National Semiconductor Reports Loss of 63 Cents Per Share For First Quarter of Fiscal 1999

For More Information
P.R.: Bill Callahan
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Email ID: bill.callahan@nsc.com

Alan Bernheimer
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Email ID: alan.bernheimer@nsc.com

Financial: Jim Foltz
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Email ID: invest.group@nsc.com
World Wide Web: http://www.national.com

NATIONAL SEMICONDUCTOR REPORTS LOSS OF 63 CENTS PER SHARE FOR FIRST QUARTER OF FISCAL 1999

September 10, 1998-- National Semiconductor Corporation? (NSM:NYSE) today reported a loss of $104.8 million, or 63 cents per share, on sales of $469.6 million for its first quarter of fiscal 1999 which ended August 30, 1998.

"Sales continued soft during the summer quarter," said Brian L. Halla, Chairman, President and Chief Executive Officer of National Semiconductor. "We think, however, we may have touched bottom as bookings in the first quarter improved for the first time in a year," Halla added.

Revenues in the first quarter of fiscal 1999 declined 8 percent from the fourth quarter of fiscal 1998. Net income in the comparable quarter last year was $62.6 million, or 38 cents per share, on sales of $656.7 million. Lower factory utilization significantly impacted gross margin and profitability as the company reduced inventory levels by $74 million in the quarter. National also initiated production runs in its state-of-the-art 0.25-micron wafer fab in South Portland, Maine during the quarter, and completed the closure of a 6-inch fab facility at its Santa Clara, California site.

Summary of results

____________________________________________________________________
 3 months ended:          			August 30, 1998        August 24, 1997
Net sales			     		$ 469.6		$656.7
Net income (loss)		    		$ (104.8)		$ 62.6
Earnings (loss) per share (diluted)		$ (0.63)     	$ 0.38
All figures in millions of dollars, except per share amounts

Quarterly bookings grew 7 percent over the fourth quarter of fiscal 1998. They were sequentially slightly weaker in June, improved in July and were up significantly in August. Quarterly bookings were down almost 30 percent compared with last year.
Personal computer-related products led the bookings improvement compared with the fourth quarter of fiscal 1998. Networking orders improved compared with depressed fourth quarter results. Analog bookings were down slightly compared with the May quarter as strong August orders were unable to offset early summer weaknesses. All major product groups declined compared with last year.
On a regional basis, the Americas and Europe bookings grew faster than the company as a whole compared with fourth quarter of fiscal 1998 and declined less than the overall company compared with last year. Only Asia Pacific bookings declined compared with fourth quarter of fiscal 1998, but all regions declined compared with last year.
"While we are encouraged by the recent seasonal improvement in bookings, we still feel it is too early to call the turn, and we remain cautious on the near term outlook," concluded Halla.
This outlook 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 remainder of the second 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 included in the company's 10-K for the year ended May 31, 1998 (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      
                                                 ------------------      
                                                Aug. 30,    Aug. 24,     
                                                  1998        1997*         
                                                --------    -------- 
Net sales                                       $469.6       $656.7 

Operating costs and expenses:
 Cost of sales                                   414.6        396.3 
 Research and development                        122.1        112.0 
 Selling, general and administrative              73.0         86.0
                                                ------       ------ 
Total operating costs and expenses               609.7        594.3
                                                ------       ------ 
Operating income(loss)                          (140.1)        62.4 
Interest income, net                               0.1         11.7 
Other income, net                                  0.3          7.4 
                                                ------       ------ 
Income(loss) before income taxes                (139.7)        81.5 
Income tax provision(benefit)                    (34.9)        18.9 
                                                ------       ------ 
Net income(loss)                               $(104.8)      $ 62.6 
                                                ======       ====== 

Earnings(loss) per share:

         Basic                                  $(0.63)      $  .39 
         Diluted                                $(0.63)      $  .38 


Selected income statement ratios as a percentage of sales:
Gross margin                                     11.7%        39.7% 
Research and development                         26.0%        17.1%
Selling, general and administrative              15.5%        13.1%           
Net income(loss)                                (22.3%)        9.5% 

Effective tax rate                              (25.0%)       23.2%


*Note:  Financial information for the three months ended August 24, 1997  
        has been restated to include Cyrix Corporation, which was      
        acquired on November 17, 1997 and accounted for as a pooling of   
        interest.         
 
