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Contacts: National Semiconductor Alan Bernheimer - Press (408) 721-8665 Email ID: alan.bernheimer@nsc.com |
Bill Callahan - Press (408) 721-2871 Email ID: bill.callahan@nsc.com |
Jim Foltz - Investor Relations (408) 721-5693 Email ID: invest.group@nsc.com |
NATIONAL SEMICONDUCTOR REPORTS NET INCOME OF 16 CENTS PER SHARE FOR THIRD FISCAL QUARTER , EXCLUDING ONE-TIME ACQUISITION CHARGEMarch 12, 1998 -- National Semiconductor Corporation® today reported net income of $26.2 million, or 16 cents per share diluted, excluding a one-time charge, on sales of $650.1 million for the third quarter of fiscal 1998. This compares with net income of $28.7 million, or 18 cents per share diluted, on sales of $564.5 million, for the comparable quarter of fiscal 1997. Last year's core National plus Cyrix results exclude a one-time pre-tax gain of $202 million related to the sale of the company's Fairchild businesses in March 1997, and have been restated to include the effects of National's merger with Cyrix Corporation in November 1997. _______________________________________________________________________ 3 months ended: Mar. 1, 1998 Feb. 23, 1997 (excluding National Core Total Company one-time charge) & Cyrix as reported Net Sales $650.1 $564.5 $712.0 Net Income $ 26.2 $ 28.7 $200.2 Earnings per share (diluted) $ 0.16 $ 0.18 $ 1.20 All figures in millions of dollars, except per share amounts For the third quarter the company reported net income of $22.3 million, or 13 cents per share diluted, which included a one-time charge of $5.2 million pre-tax for the expense of in-process research and development related to the acquisition of audio compression technology from Gulbransen Corporation. The quarter also included $11.7 million of net intellectual property and royalty income. Total company net income of $200.2 million, or $1.20 per share, for the third quarter of fiscal 1997 includes accounting adjustments related to the sale of the Fairchild product lines and the operating results of the Fairchild businesses themselves. Please refer to the Notes to Financial Tables for a complete reconciliation of the core National plus Cyrix results shown above with the consolidated total company results. Summary of results _______________________________________________________________________ 9 months ended: Mar. 1, 1998 Feb. 23, 1997 (excluding National Core Total Company one-time charges) & Cyrix as reported Net Sales $2,026.7 $1,579.8 $2,013.9 Net Income $ 142.1 $ 38.8 $ 20.6 Earnings per share (diluted) $ 0.85 $ 0.25 $ 0.13 All figures in millions of dollars, except per share amounts 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 fourth quarter, the timely ramp up of new submicron production facilities, the degree of factory utilization, the successful sale of existing inventories, and the ramp up of recently introduced products. Other risk factors are listed in the company's Form 10Q for the quarter ended November 22, 1997 (see the Outlook section of Management's Discussion and Analysis of Results of Operations and Financial Conditions).
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
------------------ -------------------
March 1, Feb. 23, March 1, Feb. 23,
1998 1997 1998 1997
(Restated) (Restated)
-------- ------- -------- --------
Net sales $650.1 $712.0 $2,026.7 $2,013.9
Operating costs and expenses:
Cost of sales 414.0 419.9 1,246.7 1,279.9
Research and development 128.9 101.4 358.9 293.7
Selling, general and
administrative 90.9 125.3 274.7 352.8
Special items:
Merger costs - - 30.0 -
Restructuring of operations (192.0) 64.3
In-process R&D charge 5.2 - 7.7 10.6
------ ------ -------- -------
Total operating costs
and expenses 639.0 454.6 1,918.0 2,001.3
------ ------ -------- -------
Operating income 11.1 257.4 108.7 12.6
Interest income(expense), net 4.7 0.4 19.8 (2.4)
Other income, net 13.9 7.9 23.2 12.6
------ ------ -------- -------
Income before
income taxes 29.7 265.7 151.7 22.8
Income tax provision 7.4 65.5 37.9 2.2
------ ------ -------- -------
Net income $ 22.3 $200.2 $ 113.8 $ 20.6
====== ====== ======== =======
Earnings per share:
Basic $ .14 $1.28 $ .70 $ .13
Diluted $ .13 $1.20 $ .68 $ .13
Selected income statement ratios as a percentage of sales:
Gross margin 36.3% 41.0% 38.5% 36.4%
Research and development 20.6% 14.2% 18.1% 15.1%
Selling, general and
administrative 14.0% 17.6% 13.6% 17.5%
Net income 3.4% 28.1% 5.6% 1.0%
Effective tax rate 25.0% 24.7% 25.0%
Current liabilities:
Short-term borrowings and current
portion of long-term debt $ 54.0 $ 15.4
Accounts payable 257.0 265.5
Accrued expenses 291.0 306.8
Income taxes 240.6 238.1
