NATIONAL SEMICONDUCTOR REPORTS EARNINGS OF 51 CENTS PER SHARE FOR THIRD QUARTER OF FISCAL 2000
March 9, 2000 - National Semiconductor Corporation (NYSE:NSM) today reported net earnings of $99.8 million, or 51 cents per share, on sales of $548.9 million for the third quarter of fiscal 2000, which ended Feb. 27, 2000. This is before net gains from special items of $228.0 million. Including these net gains the company had net income of $327.8 million or $1.68 per share. In the comparable quarter of fiscal 1999, which ended Feb. 28, 1999, the company reported a net loss of $27.2 million, or 16 cents per share, on sales of $500.1 million.
"This quarter represents another positive step towards realizing our true earnings potential," said Brian L. Halla, chairman, president and CEO, "and was also an outstanding quarter from the viewpoint of design wins and customer endorsements,"Halla added.
Sales for the quarter grew seven percent sequentially and 22 percent year-to-year. The year-to-year comparison excludes the Cyrix standalone PC processor business which was sold in September 1999. Gross margins for the quarter improved to 48.0 percent from 45.2 percent in the second quarter, due to increasing leverage from the company's Analog segment and continuing improvements in manufacturing efficiencies.
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Summary of results 3 months ended:
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Feb. 27,
2000
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Feb. 28,
1999
-------- |
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Net sales |
$ 548.9 |
$ 500.1 |
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Net income (loss) |
$ 327.8 |
$ (27.2) |
|
Net income (loss) before net gains from special items |
$ 99.8
|
$ (27.2) |
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Earnings (loss) per share diluted before net gains from special items |
$ 0.51 |
$ (0.16) |
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All figures in millions of dollars, except per share amounts |
The special items consisted of a gain of $222.3 million from the sale of our interest in Fairchild Semiconductor Corporation, a $9.9 million credit for completed restructuring activities, and a $4.2 million in-process R&D charge related to the acquisition of the wireless baseband company Algorex, Inc., which was completed in the quarter.
"With increasing customer endorsements of our new products in wireless, communications, information appliances and networking markets, we are well positioned to increase our penetration of these segments," Halla added. The company expects to show continuing sequential improvements in revenue, gross margins and operating earnings in the final quarter of fiscal year 2000.
National reported that worldwide bookings grew more than 30 percent over last year's third quarter but declined from the November quarter due to holiday seasonal effects. Monthly bookings dipped in December and January but recovered in February to exit the quarter at a robust rate. Bookings for the quarter exceeded billings. By market, third quarter Analog segment bookings increased by more than 40 percent compared with last year, led by almost doubling of order rates for both Power Management and Interface Products supporting mobile phone handset and communications markets. Information Appliance bookings were also strong compared with last year as orders for the National® Geode™ products more than doubled and PC motherboard orders grew slightly. The PC motherboard segment was seasonally slower in December, but recovered through January and February. Historical order comparisons exclude all orders for Cyrix PC processors.
National gained major customer endorsements for its leadership in the information appliance market recently at the CeBit 2000 World Business Fair in Germany. Major announcements were made at CeBit including the news that National is planning to provide its Geode core as the hardware platform to enable new MSN-based Web companions. Other announcements there included the use of National's wireless components in an NEC prototype of the world's first Bluetooth interoperable notebook PC with a built in antenna, as well as in Ericsson's new Screenphone (a complete wireless voice and data mobile design that uses National's Geode WebPAD™ technology to provide Internet access and email along with phone services in a single appliance). National also announced its entry into the GSM radio transceiver chip market, and customers demonstrated several other information appliance products at the Fair.
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 fourth quarter, the degree of factory utilization, and the ramp up of recently introduced products. Other risk factors are included in the company's 10-Q for the quarter ended November 28, 1999 (see the Outlook section of Management's Discussion and Analysis of Results of Operations and Financial Conditions)
National Semiconductor provides system-on-a-chip solutions for the information age. Combining real-world analog and state-of the-art digital technology, the company's chips lead many sectors of the personal computer, communications, and consumer markets. With headquarters in Santa Clara, California, National reported sales of $2 billion for its last fiscal year and has about 10,500 employees worldwide. Additional company and product information is available on the World Wide Web at
www.national.com.
