September 6, 2001 - National Semiconductor Corporation (NYSE:NSM) today reported a net loss of $54.6 million, or 31 cents per share, on revenues of $339.3 million for the first quarter of fiscal year 2002, which ended August 26, 2001. One year ago, in the first quarter of FY 2001, National reported net income of $149.4 million, or 76 cents per share (diluted) before special items, and $144.2 million, or 74 cents per share including those items. National's first quarter revenues last year were $640.8 million.
"Although our sales declined 15 percent during the first quarter, we are encouraged by the fact that bookings increased during Q1," said Brian Halla, chairman, president and CEO. "We also saw a 2X improvement in turns orders," Halla added. Turns orders are customer orders requested for delivery during the same quarter.
| Summary of results |
| 3 months ended: |
August 26, 2001 |
August 27, 2000 |
| Net sales |
$ 339.3 |
$640.8 |
| Net earnings (loss) |
$ (54.6) |
$144.2 |
| Earnings (loss) per share |
$ (0.31) |
$ 0.74 |
| All figures in millions of dollars except per share amounts |
During the first quarter, National's cautious management of manufacturing activity enabled the company to further reduce inventories. The lower factory utilization levels resulted in gross margins of 32.4 percent for the quarter. The company also maintained its strong financial position, ending the quarter with more than $790 million in cash and minimal amounts of debt.
Quarterly Bookings Increase Sequentially
National's worldwide bookings improved 13 percent during the first quarter, driven by increased demand from wireless, display and PC customers. Average weekly bookings in August ran at the highest rate in six months. Year-to-year, National's first quarter bookings trailed FY 2001 bookings by 54 percent.
Sales Growth Outlook for Q2
Entering the second quarter, National's 13-week backlog is higher than last quarter. In addition, the company expects to see turns orders continue at least at the level achieved in Q1. As a result, National anticipates that sales will grow sequentially in the second quarter by 5 to 7 percent. The company's gross margin percentage is expected to be comparable to the first quarter as National continues to aggressively manage inventory by controlling factory activity. Accordingly, the loss associated with this sales outlook is expected to be comparable to the first quarter.
"The recent improvement in bookings suggests that the worst may be behind us," said Halla. "But it is still premature to say that broad-based demand is returning to normal levels. In the meantime, we'll keep executing on our incremental programs with key customers."
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 at existing prices, and the ramp up of recently introduced products. Other risk factors are included in the company's 10-K for the year ended May 27, 2001 (see the Outlook section of Management's Discussion and Analysis of Results of Operations and Financial Conditions).
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 has about 10,000 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
---------------------
Aug 26, Aug 27,
2001 2000
-------- --------
Net sales $ 339.3 $ 640.8
Operating costs and expenses:
Cost of sales 229.2 301.4
Research and development 109.0 103.7
Selling, general and administrative 64.2 100.6
Special items 1.1 6.4
-------- --------
Total operating costs and expenses 403.5 512.1
-------- --------
Operating income (loss) (64.2) 128.7
Interest income, net 7.0 14.1
Other income, net 5.1 37.5
-------- --------
Net income (loss) before taxes (52.1) 180.3
Income tax expense 2.5 36.1
-------- --------
Net income (loss) $ (54.6) $ 144.2
======== ========
Earnings (loss) per share:
Basic $ (0.31) $ 0.81
Diluted $ (0.31) $ 0.74
Selected income statement items as a percentage of sales:
Gross margin 32.4% 53.0%
Research and development, excluding IPR&D charge 32.1% 16.2%
Selling, general and administrative 18.9% 15.7%
Net income (loss) (16.1)% 22.5%
