EX-99 2 ex991_120904.txt EXHIBIT 99.1 NEWS RELEASE 12/9/04 Exhibit 99.1 National Reports Earnings for Second Quarter Fiscal 2005 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 $80 Million Profit, 50.6% Gross Margin for Second Quarter Fiscal 2005 o Q2 revenues were $448.9 million, down 18% from Q1 and 5% from Q2FY04 o GAAP earnings are 21 cents per share, up from 17 cents a year ago o Q2 earnings included 3 cents per share in special gains and credits o Revenue outlook for Q3 of fiscal 2005 is flat to slightly down SANTA CLARA, CALIF., December 9, 2004 - National Semiconductor Corporation (NYSE:NSM) today reported a GAAP profit of $80 million, or 21 cents per share, on revenues of $448.9 million for the second quarter of fiscal 2005, which ended November 28, 2004. National's second quarter 2005 results included $8.8 million in a special gain from the sale of assets and a $4.2 million benefit from the resolution of a tax matter. Without these two items, National's Q2 earnings would have been approximately 18 cents per share. National's second quarter sales were 5 percent lower than Q2 of fiscal 2004, when the Company reported sales of $473.5 million and earnings of 17 cents per share. (Historical per share amounts have been adjusted for the Company's 2-for-1 stock split that occurred in May 2004.) Sequentially, National's Q2 revenues decreased 18 percent from the Q1 revenues of $548 million, which generated earnings of 31 cents per share. Second quarter gross margin was 50.6 percent, down from 55 percent in the first quarter, but higher than the 50.1 percent recorded in last year's second quarter. The sequentially lower gross margin was primarily due to reduced production volume as the Company lowered its fab capacity utilization percentage from the mid-90s to the mid-60s. "Obviously, revenues fell significantly in Q2 as we dealt with ongoing inventory reductions in the distribution channel," said Brian L. Halla, National's chairman, president and CEO. "But with our focus on higher-value analog products and by controlling costs, we were able to keep gross margins above 50 percent in Q2. I am also pleased that, even with lower year-over-year revenues, we were able to increase earnings per share. This reinforces that our business model is working." Bookings Declined in Q2 National's Q2 worldwide bookings declined 16 percent from Q1 and 31 percent compared to last year's fiscal second quarter. Orders decreased broadly across National's varied product lines as distributors and OEM customers continued their efforts to reduce inventory levels and adjust backlog heading into the post-holiday period. In particular, the Company experienced slower order rates from various Asian wireless handset customers and flat-panel display customers. However, orders for portable power management products were the most positive development with over 25 percent growth year-to-year and flat sequentially. This year-to-year growth was driven primarily by portable power management applications such as mobile phone handsets, MP3 players and game systems. Total Company billings exceeded bookings in Q2. Outlook for Q3, FY2005 National Semiconductor anticipates Q3 revenues to be flat or slightly down compared to Q2 levels. Gross margin percentage is anticipated to be similar to Q2's gross margin. "Most of the inventory reductions in the distribution channel are behind us," Halla said. "That, combined with the typical seasonality we see from our major OEM customers, is why we are guiding that third-quarter revenues will be flat to slightly down from the second quarter." 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 quarter, the degree of factory utilization, 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) and the 10-Q for the quarter ended August 29, 2004. -- more -- Summary of Results For 3 months ended For 3 months ended November 29, 2004 November 23, 2003 Net sales $448.9 million $473.5 million Net income $80.0 million $65.8 million Earnings per share $0.21 $0.17 Net income excluding a special gain and tax benefit in fiscal 2005 and special charges in fiscal 2004 $68.8 million $71.1 million Earnings per share excluding a special gain and tax benefit in fiscal 2005 and special charge in fiscal 2004 $0.18 $0.18 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, communication interface products and data conversion solutions. National's key markets include wireless handsets, displays, PCs and laptops. The company's analog products are also optimized for numerous applications in a variety of electronics markets, including medical, automotive, industrial, and test and measurement. Headquartered 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 CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in millions, except per share amounts)
