Fairchild Semiconductor Financial

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders
Fairchild Semiconductor International, Inc.:

     We have audited the accompanying consolidated balance sheets of Fairchild Semiconductor International, Inc. and subsidiaries (the “Company”) as of December 26, 1999 and May 30, 1999, the related consolidated statements of operations and stockholders’ equity (deficit) for the seven months ended December 26, 1999 and for each of the years in the three-year period ended May 30, 1999, and the related consolidated statements of cash flows for the seven months ended December 26, 1999 and for the years ended May 30, 1999 and May 31, 1998. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
     We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
     The accompanying financial statements were prepared on the basis of presentation as described in Note 1. Prior to March 11, 1997, the statements present the combined business equity and the related combined revenues less direct expenses before taxes of the Fairchild Semiconductor Business of National Semiconductor Corporation (the Business), and are not intended to be a complete presentation of the Business’ financial position, results of operations or cash flows. The results of operations before taxes are not necessarily indicative of the results of operations before taxes that would have been recorded by the Company on a stand-alone basis.
     In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 26, 1999 and May 30, 1999, the results of operations for the seven months ended December 26, 1999 and for each of the years in the three-year period ended May 30, 1999, and the results of cash flows for the seven months ended December 26, 1999 and for the years ended May 30, 1999 and May 31, 1998, on the basis described in Note 1, in conformity with generally accepted accounting principles.
     As discussed in Note 18 to the consolidated financial statements, the Company changed its method of accounting for business process reengineering costs in the year ended May 31, 1998, to adopt the provisions of the Emerging Issues Task Force Issue 97-13, “Accounting for Business Process Reengineering Costs.”

Boston, Massachusetts
January 21, 2000, except as to Note 21, which is as of January 25, 2000