STOCKHOLDERS OF FAIRCHILD ARE ADVISED TO READ THE SCHEDULE TO (INCLUDING THE OFFER TO PURCHASE, RELATED LETTER OF TRANSMITTAL AND OTHER OFFER DOCUMENTS) AND THE SCHEDULE 14D-9, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BEFORE MAKING ANY DECISION WITH RESPECT TO THE TENDER OFFER BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES THERETO.
| Fairchild Semiconductor International, Inc. | |||||||||||||||||||||
| Consolidated Statements of Operations | |||||||||||||||||||||
| (In millions, except per share and percent data) | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||||
| December 27, | September 27, | December 28, | December 27, | December 28, | |||||||||||||||||
| 2015 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
| Total revenue | $ | 317.2 | $ | 342.1 | $ | 336.6 | $ | 1,370.2 | $ | 1,433.4 | |||||||||||
| Cost of sales (1) | 212.2 | 227.1 | 232.2 | 932.4 | 967.8 | ||||||||||||||||
| Gross margin | 105.0 | 115.0 | 104.4 | 437.8 | 465.6 | ||||||||||||||||
| Gross margin % | 33.1 | % | 33.6 | % | 31.0 | % | 32.0 | % | 32.5 | % | |||||||||||
| Operating expenses: | |||||||||||||||||||||
| Research and development (2) | 38.2 | 40.4 | 40.1 | 162.6 | 165.8 | ||||||||||||||||
| Selling, general and administrative (3) | 47.4 | 47.9 | 51.6 | 205.8 | 215.9 | ||||||||||||||||
| Amortization of acquisition-related intangibles | 2.3 | 1.9 | 2.1 | 8.4 | 10.6 | ||||||||||||||||
| Restructuring, impairments, and other costs | 11.0 | 27.7 | 7.3 | 47.6 | 49.8 | ||||||||||||||||
| Acquisition-related costs | 6.5 | — | — | 6.5 | — | ||||||||||||||||
| Goodwill impairment charge | — | — | — | 0.6 | — | ||||||||||||||||
| Charge for litigation | — | — | — | — | 4.4 | ||||||||||||||||
| Total operating expenses | 105.4 | 117.9 | 101.1 | 431.5 | 446.5 | ||||||||||||||||
| Operating income (loss) | (0.4 | ) | (2.9 | ) | 3.3 | 6.3 | 19.1 | ||||||||||||||
| Other expense, net | 1.2 | 1.4 | 1.3 | 5.4 | 6.5 | ||||||||||||||||
| Income (loss) before income taxes | (1.6 | ) | (4.3 | ) | 2.0 | 0.9 | 12.6 | ||||||||||||||
| Provision for income taxes | 5.5 | 3.9 | 44.7 | 16.0 | 47.8 | ||||||||||||||||
| Net loss | $ | (7.1 | ) | $ | (8.2 | ) | $ | (42.7 | ) | $ | (15.1 | ) | $ | (35.2 | ) | ||||||
| Net loss per common share: | |||||||||||||||||||||
| Basic | $ | (0.06 | ) | $ | (0.07 | ) | $ | (0.36 | ) | $ | (0.13 | ) | $ | (0.29 | ) | ||||||
| Diluted | $ | (0.06 | ) | $ | (0.07 | ) | $ | (0.36 | ) | $ | (0.13 | ) | $ | (0.29 | ) | ||||||
| Weighted average common shares: | |||||||||||||||||||||
| Basic | 113.4 | 114.6 | 118.0 | 115.4 | 121.4 | ||||||||||||||||
| Diluted | 113.4 | 114.6 | 118.0 | 115.4 | 121.4 | ||||||||||||||||
| (1) Equity compensation expense included in cost of sales | $ | 1.0 | $ | 1.4 | $ | 1.3 | $ | 5.2 | $ | 5.3 | |||||||||||
| (2) Equity compensation expense included in research and development | $ | 2.1 | $ | 1.9 | $ | 2.1 | $ | 8.8 | $ | 8.4 | |||||||||||
| (3) Equity compensation expense included in selling, general and administrative | $ | 4.1 | $ | 3.7 | $ | 4.2 | $ | 16.8 | $ | 18.9 | |||||||||||
