National Semiconductor Announces Q3 Revenues of $369.5 Million with 22 Percent Increase in New Orders Booked During the Quarter
March 7, 2002 - National Semiconductor Corporation (NYSE:NSM) today reported revenues of $369.5 million for the third quarter of fiscal 2002 and a 22 percent increase in new orders booked during the quarter. The company recorded a net loss of 21 cents per share for the quarter, which ended February 24, 2002, compared with a second quarter loss of 26 cents per share on revenues of $366.5 million. In last year's third quarter, National reported net income of $39.2 million, or 21 cents per share, on revenues of $475.6 million. Last year's results included a pre-tax charge of $12.1 million related to the acquisition of innoCOMM.
"Our bookings momentum during the third quarter shows that our strategy and our programs are working," said Brian L. Halla, chairman, president and CEO. "We not only increased National's bookings by 22 percent sequentially, but we also grew orders year-over-year and had a positive book-to-bill for the first time in six quarters."
| Summary of results |
| 3 months ended: |
Feb. 24, 2002 |
Feb. 25, 2001 |
Net sales
Net income (loss)
Net income (loss) before
acquisition related
charge in fiscal 2001
Earnings (loss) per diluted
share including
acquisition related
charge in fiscal 2001 |
$ 369.5
$ (37.8)
$ (37.8)
$ ( 0.21) |
$ 475.6
$ 39.2
$ 48.9
$ 0.21 |
| All figures in millions of dollars except per share amounts |
Quarterly Bookings
Overall third quarter bookings increased 22 percent sequentially from the second quarter, and 16 percent compared to the year-ago quarter. While all months showed improvement, February showed the strongest year-over-year growth. Display products, which include the fast-growing flat-panel display market as well as the traditional CRT market, led the quarter with dramatic growth sequentially and year-over-year. Wireless handset products, including power management, audio chips and wireless application-specific solutions, also saw stronger bookings during Q3. Bookings for PC products, which had a solid November quarter, grew only slightly in Q3, but still showed significant year-to-year growth. Bookings for Information Appliances, such as Thin Client computing and DVD products, had strong growth quarter-to-quarter and year-to-year. Application-specific products for wireline markets, meanwhile, continued to show declining bookings. Turns orders, which are those orders requested for shipment within the same quarter, were higher than in the second quarter.
Outlook for Q4
National's guidance is for fourth quarter revenues to increase by 6 to 9 percent over the third quarter, in the range of approximately $390 to $405 million. Gross margin percentage should also improve over the third quarter, resulting in lower net loss per share.
"We still have work to do," Halla said, "but talking about 'growth' and 'improvements' is refreshing. We're an analog company pursuing the right customers with the right products and a world class manufacturing organization. We like where we're headed."
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 at existing prices, and the ramp up of recently introduced products. Other risk factors are included in the company's 10-Q from the second quarter ended November 25, 2001 and the 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) and the Annual Report dated May 27, 2001.
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 the last fiscal year and employs about 9,800 people worldwide. Additional company and product information is available on the World Wide Web at www.national.com
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share amounts)
Three Months Ended Nine Months Ended
------------------ -------------------
Feb. 24, Feb. 25, Feb. 24, Feb. 25,
2002 2001 2002 2001
------- ------- -------- --------
Net sales $ 369.5 $ 475.6 $1,075.3 $1,711.4
Operating costs and expenses:
Cost of sales 236.2 242.6 702.4 838.3
Research and development 110.3 112.0 329.7 327.8
Selling, general and
administrative 64.6 76.3 196.9 255.7
Special items - 12.1 1.1 18.5
------- ------- -------- --------
Total operating costs
and expenses 411.1 443.0 1,230.1 1,440.3
------- ------- -------- --------
Operating income(loss) (41.6) 32.6 (154.8) 271.1
Interest income, net 4.3 13.4 16.8 42.7
Other income, net 2.0 3.0 6.5 48.9
------- ------- -------- --------
Income(loss)before income taxes (35.3) 49.0 (131.5) 362.7
Income tax expense 2.5 9.8 7.5 72.6
------- ------- -------- --------
Net income(loss) $ (37.8) $ 39.2 $ (139.0) $ 290.1
======= ======= ======== ========
Earnings(loss) per share:
Basic $ (0.21) $ 0.23 $ (0.79) $ 1.64
Diluted $ (0.21) $ 0.21 $ (0.79) $ 1.53
Selected income statement ratios as a percentage of sales:
Gross margin 36.1% 49.0% 34.7% 51.0%
