8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 24, 2008

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-15181	04-3363001
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(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

Check the appropriate box below if the form 8-k filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On January 24, 2008, we announced consolidated financial results for the quarter and full year ended December 30, 2007. The press release announcing the results is included as Exhibit 99.1 to this report. Additional information about non-GAAP financial measures included in the press release is included in Exhibit 99.2. Each exhibit is incorporated herein by reference.

Signature

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

	Fairchild Semiconductor International, Inc.
Date: January 24, 2008	/s/ Robin A. Sawyer
	Robin A. Sawyer
	Vice President, Corporate Controller
	(Principal Accounting Officer and
	Duly Authorized Officer)

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release dated January 24, 2008 announcing financial results for the quarter and full year ended December 30, 2007.
99.2	Additional information about non-GAAP financial measures included in the press release.

EX-99.1

Exhibit 99.1

Fairchild Semiconductor Reports Results for the Fourth Quarter and Full Year 2007

• Highest Quarterly Sales, Gross Margins and Net Income since 2000

• Record Sales for Analog Switches and Smart Power Modules

Fairchild Semiconductor (NYSE: FCS), the leading global supplier of power semiconductors, today announced results for the fourth quarter and full year ended December 30, 2007. Fairchild reported fourth quarter sales of $431.9 million, up 1% from the prior quarter and 3% higher than the fourth quarter of 2006.

Fairchild reported fourth quarter net income of $34.0 million or $0.27 per diluted share compared to net income of $20.3 million or $0.16 per diluted share in the prior quarter and net income of $8.7 million or $0.07 per diluted share in the fourth quarter of 2006. Included in these results is a $2.3 million charge related to asset impairments and restructuring actions to streamline the company’s cost structure. Gross margin was 31.3%, 100 basis points higher sequentially and 230 basis points greater than in the fourth quarter of 2006.

Fairchild reported fourth quarter adjusted net income of $41.8 million or $0.33 per diluted share, compared to adjusted net income of $34.1 million or $0.27 per diluted share in the prior quarter and adjusted net income of $26.7 million or $0.21 per diluted share in the fourth quarter of 2006. Adjusted net income excludes amortization of acquisition-related intangibles, restructuring and impairments, purchased in-process research and development, charges for potential litigation outcomes, System General purchase accounting charges, net gain or loss on the sale of product lines, associated net tax benefits of these items and other acquisition-related intangibles, and tax benefits from finalized tax filings and audit outcomes.

Full year revenues for 2007 were $1.67 billion, an increase of 1% compared to $1.65 billion in 2006. Fairchild reported net income of $64.0 million or $0.51 per diluted share in 2007, compared to net income of $83.4 million or $0.67 per diluted share in 2006. On an adjusted basis, the company reported 2007 net income of $113.7 million or $0.90 per diluted share, compared to $111.7 million or $0.90 per diluted share in 2006.

“We reported the highest quarterly sales, gross margins and net income since the year 2000,” said Mark Thompson, Fairchild’s president and CEO. “We benefited from a higher margin product mix in the fourth quarter, especially in our Analog Products Group. Our analog switch and smart power module product lines posted record sales this quarter and were up 34 percent and 50 percent respectively in 2007 compared to 2006. APG sales were down 4% sequentially but gross margin improved 370 basis points as strong growth in our higher margin signal path products was offset by lower revenue for power conversion products as we further reduced analog channel inventory dollars. The Functional Power Group increased sales 4% from the prior quarter due to strong MOSFET and SPM^® growth.

End Markets and Channel Activity

“End market demand was inline with our expectations paced by solid shipments for our products supporting computing, handset and power supply applications,” said Thompson. “Bookings were sequentially higher in the fourth quarter and inline with expectations giving us a healthy starting backlog level. Distributor sell-through was down about 4% sequentially in Q4 after being up 7% in Q3. We increased our channel inventory while remaining well within our target range after reducing more than a week of inventory a quarter ago. We held lead times within a stable range of 8 – 9 weeks during the quarter and expect to maintain this level during Q1.”

