Press:
National Semiconductor
Alan Bernheimer
408 721-8665
alan.bernheimer@nsc.com
Bill Callahan
408 721-2871
bill.callahan@nsc.com
Investor Relations:
National Semiconductor
Jim Foltz
408 721-5693
invest@nsc.com
NATIONAL SEMICONDUCTOR REPORTS 39% GROWTH IN SALES WITH 40% INCREASE IN NEW ORDERS IN FIRST FISCAL QUARTER
Sept. 4, 1997-- National Semiconductor Corporation® today reported net income of $70.1 million, or 45 cents per share, on sales of $600.8 million for its first quarter of fiscal 1998, reflecting a 39 percent growth in revenues and a 40 percent increase in bookings over National's core business in last year's first quarter.
"Improved new order rates through the summer period enabled us to achieve our fifth consecutive quarter of increased revenues and operating earnings for our core business," said Brian L. Halla, chief executive officer of National Semiconductor.
"Our revenue was led by Analog group sales for this quarter, which were up more than 50 percent over last year's first quarter. Sales for both our Personal Systems and Communications and Consumer groups were also up almost 30 percent over last year."
Net income for the core business in the comparable quarter last year was $2.8 million or two cents per share, on sales of $433.5 million, On a total company basis (including Fairchild) for that quarter National reported a net loss of $207.6 million, or $1.51 per share on sales of $566.1 million. These net results included one-time pre-tax charges of $285.6 million relating to the sale of the Fairchild product lines and the acquisition of PicoPower.
Summary of results 3 months ended:
____________________________________________________________________________
Aug. 25, 1996
Aug. 24, 1997 National Core Total Company
Net Sales $600.8 $ 433.5 $ 566.1
Net Income $ 70.1 $ 2.8 $(207.6)
Earnings per share $ 0.45 $ 0.02 $ (1.51)
(All figures in millions of dollars,
except per share amounts)
Quarterly bookings continued to outperform season norms by growing eight percent over the fourth quarter of fiscal 1997 as weekly run rates grew strongly in June and then held steady in July and August. First quarter fiscal 1998 bookings exceeded billings and grew 40 percent over last year's first quarter.
Personal Systems showed the strongest order growth over the fourth quarter of fiscal 1997, led by the seasonal build-up in the consumer PC distribution channels. Wide Area Network products overcame the summer holidays in Europe to outgrow the company overall rate compared to both the fourth quarter and last year's first quarter. Wireless products continued to grow at more than double the company rates, sparked by the introduction of new products. LAN orders grew over last year's first quarter, but dropped compared to the fourth quarter of fiscal 1997 as the company continues to introduce new, more integrated solutions. Analog products held steady at the strong order rate of the fourth quarter and significantly outgrew the company's overall order rate of a year ago.
On a regional basis, new orders in Japan and Southeast Asia outgrew the company bookings rate as a whole compared with the fourth quarter of fiscal 1997, while Europe showed the expected seasonal drop in orders. North America was in line with the overall company bookings rate for the same period. New orders in all regions grew significantly over last year's first quarter levels, led by Southeast Asia.
During the quarter, National announced an agreement to merge with Cyrix Corporation, a leading supplier of high-performance and high-integration x86 microprocessors to the personal computer industry. Pending the approval of Cyrix's stockholders and regulatory agencies, the transaction is expected to be completed in November of 1997.
National Semiconductor Corporation, a Fortune 500 company, produces system-on-a-chip silicon solutions for the information highway, based on its leadership in analog and mixed signal technologies. National is headquartered in Santa Clara, California, and focuses on the communications, personal systems and consumer markets. National has 12,700 employees worldwide with annual sales of approximately $2.0 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
------------------
Aug. 24, Aug. 25,
1997 1996
------- -------
Net sales $ 600.8 $ 566.1
Operating costs and expenses:
Cost of sales 351.4 393.9
Research and development 101.7 86.8
Selling, general and administrative 73.9 94.0
Special items:
Restructuring of operations - 256.3
In-process R&D charge - 10.6
------- -------
Total operating costs and expenses 527.0 841.6
------- -------
Operating income(loss) 73.8 (275.5)
Interest income, net 12.7 1.3
Other income(expense), net 7.0 (2.7)
------- -------
Income(loss) before income taxes 93.5 (276.9)
Income tax provision(benefit) 23.4 (69.3)
------- -------
Net income(loss) $ 70.1 $(207.6)
======= =======
Earnings per share:
Primary $ 0.47 $(1.51)
Fully dilutive $ 0.45 $(1.51)
Selected income statement ratios as a percentage
of sales:
Gross margin 41.5% 30.4%
Research and development 16.9% 17.2%
Selling, general and administrative 12.3% 16.6%
Net income(loss) 11.7% (36.7%)
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