Research and development
(excluding in-process
R&D charge) 29.9% 23.5% 30.7% 19.2%
Selling, general and
administrative 17.5% 16.0% 18.3% 14.9%
Net income(loss) (10.2%) 8.2% (12.9%) 17.0%
Effective tax rate N/A 20.0% N/A 20.0%
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
Feb. 24, May 27,
2002 2001
ASSETS -------- --------
Current assets:
Cash and cash equivalents $ 654.1 $ 817.8
Short-term marketable investments 32.4 5.0
Receivables, net 126.4 123.4
Inventories 145.5 195.5
Deferred tax assets 97.2 97.2
Other current assets 39.7 36.1
-------- --------
Total current assets 1,095.3 1,275.0
Net property, plant and equipment 742.7 815.7
Long-term marketable debt investments 140.2 46.6
Other assets 297.8 225.0
-------- --------
Total assets $2,276.0 $2,362.3
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
portion of long-term debt $ 10.3 $ 29.4
Accounts payable 96.0 126.4
Accrued expenses 218.7 262.9
Income taxes 78.8 53.1
-------- --------
Total current liabilities 403.8 471.8
Long-term debt 21.2 26.2
Other non-current liabilities 102.0 96.4
-------- --------
Total liabilities 527.0 594.4
-------- --------
Commitments and contingencies
Shareholders' equity:
Common stock 89.6 86.9
Additional paid-in capital 1,382.2 1,280.8
Retained earnings 293.4 432.4
Accumulated other comprehensive loss (16.2) (32.2)
-------- --------
Total shareholders' equity 1,749.0 1,767.9
-------- --------
Total liabilities and shareholders' equity $2,276.0 $2,362.3
======== ========
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Nine Months Ended
----------------------
Feb. 24, Feb. 25,
2002 2001
------- -------
Cash flows from operating activities:
Net income(loss) $(139.0) $ 290.1
Adjustments to reconcile net income(loss)
with net cash provided by operations:
Depreciation and amortization 171.5 179.0
Gain on investments (6.9) (40.8)
Loss on disposal of equipment 3.1 2.7
Donation of equity securities - 20.5
Non-cash special items 1.1 18.5
Other, net 0.2 0.3
Changes in certain assets and liabilities, net:
Receivables (1.9) 102.6
Inventories 50.0 (22.8)
Other current assets (3.7) (0.9)
Accounts payable and accrued expenses (71.9) (115.7)
Current and deferred income taxes 25.7 10.8
Other liabilities 5.6 4.5
------- -------
Net cash provided by operating activities 33.8 448.8
------- -------
Cash flows from investing activities:
Purchase of property, plant and equipment (89.4) (168.4)
Maturity of available-for-sale securities 39.5 39.3
Purchase of available-for-sale securities (160.1) (28.0)
Proceeds from sale of equity investments 8.7 33.3
Business acquisitions, net of cash acquired (27.5) (98.3)
Purchase of software (16.8) (10.0)
Restricted cash (14.7) (3.5)
Other, net (10.3) (10.3)
------- -------
Net cash used by investing activities (270.6) (245.9)
------- -------
Cash flows from financing activities:
Repayment of debt (14.1) (14.9)
Issuance of common stock, net 87.2 48.5
Purchase and retirement of treasury stock - (173.5)
------- -------
Net cash provided by(used by)financing activities 73.1 (139.9)
------- -------
Net change in cash and cash equivalents (163.7) 63.0
Cash and cash equivalents at beginning of period 817.8 778.8
------- -------
Cash and cash equivalents at end of period $ 654.1 $ 841.8
======= =======
PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(in millions, except per share amounts)
Three Months Ended Nine Months Ended
------------------ -----------------
Feb. 24, Feb. 25, Feb. 24, Feb. 25,
2002 2001 2002 2001
------- ------- ------- -------
Earnings(loss) per share:
Basic $(0.21) $ 0.23 $(0.79) $ 1.64
Diluted $(0.21) $ 0.21 $(0.79) $ 1.53
Weighted-average shares:
Basic 178.4 174.0 176.7 176.7
Diluted 178.4 183.0 176.7 190.2
Income(loss) used in basic and
diluted earnings per
common share calculation $(37.8) $ 39.2 $(139.0) $290.1
NOTES TO FINANCIAL STATEMENTS:
(in millions)
Three Months Ended Nine Months Ended
------------------ -----------------
Feb. 24, Feb. 25, Feb. 24, Feb. 25,
2002 2001 2002 2001
------- ------- ------- -------
Special items
-------------
In-process reseach and
development charges $ - $ 12.1 $ 1.1 $ 16.2
Restructuring of operation - - - 2.3
------- ------- ------- -------
Total special items $ - $ 12.1 $ 1.1 $ 18.5
======= ======= ======= =======
Interest income, net
--------------------
Interest income $ 5.3 $ 14.6 $ 20.1 $ 46.4
Interest expense (1.0) (1.2) (3.3) (3.7)
------- ------- ------- -------
Interest income, net $ 4.3 $ 13.4 $ 16.8 $ 42.7
======= ======= ======= =======
Other income, net
-----------------
Net intellectual property income $ 1.0 $ 0.9 $ 2.7 $ 5.4
Gain on investments, net 1.0 2.1 4.4 43.5
Other - - (0.6) -
------- ------- ------- -------
Total other income, net $ 2.0 $ 3.0 $ 6.5 $ 48.9
======= ======= ======= =======
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