NATIONAL SEMICONDUCTOR REPORTS NET INCOME
OF $9.1 MILLION FOR FOURTH FISCAL QUARTER
Santa Clara, CA, June 6, 1996 --- National Semiconductor Corporation (NYSE:NSM) today reported net income of $9.1 million, or seven cents per share, for the fourth quarter of fiscal 1996, ended May 26, 1996, compared with net income of $81.2 million, or 59 cents per share for the comparable quarter of fiscal 1995.Sales for the most recent quarter were $612.4 million, down 9 percent from last year's fourth quarter sales of $669.8 million. Analog and mixed signal sales, led by growth in local area networks and wireless telecommunications products, represent 62.1 percent of National Semiconductor's fourth quarter sales, compared with 57.5 percent a year ago.
The company also reported net income for the 12 months ended May 26, 1996 of $185.4 million, or $1.34 per share, compared with $264.2 million, or $1.92 per share, in fiscal 1995. Revenues for fiscal 1996 grew by 10 percent to $2,623.1 million, compared with $2,379.4 million for fiscal 1995.
Summary of results:
Fourth quarter ended: May 26, 1996 May 28, 1995 Net Sales $612.4 $669.8 Net Income 9.1 81.2 Earnings per share 0.07* 0.59*Twelve months ended: May 26, 1996 May 28, 1995 Net Sales $2,623.1 $2,379.4 Net Income 185.4 264.2 Earnings per share (fully diluted) 1.34 1.92(All figures in millions of dollars, except per share amounts)
*See attached financial tables for detailThe company said continuing inventory corrections in key segments such as the personal computer market and the distribution channel resulted in lower than expected revenues and decreased factory utilization. This lower factory loading reduced gross margins and profitability in the third and fourth fiscal quarters. National said that it took steps during the recent quarter to align costs with current market conditions, and that it expects to see the benefits of these actions during the coming first quarter.
Results for the quarter included a one time pre-tax charge of $19.3 million, or 10 cents per share, primarily for severance packages associated with cost containment programs. Earnings per share for the comparable quarter last year included a net seven cents per share in one-time income from intellectual property and a charge to interest expense associated with early retirement of debt.
The company said it has recently seen signs of improvements in both the personal computer market and the U.S. distribution channel, but the outlook remains cautious. Increased activity from PC manufacturers is expected to continue through the summer as they work off existing inventory. Distributors are continuing to reduce inventories, which are still above normal levels.
Worldwide bookings rose slightly in the fourth quarter compared with the third fiscal quarter, but less than the normal seasonal expectation. Overall worldwide orders were down from last year.
The wireless telecommunications market continues to lead the company with order growth that doubled third quarter levels, making this one of the few markets to increase significantly compared with last year. Personal computer markets improved as orders for proprietary Super I/O devices more than doubled compared to third quarter. However, overall orders from the personal computer markets remain approximately 40 percent below last year, as customers complete their recent inventory corrections. Orders from automotive customers, led by single-chip mixed signal solutions, continued to show seasonal improvement over the winter quarter and were only slightly below last year. Bookings from U.S. distributors continued to weaken, as they further decreased their inventory on hand in proportion to shorter lead times from National and other semiconductor manufacturers.
On a regional basis, order declines in North America were more than offset by improvements in Europe and Japan, while bookings in the Asia-Pacific area remained even with third quarter levels. Orders in all regions declined significantly from last year's unusually strong fourth quarter.
During the quarter National's Board of Directors named Brian L. Halla chairman of the board, president and chief executive officer. Halla was formerly executive vice president of LSI Logic Corporation, and prior to that was with Intel Corporation for 14 years.
This report contains forward looking statements dependent on a number of risks and uncertainties including such factors as, but not restricted to, new orders received and shipped during the current quarter, the timely ramp up of new submicron production facilities, the degree of factory utilization, and the successful sale of existing inventories. Other risk factors are listed in the company's Form 10Q for the quarter ended February 26, 1996 (see the outlook section of Management's Discussion and Analysis of Results of Operations and Financial Conditions.)
National Semiconductor Corporation provides technologies for moving and shaping information. The company focuses on four strategic markets: communications, personal systems, industrial, and consumer. National Semiconductor is headquartered in Santa Clara, California, and has 20,000 employees worldwide.
