National Semiconductor Reports Break Even Results for Fourth Quarter of Fiscal 2001 On Revenues of $401.2 Million
June 7, 2001 - National Semiconductor Corporation today reported break even results on revenue of $401.2 million for the fourth quarter of fiscal 2001, which ended May 27, 2001. In the comparable quarter last year, which ended May 28, 2000, National reported net income of $134.2 million, or 68 cents per share, on revenues of $595.3 million before the effect of certain gains. The fourth quarter 2001 results exclude a net pre?tax charge of $33.4 million for one-time cost reduction actions, $16.2 million related to net investment write?offs, and $6.6 million in goodwill amortization. Including these charges, the company reported a net loss of $44.4 million, or 26 cents per share.
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| Summary of results*** |
| 3 months ended: |
May 27, 2001 |
May 28, 2000 |
|
Net sales
Net income (loss)
Earnings (loss) per share as reported
Net income before charges and net gains from nonrecurring items
Earnings per share diluted before charges and net gains from nonrecurring items
All figures in millions of dollars, except per share amounts |
$ 401.2
$ (44.4)
$ (0.26)
$ 0.5
$ 0.00 |
$ 595.3
$ 153.9
$ 0.78
$ 134.2
$ 0.68 |
| ***See financial tables for reconciliation of figures in this table |
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Market inventory conditions continued to impact National's orders and shipments throughout the fourth quarter. Sales were also affected by low turns orders, continued high inventory levels and manufacturing consolidations in the cell phone handset market, and weakness in the distribution channel for National's broad portfolio of analog products. Turns orders are customer orders requested for delivery during the same quarter.
"This was a tough quarter for our industry," said Brian L. Halla, chairman, president and chief executive officer. "However, it is possible that the worst bookings quarter may be behind us --- because we saw improved turns orders in May. Meanwhile, we continued to strengthen our financial fundamentals during the fourth quarter, enabling National to reduce our debt and still end the quarter with nearly $900 million in cash."
Major Activities During Quarter
During the quarter, the company implemented a strategic cost reduction program to address the reduced levels of demand. This included elimination of approximately 1,100 positions, or about 10 percent of National's global workforce. On an annual basis, these activities are expected to save National approximately $70-$80 million.
National also continues to invest in key growth opportunity markets, such as the analog-based wireless communications market. On Tuesday, National announced the acquisition of Wireless Solutions Sweden AB, a leading developer of wireless solutions ranging from telemetry to mobile phones to wireless networking, including Bluetooth? and 802.11 capabilities. Also this week, the company introduced its next generation Bluetooth silicon solution designed to enable wireless communication between consumer devices such as information appliances, cellular phones, PCs and peripherals. This is the first integration of Bluetooth technology resulting from National's acquisition of InnoCOMM in February. Bluetooth is an industry standard for short-range wireless connectivity.
Market Conditions
In terms of customer activity, National's worldwide bookings declined 19 percent sequentially from the third quarter of fiscal 2001 and 59 percent compared with last year's fourth quarter. Orders in the Asia Pacific region showed the smallest decline sequentially, compared with the third quarter, and were reinforced by actual sequential increases in orders for personal computer and information appliance products. Overall, fourth quarter billings exceeded bookings. But bookings actually improved from month to month throughout the quarter.
Forward Outlook
"Due to the low bookings in the fourth quarter we now expect a further decline in sales for the first quarter," Halla said. "Going forward, we will continue to closely control costs while investing in key markets to maximize our potential for profitability."
For the first quarter of fiscal 2002, the company's guidance is that sales may decline 15 to 20 percent sequentially. Due to the resulting under-utilization of manufacturing capacity, gross margins may decline up to 10 percentage points. The corresponding loss per share could range from 30 to 35 cents. Net results will exclude goodwill amortization based on new accounting standards that are expected to be issued by the FASB. The company's tax rate will remain at 20 percent.
Fiscal Year 2001
Summary For the year, National reported net income of $305.5 million, or $1.62 per share (fully diluted) on revenues of $2.1 billion, before the effects of one-time gains and charges. This compares with net income of $305.6 million or $1.59 per share before the effects of similar gains and charges for fiscal 2000. Including those gains and charges, National reported net income of $245.7 million, or $1.30 per share (fully diluted). This compares with net income of $620.8 million, or $3.24 per share (fully diluted) for fiscal 2000. The fiscal 2000 number includes a one-time gain of $270.7 million from the sale of Fairchild stock.