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NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share amounts)
Three Months Ended Nine Months Ended
------------------ -------------------
Feb. 27, Feb. 28, Feb. 27, Feb. 28,
2000 1999 2000 1999
-------- -------- -------- --------
Net sales $ 548.9 $ 500.1 $1,544.6 $1,479.8
Operating costs and expenses:
Cost of sales 285.2 345.0 863.4 1,176.7
Research and development 90.7 119.3 290.8 354.3
Selling, general and
administrative 78.1 82.3 229.2 240.2
Special items:
Restructuring of operations (9.9) - (13.0) 12.5
In-process R&D charge 4.2 - 4.2 -
Gain on disposition of Cyrix
PC processor business - - (26.8) -
------- ------ -------- -------
Total operating costs
and expenses 448.3 546.6 1,347.8 1,783.7
------- ------ -------- -------
Operating income(loss) 100.6 (46.5) 196.8 (303.9)
Interest income(expense), net 4.8 (0.3) 5.0 (0.5)
Other income, net 227.7 10.5 284.9 2.5
------- ------- -------- -------
Income(loss) before
income taxes and
extraordinary item 333.1 (36.3) 486.7 (301.9)
Income tax provision(benefit) 5.3 (9.1) 13.0 (75.5)
------- ------ -------- -------
Net income (loss) before
extraordinary item 327.8 (27.2) 473.7 (226.4)
Extraordinary loss on early
extinguishment of debt, net
of taxes of $0.4 million - - 6.8 -
------- ------ -------- -------
Net income(loss) $ 327.8 $ (27.2) $ 466.9 $ (226.4)
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Earnings(loss) per share:
Basic $ 1.88 $ (0.16) $ 2.71 $ (1.36)
Diluted $ 1.68 $ (0.16) $ 2.46 $ (1.36)
Selected income statement ratios as a percentage of sales:
Gross Margin 48.0% 31.0% 44.1% 20.5%
Research and Development
excluding in-process R&D
charge for fiscal 2000 16.5% 23.9% 18.8% 23.9%
Selling, general and 14.2% 16.5% 14.8% 16.2%
administrative
Net income(loss) 59.7% (5.4%) 30.2% (15.3%)
Effective tax rate 1.6% 25.0% 2.7% 25.0%
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
Feb. 27, May 30,
2000 1999
ASSETS -------- --------
Current assets:
Cash and cash equivalents $ 697.5 $ 418.7
Short-term marketable investments 86.2 107.2
Receivables, net 247.5 171.9
Inventories 169.0 141.3
Deferred tax assets 117.9 117.9
Other current assets 43.6 32.2
-------- --------
Total current assets 1,361.7 989.2
Property, plant and equipment 2,277.4 2,319.1
Less accumulated depreciation (1,491.6) (1,403.1)
-------- --------
Net property, plant and equipment 785.8 916.0
Other assets 125.6 139.1
-------- --------
Total assets $2,273.1 $2,044.3
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short term borrowings and current
portion of long-term debt $ 48.8 $ 49.3
Accounts payable 154.9 189.8
Accrued expenses 318.2 348.1
Income taxes payable 87.7 77.8
-------- --------
Total current liabilities 609.6 665.0
Long-term debt 112.3 416.3
Other non-current liabilities 65.1 62.2
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Total liabilities 787.0 1,143.5
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Commitments and contingencies
Shareholders' equity:
Common stock 88.3 84.5
Additional paid-in capital 1,369.7 1,253.1
Retained earnings (deficit) 32.8 (434.1)
Accumulated other comprehensive loss (4.7) (2.7)
-------- --------
Total shareholders' equity 1,486.1 900.8
-------- --------
Total liabilities and shareholders' equity $2,273.1 $2,044.3
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NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Nine Months Ended
--------------------
Feb. 27, Feb. 28,
2000 1999
------- -------
Cash flows from operating activities:
Net income(loss) $ 466.9 $(226.4)
Adjustments to reconcile net income(loss)
with net cash provided by operations:
Depreciation and amortization 202.3 297.3
(Gain)loss on investments (270.7) 0.1
Tax benefit associated with stock options - 0.5
Loss on disposal of equipment 9.1 42.9
