P.R.:
Alan Bernheimer
(408) 721-8665
alan.bernheimer@nsc.com
Bill Callahan
(408) 721-2871
bill.callahan@nsc.com
Financial:
Jim Foltz
(408) 721-5693
invest@nsc.com
NATIONAL SEMICONDUCTOR EARNS 21 CENTS PER SHARE WITH STRONG SALES AND ORDERS IN SECOND QUARTER
Dec. 5, 1996 -- National Semiconductor Corporation® today reported net income of $29.5 million or 21 cents per share for the second quarter of fiscal 1997, ended Nov. 24, 1996, compared with net income of $79.8 million, or 57 cents per share, for the comparable quarter of fiscal 1996.
Sales for the most recent quarter were $661.5 million, compared with sales of $711.6 million in the second quarter of fiscal 1996. The company noted that sales and new orders were up sharply from the first quarter sales level of $566.1 million, led by growth in the local area networking, wireless and personal computer markets.
Brian L. Halla, National's president and chief executive officer, said, "The strength of sales and new order rates in October and November is encouraging, but we'll wait until after the holidays to take the cork out of the bottle."
"Although our book-to-bill ratio was above 1.1 for the second quarter and customers clearly are entering the new year with very low inventory levels, we would be surprised if orders continue as strong throughout the holiday season -- happily surprised," Halla added.
Summary of results: Second quarter ended: November 24, 1996 November 26, 1995 Net Sales $661.5 $711.6 Net Income $ 29.5 $ 79.8 Earnings per share $ 0.21 $ 0.57(All figures in millions of dollars, except per share amounts)
National reported that the second quarter net income improvement reflected increased sales and higher gross margin of 34.9 percent compared with the first quarter of fiscal 1997. The company increased shipments in September and October by reducing die bank inventories without significantly increasing new wafer starts until November. This held the overall wafer fab capacity utilization to 67.4 percent.
For the first six months of fiscal 1997, ended November 24, 1996, the company reported revenues of $1,227.6 million, compared with revenues of $1,410.4 million for the first half of fiscal 1996. The company recorded a net loss for the six-month period of $178.1 million, or $1.29 per share, compared with net income of $153.3 million, or $1.10 per share for the first half of fiscal 1996. Results for the first six months of fiscal 1997 reflect a net loss of $207.6 million, or $1.51 per share, for the first quarter of fiscal 1997, ended August 25, 1996, which included one-time pre-tax charges of $285.6 million relating to the spinout of its Fairchild product lines and the acquisition of PicoPower.
Summary of results: Six months ended: November 24, 1996 November 26, 1995 Net Sales $1,227.6 $1,410.4 Net Income $ (178.1) $ 153.3 Earnings per share $ (1.29) $ 1.10(All figures in millions of dollars, except per share amounts)
The company said fall quarter worldwide bookings were seasonally up almost 30 percent over the summer quarter and were up more than 15 percent compared with last year. This was the first quarter in a year that bookings grew over the comparable quarter of the previous year. September orders were flat compared with August, while October orders grew approximately 25 percent over September. November orders continued the strong October rate. All three months improved over last year's levels.
LAN orders led the company in overall size and rate of improvement over the first quarter, with National's 100-megabit physical layer and transceiver solutions leading this segment. Strong market acceptance of the company's video display products resulted in significant growth in this area. The personal computer and wireless telephone markets also grew strongly over last year. In addition, analog multimarket products and Fairchild product line orders were up sharply as customers completed their component inventory corrections. Bookings grew in all regions compared with both the summer quarter and last year's second quarter, with book-to-bill ratios above 1.00.
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 third 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 first quarter of fiscal 1997, which ended August 26, 1996, and in Form 10K for the year ended May 26, 1996 (see the outlook section of Management's Discussion and Analysis of Results of Operations and Financial Conditions).
National Semiconductor produces analog and mixed-signal based silicon solutions for the information highway, communications, consumer and industrial markets. National Semiconductor is headquartered in Santa Clara, California, and has 18,800 employees worldwide. In fiscal 1996, the company reported sales of $2.6 billion. Additional company and product information is available on the World Wide Web at www.national.com.