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 first 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 from 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.
# # # | NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share amounts)
Three Months Ended Twelve Months Ended
------------------ -------------------
May 27, May 28, May. 27, May 28,
2001 2000 2001 2000
------- ------- -------- --------
Net sales $ 401.2 $ 595.3 $2,112.6 $2,139.9
Operating costs and expenses:
Cost of sales 236.8 291.5 1,075.1 1,154.9
Research and development 107.8 95.3 435.6 386.1
Selling, general and
administrative 72.8 83.1 328.5 312.3
Special items:
In-process R&D charge - - 16.2 4.2
Restructuring of operations 33.4 (1.7) 35.7 (14.7)
Gain on disposition of Cyrix
PC microprocessor business - - - (26.8)
Fairchild contingent liability - (18.0) - (18.0)
------- ------- -------- --------
Total operating costs
and expenses 450.8 450.2 1,891.1 1,798.0
------- ------- -------- --------
Operating income(loss) (49.6) 145.1 221.5 341.9
Interest income, net 9.3 10.3 52.0 15.3
Other income(expense), net (15.3) 0.4 33.6 285.3
------- ------- -------- --------
Income(loss) before income taxes
and extraordinary item (55.6) 155.8 307.1 642.5
Income tax expense(benefit) (11.2) 1.9 61.4 14.9
------- ------- -------- --------
Net income(loss) before
extraordinary item (44.4) 153.9 245.7 627.6
Extraordinary loss on early
extinguishment of debt, net
taxes of $0.4 million - - - 6.8
------- ------- -------- --------
Net income(loss) $ (44.4) $ 153.9 $ 245.7 $ 620.8
======= ======= ======== ========
Earnings(loss) per share before
extraordinary item:
Basic $ (0.26) $ 0.87 $ 1.40 $ 3.62
Diluted $ (0.26) $ 0.78 $ 1.30 $ 3.27
Earnings(loss) per share:
Basic $ (0.26) $ 0.87 $ 1.40 $ 3.58
Diluted $ (0.26) $ 0.78 $ 1.30 $ 3.24
Selected income statement ratios as a percentage of sales:
Gross margin 41.0% 51.0% 49.1% 46.0%
Research and development(excluding
in-process R&D charge) 26.9% 16.0% 20.6% 18.0%
Selling, general and
administrative 18.1% 14.0% 15.5% 14.6%
Net income(loss) (11.1%) 25.9% 11.6% 29.0%
Effective tax rate 20.1% 1.2% 20.0% 2.3%
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
May. 27, May 28,
2001 2000
ASSETS -------- --------
Current assets:
Cash and cash equivalents $ 817.8 $ 778.8
Short-term marketable investments 5.0 22.3
Receivables, net 123.4 258.6
Inventories 195.5 192.9
Deferred tax assets 98.3 125.7
Other current assets 35.0 40.5
-------- --------
Total current assets 1,275.0 1,418.8
Net property, plant and equipment 815.7 803.7
Long-term cash investments 46.6 48.8
Other assets 225.0 110.9
-------- --------
Total assets $2,362.3 $2,382.2
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
portion of long-term debt $ 29.4 $ 31.4
Accounts payable 126.4 194.5
Accrued expenses 262.9 315.1
Income taxes 53.1 86.7
-------- --------
Total current liabilities 471.8 627.7
Long-term debt 26.2 48.6
Other non-current liabilities 96.4 62.6
-------- --------
Total liabilities 594.4 738.9
-------- --------
Commitments and contingencies
Shareholders' equity:
Common stock 86.9 88.8
Additional paid-in capital 1,280.8 1,395.3
Retained earnings 432.4 186.7
Accumulated other comprehensive loss (32.2) (27.5)
-------- --------
Total shareholders' equity 1,767.9 1,643.3
-------- --------
Total liabilities and shareholders' equity $2,362.3 $2,382.2
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NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Twelve Months Ended
----------------------
May 27, May 28,
2001 2000
------- -------
Cash flows from operating activities:
Net income $ 245.7 $ 620.8
Adjustments to reconcile net income
with net cash provided by operations:
Depreciation and amortization 243.3 263.8
Gain on investments (30.6) (272.5)