Provision for loss on note receivable - 1.6
Non-cash special items (35.6) 12.5
Other, net 1.6 0.7
Changes in certain assets and liabilities, net:
Receivables (75.6) 8.6
Inventories (33.1) 94.3
Other current assets (11.4) 36.2
Accounts payable and accrued expenses (65.9) (28.6)
Current and deferred income taxes 9.9 (45.0)
Other liabilities 2.9 2.8
-------- --------
Net cash provided by operating activities 200.4 197.5
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Cash flows from investing activities:
Purchase of property, plant and equipment (94.1) (260.4)
Sale of equipment 8.6 -
Sale and maturity of marketable investments 127.7 131.4
Purchase of marketable investments (106.7) (124.2)
Sale of investments 283.6 0.1
Disposition of Cyrix PC processor business 75.0 -
Business acquisition, net of cash acquired (22.2) -
Purchase of investments and other, net (1.6) (10.3)
-------- --------
Net cash provided by (used by)
investing activities 270.3 (263.4)
-------- --------
Cash flows from financing activities:
Proceeds from bank borrowing - 77.5
Redemption of 6.5% convertible
subordinated notes (265.8) -
Repayment of debt (33.6) (34.5)
Issuance of common stock, net 107.5 19.9
-------- --------
Net cash provided by (used by)
financing activities (191.9) 62.9
-------- --------
Net change in cash and cash equivalents 278.8 (3.0)
Cash and cash equivalents at beginning of period 418.7 460.8
-------- --------
Cash and cash equivalents at end of period $ 697.5 $ 457.8
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PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(in millions, except per share amounts)
Three Months Ended Nine Months Ended
------------------ --------------------
Feb. 27, Feb. 28, Feb. 27, Feb. 28,
2000 1999 2000 1999
-------- ------- -------- --------
Earnings(loss) per share:
Basic $ 1.88 $ (0.16) $ 2.71 $ (1.36)
Diluted $ 1.68 $ (0.16) $ 2.46 $ (1.36)
Weighted average shares:
Basic 174.7 167.5 172.4 166.6
Diluted 194.8 167.5 189.9 166.6
Income(loss) used in basic
and diluted earnings(loss)
per common share
calculation $ 327.8 $ (27.2) $ 466.9 $(226.4)
Notes to Financial Tables
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Special Items:
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During the third quarter of fiscal 2000 the Company completed all of the termination actions related to the exit of the CPU processor business and the closure of the 8-inch development wafer fabrication facility located in Santa Clara. As a result, the Company released $7.3 million of severance reserves into net income. In connection with the closure of the wafer fabrication facility, the Company also recorded a gain of $2.6 million from the final disposition of related equipment.
In December 1999, the Company acquired Algorex, Inc., a provider of high performance digital signal processing products, architecture and software technologies for the wireless communications markets. In connection with the acquisition, the Company recorded a $4.2 million in-process research and development charge.
Three Months Ended Nine Months Ended
------------------ ------------------
Feb. 27, Feb. 28, Feb. 27, Feb. 28,
(in millions) 2000 1999 2000 1999
-------- -------- -------- --------
Interest income(expense), Net
-----------------------------
Interest income $ 8.1 $ 7.1 $ 21.6 $ 20.6
Interest expense (3.3) (7.4) (16.6) (21.1)
-------- -------- -------- --------
Interest income(expense), net $ 4.8 $ (0.3) $ 5.0 $ (0.5)
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Other income, net
-----------------
Net intellectual property income $ 3.7 $ 10.5 $ 10.6 $ 10.9
Gain(loss)on investments, net 224.0 - 272.5 (0.1)
Other - - 1.8 (8.3)
-------- -------- -------- --------
Total other income, net $ 227.7 $ 10.5 $ 284.9 $ 2.5
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