash used in investing activities.................... (141.3) (416.3)
------ ------
Cash flows from financing activities:
Proceeds from revolving credit facility, net.............. 2.1 --
Issuance of long-term debt................................ -- 660.0
Repayment of long-term debt............................... (0.8) (186.0)
Proceeds from issuance of common stock, net............... 240.0 --
Proceeds from exercise of stock options................... 3.1 --
Debt issuance costs....................................... (2.1) (22.3)
------ ------
Cash provided by financing activities................ 242.3 451.7
------ ------
Net change in cash and cash equivalents..................... 264.8 85.3
Cash and cash equivalents at beginning of period............ 138.7 3.2
------ ------
Cash and cash equivalents at end of period.................. $403.5 $ 88.5
====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The Condensed Consolidated Balance Sheets of Fairchild Semiconductor
International, Inc. (the "Company") as of July 2, 2000 and December 26, 1999 and
the Condensed Consolidated Statements of Operations and Cash Flows for the three
and six month periods ended July 2, 2000 and June 27, 1999, were prepared by the
Company. In the opinion of management, the accompanying condensed consolidated
financial statements contain all adjustments (consisting of only normal
recurring items) necessary to present fairly the financial position and results
of operations of the Company. Interim results of operations are not necessarily
indicative of the results to be expected for the full year. This report should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company's annual report on Form 10-K for the fiscal year
ended December 26, 1999.
Certain prior period amounts have been reclassified to conform to their
current presentation.
NOTE 2 -- INVENTORIES
The components of inventories are as follows:
<TABLE>
<CAPTION>
JULY 2, DECEMBER 26,
2000 1999
------- ------------
(IN MILLIONS)
<S> <C> <C>
Raw materials.......................................... $ 25.3 $ 17.1
Work in progress....................................... 108.0 99.3
Finished goods......................................... 44.3 49.9
------ ------
Total inventories............................ $177.6 $166.3
====== ======
</TABLE>
NOTE 3 -- COMPUTATION OF NET INCOME (LOSS) PER SHARE
Basic net income (loss) per common share is computed using the weighted
average number of common shares outstanding during the period. Diluted net
income (loss) per common share is computed using the weighted average number of
common and dilutive common equivalent shares outstanding during the period.
Dilutive common equivalent shares consist of stock options, however, due to the
Company's net losses for the three and six months ended June 27, 1999, the
addition of these common stock equivalents would have been anti-dilutive and
accordingly they have been excluded from the calculations for those periods. In
addition, there were 281,500 anti-dilutive common equivalent shares outstanding
at July 2, 2000 which could potentially dilute basic net income per common share
in future periods.
6
<PAGE> 7
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
The net losses used in computing net loss per common share for the three
and six months ended June 27, 1999 have been increased by dividends accrued
during each respective period for the then outstanding redeemable preferred
stock, resulting in increases to the net losses applicable to common
stockholders. All of the Company's redeemable preferred stock was converted to
common stock on August 9, 1999, in connection with the Company's initial public
offering. The following table reconciles basic to diluted weighted average
shares outstanding and net income (loss) to net income (loss) applicable to
common stockholders:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED SIX MONTHS ENDED
------------------ ------------------
JULY 2, JUNE 27, JULY 2, JUNE 27,
2000 1999 2000 1999
------- -------- ------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Basic weighted average common shares outstanding............ 97.6 63.0 95.8 63.0
Net effect of dilutive stock options based on the treasury
stock method using the average market price............... 4.4 -- 4.4 --
------ ------ ------ ------
Diluted weighted average common shares outstanding.......... 102.0 63.0 100.2 63.0
====== ====== ====== ======
Net income (loss)........................................... $ 59.7 $(69.7) $109.7 $(76.4)
Dividends on redeemable preferred stock..................... -- 2.7 -- 5.3
------ ------ ------ ------
Net income (loss) applicable to common stockholders......... $ 59.7 $(72.4) $109.7 $(81.7)
====== ====== ====== ======
</TABLE>
NOTE 4 -- SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
------------------
JULY 2, JUNE 27,
2000 1999
------- --------
(IN MILLIONS)
<S> <C> <C>
Cash paid (refunded) for:
Income taxes........................................... $ 1.8 $(0.5)
===== =====
Interest............................................... $36.1 $16.4
===== =====
</TABLE>
For the six months ended June 27, 1999, the Company accumulated dividends
on its then outstanding redeemable preferred stock of approximately $5.3
million. The accumulated dividends were recorded as an increase to the carrying
value of the redeemable preferred stock and accumulated deficit.
