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EXHIBIT 99
GENERAL SEMICONDUCTOR, INC.
EXHIBIT 99 - FORWARD LOOKING INFORMATION
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward looking statements. Our Form 10-K for the year ended December 31,
1999, our 1999 Annual Report to Stockholders, any Form 10-Q or Form 8-K of ours,
or any other oral or written statements made by or on behalf of General
Semiconductor, may include forward looking statements which reflect our current
views with respect to future events and financial performance. These forward
looking statements are identified by their use of such terms and phrases as
"intends," "intend," "intended," "goal," "estimate," "estimates," "expects,"
"expect," "expected," "project," "projects," "projected," "projections,"
"plans," "anticipates," "anticipated," "should," "designed to," "foreseeable
future," "believe," "believes" and "scheduled" and similar expressions. Readers
are cautioned not to place undue reliance on these forward looking statements,
which speak only as of the date the statement was made. We undertake no
obligation to publicly update or revise any forward looking statements, whether
as a result of new information, future events or otherwise.
Our actual results may differ significantly from the results discussed in
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, (a) the general political, economic and competitive
conditions in the United States, Taiwan (Republic of China), the People's
Republic of China, Ireland, Germany, France and other markets where we operate;
(b) changes in capital availability or costs, such as changes in interest rates,
market perceptions of the industry in which we operate, or security ratings; (c)
uncertainties relating to customer plans and commitments; (d) employee workforce
factors; (e) authoritative generally accepted accounting principles or policy
changes from such standard-setting bodies as the Financial Accounting Standards
Board and the Securities and Exchange Commission and the factors set forth
below.
OUR SUBSTANTIAL INDEBTEDNESS COULD RESTRICT OUR OPERATIONS AND MAKE US MORE
VULNERABLE TO ADVERSE ECONOMIC CONDITIONS.
We have had and will continue to have a substantial amount of outstanding
indebtedness with significant debt service requirements. In the future, we may
incur additional indebtedness.
Our substantial current and future indebtedness could have important
consequences. For example, it could:
- - impair our ability to obtain additional financing in the future;
- - reduce funds available to us for other purposes, including working
capital, capital expenditures, research and development, strategic
acquisitions and other general corporate purposes;
- - restrict our ability to introduce new products or exploit business
opportunities;
- - increase our vulnerability to economic downturns and competitive
pressures in the industry in which we operate;
- - increase our vulnerability to interest rate increases to the extent
debt under our credit facility is not hedged because the interest
rates under our credit facility are variable;
- - limit our ability to dispose of assets;
- - make it more difficult for us to satisfy our obligations with respect
to the notes; and
- - place us at a competitive disadvantage.
WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH TO SERVICE OUR DEBT. OUR ABILITY TO
GENERATE CASH DEPENDS UPON MANY FACTORS BEYOND OUR CONTROL.
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We will require a significant amount of cash to service our indebtedness and to
fund our operations. Based on our current level of operations, we believe that
our cash flow from operations and our available financing will be adequate to
meet our anticipated requirements for operating our business and servicing our
debt. Our ability to generate cash depends upon, among other things, our future
operating performance. To a large extent, this depends upon economic, financial,
competitive and other factors beyond our control. If we cannot generate enough
cash from operations to make payments on our indebtedness, we will need to
refinance our indebtedness, obtain additional financing or sell assets. We
cannot assure that we would be able to do so or do so without additional
expense.
WE OPERATE IN AN INDUSTRY THAT HAS RECENTLY EXPERIENCED UNUSUALLY LARGE PRICE
DECLINES AND FUTURE PRICING DECLINES MAY ADVERSELY AFFECT OUR BUSINESS, RESULTS
OF OPERATIONS AND LIQUIDITY.
The discrete segment of the semiconductor industry has recently experienced
unusually large price declines and may experience such declines in the future.
During 1998 and the first quarter of 1999, average selling prices of our
products weakened at rates beyond those historically experienced due to
continued excess capacity in the industry. The excess capacity resulted from a
combination of factors, including industry capacity expansion in 1996, economic
difficulties in Southeast Asia, the economic slowdown in Japan and difficulties
in the computer and computer peripherals industry. During this period, our
production facilities were underutilized. The underutilization of our facilities
for an extended period in the future could result in production inefficiencies
and cause a reduction in our operating margins. We cannot assure that our
industry will not experience future price declines which could have a material
adverse effect on our business, results of operations and liquidity.