------- --------
Total current liabilities 842.6 825.8
Long-term debt 383.8 460.5
Deferred income taxes 9.3 12.1
Other non-current liabilities 43.2 40.7
------- --------
Total liabilities 1,278.9 1,339.1
------- --------
Commitments and contingencies
Shareholders' equity:
Common stock 82.4 80.7
Additional paid-in capital 1,195.9 1,111.7
Retained earnings 788.2 679.3
------- --------
Total shareholders' equity 2,066.5 1,871.7
------- --------
Total liabilities and shareholders' equity $3,345.4 $3,210.8
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Nine Months Ended
--------------------
March 1, Feb. 23,
1998 1997
(Restated)
------- -------
Cash flows from operating activities:
Net income $ 113.8 $ 20.6
Adjustments to reconcile net income
with net cash provided by operations:
Depreciation and amortization 215.0 192.4
Gain on investments (8.9) (1.0)
Tax benefit associated with stock options 17.7 10.4
In-process research and development charge 7.7 10.6
Loss on disposal of equipment 9.4 3.4
Write-down of inventory - 5.1
Non-cash special charges 30.0 64.3
Other, net 3.6 (3.3)
Changes in certain assets and liabilities, net:
Receivables (3.9) (45.6)
Inventories (76.7) 29.5
Other current assets (3.7) 10.4
Accounts payable and accrued expenses (48.2) 10.6
Current and deferred income taxes 0.7 (14.2)
Other non-current liabilities 2.5 (1.4)
------- -------
Net cash provided by operating activities 259.0 291.8
------- -------
Cash flows from investing activities:
Purchase of property, plant and equipment (513.9) (456.1)
Sale and maturity of marketable investments 1,001.6 904.7
Purchase of marketable investments (1,034.9) (889.5)
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
March 1, May 25,
1998 1997
(Restated)
ASSETS -------- --------
Current assets:
Cash and cash equivalents $ 633.3 $ 897.8
Short-term marketable investments 113.1 79.6
Receivables, net 268.1 281.0
Inventories 300.0 205.8
Deferred tax assets 176.7 173.3
Other current assets 77.2 99.9
------- --------
Total current assets 1,568.4 1,737.4
Property, plant and equipment 2,882.5 2,420.4
Less accumulated depreciation (1,222.3) (1,071.4)
------- --------
Net property, plant and equipment 1,660.2 1,349.0
Other assets 116.8 124.4
------- --------
Total assets $3,345.4 $3,210.8
======== ========
Sale of investments 16.2 5.0
Business acquisition, net of cash acquired (8.3) (15.4)
Purchase of investments and other, net (22.3) (9.9)
------- -------
Net cash used by investing activities (561.6) (461.2)
------- -------
Cash flows from financing activities:
Issuance of 5.5% convertible subordinated notes,
less issuance costs - 126.5
Issuance of debt 100.4 57.7
Redemption of 5.5% convertible subordinated notes (126.4) -
Repayment of debt (10.8) (97.0)
Issuance of common stock, net 57.3 35.6
------- -------
Net cash provided by financing activities 20.5 122.8
------- -------
Net change in cash and cash equivalents (282.1) (46.6)
Adjustment to conform pooling of interests for
cash and cash equivalents at beginning of year 17.6 -
Cash and cash equivalents at beginning of period 897.8 486.7
------- -------
Cash and cash equivalents at end of period $ 633.3 $ 440.1
======= =======
PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(in millions, except per share amounts)
Three Months Ended Nine Months Ended
------------------ --------------------
March 1, Feb. 23, March 1, Feb. 23,
1998 1997 1998 1997
(Restated) (Restated)
-------- ------- -------- --------
Earnings per share:
Basic $ .14 $1.28 $ .70 $0.13
Diluted $ .13 $1.20 $ .68 $0.13
Weighted average shares:
Basic 164.5 156.2 163.5 154.9
Diluted 167.3 168.6 167.7 157.6
Income used in basic
earnings per common share
calculation $ 22.3 $200.2 $113.8 $ 20.6
Income used in diluted
earnings per share
(reflecting adjustment for
interest on convertible
notes when dilutive) $ 22.3 $202.8 $113.8 $ 20.6
Notes to Financial Tables
-------------------------
Merger
------
On November 17, 1997, the Company merged with Cyrix Corporation (³Cyrix). Cyrix designs, develops and markets IBM personal computer software-compatible microprocessors for the personal computer industry and is a source of X86 microprocessors of original design for the personal computer marketplace. In connection with the merger, the Company recorded a one-time charge of $30.0 million related to certain merger and related expenses which is included in the statement of operations for the nine months ended November 23, 1997. These expenses primarily include transaction fees for investment bankers, attorneys, and accountants; financial printing costs; and costs associated with the elimination of duplicate facilities and operations.