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share amounts)
Three Months Ended Six Months Ended
------------------ -------------------
Nov. 24, Nov. 26, Nov. 24, Nov. 26,
1996 1995 1996 1995
-------- -------- -------- --------
Net sales $ 661.5 $ 711.6 $1,227.6 $1,410.4
Operating costs and expenses:
Cost of sales 430.7 398.6 824.6 796.3
Research and development 89.0 88.7 186.4 173.6
Selling, general and
administrative 106.4 128.8 200.4 258.0
Restructuring of operations - - 256.3 -
------- ------ -------- -------
Total operating costs
and expenses 626.1 616.1 1,467.7 1,227.9
------- ------ -------- -------
Operating income(loss) 35.4 95.5 (240.1) 182.5
Interest income, net 1.0 2.7 2.3 5.8
Other income, net 3.0 8.0 .3 16.0
------- ------- -------- -------
Income(loss) before
income taxes 39.4 106.2 (237.5) 204.3
Income tax provision(benefit) 9.9 26.4 (59.4) 51.0
------- ------ -------- -------
Net income(loss) $ 29.5 $ 79.8 $ (178.1) $ 153.3
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Earnings per share:
Primary $ .21 $ .61 $(1.29) $1.16
Fully diluted $ .21 $ .57 $(1.29) $1.10
Selected income statement ratios presented as a percentage of sales:
Gross Margin 34.9% 44.0% 32.8% 43.5%
Research and Development 13.5% 12.5% 15.2% 12.3%
Selling, general and 16.1% 18.1% 16.3% 18.3%
administrative
Net income (loss) 4.5% 11.2% (14.5%) 10.9%
Effective tax rate 25.0% 25.0% 25.0% 25.0%
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
Nov. 24, May 26,
1996 1996
ASSETS -------- --------
Current assets:
Cash and cash equivalents $ 396.7 $ 442.4
Short-term marketable investments 45.2 61.9
Receivables, net 304.3 281.2
Inventories 261.9 325.7
Deferred tax assets 140.4 71.1
Other current assets 65.5 73.7
------- -------
Total current assets 1,214.0 1,256.0
Property, plant and equipment 2,535.7 2,516.7
Less accumulated depreciation 1,292.5 1,208.6
------- -------
Net property, plant and equipment 1,243.2 1,308.1
Long-term marketable investments 7.0 11.7
Other assets 87.4 82.2
------- -------
Total assets $2,551.6 $2,658.0
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short term borrowings and current
portion of long-term debt $ 30.8 $ 21.5
Accounts payable 207.4 255.6
Accrued expenses 295.5 235.1
Income taxes 162.6 164.6
------- -------
Total current liabilities 696.3 676.8
Long-term debt 382.8 350.5
Deferred income taxes 11.1 12.1
Other non-current liabilities 39.6 41.4
------- -------
Total liabilities 1,129.8 1,080.8
------- -------
Commitments and contingencies
Shareholders' equity:
Common stock 69.8 68.4
Additional paid-in capital 952.9 930.2
Retained earnings 399.1 578.6
------- -------
Total shareholders' equity 1,421.8 1,577.2
------- -------
Total liabilities and shareholders' equity $2,551.6 $2,658.0
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NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions) Six Months Ended
--------------------
Nov. 24, Nov. 26,
1996 1995
------- -------
Cash flows from operating activities:
Net income(loss) $(178.1) $ 153.3
Adjustments to reconcile net income(loss)
with net cash provided by operations:
Depreciation and amortization 134.8 108.8
(Gain)loss on investments 3.0 (5.2)
Tax benefit associated with stock options 4.1 12.0
In-process research and development charge 10.6 -
Loss on disposal of equipment 2.4 4.3
Write-down of inventory 15.1 -
Restructuring charges 256.3 -
Other, net (1.6) (2.3)
Changes in certain assets and liabilities, net:
Receivables (23.1) (36.3)
Inventories 48.7 (40.6)
Other current assets 8.2 (35.2)
Accounts payable and accrued expenses (71.9) (53.3)
Current and deferred income taxes (72.3) 23.2
Other non-current liabilities (1.8) 1.8
-------- --------
Net cash provided by operating activities 134.4 130.5
-------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment (231.8) (277.3)
Proceeds from the sale and maturity of
marketable investments 541.4 305.2
Purchases of marketable investments (524.7) (318.1)
Proceeds from sale of investments - 7.8
Business acquisition (15.4) -