7
<PAGE> 8
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
NOTE 5 -- SEGMENT INFORMATION
The Company has determined that its Configurable Products Business Unit
(formerly known as the Non-Volatile Memory Division) no longer meets the
requirements of a reportable segment under SFAS No. 131 and accordingly now
reports this segment's results as part of the "Other" category for all periods
presented. Management has also determined that its contract manufacturing
business need not be reported as a separate reportable operating segment and
will record its results together with the Configurable Products Business Unit in
the "Other" category. Management evaluates the contract manufacturing business
differently than its other operating segments, due in large part to the fact
that it is predominantly driven by legal agreements for limited time periods,
entered into with the Company's former parent National Semiconductor and Samsung
Electronics. Selected operating segment financial information for the three and
six months ended July 2, 2000 and June 27, 1999 is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------- -------------------
JULY 2, JUNE 27, JULY 2, JUNE 27,
2000 1999 2000 1999
------- -------- ------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
REVENUE:
Analog................................. $ 94.5 $ 61.8 $181.0 $ 77.7
Discrete............................... 183.0 114.3 357.4 161.8
Interface and Logic.................... 104.8 70.4 198.3 141.5
Other(1)............................... 54.4 38.2 101.7 81.0
------ ------ ------ ------
Total............................. $436.7 $284.7 $838.4 $462.0
====== ====== ====== ======
OPERATING INCOME (LOSS):
Analog................................. $ 13.6 $ 11.2 $ 22.5 $ 8.5
Discrete............................... 32.5 0.8 58.3 3.9
Interface and Logic.................... 24.2 5.3 41.0 13.0
Other(1)............................... 16.9 (12.9) 31.4 (10.2)
Purchased in-process research and
development.......................... (3.2) (34.0) (3.2) (34.0)
Restructuring and impairments.......... -- (14.1) 5.6 (16.8)
------ ------ ------ ------
Total........................ $ 84.0 $(43.7) $155.6 $(35.6)
====== ====== ====== ======
</TABLE>
---------------
(1) Other includes revenues and operating income from contract manufacturing
activities disclosed in the Company's statements of operations. The Company
allocates no other costs to its contract manufacturing business other than
those separately shown in the statements of operations.
NOTE 6 -- RESTRUCTURING AND IMPAIRMENTS
During the six months ended July 2, 2000, the Company recorded a pre-tax
restructuring gain of approximately $5.6 million. During the first quarter of
2000, the Company re-evaluated and subsequently adjusted its non-cash
restructuring accruals based upon final execution of several of its plans. This
resulted in a one-time gain of $2.1 million. The Company also recorded a
one-time gain of $3.5 million for additional funds received in connection with
the sale of its former Mountain View, California facility.
8
<PAGE> 9
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
The following table summarizes the year-to-date activity of the remaining
active restructuring plan, which related to the transfer of analog wafer
production to South Portland, Maine (In millions):
<TABLE>
<CAPTION>
<S> <C>
Accrual balance as of December 26, 1999..................... $2.6
Cash payments............................................... (1.7)
----
Accrual balance as of April 2, 2000......................... 0.9
Cash payments............................................... (0.6)
----
Accrual balance as of July 2, 2000.......................... $0.3
====
</TABLE>
The Company expects that all amounts will be substantially paid by the end
of the third quarter of 2000.
NOTE 7 -- FOLLOW-ON OFFERING
On January 25, 2000, the Company completed a follow-on public offering of
23,500,000 shares of its Class A Common Stock at a price of $33.4375 per share.
In addition, 1,410,000 shares were sold by an existing stockholder pursuant to
the underwriter's overallotment option. The underwriting discount was $1.50 per
share. The 23,500,000 shares included 6,140,880 newly issued shares sold by the
Company and 17,359,120 shares sold by existing stockholders, including all
remaining shares owned by National Semiconductor, the Company's former parent.
The Company did not receive any proceeds from shares sold by existing
stockholders. The net proceeds to the Company after the underwriting discount
and other related expenses were approximately $240.0 million.
NOTE 8 -- ACQUISITION
On May 28, 2000, the Company completed its acquisition of QT
Optoelectronics, Inc. ("QTO") for approximately $90.9 million, 87.5 percent paid
in the Company's common stock with the remainder paid in cash. In addition, in
conjunction with the acquisition, the Company assumed and immediately repaid
$14.0 million of QTO's long-term debt. QTO designs, manufactures and markets LED
lamps and displays, infrared components, custom optoelectronics and optocouplers
and is the world's largest independent company solely focused on
optoelectronics. The transaction was accounted for as a purchase.
NOTE 9 -- LONG-TERM DEBT
During the second quarter of 2000, the Company refinanced its senior bank
facilities, converting approximately $117.8 million of outstanding senior term
debt into a new revolving credit line with total borrowing capacity of $300.0
million. In connection with the refinancing, the Company paid approximately $2.1
million in deferred financing costs and wrote-off $3.6 million of deferred
financing costs associated with the retired term debt. Borrowings under the new
credit agreement accrue interest based on either the bank's rate or the
Eurodollar rate, at the option of the Company. The interest rate at July 2, 2000
was approximately 7.94%. Borrowings under the agreement are secured by a pledge
of common stock of the Company and its subsidiaries.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Readers are cautioned not to place undue reliance on forward-looking
statements in this report. See "Outlook and Business Risks" below.
OVERVIEW
Fairchild Semiconductor International, Inc. ("Fairchild International"),
through its wholly-owned subsidiary Fairchild Semiconductor Corporation
(collectively, the "Company"), is a leading designer, manufacturer and supplier
of building block semiconductors and optoelectronics for multi market uses.
Semiconductor product offerings include analog and mixed signal, discrete power
and signal technology, interface and logic, and non-volatile memory
semiconductors. Optoelectronic product offerings include optocouplers, LED
displays and infrared components. These multi-market products serve the
telecommunications, consumer, industrial, personal systems and automotive
markets.