WE FACE SIGNIFICANT COMPETITION IN THE DISCRETE SEGMENT OF THE SEMICONDUCTOR
INDUSTRY, WHICH MAY ADVERSELY AFFECT US.
We are subject to competition from a substantial number of foreign and domestic
companies, some of which have greater financial, engineering, manufacturing and
other resources, or offer a broader product line than we do. Our competitors can
be expected to continue to improve the design and performance of their products
and to introduce new products with competitive price and performance
characteristics. Although we believe that we enjoy certain technological and
other advantages over our competitors, realizing and maintaining such advantages
will require continued investment by us in engineering, research and
development, marketing and customer service and support. We cannot assure that
we will have sufficient resources to continue to make such investments or that
we will be successful in maintaining our advantages.
OUR BUSINESS IS SUBJECT TO THE ECONOMIC AND POLITICAL RISKS OF OPERATING OUR
FACILITIES AND SELLING OUR PRODUCTS IN FOREIGN COUNTRIES.
Almost all of our products are manufactured or assembled in Taiwan (Republic of
China), the People's Republic of China, Ireland, Germany and France. These
foreign operations are subject to the risks inherent in situating operations
abroad, including risks with respect to currency exchange rates, economic and
political destabilization, restrictive actions by foreign governments,
nationalizations, natural events such as severe weather, floods and earthquakes,
the laws and policies of the United States affecting trade, foreign investment
and loans, and foreign tax laws. Our cost-competitive status could be adversely
affected if, relative to our competitors, we experience unfavorable movements in
foreign currency exchange rates.
In addition, international sales of our products generally represent
approximately 70% of our annual sales. Our financial performance in the future
may be adversely affected by international economic conditions.
WE MAY NOT BE ABLE TO SUCCESSFULLY MAKE ACQUISITIONS.
As part of our business strategy, we intend to make acquisitions. We may not be
able to complete any acquisition in the future or identify those candidates that
would result in a successful transaction. In addition, we may not be able to
complete future acquisitions at acceptable prices and terms, and increased
competition for acquisition candidates could result in fewer acquisition
opportunities and higher
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acquisition prices. The magnitude, timing and nature of future acquisitions will
depend upon various factors, including:
- - the availability of suitable acquisition candidates;
- - competition with others for suitable acquisitions;
- - the negotiation of acceptable terms;
- - our access to capital;
- - the availability of skilled employees to manage and operate the
acquired companies; and
- - general economic and business conditions.
We expect to finance acquisitions with cash on hand, through issuance of debt or
equity securities and through borrowings under credit arrangements, including
pursuant to our credit facility, subject to the restrictions set forth in the
credit facility. The ability to obtain debt or equity financing is subject to
market conditions and to limitations imposed on us by our credit facility.
Therefore, we may not be able to obtain additional financing in order to finance
future acquisitions. Our operating and financial flexibility could be
substantially limited if we use cash to complete acquisitions.
POTENTIAL ENVIRONMENTAL LIABILITIES, INCLUDING THOSE RELATING TO FORMER
OPERATIONS, MAY ADVERSELY IMPACT OUR FINANCIAL POSITION.
We are subject to various federal, state, local and foreign laws and regulations
governing environmental matters, including the use, discharge and disposal of
hazardous materials. We are presently engaged in the remediation of sites
associated with eight discontinued operations in six states, and we are a
"potentially responsible party" at five hazardous waste sites in four states. We
have recorded a reserve for environmental matters of $30.2 million at December
31, 1999. While the ultimate outcome of these matters cannot be determined, we
do not believe that the final disposition of these matters will have a material
adverse effect on our financial position, results of operations or cash flows
beyond the amounts previously provided for in our financial statements.
Our present and past facilities have been in operation for many years, and, over
that time, these facilities have used substances which are or might be
considered hazardous, and we have generated and disposed of wastes which are or
might be considered hazardous. In addition, new environmental legislation or
regulations may be enacted in the future. Therefore, it is possible that
additional environmental issues may arise in the future which we cannot now
predict.
YEAR 2000
The Company did not experience a material adverse effect on its products,
services, competitive position, financial condition or results of operations as
a result of the Year 2000 phenomenon. However, the Company can give no assurance
that the systems of other companies or government agencies on which the Company
relies have been converted on time or that a failure to convert by another
company or a conversion that is incompatible with the Company's systems will not
have a material adverse effect on the Company.
The disclosures contained herein constitute Year 2000 Readiness Statements
pursuant to the Year 2000 Information and Readiness Disclosure Act, Public Law
105-271.
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