Loss on disposal of equipment 3.1 11.9
Donation of equity securities 20.5 -
Non-cash special items 51.9 (55.3)
Other, net 0.3 1.6
Changes in certain assets and liabilities, net:
Receivables 135.2 (86.7)
Inventories (2.6) (57.0)
Other current assets 1.9 (8.3)
Accounts payable and accrued expenses (168.9) (9.7)
Current and deferred income taxes (7.2) (3.1)
Other liabilities (4.4) (5.8)
------- -------
Net cash provided by operating activities 488.2 399.7
------- -------
Cash flows from investing activities:
Purchase of property, plant and equipment (227.6) (169.9)
Sale of equipment - 8.6
Sale and maturity of marketable investments 48.2 151.2
Purchase of marketable investments (28.0) (115.1)
Sale of investments 34.8 286.0
Business acquisitions, net of cash acquired (99.1) (22.2)
Disposition of Cyrix PC microprocessor business - 75.0
Purchase of investments, net (11.9) (11.6)
Other, net (15.0) 5.5
------- -------
Net cash provided by(used by) investing activities (298.6) 207.5
------- -------
Cash flows from financing activities:
Redemption of convertible subordinated notes - (265.8)
Repayment of debt (24.4) (114.7)
Issuance of common stock, net 68.2 133.4
Purchase and retirement of treasury stock (194.4) -
------- -------
Net cash used by financing activities (150.6) (247.1)
------- -------
Net change in cash and cash equivalents 39.0 360.1
Cash and cash equivalents at beginning of year 778.8 418.7
------- -------
Cash and cash equivalents at end of year $ 817.8 $ 778.8
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PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(in millions, except per share amounts)
Three Months Ended Twelve Months Ended
------------------ -----------------
May. 27, May 28, May. 27, May 28,
2001 2000 2001 2000
------- ------- ------- -------
Earnings(loss) per share:
Basic $(0.26) $ 0.87 $ 1.40 $ 3.58
Diluted $(0.26) $ 0.78 $ 1.30 $ 3.24
Weighted-average shares:
Basic 173.6 177.1 175.9 173.6
Diluted 173.6 197.0 188.4 191.7
Income(loss) used in basic and
diluted earnings per
common share calculation $(44.4) $153.9 $245.7 $620.8
Weighted-average shares used in basic and diluted earnings per share for
the three and twelve months ended May 27, 2001 include the effect of the
company?s repurchase of approximately 0.9 million and 8.3 million shares
of common stock, respectively. In addition, weighted-average shares used
in diluted earnings per share for the same periods in fiscal 2001,
compared to fiscal 2000, reflect less dilution from outstanding options
due to lower average market price.
NOTES TO FINANCIAL STATEMENTS:
Detail of net income excluding nonrecurring items:
Three Months Ended
------------------
May 27, May 28,
2001 2000
-------- --------
Income(loss) before tax, as reported $ (55.6) $ 155.8
Exclude:
Special items 33.4 (19.7)
Loss related to investment write-downs 16.2 -
Goodwill amortization 6.6 -
-------- --------
Adjusted income before tax 0.6 136.1
Income tax expense 0.1 1.9
-------- --------
Net income excluding nonrecurring items $ 0. $ 134.2
======== ========
Income statement detail:
Three Months Ended Twelve Months Ended
------------------ -----------------
May 27, May 28, May 27, May 28,
2001 2000 2001 2000
------- ------- ------- -------
Interest income, net
--------------------
Interest income $ 10.9 $ 11.6 $ 57.3 $ 33.2
Interest expense (1.6) (1.3) (5.3) (17.9)
------- ------- ------- -------
Interest income, net $ 9.3 $ 10.3 $ 52.0 $ 15.3
======= ======= ======= =======
Other income(expense), net
-----------------
Net intellectual property income $ 0.9 $ 0.9 $ 6.3 $ 11.5
Gain(loss) on investments, net (16.2) - 30.4 272.5
Other - (0.5) (3.1) 1.3
------- ------- ------- -------
Total other income
(expense), net $(15.3) $ 0.4 $ 33.6 $285.3
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