The Company has changed its fiscal year end from the last Sunday in May to
the last Sunday in December. The current fiscal year is the first under the new
fiscal calendar and will end on December 31, 2000. The Company's discussion
below compares the current quarter and year to date results to the comparable
results a year ago. The current quarter and year to date results include the
results of the power device business acquired from Samsung Electronics on April
13, 1999. The comparable periods of 1999 include the power device business
results only from the date of acquisition forward. The table below presents
selected financial results for the six months ended July 2, 2000 and June 27,
1999 reported both with and without the power device business acquired from
Samsung Electronics:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------------------------------
EXCLUDING EXCLUDING
JULY 2, POWER DEVICES JUNE 27, POWER DEVICES
2000 JULY 2, 2000 1999 JUNE 27, 1999
-------- ------------- -------- -------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales--trade............................ $778.9 $480.3 $408.0 $299.1
Contract manufacturing...................... 59.5 43.8 54.0 49.2
------ ------ ------ ------
Total revenue..................... 838.4 524.1 462.0 348.3
Gross profit--trade......................... 275.0 187.7 85.4 50.8
Gross profit--contract manufacturing........ 22.8 13.6 14.6 12.2
Operating income (loss)..................... 155.6 105.3 (35.6) (56.8)
</TABLE>
RESULTS OF OPERATIONS
Fairchild International generated net income of $59.7 million and $109.7
million in the second quarter and first six months of 2000, respectively,
compared to net losses of $69.7 million and $76.4 million in the comparable
periods of 1999. Excluding restructuring and non-recurring (gains) charges and
amortization of acquisition-related intangibles, adjusted net income (loss) was
as follows for the three and six months ended July 2, 2000 and June 27, 1999,
respectively:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------- -------------------
JULY 2, JUNE 27, JULY 2, JUNE 27,
2000 1999 2000 1999
------- -------- ------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Net income (loss).............................. $ 59.7 $(69.7) $109.7 $(76.4)
Restructuring and impairments.................. -- 14.1 (5.6) 16.8
Purchased in-process research and
development.................................. 3.2 34.0 3.2 34.0
Non-recurring (gains) charges.................. (1.8) 15.4 (1.8) 15.4
Amortization of acquisition-related
intangibles.................................. 9.0 8.2 17.4 9.0
Less associated tax effects.................... (1.1) (3.9) (1.3) (4.1)
------ ------ ------ ------
Adjusted net income (loss)..................... $ 69.0 $ (1.9) $121.6 $ (5.3)
====== ====== ====== ======
</TABLE>
Restructuring and impairments in the first six months of 2000 include gains
in the first quarter resulting from funds received in connection with the sale
of the Company's former Mountain View, California facility ($3.5 million) and
the adjustment of restructuring reserves upon final execution of several prior
year actions
10
<PAGE> 11
($2.1 million). Restructuring and impairments in the first six months of 1999
include in the first quarter, restructuring charges resulting from the transfer
of assembly and test activities from the Company's former Mountain View,
California facility to its Penang, Malaysia facility ($2.7 million) and in the
second quarter of 1999 charges associated with the transfer of all wafer
production from Mountain View, California to South Portland, Maine ($10.0
million) and charges related to the 1999 Memory restructuring action ($4.1
million). Non-recurring (gains) charges in the second quarter and first six
months of 2000 include charges for the write-off of debt issuance costs
associated with refinanced debt ($3.6 million) offset by gains resulting from
revisions of estimated charges recorded in sales and cost of sales as part of
the 1999 Memory restructuring action ($5.4 million). Non-recurring (gains)
charges in the second quarter and first six months of 1999 include charges
recorded in sales and cost of sales as part of the 1999 Memory restructuring
action ($15.4 million).
Operating income was $84.0 million and $155.6 million in the second quarter
and first six months of 2000, respectively, compared to operating losses of
$43.7 million and $35.6 million in the second quarter and first six months of
1999. Excluding restructuring and impairments and other non-recurring (gains)
charges, operating income was $81.8 million and $147.8 million in the second
quarter and first six months of 2000, respectively, compared to $19.8 million
and $30.6 million in the comparable periods of 1999. The increase in operating
income in the second quarter and first six months of 2000 is due to the
acquisition of the power device business from Samsung Electronics in April 1999
and higher revenues and gross profits for the historical business due to new
product introductions and improved business conditions, resulting in higher
factory utilization in the second quarter and first six months of 2000 as
compared to the second quarter and first six months of 1999.
All operating segments reported improved operating results in the second
quarter and first six months of 2000 as compared to the comparable periods of
1999. Analog had operating income of $13.6 million and $22.5 million in the
second quarter and first six months of 2000, respectively, as compared to
operating income of $11.2 million and $8.5 million in the comparable periods of
1999. The increases in Analog's operating income were due to the addition of the
analog power device business acquired from Samsung Electronics and higher
revenues and improved gross profits from the Company's historical analog
business, driven by the beneficial effect of moving wafer production to South
Portland, Maine. In the second quarter and first six months of 1999, wafer
production occurred in the now closed Mountain View, California facility.
Discrete had operating income of $32.5 million and $58.3 million in the second
quarter and first six months of 2000, respectively, as compared to $0.8 million
and $3.9 million in the comparable periods of 1999. The increases in Discrete
operating income resulted from the addition of the discrete power device
business acquired from Samsung Electronics and higher revenues and gross profits
in the Company's historical discrete business due to a better sales mix
resulting from new product introductions, including new Power MOSFET products
and improved factory utilization. Interface and Logic had operating income of
$24.2 million and $41.0 million in the second quarter and first six months of
2000, respectively, as compared to operating income of $5.3 million and $13.0
million in the comparable periods of 1999. The increase in Interface and Logic
operating income was due to higher revenues and improved gross profits due to a
better sales mix resulting from new product introductions, particularly
Interface and improved factory utilization.
