As the semiconductor industry ended in 2008, the growing worldwide recession began to significantly impact demand. The first quarter of 2009 demand has continued to be week across the broad range of end markets. Fairchild has responded to this difficult economic environment with a series of aggressive cost reductions including a significant reduction of our manufacturing footprint. Fairchild entered the current down cycle with one of the leanest inventory positions in the industry, which has allowed us to more quickly respond to the lower demand environment, the industry now confronts. We are confident that the actions we have taken so far to reduce cost, decrease inventory levels and reduce our manufacturing base will enable us to significantly improve margins and earnings as sales improve.

Fairchild generated $185 million in cash flow from operations in 2008 and ended the first quarter of 2009 with $387 million in cash and securities. The company is committed to managing its balance sheet to increase shareholder value and to make strategic acquisitions that can accelerate its gross margin improvement plan.

Fairchild is focused on designing higher complexity, integrated power and mobile solutions that meet our customers' needs by providing better performance and higher efficiency in extremely small form factors. Fairchild continues to build on its rich history of innovation to address one of the greatest challenges we face today--reducing wasted energy and improving efficiency in an increasingly power-hungry world.