Fourth Quarter Financials

“We reported continued sales and gross margin growth while reducing operating expenses,” said Mark Frey, Fairchild’s executive vice president and CFO. “We improved gross margin 100 basis points sequentially due to a richer product mix and greater manufacturing efficiencies. We also reduced SG&A expenses in the fourth quarter as we continue to benefit from streamlining actions and tight spending controls.

“Cash and marketable securities increased $11.1 million to $462.1 million in the fourth quarter which reflected cash flow from operations of $58.8 million, capital spending of $41.3 million and stock repurchases of $10 million,” stated Frey.

First Quarter Guidance

“We expect first quarter revenue to be down 2% to 6% and gross margin to be approximately 100 to 150 basis points lower sequentially due to lower factory loadings and changes in variable compensation accruals,” said Frey. “At the start of the first quarter, we had about 85% of this sales guidance booked and scheduled to ship. Although we continue to exercise strict controls over spending, we expect R&D and SG&A expenses to increase to approximately $87 – $90 million in the first quarter due to the resumption of FICA and other payroll taxes as well as changes in variable compensation accruals. Net interest and other expenses are expected to be $5.0 – $5.5 million for the first quarter.

This press release includes references to adjusted net income (loss) (which excludes amortization of acquisition-related intangibles, restructuring and impairments, purchased in-process research and development, charges for potential litigation outcomes, System General purchase accounting charges, net gain or loss on the sale of product lines, associated net tax benefits of these items and other acquisition-related intangibles, and tax benefits from finalized tax filings and audit outcomes), statements of operations prepared in accordance with generally accepted accounting principles (GAAP) (which include these items), and a reconciliation from adjusted net income to GAAP net income and adjusted gross margin to GAAP gross margin. GAAP and adjusted results both include equity based compensation expense. Adjusted results are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. Fairchild presents adjusted results because its management uses them as additional measures of the company’s operating performance, and management believes adjusted financial information is useful to investors because it illuminates underlying operational trends by excluding significant non-recurring, non-cash or otherwise unusual transactions. Fairchild’s criteria for determining adjusted results may differ from methods used by other companies, and should not be regarded as a replacement for corresponding GAAP measures.

Special Note on Forward Looking Statements:

Some of the paragraphs above contain forward-looking statements that are based on management’s assumptions and expectations and that involve risk and uncertainty. Other forward-looking statements may also be found in this news release. Forward-looking statements usually, but do not always, contain forward-looking terminology such as “we believe,” “we expect,” or “we anticipate,” or refer to management’s expectations about Fairchild’s future performance. Many factors could cause actual results to differ materially from those expressed in forward-looking statements. Among these factors are the following: changes in demand for our products; changes in inventories at our customers and distributors; technological and product development risks, including the risks of failing to maintain the right to use some technologies or failing to adequately protect our own intellectual property against misappropriation or infringement; availability of manufacturing capacity; the risk of production delays; availability of raw materials at competitive prices; competitors’ actions; loss of key customers, including but not limited to distributors; the inability to attract and retain key management and other employees; order cancellations or reduced bookings; changes in manufacturing yields or output; risks related to warranty and product liability claims; risks inherent in doing business internationally; changes in tax regulations or the migration of profits from low tax jurisdictions to higher tax jurisdictions; regulatory risks and significant litigation. These and other risk factors are discussed in the company’s quarterly and annual reports filed with the Securities and Exchange Commission (SEC) and available at the Investor Relations section of Fairchild Semiconductor’s web site at investor.fairchildsemi.com or the SEC’s web site at www.sec.gov.

About Fairchild Semiconductor:

Fairchild Semiconductor is a global leader delivering energy-efficient power analog and power discrete solutions. Fairchild is The Power Franchise^®, providing leading-edge silicon and packaging technologies, manufacturing strength and system expertise for consumer, communications, industrial, portable, computing and automotive systems. An application-driven, solution-based semiconductor supplier, Fairchild provides online design tools and design centers worldwide as part of its comprehensive Global Power Resource^SM. Please contact us on the web at www.fairchildsemi.com.