Three Months Ended Six Months Ended -------------------------- ------------------------- Nov. 28, Nov. 23, Nov. 28, Nov. 23, 2004 2003 2004 2003 ------------ ------------- ------------ ------------ Net sales $ 448.9 $ 473.5 $ 996.9 $ 898.3 Operating costs and expenses: Cost of sales 221.9 236.5 468.3 460.9 Research and development 82.1 84.3 167.8 177.5 Selling, general and administrative 63.9 71.7 131.7 139.0 Special items - (Income) expense (9.6) 6.7 (9.9) 11.3 ------------ ------------- ------------ ------------ Total operating costs and expenses 358.3 399.2 757.9 788.7 ------------ ------------- ------------ ------------ Operating income 90.6 74.3 239.0 109.6 Interest income, net 3.5 2.5 6.1 5.6 Other expense, net (1.2) (2.0) (3.2) (4.5) ------------ ------------- ------------ ------------ Income before taxes and cumulative effect of a change in accounting principle 92.9 74.8 241.9 110.7 Income tax expense 12.9 9.0 44.2 13.3 ------------ ------------- ------------ ------------ Income before cumulative effect of a change in accounting principle 80.0 65.8 197.7 97.4 Cumulative effect of a change in accounting principle including tax effect of $0.2 million - - - (1.9) ------------ ------------- ------------ ------------ Net income $ 80.0 $ 65.8 $ 197.7 $ 95.5 ============ ============= ============ ============ Earnings per share: Income before cumulative effect of a change in accounting principle: Basic $ 0.22 $ 0.18 $ 0.55 $ 0.27 Diluted $ 0.21 $ 0.17 $ 0.52 $ 0.25 Net income: Basic $ 0.22 $ 0.18 $ 0.55 $ 0.26 Diluted $ 0.21 $ 0.17 $ 0.52 $ 0.25 Selected income statement ratios as a percentage of sales Gross margin 50.6% 50.1% 53.0% 48.7% Research and development 18.3% 17.8% 16.8% 19.8% Selling, general and administrative 14.2% 15.1% 13.2% 15.5% Net income 17.8% 13.9% 19.8% 10.6% Effective tax rate 13.9% 12.0% 18.3% 12.0%
-- more -- NATIONAL SEMICONDUCTOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in millions)
Nov. 28, May 30, 2004 2004 -------------------- ------------------- ASSETS Current assets: Cash and cash equivalents $ 751.1 $ 642.9 Short-term marketable investments 139.0 139.3 Receivables 148.3 198.9 Inventories 201.2 200.1 Other current assets 65.5 64.6 -------------------- ------------------- Total current assets 1,305.1 1,245.8 Net property, plant and equipment 677.4 699.6 Goodwill 173.3 173.3 Deferred tax assets 73.3 73.3 Other assets 101.1 88.4 -------------------- ------------------- Total assets $2,330.2 $2,280.4 ==================== =================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ - $ 22.1 Accounts payable 83.3 141.0 Accrued expenses 181.6 234.8 Income taxes payable 54.3 63.4 -------------------- ------------------- Total current liabilities 319.2 461.3 Long-term debt 22.1 - Other noncurrent liabilities 140.8 138.6 -------------------- ------------------- Total liabilities 482.1 599.9 -------------------- ------------------- Commitments and contingencies Shareholders' equity: Common stock 177.7 178.8 Additional paid-in capital 1,008.0 1,030.1 Retained earnings 750.6 560.0 Accumulated other comprehensive loss (88.2) (88.4) -------------------- ------------------- Total shareholders' equity 1,848.1 1,680.5 -------------------- ------------------- Total liabilities and shareholders' equity $2,330.2 $2,280.4 ==================== ===================
-- more -- NATIONAL SEMICONDUCTOR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in millions)