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS  (Unaudited)
(in millions)
                                               Aug. 30,       May 31, 
                                                1998           1998  
ASSETS                                        --------       --------
Current assets:
  Cash and cash equivalents                   $  376.2       $  460.8
  Short-term marketable investments              102.1          112.4
  Receivables, net                               213.2          208.5
  Inventories                                    209.5          283.9
  Deferred tax assets                            181.2          166.2
  Other current assets                            68.6           76.4
                                               -------       --------
    Total current assets                       1,150.8        1,308.2

Property, plant and equipment                  3,003.3        2,939.7
  Less accumulated depreciation               (1,353.7)      (1,283.9)
                                               -------       --------
  Net property, plant and equipment            1,649.6        1,655.8
Other assets                                     162.2          136.7
                                               -------       --------
  Total assets                                $2,962.6       $3,100.7
                                              ========       ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Short-term borrowings and current 
    portion of long-term debt                 $   36.6       $   53.9
  Accounts payable                               197.8          237.0
  Accrued expenses                               296.2          310.9
  Income taxes                                   212.9          191.8
                                               -------       --------
    Total current liabilities                    743.5          793.6

Long-term debt                                   398.5          390.7
Deferred income taxes                              3.3            4.4
Other non-current liabilities                     52.3           53.1
                                               -------       --------
    Total liabilities                          1,197.6        1,241.8
                                               -------       --------

Commitments and contingencies                                        

Shareholders' equity:
  Common stock                                    83.1           82.7
  Additional paid-in capital                   1,210.6        1,200.3
  Retained earnings                              471.3          575.9
                                               -------       --------
  Total shareholders' equity                   1,765.0        1,858.9
                                               -------       --------
  Total liabilities and shareholders' equity  $2,962.6       $3,100.7
                                              ========       ========
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)    
                                                     Three Months Ended
                                                    --------------------
                                                    Aug. 31,     Aug. 24,
                                                     1998         1997*
                                                    -------      ------- 
Cash flows from operating activities:
Net income(loss)                                    $(104.8)      $ 62.6 
Adjustments to reconcile net income(loss)
  with net cash (used by) provided by operations:
    Depreciation and amortization                      89.5         63.0
    Gain on investments                                  -          (6.7)
    Loss on disposal of equipment                       1.7          4.2
    Tax benefit associated with stock options           0.2          9.0 
    Other, net                                           -           0.1
Changes in certain assets and liabilities, net:
  Receivables                                          (4.7)       (66.8)
  Inventories                                          74.4        (16.6)
  Other current assets                                  7.8         (7.6)
  Accounts payable and accrued expenses               (52.1)        (2.4)
  Current and deferred income taxes                   (18.7)        (1.4)
  Other non-current liabilities                        (0.8)         4.7
                                                    -------      ------- 
Net cash (used by) provided by operating activities    (7.5)        42.1
                                                    -------      -------
Cash flows from investing activities:
Purchase of property, plant and equipment             (73.9)      (200.1)
Sale and maturity of marketable investments            33.3        546.8
Purchase of marketable investments                    (22.8)      (586.8)
Purchase of investments and other, net                 (9.4)         3.0
                                                    -------      ------- 
Net cash used by investing activities                 (72.8)      (237.1)
                                                    -------      ------- 
Cash flows from financing activities:
Issuance of debt                                         -           0.4
Repayment of debt                                      (9.5)        (2.4)
Issuance of common stock, net                           5.2         25.9
    -------      ------- 
Net cash (used by) provided by financing activities    (4.3)        23.9 
                                                    -------      ------- 
Net change in cash and cash equivalents               (84.6)      (171.1)
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      460.8        897.8
                                                    -------      ------- 
Cash and cash equivalents at end of period          $ 376.2      $ 744.3 
                                                    =======      =======


*Note:  Financial information for the three months ended August 24, 1997  
        has been restated to include Cyrix Corporation, which was      
        acquired on November 17, 1997 and accounted for as a pooling of   
        interest.          
 
PART I.  FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(in millions, except per share amounts)

                            		Three Months Ended      
                            		------------------      
                            		 Aug. 30,    Aug. 24,     
                            		1998        1997 
                            		 --------    --------      


Earnings per share:

         Basic                                  ($0.63)      $ .39       
         Diluted                                ($0.63)      $ .38       

Weighted average shares: 
         Basic                                   165.8       162.3         
         Diluted                                 165.8       165.9         
   
Income used in basic and diluted earnings per
   common share calculation                    ($104.8)      $62.6




Notes to Financial Tables
-------------------------
(in millions)
                                                 Three Months Ended
                                                 -------------------
                                                 Aug. 30,   Aug. 24,
                                                   1998       1997
                                                 --------   --------
Interest Income, Net                             
--------------------
Interest income                                   $   7.0   $  14.1
Interest expense                                     (6.9)     (2.4)
                                                  -------   -------
Interest income, net                              $   0.1   $  11.7
                                                  =======   =======      

Other Income, Net
-----------------
Net intellectual property income                  $   0.3   $   0.8    
Gain on investments, net                               -        6.6 
                                                  -------   -------    
     Total other income, net                      $   0.3   $   7.4    
                                                  =======   =======

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