Editorial Contacts:

Fairchild Semiconductor:	Fairchild Semiconductor:	Agency Contact:
Patti Olson	Dan Janson	Marsha Lisak, Senior Account Executive
Corporate Communications	Investor Relations	WelComm, Inc.
(800) 341-0392 X 8728 Fax: (207) 775-8161	(207) 775-8660 Fax: (207) 761-3415	(805) 223-2311 Fax: (858) 279-5400
Email: patti.olson@fairchildsemi.com	Email: investor@fairchildsemi.com	Email: marsha@welcomm.com

Fairchild Semiconductor International, Inc. Consolidated Statements of Operations (In millions, except per share amounts) (Unaudited)
	Three Months Ended									Twelve Months Ended
	December 30, 2007			September 30, 2007			December 31, 2006			December 30, 2007			December 31, 2006
Total revenue	$	431.9		$	426.8		$	418.3		$	1,670.2		$	1,651.1
Cost of sales (1)		296.9			297.4			296.9			1,179.7			1,154.3
Gross margin		135.0			129.4			121.4			490.5			496.8
Gross margin %		31.3	%		30.3	%		29.0	%		29.4	%		30.1	%
Operating expenses:
Research and development (2)		27.4			26.9			26.5			109.8			107.5
Selling, general and administrative (3)		55.3			57.3			60.2			230.3			241.9
Amortization of acquisition-related intangibles		5.5			5.6			5.9			23.5			23.5
Restructuring and impairments		2.3			2.4			3.2			10.8			3.2
Purchased in-process research and development		—			0.2			—			3.9			—
Charge for potential litigation outcomes, net		—			7.8			8.2			9.5			8.2
(Gain) loss on sale of product line, net		—			0.4			—			0.4			(6.0	)
Total operating expenses		90.5			100.6			104.0			388.2			378.3
Operating income		44.5			28.8			17.4			102.3			118.5
Other expense, net		5.0			5.0			3.3			20.2			19.7
Income before income taxes		39.5			23.8			14.1			82.1			98.8
Provision for income taxes		5.5			3.5			5.4			18.1			15.4
Net income	$	34.0		$	20.3		$	8.7		$	64.0		$	83.4
Net income per common share:
Basic	$	0.27		$	0.16		$	0.07		$	0.52		$	0.68
Diluted	$	0.27		$	0.16		$	0.07		$	0.51		$	0.67
Weighted average common shares:
Basic		124.4			124.5			122.7			124.1			122.2
Diluted		126.2			126.8			124.8			126.3			124.4
(1)      Equity compensation expense included in cost of sales	$	1.1		$	1.2		$	1.4		$	5.3		$	5.6
(2)      Equity compensation expense included in research and development	$	1.2		$	0.9		$	0.9		$	4.1		$	4.3
(3)      Equity compensation expense included in selling, general and administrative	$	3.5		$	4.0		$	4.4		$	15.4		$	16.8
Fairchild Semiconductor International, Inc. Reconciliation of Net Income To Adjusted Net Income (In millions) (Unaudited)
	Three Months Ended									Twelve Months Ended
	December 30, 2007			September 30, 2007			December 31, 2006			December 30, 2007			December 31, 2006
Net income	$	34.0		$	20.3		$	8.7		$	64.0		$	83.4
Adjustments to reconcile net income to adjusted net income:
Restructuring and impairments		2.3			2.4			3.2			10.8			3.2
Purchased in-process research and development		—			0.2			—			3.9			—
Charge for potential litigation outcomes, net		—			7.8			8.2			9.5			8.2
System General purchase accounting charges		—			—			—			3.7			—
(Gain) loss on sale of product line, net		—			0.4			—			0.4			(6.0	)
Amortization of acquisition-related intangibles		5.5			5.6			5.9			23.5			23.5
Associated tax effects of the above and other acquisition intangibles		—			(2.6	)		0.7			(3.0	)		2.9
Tax benefits from finalized tax filings and audit outcomes		—			—			—			0.9			(3.5	)
Adjusted net income	$	41.8		$	34.1		$	26.7		$	113.7		$	111.7
Adjusted net income per common share:
Basic	$	0.34		$	0.27		$	0.22		$	0.92		$	0.91
Diluted	$	0.33		$	0.27		$	0.21		$	0.90		$	0.90

Fairchild Semiconductor International, Inc.

