May 8, 2001 - National Semiconductor Corporation (NYSE:NSM) today announced that sales for the company's fourth quarter of fiscal 2001, ending May 27, 2001, will decline 16 to 18 percent sequentially from the third quarter. With this revised forecast, National Semiconductor now expects fourth quarter revenues of approximately $390-$400 million.
Market conditions for National's customers are impacting orders and shipments in the fourth quarter. Sales are also being affected by lower than expected turns orders, continued high inventory levels and manufacturing consolidations in the cell phone handset market, and weakness in the broad analog market through the distribution channel. Turns orders are customer orders requested for delivery during the same quarter.
In response to these business conditions, the Company is refocusing its resources in order to position itself for anticipated growth opportunities in the market. At the same time, the Company is implementing a strategic cost-reduction program that addresses the reduced levels of demand. On an annual basis, these activities are expected to save National approximately $70-$80 million.
Due to lower factory loadings in the fourth quarter, the Company now expects to achieve gross margins of approximately 41-42 percent for the quarter. The Company's pro forma net results for the fourth quarter, excluding goodwill amortization, special charges of $25-$30 million for the cost reduction program and $10-$12 million for investment writedowns, may range from a loss of 4 cents per share to break even. National will report fourth quarter earnings on June 7.
The cost-reduction program will include elimination of approximately 1,100 positions, or approximately 10 percent of National's global workforce, during the fourth quarter. This action will affect 800 fulltime employees and 128 contractors, and be achieved through a combination of layoffs, attrition and retirements. All affected employees will receive complete severance benefits including pay, medical and dental benefits, and outplacement services.
"This was a tough action for us to take, especially because it impacts many people who have served National well," said Brian L. Halla, National's chairman, president and chief executive officer. "However, given the continuing weakness in the marketplace, it is necessary to conform our resources to the market in order to maximize National's opportunity for longterm success."
National Semiconductor will host a conference call related to this announcement at 4:30 p.m. EDT today, Tuesday, May 8, 2001. Call-in numbers are: West Coast, 415-537-1802, and East Coast, 212-896-6094. Participants will include Chief Executive Officer Brian Halla, Chief Operating Officer Don Macleod and Acting Chief Financial Officer Lewis Chew. The conference call will also be simultaneously webcast at: www.national.com/invest. Replays of the call will be available starting at 6:00 p.m. EDT at 800-633-8284, with reservation number 18823039, or at www.national.com/invest
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, the successful sale of existing inventories, and the ramp up of recently introduced products. Other risk factors are included in the company's 10Q for the third quarter ended February 25, 2001 and the 10-K for the year ended May 28, 2000 (see Outlook section of Management's Discussion and Analysis of Result of Operations and Financial Conditions) and the Annual Report dated May 28, 2000.
About National Semiconductor
National Semiconductor is the premier analog company driving the information age. Combining real-world analog and state-of-the-art digital technology, the company is focused on the fast growing markets for wireless handsets; information appliances; information infrastructure; and display, imaging and human interface technologies. With headquarters in Santa Clara, California, National reported sales of $2.1 billion for its last fiscal year and employs about 10,000 employees worldwide. Additional company and product information is available on the World Wide Web at www.national.com.