| Fairchild Semiconductor International, Inc. | |||||||||||||||||||||
| Reconciliation of Net Income (Loss) To Adjusted Net Income | |||||||||||||||||||||
| (In millions) | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||||
| December 27, | September 27, | December 28, | December 27, | December 28, | |||||||||||||||||
| 2015 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
| Net loss | $ | (7.1 | ) | $ | (8.2 | ) | $ | (42.7 | ) | $ | (15.1 | ) | $ | (35.2 | ) | ||||||
| Adjustments to reconcile net loss to adjusted net income: | |||||||||||||||||||||
| Restructuring, impairments, and other costs | 11.0 | 27.7 | 7.3 | 47.6 | 49.8 | ||||||||||||||||
| Acquisition-related costs | 6.5 | — | — | 6.5 | — | ||||||||||||||||
| Gain from sale of equity investment | — | — | — | — | (1.4 | ) | |||||||||||||||
| Loss on disposal of property, plant and equipment | — | — | — | — | 1.9 | ||||||||||||||||
| Accelerated depreciation on assets related to factory closures (1) | (0.1 | ) | 0.8 | 4.7 | 8.7 | 6.5 | |||||||||||||||
| Inventory write-offs associated with factory closures (1) | (0.1 | ) | 1.0 | — | 5.5 | — | |||||||||||||||
| Charge for litigation | — | — | — | — | 4.4 | ||||||||||||||||
| Goodwill impairment charge | — | — | — | 0.6 | — | ||||||||||||||||
| Amortization of acquisition-related intangibles | 2.3 | 1.9 | 2.1 | 8.4 | 10.6 | ||||||||||||||||
| Associated tax effects of the above and other acquisition-related intangibles | 0.2 | 0.1 | 3.7 | 1.0 | 3.0 | ||||||||||||||||
| Change in deferred tax asset value | — | — | 36.8 | — | 36.8 | ||||||||||||||||
| Adjusted net income | $ | 12.7 | $ | 23.3 | $ | 11.9 | $ | 63.2 | $ | 76.4 | |||||||||||
| Adjusted net income per common share: | |||||||||||||||||||||
| Basic | $ | 0.11 | $ | 0.20 | $ | 0.10 | $ | 0.55 | $ | 0.63 | |||||||||||
| Diluted | $ | 0.11 | $ | 0.20 | $ | 0.10 | $ | 0.54 | $ | 0.62 | |||||||||||
| (1) Recorded in cost of sales | |||||||||||||||||||||
| Fairchild Semiconductor International, Inc. | |||||||||||||||||||||
| Reconciliation of Gross Margin To Adjusted Gross Margin | |||||||||||||||||||||
| (In millions) | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||||
| December 27, | September 27, | December 28, | December 27, | December 28, | |||||||||||||||||
| 2015 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
| Gross margin | $ | 105.0 | $ | 115.0 | $ | 104.4 | $ | 437.8 | $ | 465.6 | |||||||||||
| Adjustments to reconcile gross margin to adjusted gross margin: | |||||||||||||||||||||
| Accelerated depreciation on assets related to factory closures | (0.1 | ) | 0.8 | 4.7 | 8.7 | 6.5 | |||||||||||||||
| Inventory write-offs associated with factory closures | (0.1 | ) | 1.0 | — | 5.5 | — | |||||||||||||||
| Adjusted gross margin | $ | 104.8 | $ | 116.8 | $ | 109.1 | $ | 452.0 | $ | 472.1 | |||||||||||
| Adjusted gross margin % | 33.0 | % | 34.1 | % | 32.4 | % | 33.0 | % | 32.9 | % | |||||||||||
| Adjusted cost of sales | $ | 212.4 | $ | 225.3 | $ | 227.5 | $ | 918.2 | $ | 961.3 | |||||||||||
