EX-99 2 ex991_99.txt EXHIBIT 99.1 NEWS RELEASE SEPTEMBER 9, 2004 Exhibit 99.1 News Media: Financial: Jeff Weir Jennifer Stratiff National Semiconductor National Semiconductor (408) 721-5199 (408) 721-5007 jeff.weir@nsc.com invest.group@nsc.com National Semiconductor Reports $117.7 Million Profit for First Quarter, 29% Revenue Growth Year-to-Year and Record Gross Margin o Q1, FY05 earnings are 31 cents per share, up from 8 cents in Q1, FY04 o Gross margin hit new all-time high of 55%, compared to 47% a year ago o Revenues were $548 million, compared to $424.8 million last year o Company provides cautious outlook for Q2; sales may decline 8-10% from Q1 SANTA CLARA, Calif., Sept. 9, 2004 - National Semiconductor Corporation (NYSE:NSM) today reported a GAAP profit of $117.7 million, or 31 cents per share, on revenues of $548 million for the first quarter of fiscal 2005, which ended August 29, 2004. National's first quarter sales were 29 percent higher than the first quarter of fiscal 2004, when the company reported sales of $424.8 million and earnings of 8 cents per share. Sequentially, National's Q1 revenues were 4 percent lower than the fourth quarter of fiscal 2004, when the company recorded revenues of $571 million and earnings of 24 cents per share. National's fourth quarter 2004 results included a $30 million pre-tax special charge for a litigation matter. In the first quarter of fiscal 2005, National achieved a new record in gross margin of 55 percent, up from 54.4 percent in the prior quarter. For the first quarter of fiscal 2004, National's gross margin was 47 percent. "National's business over the summer was affected by slower orders than we originally anticipated, particularly from our distribution channel," said Brian L. Halla, National's chairman, president and CEO. "However, we continued to show positive results from our analog focus and we're pleased that we were able to increase gross margin in a seasonally slow quarter. As a result of our continued focus on selling higher-value, higher margin analog products, we provided shareholders with a 28 percent return on invested capital (ROIC) in Q1." BOOKINGS PATTERNS FOR Q1 National's worldwide bookings in Q1 were 5 percent higher than last year's Q1. But on a sequential basis, bookings declined 29 percent from the fourth quarter of fiscal 2004. The decline in bookings was attributed to a combination of factors, including seasonally slower demand, shorter lead times --- which prompted distributors and OEM customers to reduce backlog coverage --- and supply chain corrections from flat panel display customers and some wireless handset customers in Asia. The sequential decline in revenues for Q1 was directly related to lower-than-anticipated turns orders, which were driven by these same global market developments. Turns orders are orders requested for delivery within the same quarter. From a geographic market perspective, Q1 bookings declined sequentially in all regions. Bookings in Europe and Japan were generally stronger than in the United States and Asia Pacific. Weekly bookings improved slightly during the month of August compared to July. Billings exceeded bookings in the first quarter. GUIDANCE FOR Q2, FY2005 National expects distributors and some customers to continue adjusting order backlog and inventories in Q2. As a result, the Company anticipates revenues may decline 8 to 10 percent sequentially during Q2. This revenue range may be accompanied by gross margin of approximately 51 percent. Operating expenses, meanwhile, are expected to be comparable to Q1. "As we work through these inventory adjustments, National will continue to drive a proven business model that focuses on high-value analog products," Halla said. "This slowdown won't distract us from pursuing National's long-term objectives to create the best returns for our shareholders." SPECIAL NOTE This release contains forward-looking statements dependent on a number of risks and uncertainties pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These factors include, but are not restricted to, new orders received and shipped during the first quarter, the degree of factory utilization, the successful start up of production in National's Suzhou assembly and test facility, the sale of 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 30, 2004 (see Outlook and Risk Factors sections of Management's Discussion and Analysis of Financial Conditions and Results of Operations). Summary of Results -------------------------------------------------------------------------------- For 3 months ended August 29, 2004 August 24, 2003 --------------- --------------- Net sales $ 548.0 $ 424.8 Net income $ 117.7 $ 29.7 Earnings per share, diluted $ 0.31 $ 0.08 -------------------------------------------------------------------------------- All figures in millions of dollars, except for per share amounts ABOUT NATIONAL SEMICONDUCTOR National Semiconductor, the industry's premier analog company, creates high performance analog devices and subsystems. National's leading-edge products include power management circuits, display drivers, audio and operational amplifiers, and data conversion solutions. National's key markets include wireless handsets, displays, PCs, networks and a broad range of portable applications. With headquarters in Santa Clara, California, National reported sales of $1.98 billion for fiscal 2004, which ended May 30, 2004. Additional company and product information is available at www.national.com. National Semiconductor is a registered trademark. NATIONAL SEMICONDUCTOR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in millions, except per share amounts) Three Months Ended ---------------------------------- Aug. 29, 2004 Aug. 24, 2003 ----------------- ---------------- Net sales $ 548.0 $ 424.8 Operating