Excluding depreciation and amortization of $36.5 million and $74.9 million
in the second quarter and first six months of 2000, respectively, and $34.8
million and $59.5 million in the comparable periods of 1999, and restructuring
and non-recurring (gains) charges, earnings before interest, taxes, depreciation
and amortization ("EBITDA") were $118.3 million and $222.7 million in the second
quarter and first six months of 2000, respectively, compared to $54.6 million
and $90.1 million in the comparable periods of 1999. EBITDA is presented because
the Company believes that it is a widely accepted financial indicator of an
entity's ability to incur and service debt. EBITDA should not be considered as
an alternative to net income, operating income, or other consolidated operations
and cash flow data prepared in accordance with generally accepted accounting
principles, as an indicator of the operating performance of Fairchild
International, or as an alternative to cash flows as a measure of liquidity.
11
<PAGE> 12
REVENUES
Fairchild International's revenues consist of trade sales to unaffiliated
customers (93.9% and 92.9% of total revenues in the second quarter and first six
months of 2000, respectively, and 89.8% and 88.3% of total revenues in the
comparable periods of 1999) and revenues from contract manufacturing services
provided to National Semiconductor and Samsung Electronics (6.1% and 7.1% of
total revenues in the second quarter and first six months of 2000, respectively,
and 10.2% and 11.7% of total revenues in the comparable periods of 1999).
Trade sales increased 60.4% to $410.0 million in the second quarter of 2000
compared with $255.6 million in the second quarter of 1999. On year-to-date
basis, trade sales increased 90.9% to $778.9 million compared to $408.0 million
for the comparable period in 1999. Excluding a non-recurring gain in the second
quarter and first six months of 2000 resulting from the release of reserves
associated with the 1999 Memory restructuring action of $2.1 million, trade
sales increased 59.6% and 90.4%, to $407.9 million and $776.8 million,
respectively. Trade sales for the second quarter and first six months of 2000
include sales from the power device business. Trade sales for the second quarter
and first six months of 1999 include sales from the power device business as of
the acquisition date of April 13, 1999. Increases in the Company's trade sales
resulted from higher sales volume reflecting strength in end-markets,
particularly communications, and reflect increased volume from the power device
business and higher average selling prices reflecting an improved sales mix due
to new product introductions.
Analog revenues increased 52.9% and 132.9% to $94.5 million and $181.0
million in the second quarter and first six months of 2000, respectively, from
$61.8 million and $77.7 million in the comparable periods of 1999. The increases
in Analog sales reflect improved business conditions resulting in higher sales
volumes and full three and six month periods of power device revenues in 2000.
Discrete revenues increased 60.1% and 120.9% to $183.0 million and $357.4
million in the second quarter and first six months of 2000, respectively,
compared to $114.3 million and $161.8 million in the comparable periods of 1999.
The increases in Discrete revenue were across all product lines as both volume
and prices increased over the comparable prior year periods due in part to the
addition of power device revenues. Interface and Logic revenues increased 48.9%
and 40.1% to $104.8 million and $198.3 million in the second quarter and first
six months of 2000, respectively, from $70.4 million and $141.5 million in the
comparable periods of 1999. Increases in Interface and Logic revenues were
largely volume driven, resulting from strengthening demand and new product
introductions.
Approximately 67.7% and 69.1% of the Company's trade revenues were
generated from Analog and Discrete products in the second quarter and first six
months of 2000, respectively.
Geographically, 22.9%, 14.0%, 45.8% and 17.3% of trade sales were derived
from North America, Europe, Asia/Pacific and Korea, respectively, in the second
quarter of 2000 as compared to 23.5%, 12.7%, 42.9% and 20.9%, respectively, in
the second quarter of 1999. On a year-to-date basis, 23.4%, 14.3%, 43.9% and
18.4% of trade sales were derived from North America, Europe, Asia/Pacific and
Korea, respectively, in the first six months of 2000 as compared to 27.5%,
15.4%, 43.3% and 13.8%, respectively in the comparable period of 1999.
Asia/Pacific region revenues increased 58.4% and 108.2% in the second quarter
and first six months of 2000, respectively, over the comparable periods of 1999.
The increases in the Asia/Pacific region are due to incremental revenues from
the power device and general purpose logic businesses, strength in the consumer
segment and improved regional economic conditions. Revenues in the Europe region
increased 77.1% and 77.3% in the second quarter and first six months of 2000,
respectively, over the comparable periods of 1999. The increase in Europe was
also due to incremental power device and discrete business revenues and
improvements in the communications, consumer and distribution markets. North
American revenues increased 56.6% and 62.5% in the second quarter and first six
months of 2000, respectively, over the comparable periods of 1999. The increase
in North America resulted from incremental power device business revenues,
increased distribution sales and overall improved market conditions.
Contract manufacturing revenues decreased 8.2% to $26.7 million in the
second quarter of 2000 compared to $29.1 million in the second quarter of 1999.
On a year-to-date basis, contract manufacturing revenues increased 10.2% to
$59.5 million as compared to $54.0 million for the comparable period in 1999.