Reconciliation of Gross Margin To Adjusted Gross Margin

(In millions)

(Unaudited)

	Three Months Ended									Twelve Months Ended
	December 30, 2007			September 30, 2007			December 31, 2006			December 30, 2007			December 31, 2006
Gross margin	$	135.0		$	129.4		$	121.4		$	490.5		$	496.8
Adjustments to reconcile gross margin to adjusted gross margin:
System General purchase accounting charges		—			—			—			3.7			—
Adjusted gross margin	$	135.0		$	129.4		$	121.4		$	494.2		$	496.8
Adjusted gross margin %		31.3	%		30.3	%		29.0	%		29.6	%		30.1	%

Adjusted net income, adjusted net income per share, and adjusted gross margin should not be considered as alternatives to net income, net income per share, gross margin or other measures of consolidated operations and cash flow data prepared in accordance with accounting principles generally accepted in the United States of America, as indicators of our operating performance, or as alternatives to cash flow as a measure of liquidity.

Fairchild Semiconductor International, Inc.

Consolidated Balance Sheets

(In millions)

(Unaudited)

	December 30, 2007		September 30, 2007		December 31, 2006
ASSETS
Current assets:
Cash and cash equivalents	$	409.0	$	397.1	$	525.2
Short-term marketable securities		2.1		51.9		59.1
Receivables, net		179.0		184.6		163.3
Inventories		243.5		242.0		238.9
Other current assets		51.9		49.6		42.0
Total current assets		885.5		925.2		1,028.5
Property, plant and equipment, net		676.0		667.8		646.4
Intangible assets, net		123.7		129.2		103.6
Goodwill		353.2		353.2		229.9
Long-term marketable securities		51.0		2.0		2.1
Other assets		43.2		46.2		35.1
Total assets	$	2,132.6	$	2,123.6	$	2,045.6
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	203.7	$	3.8	$	2.8
Accounts payable		130.6		142.8		90.2
Accrued expenses and other current liabilities		110.5		116.8		169.5
Total current liabilities		444.8		263.4		262.5
Long-term debt, less current portion		385.9		585.9		589.7
Other liabilities		80.2		81.0		59.0
Minority Interest		—		—		—
Total liabilities		910.9		930.3		911.2
Temporary equity - deferred stock units		3.2		2.9		2.2
Total stockholders’ equity		1,218.5		1,190.4		1,132.2
Total liabilities, temporary equity and stockholders’ equity	$	2,132.6	$	2,123.6	$	2,045.6

Fairchild Semiconductor International, Inc.

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)

	Three Months Ended			Twelve Months Ended
	December 30, 2007			December 30, 2007			December 31, 2006
Cash flows from operating activities:
Net income	$	34.0		$	64.0		$	83.4
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		32.2			127.0			116.8
Non-cash stock-based compensation expense		5.8			24.8			26.7
Non-cash restructuring and impairments expense		0.7			3.1			2.2
Purchased in-process research & development		—			3.9			—
Deferred income taxes, net		0.1			(6.1	)		(1.8	)
Other		1.6			3.9			(3.1	)
Changes in operating assets and liabilities, net of acquisitions		(15.6	)		(30.0	)		(39.3	)
Cash provided by operating activities		58.8			190.6			184.9
Cash flows from investing activities:
Capital expenditures		(41.3	)		(140.4	)		(111.8	)
Purchase of marketable securities		(3.5	)		(165.7	)		(176.1	)
Sale of marketable securities		2.0			172.7			249.3
Maturity of marketable securities		—			0.1			81.1
Other		—			(1.2	)		(1.0	)
Acquisitions and divestitures, net of cash acquired		—			(178.3	)		5.4
Cash provided by (used in) investing activities		(42.8	)		(312.8	)		46.9
Cash flows from financing activities:
Repayment of long-term debt		—			(2.8	)		(54.1	)
Proceeds from issuance of common stock and from exercise of stock options, net		4.8			37.1			27.3
Other		(8.9	)		(28.3	)		(10.5	)
Cash provided by (used in) financing activities		(4.1	)		6.0			(37.3	)
Net change in cash and cash equivalents		11.9			(116.2	)		194.5
Cash and cash equivalents at beginning of period		397.1			525.2			330.7
Cash and cash equivalents at end of period	$	409.0		$	409.0		$	525.2

EX-99.2

Exhibit 99.2

Information About Our Non-GAAP Financial Measures

Regulation G and other provisions of the securities laws regulate the use of financial measures that are not prepared in accordance with generally accepted accounting principles (we refer to such measures as “non-GAAP financial measures”). In the press release included in this current report on Form 8-K, we provide information on “adjusted net income”, the related “adjusted earnings per share” (or “adjusted EPS”), “adjusted gross margin” and the related “adjusted gross margin percent,” each of which is a non-GAAP financial measure.