costs and expenses: Cost of sales 246.4 224.4 Research and development 85.7 92.1 Selling, general and administrative 67.8 68.4 Special items (0.3) 4.6 ---------------- ---------------- Total operating costs and expenses 399.6 389.5 ----------------- ---------------- Operating income 148.4 35.3 Interest income, net 2.6 3.1 Other expense, net (2.0) (2.5) ----------------- ---------------- Income before taxes and cumulative effect of a change in accounting principle 149.0 35.9 Income tax expense 31.3 4.3 ----------------- ---------------- Income before cumulative effect of a change in accounting principle 117.7 31.6 Cumulative effect of a change in accounting principle including tax effect of $0.2 million - (1.9) ----------------- ---------------- Net income $ 117.7 $ 29.7 ================= ================ Earnings per share: Income before cumulative effect of a change in accounting principle: Basic $ 0.33 $ 0.09 Diluted $ 0.31 $ 0.08 Net income: Basic $ 0.33 $ 0.08 Diluted $ 0.31 $ 0.08 Selected income statement ratios as a percentage of sales: Gross margin 55.0% 47.2% Research and development 15.6% 21.7% Selling, general and administrative 12.4% 16.1% Net income 21.5% 7.0% Effective tax rate 21.0% 12.0%
NATIONAL SEMICONDUCTOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in millions) Aug. 29, May 30, 2004 2004 -------------------- ------------------- ASSETS Current assets: Cash and cash equivalents $ 723.5 $ 642.9 Short-term marketable investments 139.6 139.3 Receivables 191.4 198.9 Inventories 205.7 200.1 Other current assets 81.6 64.6 -------------------- ------------------- Total current assets 1,341.8 1,245.8 Net property, plant and equipment 708.0 699.6 Goodwill 173.3 173.3 Deferred tax assets 73.3 73.3 Other assets 93.6 88.4 -------------------- ------------------- Total assets $2,390.0 $2,280.4 ==================== =================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 0.2 $ 22.1 Accounts payable 129.6 141.0 Accrued expenses 181.1 234.8 Income taxes payable 88.0 63.4 -------------------- ------------------- Total current liabilities 398.9 461.3 Long-term debt 21.9 - Other noncurrent liabilities 144.5 138.6 -------------------- ------------------- Total liabilities 565.3 599.9 -------------------- ------------------- Commitments and contingencies Shareholders' equity: Common stock 179.1 178.8 Additional paid-in capital 1,055.6 1,030.1 Retained earnings 677.7 560.0 Accumulated other comprehensive loss (87.7) (88.4) -------------------- ------------------- Total shareholders' equity 1,824.7 1,680.5 -------------------- ------------------- Total liabilities and shareholders' equity $2,390.0 $2,280.4 ==================== ===================
NATIONAL SEMICONDUCTOR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in millions) Three Months Ended -------------------------------------- Aug. 29, Aug. 24, 2004 2003 --------------- -------------- Cash flows from operating activities: Net income $ 117.7 $ 29.7 Adjustments to reconcile net income with net cash provided by operating activities: Cumulative effect of a change in accounting principle - 1.9 Depreciation and amortization 49.0 55.2 Gain on investments (0.1) (2.3) Share in net losses of equity-method investments 1.6 4.8 Loss on disposal of equipment 0.1 2.2 Noncash special items 0.5 3.9 Other, net (0.4) 0.7 Changes in certain assets and liabilities, net: Receivables 7.5 (15.5) Inventories (5.6) (17.5) Other current assets (17.5) (10.3) Accounts payable and accrued expenses (63.7) (27.8) Income taxes payable 24.6 (3.1) Other noncurrent liabilities 5.9 4.3 --------------- -------------- Net cash provided by operating activities 119.6 26.2 --------------- -------------- Cash flows from investing activities: Purchase of property, plant and equipment (55.0) (40.7) Sale and maturity of available-for-sale securities - 244.8 Purchase of available-for-sale securities - (327.6) Sale of investments 0.1 - Security deposits on leased equipment (2.8) - Funding of benefit plan (4.8) (2.7) Other, net (0.1) 1.3 --------------- -------------- Net cash used by investing activities (62.6) (124.9) --------------- -------------- Cash flows from financing activities: Repayment of debt - (0.9) Payment on software license obligations (1.5) (1.8) Issuance of common stock 25.1 20.6 --------------- -------------- Net cash provided by financing activities 23.6 17.9 --------------- -------------- Net change in cash and cash equivalents 80.6 (80.8) Cash and cash equivalents at beginning of period 642.9 802.2 --------------- -------------- Cash and cash equivalents at end of period $ 723.5 $ 721.4 =============== ==============
PART I. FINANCIAL INFORMATION EARNINGS PER SHARE (Unaudited) (in millions, except per share amounts) Three Months Ended --------------------------- Aug. 29, Aug. 24, 2004 2003 -------------- ------------ Earnings per share: Basic $ 0.33 $ 0.08 Diluted $ 0.31 $ 0.08 Net income used in basic and diluted earnings per share calculation $117.7 $29.7 Weighted-average shares: Basic 357.3 369.0 Diluted 381.7 383.8
NOTES TO FINANCIAL STATEMENTS: (in millions) Three Months Ended --------------------------- Aug. 29, Aug. 24, Special items - Income (expense) 2004 2003 -------------- ------------ Net intellectual property income $ 1.5 $ 8.0 Cost reduction charges (1.2) (12.6) -------------- ------------ Total special items $ 0.3 $ (4.6) ============== ============ Interest income, net Interest income $ 3.1 $ 3.2 Interest expense (0.5) (0.1) -------------- ------------ Interest income, net $ 2.6 $ 3.1 ============== ============ Other income(expense), net Share in net losses of equity-method investments $ (1.6) $ (4.8) Net gain on marketable and other investments 0.1 2.3 Other (0.5) - -------------- ------------ Total other expense, net $ (2.0) $ (2.5) ============== ============