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NATIONAL SEMICONDUCTOR REPORTS EARNINGS OF 76 CENTS PER SHARE EXCLUDING SPECIAL ITEMS FOR FIRST QUARTER OF FISCAL 2001
September 7, 2000 - National Semiconductor Corporation
(NYSE:NSM) today reported net income of $149.4 million, or 76 cents per share (diluted), excluding special items, on revenues of $640.8 million for its first quarter of fiscal 2001, which ended August 27, 2000. Including $6.4 million in pretax special items, earnings were 74 cents per share. In the comparable quarter of fiscal 2000, National reported net income of $47.1 million, or 25 cents per share (diluted), on revenues of $481.8 million.
"National Semiconductor posted another strong quarter of great results," said Brian L.
Halla, chairman, president and chief executive officer. "We continue to execute on our strategy of moving to higher margin products, improving manufacturing efficiency, partnering with customers to provide integrated solutions, and targeting growing markets that build on our strengths in analog and mixed signal devices-which are the backbone of the Internet and wireless technology. I am also very pleased that our team achieved strong gains in bookings, revenues and profitability
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Summary of results____________________________________________________________
3 months ended: August 27, 2000 August 29, 1999
(excluding Total Company Total Company
special items) as reported as reported
Net sales $ 640.8 $ 640.8 $ 481.8
Net earnings $ 149.4 $ 144.2 $ 47.1
Earnings per share (diluted) $ 0.76 $ 0.74 $ 0.25
All figures in millions of dollars except per share amounts Included in other income for the first quarter of fiscal 2001 is a gain of $20.5 million from the sale of equity securities which were donated to establish the National Semiconductor Foundation. The expense associated with the donation, also totaling $20.5 million is included in SG&A. As a result, the foundation endowment had a net zero impact to net income for the first quarter of fiscal 2001.
National's continued focus on streamlining manufacturing costs and increasing capacity utilization also enabled the company to increase gross margin by 2 percentage points to a record 53 percent during the first quarter.
"Our leadership in wireless communications and related Analog markets, such as the Internet Information Appliance market, makes us optimistic for continuing improvement in our business outlook," Halla added. "For example, we continue to gain momentum in new wireless markets, where we are shipping in volume our tri-band GSM transceiver, the first member of a new integrated chipset for handheld phones. At the same time, we are partnering with virtually all of the world's leading electronics and PC makers to help create easy-to-use Internet access devices for consumers."
In the Information Appliance sector, National's partners-including IBM, AOL and Viewsonic, among others-introduced numerous products to market, including WebPAD? devices, thin clients and interactive TV set-top boxes. Because of National's core strengths in analog, its high-performance Geode? processors and proven success in building partnerships, the company has confirmed close to 100 design wins with the OEMs and PC makers that are expanding into the emergent Information Appliance market.
National also made several significant announcements during the first quarter. The company purchased Vivid Semiconductor to further expand National's strengths in silicon solutions for flat-panel displays. The company also signed a 10-year agreement with TSMC (Taiwan Semiconductor Manufacturing Company) which transfers TSMC's advanced manufacturing processes to National. This partnership ensures that National's South Portland, Maine fabrication facility will remain at the cutting edge of technology. The company also launched a charitable foundation with a $20-million endowment during the quarter to expand its participation in community, educational and humanitarian activities.
National's key markets-analog, wireless and Internet communication devices-continued to expand during the first quarter. Worldwide orders were up 34 percent over last year's first quarter and grew sequentially over the May quarter. Geographically, all regions grew over last year, and all regions except Europe grew sequentially over the May quarter. Bookings significantly exceeded billings for the quarter.
On a product line basis, Analog bookings continued to grow by 30 percent over last year, led by Interface and Audio products, but declined slightly from the May quarter due to backlog adjustments on the part of some wireless handset customers. Information Appliance bookings rose by double digits compared with last year's August quarter and the most recent May quarter. Double-digit seasonal strength in personal computer motherboard products was augmented by a near doubling of orders for National's Geode? family of integrated processors. Orders for Other Products also showed double-digit growth on a year-over-year and sequential quarter basis.
Looking forward to the November quarter, National continues to target sequential sales growth of 6 to 8 percent in the November quarter and mid-30 percent growth year-over-year. Continued increases in gross margin should offset on-going increases in R&D and other expenses for a resulting improvement in earnings per share, the company said.
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 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 28, 2000 (see the Outlook section of Management's Discussion and Analysis of Results of Operations and Financial Conditions).