We believe these measures provide important supplemental information to investors. We use these measures, together with GAAP measures, for internal managerial purposes and as a means to evaluate period-to-period comparisons. However, we do not, and you should not, rely on non-GAAP financial measures alone as measures of our performance. We believe that non-GAAP financial measures reflect an additional way of viewing aspects of our operations that – when taken together with GAAP results and the reconciliations to corresponding GAAP financial measures that we also provide in our press releases – provide a more complete understanding of factors and trends affecting our business. We strongly encourage you to review all of our financial statements and publicly-filed reports in their entirety and to not rely on any single financial measure.

For information about our financial results as reported in accordance with GAAP, see Item 8 of Part II, “Consolidated Financial Statements and Supplementary Data” in our annual report on Form 10-K for the year ended December 31, 2006. For a quantitative reconciliation of our non-GAAP financial measures to the most comparable GAAP measures, see “Reconciliation of Net Income to Adjusted Net Income” and “Reconciliation of Gross Margin to Adjusted Gross Margin” in Exhibit 99.1 included in this current report on Form 8-K.

Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures, even if they have similar names.

Items That We Exclude from Adjusted Net Income

Adjusted net income, which we reconcile to net income, excludes the following items:

• restructuring and impairments,

• distributor sales reserves and inventory charges associated with product discontinuations,

• costs associated with early retirement of debt,

• purchased in-process research and development,

• purchase accounting charges,

• a gain or loss on the sale of a product line,

• amortization of acquisition-related intangibles,

• certain charges relating to potential litigation outcomes,

• write off (recovery) of equity investments,

• lawsuit settlement gains,

• accelerated depreciation on assets to be abandoned,

• the tax effects associated with the above and other acquisition intangibles,

• tax benefits from finalized tax filings and audit outcomes,

• reserve for deferred tax assets, and

• repatriation tax effect.

Not all of these items are necessarily included in the calculation of net income each quarter. To understand which of the above items are included in the calculation of net income, and excluded from the calculation of adjusted net income, see the reconciliation data in Exhibit 99.1 included in this current report on Form 8-K.

Adjusted EPS is derived from adjusted net income, using the same measures of outstanding shares as are used to calculate net income per share in accordance with GAAP.

Items That We Exclude from Adjusted Gross Margin

Adjusted gross margin, which we reconcile to gross margin, excludes purchase accounting charges.

Adjusted gross margin percent is derived from adjusted gross margin using the same measures of revenue as are used to calculate gross margin percent in accordance with GAAP.

We use adjusted net income and adjusted gross margin to manage and evaluate our business operations and overall financial performance because they exclude some cash and non-cash items that are either beyond our immediate control or are not characteristic of our underlying business operations for the periods in which they are recorded, or both.

We exclude these items for the following reasons:

• We believe such charges do not reflect results of our ongoing operations.

• We believe that, since such charges are not recorded in all periods, excluding them provides better comparability of our results of operations from period-to-period.

• Adjusted results provide an additional measure that our stockholders and debtholders have requested and expect as a means to project future results of operations.

• Although, for the reasons given above, our adjusted results may not be directly comparable with those of other companies, we believe they provide an additional point of comparison (particularly when viewed in the context of the reconciling data that we also provide) that investors may use to compare us with other companies in our industry, many of which also provide non-GAAP financial measures or highlight certain charges in their GAAP presentations.

• For comparison and projection purposes, GAAP measures alone may not provide all information that an investor may wish to consider. For example, amortization of acquisition-related intangibles, included in the GAAP measure, would be higher for a company that has grown through acquisitions than for a company that has grown internally. Excluding and explaining such charges as part of the presentation of the non-GAAP financial measure provides additional information for an investor to use, together with the GAAP measure, in comparing the performance of the two companies.