The decrease in second quarter contract manufacturing revenue results from
diminishing demand from
12
<PAGE> 13
National Semiconductor offset somewhat by the additional contract manufacturing
business with Samsung Electronics. The year-to-date increase results from
additional contract manufacturing business with Samsung Electronics.
GROSS PROFIT
Gross profit increased 184.8% to $160.6 million in the second quarter of
2000 compared to $56.4 million in the second quarter of 1999. As a percentage of
sales, gross profits were 36.8% in the second quarter of 2000 as compared to
19.8% in the second quarter of 1999. On a year-to-date basis, gross profit
increased 197.8% to $297.8 million compared to $100.0 million in the comparable
period in 1999. As a percentage of sales, gross profits were 35.5% in the first
six months of 2000, as compared to 21.6% in the comparable period in 1999.
Excluding non-recurring gains in the second quarter and first six months of 2000
resulting from revisions of estimated charges associated with the 1999 Memory
restructuring action totaling $5.4 million, gross profits increased 175.2% and
192.4%, to $155.2 million and $292.4 million, respectively. Gross trade profit
increased 209.9% to $150.6 million in the second quarter of 2000 compared to
$48.6 million in the second quarter of 1999. As a percentage of sales, gross
trade profits were 36.7% in the second quarter of 2000 compared to 19.0% in the
second quarter of 1999. On a year-to-date basis, gross trade profit increased
222.0% to $275.0 million compared to $85.4 million in the comparable period in
1999. As a percentage of sales, gross profits were 35.3% in the first six months
of 2000, as compared to 20.9% in the comparable period in 1999. Excluding non-
recurring gains in the second quarter and first six months of 2000 resulting
from revisions of estimated charges associated with the 1999 Memory
restructuring action totaling $5.4 million, gross trade profits increased 198.8%
and 215.7%, to $145.2 million and $269.6 million, respectively. The increase in
gross trade profit as a percentage of trade sales was due in part to a better
sales mix resulting from new product introductions and slightly higher average
selling prices, as mentioned above, as well as the favorable effect of increased
factory utilization and the full benefit of cost reduction actions undertaken
during 1999. Contract manufacturing gross profit increased 28.2% to $10.0
million in the second quarter of 2000 compared to $7.8 million in the second
quarter of 1999. On a year-to-date basis, contract manufacturing gross profit
increased 56.2% to $22.8 million compared to $14.6 million in the comparable
period in 1999. The increase in contract manufacturing gross profit is due to
incremental business with Samsung Electronics as a result of the acquisition of
the power device business and improved factory utilization.
RESEARCH AND DEVELOPMENT
Research and development expenses ("R&D") were $18.8 million, or 4.6% of
trade sales, in the second quarter of 2000, compared to $13.1 million, or 5.1%
of trade sales, in the second quarter of 1999. On a year-to-date basis, R&D was
$36.6 million, or 4.7% of trade sales, compared to $22.6 million, or 5.5% of
trade sales, for the comparable period of 1999. The increases in R&D were driven
primarily by higher incremental dedicated R&D costs incurred by the power device
business in the second quarter and first six months of 2000. R&D efforts are
focused on Fairchild International's growth products (Analog, DMOS power, CMOS
logic and Optoelectronics). In the second quarter and first six months of 2000,
R&D expenditures were 5.2% and 5.3% of their trade sales, respectively, for
these growth products as compared to 5.7% and 6.6%, respectively, for the second
quarter and first six months of 1999. R&D expenditures for Fairchild
International's mature products (Bipolar Logic, Bipolar Discrete and EPROM) were
less than 1% of their trade sales for the second quarter and first six months of
2000 as compared to 1.4% and 1.0%, respectively, for the second quarter and
first six months of 1999. The decrease in R&D expenditures for growth products
as a percentage of trade sales is due to the relatively smaller R&D requirements
of the power device business as a percentage of sales.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses ("SG&A") were $54.6 million,
or 13.3% of trade sales, in the second quarter of 2000, compared to $38.9
million, or 15.2% of trade sales, in the second quarter of 1999. On a
year-to-date basis, SG&A expenses were $108.0 million, or 13.9% of trade sales,
compared to $62.2 million, or 15.2% of trade sales, for the comparable period of
1999. The increase in SG&A expenses was primarily the result of the incremental
SG&A expenses of the power device business including amortization of
13
<PAGE> 14
acquisition-related intangibles, increased selling expenses in support of higher
sales volumes and incremental amortization of acquisition-related intangibles
associated with the QT Optoelectronics acquisition.
RESTRUCTURING AND IMPAIRMENTS
The Company recorded a pre-tax gain of approximately $5.6 million during
the first six months of 2000. This one-time gain was for additional funds
received in connection with the sale of the Company's former Mountain View,
California facility ($3.5 million) and the adjustment of restructuring reserves
($2.1 million) based upon final execution of several prior year plans.
Restructuring and impairments of $14.1 million and $16.8 million were recorded
in the second quarter and first six months of 1999, respectively. In the first
quarter of 1999, a one-time charge was taken in connection with the transfer of
assembly and test activities from the Company's former Mountain View, California
facility to its Penang, Malaysia facility ($2.7 million). In the second quarter
of 1999 the Company recorded pre-tax restructuring charges associated with the
transfer of all wafer production from Mountain View, California to South
Portland, Maine ($10.0 million), and charges related to the 1999 Memory
restructuring action ($4.1 million).