Purchases of investments and other, net (10.4) (10.4)
-------- --------
Net cash used by investing activities (240.9) (292.8)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of convertible subordinated
notes, less issuance costs - 253.3
Proceeds from the issuance of debt 52.2 42.0
Repayment of debt (10.6) (14.7)
Issuance of common stock, net 19.2 22.3
Purchase of treasury stock - (57.4)
Payment of preferred dividends - (5.6)
-------- --------
Net cash provided by financing activities 60.8 239.9
-------- --------
Net change in cash and cash equivalents (45.7) 77.6
Cash and cash equivalents at beginning of period 442.4 420.3
-------- --------
Cash and cash equivalents at end of period $ 396.7 $ 497.9
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NATIONAL SEMICONDUCTOR CORPORATION
EARNINGS PER SHARE (Unaudited)
(in millions, except per share amounts)
Three Months Ended Six Months Ended
------------------ --------------------
Nov. 24, Nov. 26, Nov. 24, Nov. 26,
1996 1995 1996 1995
-------- ------- -------- --------
Earnings (loss) per share:
Primary $ .21 $ .61 $(1.29) $1.16
Fully diluted $ .21 $ .57 $(1.29) $1.10
Weighted average shares:
Primary 141.6 126.9 138.4 127.2
Fully diluted 142.6 143.1 138.4 141.4
Income (loss) used in primary
earnings per common share
calculation(reflecting
preferred dividends
if applicable) $ 29.5 $ 77.0 $(178.1) $ 147.7
Income (loss) used in fully
diluted earnings per share
(reflecting adjustment for
interest on convertible
notes when dilutive) $ 29.5 $ 81.9 $(178.1) $ 155.4
Notes to Financial Tables-------------------------
One-Time Charges
----------------
As previously announced in the first quarter of fiscal 1997, the Company recorded a $275 million one-time charge in connection with the formation of the Fairchild Semiconductor organization that consisted of a $256.3 million restructure charge and charges to cost of sales of $18.7 million for the write-down of certain Fairchild inventory to net realizable value as well as other cost reduction activities. In a separate transaction, the Company also recorded a one-time charge of $10.6 million to expense in-process research and development related to the acquisition of PicoPower.
Selected Financial Information
------------------------------
The following table summarizes selected financial information excluding the effect of the one-time charges for the Fairchild Semiconductor Organization and the National core business:
Three Months Ended Six Months Ended
---------------------- --------------------------
($ in millions) Fair- Nat’l Total Fair- Nat’l Total
child Core Co. child Core Co.
------ ------ ------ ------ -------- -------
Fiscal 1997
-----------
Period Ended
November 24, 1996:
Sales $154.0 $507.5 $661.5 $286.7 $940.9 $1,227.6
Gross margin 23.6% 38.3% 34.9% 22.8% 37.9% 34.4%
Income
before taxes $10.2 $29.2 $39.4 $15.3 $32.8 $48.1
Fiscal 1996
-----------
Period Ended
November 26, 1995:
Sales $191.2 $520.4 $711.6 $376.8 $1,033.6 $1,410.4
Gross margin 35.5% 47.1% 44.0% 35.0% 46.7% 43.5%
Income
before taxes $30.8 $75.4 $106.2 $57.8 $146.5 $204.3
The financial information presented for Fairchild Semiconductor and National Core Business is pro forma and includes certain expenses for research and development, selling and marketing, and headquarter functions which are allocated from central corporate cost centers. Income before taxes for fiscal 1996 reflects management’s best efforts to restate these allocations to be consistent with the allocation basis used in the current year.
Other Income, Net
-----------------
Components of other Three Months Ended Six Months Ended
income, net were: ------------------ ------------------
(in millions) Nov. 24, Nov. 26, Nov. 24, Nov. 26,
1996 1995 1996 1995
-------- -------- -------- --------
Net intellectual property
income $ 1.4 $ 8.0 $ 1.7 $ 10.8
Gain(loss)on investments, net - - (3.0) 5.2
Other 1.6 - 1.6 -
------- ------- ------- -------
Total other income, net $ 3.0 $ 8.0 $ .3 $ 16.0
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