Six Months Ended -------------------------------------- Nov. 28, Nov. 23, 2004 2003 --------------- -------------- Cash flows from operating activities: Net income $ 197.7 $ 95.5 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 98.7 107.3 Gain on investments (0.6) (3.0) Share in net losses of equity-method investments 3.4 7.7 Tax benefit associated with stock options 3.9 - Loss on disposal of equipment 0.7 2.2 Noncash special items (8.3) 4.5 Other, net - 2.4 Changes in certain assets and liabilities, net: Receivables 52.3 (21.4) Inventories (1.2) (29.7) Other current assets (1.4) (6.3) Accounts payable and accrued expenses (106.2) (14.6) Income taxes payable (9.1) 5.0 Other noncurrent liabilities 2.2 11.1 --------------- -------------- Net cash provided by operating activities 232.1 162.6 --------------- -------------- Cash flows from investing activities: Purchase of property, plant and equipment (73.8) (86.1) Sale and maturity of available-for-sale securities - 314.0 Purchase of available-for-sale securities - (386.7) Sale of investments 0.6 7.2 Sale of business 10.0 - Security deposits on leased equipment (12.9) - Investment in nonpublicly traded companies (0.4) (1.7) Funding of benefit plan (6.6) (4.5) Other, net - 1.1 --------------- -------------- Net cash used by investing activities (83.1) (156.7) --------------- -------------- Cash flows from financing activities: Payment on software license obligations (12.2) (12.9) Repayment of debt - (1.8) Issuance of common stock 46.3 120.1 Purchase and retirement of treasury stock (74.9) (400.0) --------------- -------------- Net cash used by financing activities (40.8) (294.6) --------------- -------------- Net change in cash and cash equivalents 108.2 (288.7) Cash and cash equivalents at beginning of period 642.9 802.2 --------------- -------------- Cash and cash equivalents at end of period $ 751.1 $ 513.5 =============== ==============
-- more -- PART I. FINANCIAL INFORMATION EARNINGS PER SHARE (Unaudited) (in millions, except per share amounts)
Three Months Ended Six Months Ended --------------------------- ------------------------- Nov. 28, Nov. 23, Nov. 28, Nov. 23, 2004 2003 2004 2003 -------------- ------------ ------------ ------------ Earnings per share: Basic $ 0.22 $ 0.18 $ 0.55 $ 0.26 Diluted $ 0.21 $ 0.17 $ 0.52 $ 0.25 Net income used in basic and diluted earnings per share calculation $ 80.0 $ 65.8 $ 197.7 $ 95.5 Weighted-average shares: Basic 356.0 360.2 356.7 364.6 Diluted 374.2 391.0 378.0 387.4
NOTES TO FINANCIAL STATEMENTS: (in millions, except per share amounts) Reconciliation of net income as reported to net income excluding a special gain and tax benefit in fiscal 2005 and special charges in fiscal 2004:
Three Months Ended -------------------------------------- Nov. 28, Nov. 23, 2004 2003 ------------------- ------------------ Net income as reported $ 80.0 $ 65.8 (Deduct) add: Special (gain) and charges, net of tax effect of $1.8 million in fiscal 2005 and $0.7 million in fiscal 2004 (7.0) 5.3 Tax benefit from resoution of foreign tax dispute (4.2) - ------------------- ------------------ Net income excluding special gain and tax benefit in fiscal 2005 and special charges in fiscal 2004 $ 68.8 $ 71.1 =================== ================== Earnings per share: Basic $ 0.19 $ 0.20 Diluted $ 0.18 $ 0.18 Weighted-average shares: Basic 356.0 360.2 Diluted 374.2 391.0
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Three Months Ended Six Months Ended --------------------------- -------------------------> Nov. 28, Nov. 23, Nov. 28, Nov. 23, Special items - Income (expense) 2004 2003 2004 2003 -------------- ------------ ------------ ------------ Sale of business $ 8.8 $ - $ 8.8 $ - IP income (expense) 0.8 (0.7) 2.3 7.3 Cost reduction charges - (6.0) (1.2) (18.6) -------------- ------------ ------------ ------------ Total special items - Income (expense) $ 9.6 $ (6.7) $ 9.9 $ (11.3) ============== ============ ============ ============ Interest income, net Interest income $ 3.8 $ 2.7 $ 6.9 $ 5.9 Interest expense (0.3) (0.2) (0.8) (0.3) -------------- ------------ ------------ ------------ Interest income, net $ 3.5 $ 2.5 $ 6.1 $ 5.6 ============== ============ ============ ============ Other expense, net Gain on investments $ 0.5 $ 0.7 $ 0.6 $ 3.0 Share in net losses of equity-method investments (1.7) (2.9) (3.3) (7.7) Other - 0.2 (0.5) 0.2 -------------- ------------ ------------ ------------ Total other expense, net $ (1.2) $ (2.0) $ (3.2) $ (4.5) ============== ============ ============ ============