INTEREST EXPENSE
Interest expense was $22.9 million and $43.7 million in the second quarter
and first six months of 2000, respectively, compared to $31.0 million and $46.4
million in the comparable periods of 1999. Interest in the second quarter and
first six months of 2000 includes an unusual charge of $3.6 million for the
write-off of debt issuance costs associated with the refinancing of the
Company's senior bank facilities. Excluding this charge, interest expense was
$19.3 million and $40.1 million in the second quarter and first six months of
2000. The decrease in interest expense is principally the result of reduced
indebtedness, which was retired with the proceeds of the Company's initial
public offering.
INTEREST INCOME
Interest income was $6.0 million and $10.0 million in the second quarter
and first six months of 2000, respectively, compared to $0.5 million and $0.5
million in the comparable periods of 1999. The increase in interest income in
2000 is due to the Company's higher cash balances in 2000.
INCOME TAXES
Income tax expense was $7.4 million and $12.2 million for the second
quarter and first six months of 2000, respectively, compared to a tax benefit of
$4.5 million and $5.1 million in the second quarter and first six months of
1999. The effective tax rates for the second quarter and first six months of
2000 were 11.0% and 10.0%, respectively, compared to 6.1% and 6.3% in the second
quarter and first six months of 2000. The tax provisions for the second quarter
and first six months of 2000 are based on income generated from the Company's
foreign operations, excluding Korea where the Company benefits from a tax
holiday. The decrease in the tax benefits from the year-ago periods is due to
profits earned in 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Company has a borrowing capacity of $300.0 million for working capital
and general corporate purposes under its revolving credit facility. At July 2,
2000, the Company had drawn approximately $120.2 million against the revolving
credit facility.
The Company's senior credit facilities, 10 1/8% Senior Subordinated Notes
and 10 3/8% Senior Subordinated Notes do, and other debt instruments Fairchild
International may enter into in the future may, impose various restrictions and
covenants on Fairchild International which could potentially limit Fairchild
International's ability to respond to market conditions, to provide for
unanticipated capital investments or to take advantage of business
opportunities. The restrictive covenants include limitations on consolidations,
mergers and acquisitions, restrictions on creating liens, restrictions on paying
dividends or making other similar restricted payments, restrictions on asset
sales and limitations on borrowing money, among other restrictions. The
covenants relating to financial ratios include minimum fixed charge and interest
coverage ratios and a
14
<PAGE> 15
maximum leverage ratio. The senior credit facilities also limit our ability to
modify our certificate of incorporation, bylaws, shareholder agreements, voting
trusts or similar arrangements. In addition, the senior credit facilities, the
10 1/8% Senior Subordinated Notes and the 10 3/8% Senior Subordinated Notes
contain additional restrictions limiting the ability of our subsidiaries to make
dividends or advances to Fairchild International. However, our subsidiaries are
permitted without material restrictions under our debt instruments to make
dividends or advances to Fairchild Semiconductor Corporation. We believe that
those funds permitted to be transferred to us, together with existing cash, will
be sufficient to meet our cash obligations. Fairchild International expects that
its existing cash and available funds from its amended senior credit facilities
and funds generated from operations, will be sufficient to meet its anticipated
operating requirements and to fund its research and development and capital
expenditures for the next twelve months. We intend to invest approximately
$255.0 million in 2000 to expand capacity at all of the Company's major
manufacturing fabs and assembly/test centers. In the long-term, additional
borrowing or equity investment may be required to fund future acquisitions.
On January 25, 2000, the Company completed a follow-on public offering of
23,500,000 shares of its Class A Common Stock at a price of $33.4375 per share.
In addition, 1,410,000 shares were sold by an existing stockholder pursuant to
the underwriter's overallotment option. The underwriting discount was $1.50 per
share. The 23,500,000 shares included 6,140,880 newly issued shares sold by the
Company and 17,359,120 shares sold by existing stockholders, including all
remaining shares owned by National Semiconductor, the Company's former parent.
The Company did not receive any proceeds from shares sold by existing
stockholders. The net proceeds to the Company after the underwriting discount
and other related expenses were approximately $240.0 million.
On June 6, 2000, the Company refinanced its senior bank facilities,
converting approximately $117.8 million of outstanding senior term debt into a
new revolving credit line with total borrowing capacity of $300.0 million.
Borrowings under the new credit agreement accrue interest based on either the
bank's rate or the Eurodollar rate, at the option of the Company. The interest
rate at July 2, 2000 was approximately 7.94%. Borrowings under the agreement are
secured by a pledge of common stock of the Company and its subsidiaries.
As of July 2, 2000, the Company's cash and cash equivalents balance was
$403.5 million, an increase of $264.8 million from December 26, 1999.
During the first six months of 2000, the Company's operations provided
$163.8 million in cash compared to $49.9 million of cash in the first six months
of 1999. The increase in cash provided by operating activities reflects
increases in the first six months of 2000 in net income (loss) adjusted for
non-cash items of $147.7 million offset by decreases in cash flows from changes
in operating assets and liabilities of $33.8 million as compared with the first
six months of 1999. Cash used in investing activities during the first six
months of 2000 totaled $141.3 million, compared to $416.3 million in the first
six months of 1999. The difference primarily results from the acquisition of the
power device business of Samsung in 1999 offset by increased capital
expenditures in the first six months of 2000. Capital expenditures in the first
six months of 2000 were made principally in the Company's wafer fabs and
assembly and test facilities, and were part of the Company's 2000 plan to add
capacity at all manufacturing locations. Capital expenditures for the balance of
2000 will be made primarily to execute this plan. Cash provided by financing
activities of $242.3 million for the first six months of 2000 was primarily from
the issuance of common stock. Cash provided by financing activities of $451.7
million in the first six months of 1999 was due primarily to proceeds received
from the Company's issuance of long-term debt.
