NATIONAL SEMICONDUCTOR REPORTS THIRD QUARTER NET INCOME
OF $23.0 MILLION
Santa Clara, CA, March 7, 1996 - National Semiconductor Corporation (NYSE:NSM) today reported net income of $23.0 million, or 17 cents per share, on sales of $600.3 million, for the third quarter of fiscal 1996, ended Feb. 25, 1996. This compared with net income of $57.0 million, or 42 cents per share (fully diluted), on sales of $571.4 million for the comparable quarter of fiscal 1995.
Summary of results:
Third quarter ended: February 25, 1996 February 26, 1995 Net Sales $600.3 $571.4 Net Income 23.0 57.0 Earnings per share 0.17 0.42(All figures in millions of dollars, except per share amounts)
The third quarter included a one-time pre-tax charge of $11.4 million, or six cents per share, related to the acquisition of Sitel Sierra, b.v. in the Netherlands to augment National's capabilities in high performance wireless communications technologies. National also completed the sale of Dyna-Craft, Inc., during the quarter.
The company attributed the decrease in earnings to a combination of lower than expected revenues and reduced factory utilization. These factors were caused primarily by an industry-wide slowdown in new orders through the early part of the third quarter as customers and distributors reduced inventories.
In a statement from the three-member Office of the President the company said, "A number of our markets reflected lower than expected sales through the year-end holiday season, particularly the PC market, resulting in increased component inventory levels and significantly lower bookings for our semiconductor products. We did see a pickup in new orders through February, but bookings have not yet regained their normal seasonal momentum."
The Office of the President consists of three executive vice presidents and chief operating officers, Richard M. Beyer, Ellen Hancock and Kirk P. Pond. They are directing the company pending the appointment of a chief executive officer to replace Gilbert F. Amelio, who resigned during the quarter to become chairman and CEO of Apple Computer, Inc.
The company expects that shipments in the fourth fiscal quarter, which ends May 26, 1996, will show the usual seasonal upturn, but cautioned that the revenue growth in the quarter is dependent on continued bookings improvement.
Worldwide bookings overall were down by approximately 20 percent in the third quarter, compared with the fall quarter of fiscal 1996, which closed Nov. 26, 1995. This was more than the normal seasonal expectation. Orders were also down approximately 20 percent from the third quarter of fiscal 1995. Analog and mixed signal orders, which now represent 59 percent of total sales, were down in similar proportions to overall bookings.
Despite the slowdown in overall new orders during the third quarter, some application specific markets showed strong bookings, such as Local Area Networks and public communication network markets. These strengths were offset, however, by weakness caused by the inventory corrections in the distribution channel, the personal computer industry and analog portable phone markets. These market weaknesses particularly affected bookings for National's multi-market analog products. Orders for bipolar logic and EPROM memory products continued to decline as the company continues to shift emphasis from these older markets to higher margin products for moving and shaping information.
On a regional basis, orders in North America were down from the immediately preceding second quarter at levels similar to overall order patterns, but declined only slightly year-to- year. Orders in Europe were in line with the worldwide pattern, while orders in Japan were up slightly over the immediately preceding quarter and down slightly compared to the third quarter a year ago. Bookings were down more than the worldwide average in the Asia Pacific Region.
For the first three quarters, ended February 25, 1996, National Semiconductor reported net income of $176.3 million, or $1.26 per share (fully diluted), on sales of $2,010.7 million. This compares with net income of $183.0 million, or $1.33 per share (fully diluted), on sales of $1,709.6 million for the comparable nine months of fiscal 1995.
Summary of results:
Nine months ended: February 25, 1996 February 26, 1995 Net Sales $2,010.7 $1,709.6 Net Income 176.3 183.0 Earnings per share (fully diluted) 1.26 1.33(All figures in millions of dollars, except per share amounts)
CORP96003FIN
PART I. FINANCIAL INFORMATION
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in millions, except per share amounts)
Three Months Ended Nine Months Ended
------------------ --------------------
Feb. 25, Feb. 26, Feb. 25, Feb. 26,
1996 1995 1996 1995
-------- ------- -------- --------
Net sales $ 600.3 $571.4 $2,010.7 $1,709.6
Operating costs and expenses:
Cost of sales 368.7 342.1 1,165.0 995.4
Research and development 96.9 72.5 270.5 205.4
Selling, general and
administrative 112.1 103.1 370.1 314.5
Restructuring of operations - (5.5) - (5.5)
------- ------ -------- -------
Total operating costs
and expenses 577.7 512.2 1,805.6 1,509.8
------- ------ -------- -------
Operating income 22.6 59.2 205.1 199.8
Interest income, net 4.1 4.7 9.9 12.7
Other income, net 4.0 7.4 20.0 16.2
------- ------ -------- -------
Income before income taxes 30.7 71.3 235.0 228.7
Income taxes 7.7 14.3 58.7 45.7