Three Months Ended
---------------------------------
Total Special National
Company Items Core with
Cyrix
--------- -------- ---------
March 1, 1998:
Net sales $ 650.1 $ 650.1
Gross profit $ 236.1 $ 236.1
Gross margin 36.3% 36.3%
Research & development $ 128.9 $ 128.9
Selling, gen. & admin. $ 90.9 $ 90.9
Special items $ (5.2) $ 5.2 $ -
Net income $ 22.3 $ 3.9 $ 26.2
Earnings per share-
diluted: $ 0.13 $ 0.16
Three Months Ended
---------------------------------------------
Total Special Fairchild National
Company Items Core with
Cyrix
--------- -------- --------- ----------
February 23, 1997:
Net sales $ 712.0 $ (147.5) $ 564.5
Gross profit $ 292.1 $ (10.0) $ (52.9) $ 229.2
Gross margin 41.0% 40.6%
Research & development $ 101.4 $ (5.1) $ 96.3
Selling, gen. & admin. $ 125.3 $ (20.2) $ 105.1
Special items $ 192.0 $(192.0) $ -
Net income $ 200.2 $(151.5) $ (20.0) $ 28.7
Earnings per share-
diluted: $ 1.20 $ 0.18
Nine Months Ended
---------------------------------
Total Special National
Company Items Core with
Cyrix
--------- -------- ---------
March 1, 1998:
Net sales $2,026.7 $2,026.7
Gross profit $ 780.0 $ 780.0
Gross margin 38.5% 38.5%
Research & development $ 358.9 $ 358.9
Selling, gen. & admin. $ 274.7 $ 274.7
Special items $ (37.7) $ 37.7 $ -
Net income $ 113.8 $ 28.3 $ 142.1
Earnings per share-
diluted: $ 0.68 $ 0.85
Nine Months Ended
---------------------------------------------
Total Special Fairchild National
Company Items Core with
Cyrix
--------- -------- --------- ----------
February 23, 1997:
Net sales $2,013.9 $ (434.1) $1,579.8
Gross profit $ 734.0 $ 8.7 $ (135.3) $ 607.4
Gross margin 36.4% 38.4%
Research & development $ 293.7 $ (14.0) $ 279.7
Selling, gen. & admin. $ 352.8 $ (59.4) $ 293.4
Special items $ (74.9) $ 74.9 $ -
Net income $ 20.6 $ 62.7 $ (44.5) $ 38.8
Earnings per share-
diluted: $ 0.13 $ 0.25
The selected financial information presented above for the three months and nine months ended February 23, 1997 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 National Core and Fairchild Semiconductor.
Other Income, Net
----------------------------
Components of other Three Months Ended Nine Months Ended
income,net were: ------------------ ------------------
(in millions) March 1, Feb. 23, March 1, Feb. 23,
1998 1997 1998 1997
(Restated) (Restated)
-------- -------- -------- --------
Net intellectual property income $ 11.7 $ 1.9 $ 14.3 $ 8.0
Gain on investments, net 1.8 4.0 10.3 1.0
Other 0.4 2.0 (1.4) 3.6
------- ------- ------- -------
Total other income, net $ 13.9 $ 7.9 $ 23.2 $ 12.6
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