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NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share amounts)
Three Months Ended
------------------
Aug 27, Aug 29,
2000 1999
-------- --------
Net sales $ 640.8 $ 481.8
Operating costs and expenses:
Cost of sales 301.4 296.7
Research and development 103.7 115.1
Selling, general and
administrative 100.6 76.0
Special items:
In process R&D charge 4.1 -
Restructuring of operations 2.3 -
------- ------
Total operating costs
and expenses 512.1 487.8
------- ------
Operating income (loss) 128.7 (6.0)
Interest income(expense), net 14.1 (1.4)
Other income, net 37.5 57.0
------- -------
Net income before taxes 180.3 49.6
Income tax expense 36.1 2.5
------- ------
Net income $ 144.2 $ 47.1
======= ======
Earnings per share:
Basic $ 0.81 $ 0.28
Diluted $ 0.74 $ 0.25
Selected income statement items as a percentage of sales:
Gross margin 53.0% 38.4%
Research and development,
excluding IPR&D charge 16.2% 23.9%
Selling, general and
administrative 15.7% 15.8%
Net income 22.5% 9.8%
Effective tax rate 20.0% 5.0%
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
Aug 27, May 28,
2000 2000
ASSETS -------- --------
Current assets:
Cash and cash equivalents $ 836.5 $ 778.8
Short-term marketable investments 30.3 71.1
Receivables, net 278.4 258.6
Inventories 196.0 192.9
Deferred tax assets 125.7 125.7
Other current assets 60.2 40.5
-------- --------
Total current assets 1,527.1 1,467.6
Net property, plant and equipment 804.2 803.7
Long-term cash investments 58.8 -
Other assets 154.9 110.9
-------- --------
Total assets $2,545.0 $2,382.2
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short term borrowings and current
portion of long-term debt $ 31.7 $ 31.4
Accounts payable 176.3 194.5
Accrued expenses 268.6 315.1
Income taxes 111.4 86.7
-------- --------
Total current liabilities 588.0 627.7
Long-term debt 44.1 48.6
Other non-current liabilities 66.3 62.6
-------- --------
Total liabilities 698.4 738.9
-------- --------
Commitments and contingencies
Shareholders' equity:
Common stock 89.3 88.8
Additional paid-in capital 1,418.4 1,395.3
Retained earnings 330.9 186.7
Accumulated other comprehensive
income (loss) 8.0 (27.5)
-------- --------
Total shareholders' equity 1,846.6 1,643.3
-------- --------
Total liabilities and shareholders' equity $2,545.0 $2,382.2
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NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Three Months Ended
--------------------
Aug 27, Aug 29,
2000 1999
------- -------
Cash flows from operating activities:
Net income $ 144.2 $ 47.1
Adjustments to reconcile net income
with net cash provided by (used by) operations:
Depreciation and amortization 59.3 72.6
Gain on investments (36.1) (48.4)
Loss on disposal of equipment 0.8 3.7
Stock donation 20.5 -
Non-cash special items 6.4 -
Other, net (1.0) 7.4
Changes in certain assets and liabilities, net:
Receivables (19.8) (36.8)
Inventories (3.1) (4.6)
Other current assets (20.5) (1.9)
Accounts payable and accrued expenses (63.1) (77.7)
Current and deferred income taxes 24.7 12.6
Other liabilities 3.7 1.5
-------- --------
Net cash provided by (used by)
operating activities 116.0 (24.5)
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Cash flows from investing activities:
Purchase of property, plant and equipment (51.0) (21.7)
Sale and maturity of marketable investments 2.1 61.3
Purchase of marketable investments (20.0) (62.5)
Proceeds from sale of investment 21.3 52.2
Business acquisition, net of cash acquired (24.9) -
Purchase of investments and other, net (0.3) (1.8)
-------- --------
Net cash provided by (used by)
investing activities (72.8) 27.5
-------- --------
Cash flows from financing activities:
Repayment of debt (4.2) (19.0)
Issuance of common stock, net 18.7 26.2
-------- --------
Net cash provided by financing activities 14.5 7.2
-------- --------
Net change in cash and cash equivalents 57.7 10.2
Cash and cash equivalents at beginning of period 778.8 418.7
-------- --------
Cash and cash equivalents at end of period $ 836.5 $ 428.9
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PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(in millions, except per share amounts)
Three Months Ended
------------------
Aug 27, Aug 29,
2000 1999
-------- -------
Earnings per share:
Basic $ 0.81 $ 0.28
Diluted $ 0.74 $ 0.25
Weighted average shares:
Basic 178.1 170.3
Diluted 195.8 185.4
Income used in basic
and diluted earnings
per share calculation $ 144.2 $ 47.1
NOTES TO FINANCIAL TABLES
(in millions)
Three Months Ended
------------------
Aug 27, Aug 29,
2000 1999
-------- --------
Interest income(expense), net
-----------------------------
Interest income $ 15.4 $ 5.9
Interest expense $ (1.3) $ (7.3)
-------- --------
Interest income(expense), net $ 14.1 $ (1.4)
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Other income, net
-----------------
Net intellectual property income $ 1.4 $ 6.8
Gain on investments 36.1 48.4
Other - 1.8
-------- --------
Total other income, net $ 37.5 $ 57.0
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Included in gain on investments for fiscal 2001 is a gain of $20.5 million from the distribution of equity securities that were a part of the company's investment portfolio, which were donated to establish the National Semiconductor Foundation. The expense associated with the donation also totaling $20.5 million is included in SG&A for fiscal 2001. |
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