------- ------ -------- -------
Net Income $ 23.0 $ 57.0 $ 176.3 $ 183.0
======= ====== ======== =======
Earnings per share:
Primary $ .17 $ .43 $ 1.30 $1.39
Fully diluted $ .17 $ .42 $ 1.26 $1.33
Selected income statement ratios as a percentage of sales:
Gross Margin 38.6% 40.1% 42.1% 41.8%
Research and Development 16.1% 12.7% 13.5% 12.0%
Selling, general and 18.7% 18.0% 18.4% 18.4%
administrative
Net income 3.8% 10.0% 8.8% 10.7%
Effective tax rate 25.1% 20.1% 25.0% 20.0%
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
Feb. 25, May 28,
1996 1995
ASSETS -------- --------
Current assets:
Cash and cash equivalents $ 428.2 $ 420.3
Short-term marketable investments 98.8 47.1
Receivables, net 316.4 318.0
Inventories 326.5 263.0
Deferred tax assets 84.2 77.4
Other current assets 80.3 52.5
------- -------
Total current assets 1,334.4 1,178.3
Property, plant and equipment 2,337.7 2,147.6
Less accumulated depreciation 1,167.8 1,185.2
------- -------
Net property, plant and equipment 1,169.9 962.4
Long-term marketable investments 16.0 20.2
Other assets 81.2 74.8
------- -------
Total assets $2,601.5 $2,235.7
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
portion of long-term debt $ 23.4 $ 23.6
Accounts payable 194.4 272.0
Accrued expenses 227.2 230.7
Income taxes 184.2 159.6
------- -------
Total current liabilities 629.2 685.9
Long-term debt 357.1 82.5
Deferred income taxes 19.4 20.1
Other non-current liabilities 39.7 40.5
------- -------
Total liabilities 1,045.4 829.0
------- -------
Commitments and contingencies
Shareholders' equity:
Convertible preferred stock - 0.2
Common stock 67.8 63.1
Additional paid-in capital 915.1 992.3
Retained earnings 577.0 411.0
Treasury stock, at cost (3.8) (59.9)
------- -------
Total shareholders' equity 1,556.1 1,406.7
------- -------
Total liabilities and shareholders' equity $2,601.5 $2,235.7
======== ========
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in millions)
Nine Months Ended
--------------------
Feb. 25, Feb. 26,
1996 1995
-------- -------
Cash flows from operating activities:
Net Income $ 176.3 $ 183.0
Adjustments to reconcile net income
with net cash provided by operations:
Depreciation and amortization 169.4 131.6
Gain on sale of investments (6.7) (6.9)
Tax benefit associated with stock options 12.8 26.7
In-process research and development charge 11.4 1.5
Loss on disposal of equipment 2.6 4.5
Other, net (2.6) (.9)
Changes in certain assets and liabilities, net:
Receivables (11.4) (18.5)
Inventories (78.0) (33.4)
Other current assets (39.9) (4.8)
Accounts payable and accrued expenses (74.4) (85.7)
Current and deferred income taxes 17.7 (26.2)
Other non-current liabilities (1.9) 2.4
-------- -------
Net cash provided by operating activities 175.3 173.3
-------- -------
Cash flows from investing activities:
Purchases of property, plant and equipment (423.1) (238.3)
Proceeds from sale of equipment 24.6 -
Proceeds from the sale and maturities of
marketable investments 578.2 618.6
Purchases of marketable investments (630.1) (609.3)
Proceeds from sale of net assets of DynaCraft Inc. 70.0 -
Proceeds from sale of investments 7.8 7.9
Business acquisitions, net of cash acquired (19.2) (12.0)
Purchases of investments and other, net (10.7) (12.9)
-------- -------
Net cash used by investing activities (402.5) (246.0)
-------- -------
Cash flows from financing activities:
Proceeds from issuance of convertible subordinated
notes, less issuance costs 253.3 -
Proceeds from the issuance of debt 42.0 61.1
Repayment of debt (20.9) (48.7)
Issuance of common stock under
employee benefit plans 29.3 11.2
Purchase of treasury stock (63.0) (51.9)
Payment of preferred dividends (5.6) (8.4)
-------- -------
Net cash provided (used) by financing activities 235.1 (36.7)
-------- -------
Net change in cash and cash equivalents 7.9 (109.4)
Cash and cash equivalents at beginning of period 420.3 398.1
-------- -------
Cash and cash equivalents at end of period $ 428.2 $ 288.7
======== =======
PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(in millions, except per share amounts)
Three Months Ended Nine Months Ended
------------------ --------------------
Feb. 25, Feb. 26, Feb. 25, Feb. 26,
1996 1995 1996 1995
-------- ------- -------- --------
Earnings per share:
Primary $ .17 $ .43 $ 1.30 $1.39
Fully diluted $ .17 $ .42 $ 1.26 $1.33
Weighted average shares:
Primary 137.8 124.7 131.1 125.2
Fully diluted 137.8 136.9 142.6 137.5
Income used in primary
earnings per share
(reflecting preferred
dividends) $ 23.0 $ 54.2 $ 170.7 $ 174.6
Income used in fully diluted
earnings per share
(reflecting adjustment
for interest on convertible
debt when dilutive) $ 23.0 $ 57.0 $ 180.1 $ 183.0
Major Product Sales as a Percent of Total Sales:
Analog 17.0% 17.4% 17.4% 16.6%
Analog Rich Mixed Signal 20.5% 21.3% 21.1% 21.4%
Mixed Signal 21.6% 17.5% 20.4% 17.9%
------ ------ ------ ------
Analog/Mixed Signal 59.1% 56.2% 58.9% 55.9%
Discretes 7.0% 5.0% 6.7% 4.7%
Bipolar Logic 6.8% 8.7% 7.2% 8.4%
CMOS Logic 6.9% 5.9% 6.5% 6.4%
Non-Volatile Memory 6.2% 8.0% 6.8% 7.9%
Digital Other/DCI/Corporate 14.0% 16.2% 13.9% 16.7%
------ ------ ------ ------
Total 100.0% 100.0% 100.0% 100.0%
For more information:
P.R.: Alan Bernheimer or Bill Callahan
(408) 721-8665 (408) 721-2871
alan.bernheimer@nsc.com bill.callahan@nsc.com
Financial: Jim Foltz
(408) 721-5693
invest@tevm2.nsc.com