LIQUIDITY AND CAPITAL RESOURCES OF FAIRCHILD INTERNATIONAL, EXCLUDING OUR
SUBSIDIARIES
Fairchild International is a holding company, the principal asset of which
is the stock of its subsidiary, Fairchild Semiconductor Corporation. Fairchild
International on a stand-alone basis had no cash flow from operations in the
first six months of 2000, nor in the first six months of 1999. Fairchild
International on a stand-alone basis has no cash requirements for the next
twelve months.
15
<PAGE> 16
OUTLOOK AND BUSINESS RISKS
This quarterly report includes "forward-looking statements" as that term is
defined in Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements can be identified by the use of forward-looking terminology such as
"believes," "expects," "may," "will," "should," "seeks," "approximately,"
"intends," "plans," "estimates," "anticipates," or "hopeful," or the negative of
those terms or other comparable terminology, or by discussions of strategy,
plans or intentions. For example, the following two paragraphs contain numerous
forward-looking statements. All forward-looking statements in this quarterly
report are made based on management's current expectations and estimates, which
involve risks and uncertainties, including those described in the following
paragraphs. Among these factors are the following: changes in overall economic
conditions; changes in demand for our products; changes in inventories at our
customers and distributors; technological and product development risks;
availability of manufacturing capacity; availability of raw materials;
competitors' actions; loss of key customers; order cancellations or reduced
bookings; changes in manufacturing yields or output; and significant litigation.
Other factors that may affect the company's future operating results are
described in Fairchild International's annual report on Form 10-K, under the
Risk Factors caption in the Business section. Such risks and uncertainties could
cause actual results to be materially different than those in forward-looking
statements. Readers are cautioned not to place undue reliance on the
forward-looking statements in the following paragraphs or elsewhere in this
quarterly report. Fairchild International assumes no obligation to update such
information.
Market conditions remained strong in the second quarter of 2000. Bookings
were driven by strength in wireless and wireline communications, as well as
stronger seasonal orders from the personal computer industry. Overall leadtimes
remained stable, although leadtimes for advanced surface mount packaged products
in MOSFETs, Logic, and Discrete lengthened during the quarter. Pricing remained
stable in the second quarter of 2000, and with firming leadtimes, prices are
expected to remain stable through the third quarter of 2000. Fairchild
International expects that third quarter revenues will increase 5%-6% over
second quarter of 2000 and that total 2000 revenues will be approximately 35-38%
higher than pro forma 1999 revenues, which include a full year of power device
revenues. Fairchild International expects that margins will continue to improve
slowly through 2000 as a result of improved product mix due to continued new
product introductions. Potential factors that may preclude us from realizing any
or all of these expectations include, but are not limited to, softening of
industry-wide demand, renewed industry-wide price competition, failure to
execute new product development plans and failure to execute capacity expansion
plans.
The manufacturing agreements entered into with National Semiconductor at
the time of the Company's recapitalization expired during the second quarter of
2000. For the twelve months ended May 2000, the agreements provided for
guaranteed minimum contract manufacturing revenues of $80.0 million. National
Semiconductor has complied with its purchase commitment. Fairchild International
and National Semiconductor have entered into new manufacturing agreements
effective June 1, 2000. The terms of these agreements are not as favorable to
the Company as the previous agreements since these agreements do not provide for
any minimum annual purchase commitments. Fairchild International expects that
revenues from National Semiconductor, which were approximately $19.4 million and
$43.8 million in the second quarter and first six months of 2000, respectively,
will decline modestly for the remaining quarters of 2000. As a result, contract
manufacturing revenues from National Semiconductor are expected to be lower in
2000 than 1999. Fairchild International anticipates that capacity not utilized
for contract manufacturing activities in 2000 will be fully absorbed by capacity
demands for the Company's power and interface products.
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, which provides guidance on the recognition,
presentation, and disclosure of revenue in financial statements filed with the
Commission. This SAB is effective beginning in the fourth quarter of 2000, as
provided for in SAB 101B. Compliance with this SAB is not expected to have a
material impact on the Company's consolidated financial position or results of
operations.
16
<PAGE> 17
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended by SFAS No. 138, which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives), and for hedging activities. This
Statement is effective for all fiscal quarters of fiscal years beginning after
June 15, 2000, as provided for in SFAS No. 137. The adoption of this Statement
is not expected to have a material impact on the Company's consolidated
financial position or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Reference is made to Part II, Item 7A, Quantitative and Qualitative
Disclosure about Market Risk, in Fairchild International's annual report on Form
10-K for the year ended December 26, 1999 and under the subheading "Quantitative
and Qualitative Disclosures about Market Risk" in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on page 28 of
Fairchild International's Annual Report to Stockholders for the year ended
December 26, 1999.