CORP96004FIN
PART I. FINANCIAL INFORMATION
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share amounts)
Three Months Ended Twelve Months Ended
------------------ -------------------
May 26, May 28, May 26, May 28,
1996 1995 1996 1995
------- ------- -------- --------
Net sales $612.4 $669.8 $2,623.1 $2,379.4
Operating costs and expenses:
Cost of sales 395.9 389.1 1,560.9 1,384.5
Research and development 90.8 77.7 361.3 283.1
Selling, general and
administrative 116.7 118.8 486.8 433.3
Restructuring of operations - - - (5.5)
------ ------ -------- -------
Total operating costs
and expenses 603.4 585.6 2,409.0 2,095.4
------ ------ -------- -------
Operating income 9.0 84.2 214.1 284.0
Interest income, net 3.4 1.9 13.3 14.6
Other income, net (.2) 14.4 19.8 30.6
------ ------ -------- -------
Income before income taxes 12.2 100.5 247.2 329.2
Income taxes 3.1 19.3 61.8 65.0
------ ------ -------- -------
Net Income $ 9.1 $ 81.2 $ 185.4 $ 264.2
====== ====== ======== =======
Earnings per share:
Primary $ .07 $ .62 $ 1.36 $2.02
Fully diluted $ .07 $ .59 $ 1.34 $1.92
Selected income statement ratios as a percentage of sales:
Gross margin 35.4% 41.9% 40.5% 41.8%
Research and development 14.8% 11.6% 13.8% 11.9%
Selling, general and 19.1% 17.7% 18.6% 18.2%
administrative
Net income 1.5% 12.1% 7.1% 11.1%
Effective tax rate 25.0% 19.2% 25.0% 19.7%
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
May 26, May 28,
1996 1995
ASSETS -------- --------
Current assets:
Cash and cash equivalents $ 442.4 $ 420.3
Short-term marketable investments 61.9 47.1
Receivables, net 281.2 318.0
Inventories 325.7 263.0
Deferred tax assets 71.1 77.4
Other current assets 73.7 52.5
------- -------
Total current assets 1,256.0 1,178.3
Property, plant and equipment 2,516.7 2,147.6
Less accumulated depreciation 1,208.6 1,185.2
------- -------
Net property, plant and equipment 1,308.1 962.4
Long-term marketable investments 11.7 20.2
Other assets 82.2 74.8
------- -------
Total assets $2,658.0 $2,235.7
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
portion of long-term debt $ 21.5 $ 23.6
Accounts payable 255.6 272.0
Accrued expenses 235.1 230.7
Income taxes 164.6 159.6
------- -------
Total current liabilities 676.8 685.9
Long-term debt 350.5 82.5
Deferred income taxes 12.1 20.1
Other non-current liabilities 41.4 40.5
------- -------
Total liabilities 1,080.8 829.0
------- -------
Commitments and contingencies
Shareholders' equity:
Convertible preferred stock - 0.2
Common stock 68.4 63.1
Additional paid-in capital 926.9 992.3
Retained earnings 581.9 411.0
Treasury stock, at cost - (59.9)
------- -------
Total shareholders' equity 1,577.2 1,406.7
------- -------
Total liabilities and shareholders' equity $2,658.0 $2,235.7
======== ========
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Twelve Months Ended
--------------------
May. 26, May. 28,
1996 1995
------- -------
Cash flows from operating activities:
Net Income $ 185.4 $ 264.2
Adjustments to reconcile net income
with net cash provided by operations:
Depreciation and amortization 232.6 185.4
Gain on sale of investments (4.3) (6.9)
Tax benefit associated with stock options 15.9 51.9
In-process research and development charge 11.4 1.5
Loss on disposal of equipment 4.8 8.6
Other, net (0.5) (2.1)
Changes in certain assets and liabilities, net:
Receivables 23.8 (26.5)
Inventories (77.2) (48.4)
Other current assets (33.3) (4.5)
Accounts payable and accrued expenses (5.3) 22.0
Current and deferred income taxes 8.3 (19.6)
Other non-current liabilities (0.2) 9.0
------- -------
Net cash provided by operating activities 361.4 434.6
------- -------
Cash flows from investing activities:
Purchases of property, plant and equipment (628.1) (476.8)
Proceeds from sale of equipment 24.6 -
Proceeds from the sale and maturities of
marketable investments 936.9 892.0
Purchases of marketable investments (952.0) (841.6)
Proceeds from sale of net assets of DynaCraft Inc. 70.0 -
Proceeds from sale of investments 7.8 -
Business acquisitions, net of cash acquired (19.2) (12.0)
Purchases of investments and other, net (19.0) (16.6)
------- -------
Net cash used by investing activities (579.0) (455.0)
------- -------
Cash flows from financing activities:
Proceeds from issuance of convertible subordinated
notes, less issuance costs 253.3 -
Proceeds from the issuance of debt 42.0 157.8
Repayment of debt (29.4) (83.0)
Issuance of common stock under
employee benefit plans 42.4 29.4
Purchase of treasury stock (63.0) (50.4)
Payment of preferred dividends (5.6) (11.2)
------- -------
Net cash used by financing activities 239.7 42.6
------- -------
Net change in cash and cash equivalents 22.1 22.2
Cash and cash equivalents at beginning of period 420.3 398.1
------- -------
Cash and cash equivalents at end of period $ 442.4 $ 420.3
======= =======
PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(in millions, except per share amounts)
Three Months Ended Twelve Months Ended
------------------ -------------------
May 26, May 28, May 26, May 28,
1996 1995 1996 1995
------- ------- -------- --------
Earnings per share:
Primary $ .07 $ .62 $ 1.36 $2.02
Fully diluted $ .07 $ .59 $ 1.34 $1.92
Weighted average shares:
Primary 137.8 125.6 132.5 125.2
Fully diluted 137.8 138.7 138.6 137.5
Income used in primary
earnings per share
(reflecting preferred
dividends) $ 9.1 $ 78.4 $ 179.8 $ 253.0
Income used in fully diluted
earnings per share
(reflecting adjustment for
interest on convertible
debt, when dilutive) $ 9.1 $ 81.2 $ 185.4 $ 264.2
Major Product Sales as a Percent of Total Sales:
Analog 17.9% 17.7% 17.5% 16.9%
Analog Rich Mixed Signal 20.2% 20.8% 20.9% 21.2%
Mixed Signal 24.0% 19.0% 21.4% 18.2%
------ ------ ------ ------
Analog/Mixed Signal 62.1% 57.5% 59.8% 56.3%
Bipolar Logic 6.4% 8.6% 7.0% 8.5%
CMOS Logic 6.8% 6.0% 6.6% 6.3%
Discretes 6.5% 5.3% 6.7% 4.9%
Non-Volatile Memory 6.3% 7.7% 6.5% 7.8%
Digital Other/DCI/Corporate 11.9% 14.9% 13.4% 16.2%
------ ------ ------ ------
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