Effective tax rate N/A 20.0%
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
Aug 26, May 27,
2001 2001
ASSETS -------- --------
Current assets:
Cash and cash equivalents $ 701.1 $ 817.8
Short-term marketable investments 10.0 5.0
Receivables, net 114.3 123.4
Inventories 182.8 195.5
Deferred tax assets 97.2 97.2
Other current assets 46.6 36.1
-------- --------
Total current assets 1,152.0 1,275.0
Net property, plant and equipment 798.7 815.7
Long-term marketable debt investments 81.6 46.6
Other assets 248.8 225.0
-------- --------
Total assets $2,281.1 $2,362.3
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
portion of long-term debt $ 16.2 $ 29.4
Accounts payable 119.0 126.4
Accrued expenses 211.5 262.9
Income taxes 75.4 53.1
-------- --------
Total current liabilities 422.1 471.8
Long-term debt 24.8 26.2
Other non-current liabilities 98.1 96.4
-------- --------
Total liabilities 545.0 594.4
-------- --------
Commitments and contingencies
Shareholders' equity:
Common stock 87.9 86.9
Additional paid-in capital 1,316.6 1,280.8
Retained earnings 377.8 432.4
Accumulated other comprehensive loss (46.2) (32.2)
-------- --------
Total shareholders' equity 1,736.1 1,767.9
-------- --------
Total liabilities and shareholders' equity $2,281.1 $2,362.3
======== ========
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Three Months Ended
---------------------
Aug 26, Aug 27,
2001 2000
-------- --------
Cash flows from operating activities:
Net income (loss) $ (54.6) $ 144.2
Adjustments to reconcile net income (loss)
with net cash provided by (used by) operations:
Depreciation and amortization 56.9 59.3
Gain on investments (5.6) (36.1)
Loss on disposal of equipment 0.3 0.8
Stock donation - 20.5
Non-cash special items 1.1 6.4
Other, net - (1.0)
Changes in certain assets and liabilities, net:
Receivables 10.2 (19.8)
Inventories 12.7 (3.1)
Other current assets (10.6) (20.5)
Accounts payable and accrued expenses (58.2) (63.1)
Current and deferred income taxes 22.3 24.7
Other liabilities 1.7 3.7
-------- --------
Net cash provided by (used by)
operating activities (23.8) 116.0
-------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (35.1) (51.0)
Sale and maturity of marketable investments 10.0 2.1
Purchase of marketable investments (50.0) (20.0)
Proceeds from sale of investment 6.7 21.3
Business acquisition, net of cash acquired (27.5) (24.9)
Purchase of investments and other, net (14.2) (0.3)
-------- --------
Net cash used by investing activities (110.1) (72.8)
-------- --------
Cash flows from financing activities:
Repayment of debt (4.6) (4.2)
Issuance of common stock, net 21.8 18.7
-------- --------
Net cash provided by financing activities 17.2 14.5
-------- --------
Net change in cash and cash equivalents (116.7) 57.7
Cash and cash equivalents at beginning of period 817.8 778.8
-------- --------
Cash and cash equivalents at end of period $ 701.1 $ 836.5
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PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(in millions, except per share amounts)
Three Months Ended
---------------------
Aug 26, Aug 27,
2001 2000
-------- --------
Earnings (loss) per share:
Basic $ (0.31) $ 0.81
Diluted $ (0.31) $ 0.74
Weighted average shares:
Basic 174.9 178.1
Diluted 174.9 195.8
Income (loss) used in basic and diluted
earnings per share calculation $ (54.6) $ 144.2
NOTES TO FINANCIAL TABLES
(in millions)
Three Months Ended
---------------------
Aug 26, Aug 27,
2001 2000
-------- --------
Special items
-------------
In-process research and development charge $ 1.1 $ 4.1
Restructuring of operations 2.3
-------- --------
Total special items $ 1.1 $ 6.4
======== ========
Interest income, net
--------------------
Interest income $ 8.2 $ 15.4
Interest expense (1.2) (1.3)
-------- --------
Interest income, net $ 7.0 $ 14.1
======== ========
Other income, net
-----------------
Net intellectual property income $ 1.3 $ 1.4
Gain on investments 3.8 36.1
-------- --------
Total other income, net $ 5.1 $ 37.5
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