17
<PAGE> 18
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On November 2, 1999, our principal operating subsidiary, Fairchild
Semiconductor Corporation, was named as a defendant in a patent infringement
lawsuit filed by Siliconix Incorporated in the United States District Court for
the Northern District of California. The complaint filed in the suit alleges
that some of our products infringe two Siliconix patents and claims an
unspecified amount of damages. We are contesting these claims vigorously.
In addition to the above proceeding, from time to time we are involved in
other legal proceedings in the ordinary course of business. We believe that
there is no such ordinary course litigation pending that could have,
individually or in the aggregate, a material adverse effect on our business,
financial condition, results of operations or cash flows.
ITEM 2. CHANGES IN SECURITIES
On May 16, 2000, upon stockholder approval at its annual meeting, the
registrant amended its restated certificate of incorporation to increase the
number of shares of Class A Common Stock authorized for issuance to 140,000,000
from 110,000,000 and to increase the number of shares of Class B Common Stock
authorized for issuance to 140,000,000 from 110,000,000. The amendment did not
materially modify the rights of holders of either class of the registrant's
common stock.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The registrant's annual meeting of stockholders was held on May 16,
2000.
(b) The following directors were elected at the meeting:
<TABLE>
<CAPTION>
FOR AUTHORITY WITHHELD
---------- ------------------
<S> <C> <C>
Kirk P. Pond............................... 73,558,306 33,353
Joseph R. Martin........................... 73,559,424 33,353
Richard M. Cashin, Jr...................... 73,085,150 33,353
Paul C. Schorr IV.......................... 73,556,474 33,353
Ronald W. Shelly........................... 73,561,274 33,353
William N. Stout........................... 73,557,074 33,353
</TABLE>
(c) The following proposals were voted on at the meeting:
(i) On a proposal to amend the company's restated certificate of
incorporation authorizing the issuance of additional shares of
common stock, as described in Item 2, above:
FOR: 72,799,850 AGAINST: 657,510 ABSTAIN: 55,610
(ii) On a proposal to approve the Fairchild Semiconductor International,
Inc. Employee Stock Purchase Plan:
FOR: 59,804,134 AGAINST: 779,199 ABSTAIN: 10,961
(iii) On a proposal to approve the Fairchild Semiconductor
International, Inc. 2000 Executive Stock Option Plan:
FOR: 53,017,645 AGAINST: 7,552,922 ABSTAIN: 23,727
18
<PAGE> 19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<S> <C>
3.01 Amendment to restated certificate of incorporation dated May
16, 2000 (incorporated by reference to the registrant's
registration statement on Form S-8 (SEC File No. 333-40416),
filed June 29, 2000).
10.01 Employment Agreement between the company and Kirk P. Pond
10.02 Employment Agreement between the company and Joseph R.
Martin
10.03 Employment Agreement between the company and Daniel E. Boxer
10.04 Fairchild Semiconductor International, Inc. 2000 Executive
Stock Option Plan
10.05 Executive Stock Option Agreements with Kirk P. Pond, Joseph
R. Martin and Daniel E. Boxer
10.06 Executive Stock Option Agreements with Jerry M. Baker and
Keith Jackson
10.07 Fairchild Semiconductor International, Inc. 2000 Stock
Option Plan
10.08 Credit Agreement dated as of June 6, 2000 among Fairchild
Semiconductor Corporation, Fairchild Semiconductor
International, Inc., Credit Suisse First Boston, Fleet
National Bank, ABN Amro Bank NV and certain other lenders
10.09 Fairchild Semiconductor International, Inc. Employee Stock
Purchase Plan
27 Financial Data Schedule
</TABLE>
b) Reports on Form 8-K
1. On April 14, 2000, Fairchild Semiconductor International, Inc. filed
a Form 8-K to disclose it had signed an agreement to acquire QT
Optoelectronics, Inc.
2. On June 1, 2000, Fairchild Semiconductor International, Inc. filed a
Form 8-K to disclose that it had completed the acquisition of QT
Optoelectronics, Inc.
ITEMS 3 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
19
<PAGE> 20
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Fairchild Semiconductor International,
Inc.
By: /s/ DAVID A. HENRY
------------------------------------
David A. Henry
Vice President, Corporate Controller
(Principal Accounting Officer)
Date: August 16, 2000
20
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT INDEX
----------- -------------
<S> <C>
3.01 Amendment to restated certificate of incorporation dated May
16, 2000 (incorporated by reference to the registrant's
registration statement on Form S-8 (SEC File No. 333-40416),
filed June 29, 2000).
10.01 Employment Agreement between the company and Kirk P. Pond
10.02 Employment Agreement between the company and Joseph R.
Martin
10.03 Employment Agreement between the company and Daniel E. Boxer
10.04 Fairchild Semiconductor International, Inc. 2000 Executive
Stock Option Plan
10.05 Executive Stock Option Agreements with Kirk P. Pond, Joseph
R. Martin and Daniel E. Boxer
10.06 Executive Stock Option Agreements with Jerry M. Baker and
Keith Jackson
10.07 Fairchild Semiconductor International, Inc. 2000 Stock
Option Plan
10.08 Credit Agreement dated as of June 6, 2000 among Fairchild
Semiconductor Corporation, Fairchild Semiconductor
International, Inc., Credit Suisse First Boston, Fleet
National Bank, ABN Amro Bank NV and certain other lenders
10.09 Fairchild Semiconductor International, Inc. Employee Stock
Purchase Plan
27 Financial Data Schedule
</TABLE>