Aug. 24, May 25,
1997 1997
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 659.6 $ 832.1
Short-term marketable investments 119.1 57.6
Receivables, net 301.8 255.8
Inventories 193.9 181.4
Deferred tax assets 168.5 168.5
Other current assets 51.9 57.2
-------- --------
Total current assets 1,494.8 1,552.6
Property, plant and equipment 2,455.0 2,271.9
Less accumulated depreciation (1,049.1) (1,008.5)
-------- --------
Net property, plant and equipment 1,405.9 1,263.4
Long-term marketable investments 5.4 6.4
Other assets 93.0 91.7
-------- --------
Total assets $2,999.1 $2,914.1
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
portion of long-term debt $ 32.8 $ 12.3
Accounts payable 248.2 248.0
Accrued expenses 270.7 293.4
Income taxes 236.6 237.7
-------- --------
Total current liabilities 788.3 791.4
Long-term debt 302.6 324.3
Deferred income taxes 7.8 8.9
Other noncurrent liabilities 45.4 40.7
-------- --------
Total liabilities 1,144.1 1,165.3
-------- --------
Commitments and contingencies
Shareholders' equity:
Common stock 73.4 72.6
Additional paid-in capital 1,108.7 1,070.7
Retained earnings 672.9 605.5
-------- --------
Total shareholders' equity 1,855.0 1,748.8
-------- --------
Total liabilities and shareholders' equity $2,999.1 $2,914.1
======== ========
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Three Months Ended
------------------
Aug. 24, Aug. 25,
1997 1996
------- -------
Cash flows from operating activities:
Net income(loss) $ 70.1 $(207.6)
Adjustments to reconcile net income(loss)
with net cash provided by (used in) operations:
Depreciation and amortization 56.8 65.3
(Gain)/loss on sale of investments (6.7) 3.0
Tax benefit associated with stock options 9.0 1.7
In-process research and development charge - 10.6
Loss on disposal of equipment 4.2 0.3
Write down of inventory - 15.1
Restructuring of operations - 169.4
Other, net 0.1 2.7
Changes in certain assets and liabilities, net:
Receivables (46.0) (7.7)
Inventories (12.5) 7.0
Other current assets 5.3 9.1
Accounts payable and accrued expenses (20.0) (21.2)
Current and deferred income taxes (2.2) (78.0)
Other liabilities 4.7 (4.5)
------- -------
Net cash provided by (used in) operating 62.8 (34.8)
activities ------- -------
Cash flows from investing activities:
Purchase of property, plant and equipment (196.3) (105.2)
Sale and maturity of marketable investments 515.5 275.0
Purchase of marketable investments (577.0) (252.1)
Sale of investments 8.7 -
Business acquisition, net of cash acquired - (15.4)
Purchase of investments and other, net (8.8) (7.1)
------- -------
Net cash used in investing activities (257.9) (104.8)
------- -------
Cash flows from financing activities:
Issuance of debt 0.4 1.5
Repayment of debt (1.6) (5.3)
Issuance of common stock, net 23.8 8.6
------- -------
Net cash provided by financing activities 22.6 4.8
------- -------
Net change in cash and cash equivalents (172.5) (134.8)
Cash and cash equivalents at beginning of period 832.1 442.4
------- -------
Cash and cash equivalents at end of period $ 659.6 $ 307.6
======= =======
NATIONAL SEMICONDUCTOR CORPORATION
EARNINGS PER SHARE(Unaudited)
(in millions, except per share amounts)
Three Months Ended
------------------
Aug. 24, Aug. 25,
1997 1996
------- -------
Earnings per share:
Primary $ 0.47 $(1.51)
Fully diluted $ 0.45 $(1.51)
Weighted average shares:
Primary 149.9 137.7
Fully diluted 156.7 137.7
Income(loss) used in primary earnings per common
share calculation $ 70.1 $(207.6)
Income(loss) used in fully diluted earnings per
common share calculation (reflecting
adjustment for interest on convertible notes
when dilutive) $ 70.1 $(207.6)
Selected Financial Information
The following selected financial information is presented for comparative purposes. The selected financial information for the three months ended August 25, 1996 represents the National core business without Fairchild and excludes special items and the effect of special charges related to the Company's reorganization of its operating structure in the first quarter of fiscal 1997 (in millions):
Three Months Ended
------------------
Aug. 24, Aug. 25,
1997 1996
------- -------
Net sales $600.8 $433.5
Gross profit $249.4 $162.0
Gross margin 41.5% 37.4%
Research and development $101.7 $ 82.3
Selling, general and administrative $ 73.9 $ 75.3
Net income $ 70.1 $ 2.8
The selected financial information presented above for the three months ended August 25, 1996 is pro forma and includes certain expenses for research and development, selling and marketing, and headquarter functions which were allocated from central corporate cost centers to Fairchild Semiconductor and the National core business.
Notes to Financial Tables
Other Income(Expense), Net
Other income, net for the first quarter of fiscal 1998 includes $0.3 million of net intellectual property income and a $6.7 million net gain on sale of investments. Other income, net for the first quarter of fiscal 1997 includes $0.3 million of net intellectual property income offset by a $3.0 million net loss on investments primarily attributable to the write down of an investment to net realizable value.