8-K 1 form8k_060806.htm NEWS RELEASE

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): June 8, 2006

 

NATIONAL SEMICONDUCTOR CORPORATION

(Exact name of registrant as specified in its charter)

 

DELAWARE

 

1-6453

 

95-2095071

(State of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification Number)

 

 

2900 SEMICONDUCTOR DRIVE, P.O. BOX 58090

SANTA CLARA, CALIFORNIA 95052-8090

(Address of Principal Executive Offices)

 

(408) 721-5000

 

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A. 2. below):

 

o

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


 

 

NATIONAL SEMICONDUCTOR CORPORATION

 

 

Table of Contents

 

 

 

 

 

 

 

 

 

 

Page

Section 2 – Financial Information

 

 

 

 

 

 

Item 2.02

Results of Operations and Financial Condition

 

3

 

 

 

 

Section 8 – Other Events

 

 

 

 

 

 

Item 8.01

Other Events

 

3

 

 

 

 

Section 9 – Financial Statements and Exhibits

 

 

 

 

 

 

Item 9.01

Financial Statements and Exhibits

 

3

 

 

 

 

Signature

 

 

4

 

 

 

 

Exhibits:

 

 

 

99.1

News release dated June 8, 2006 (Earnings)

 

 

 

 

 

 

 

 

 

 


 

 

NATIONAL SEMICONDUCTOR CORPORATION

 

 

Item 2.02

RESULTS OF OPERATION AND FINANCIAL CONDITION

 

On June 8, 2006, National Semiconductor Corporation issued a news release announcing earnings for the quarter ended May 28, 2006. The earnings news release, which has been attached as Exhibit 99.1, contains unaudited Condensed Consolidated Statements of Operations, Balance Sheets, and Statements of Cash Flows that are presented in accordance with United States generally accepted accounting principles, or GAAP. The information in Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

 

 

Item 8.01

OTHER EVENTS

 

On June 8, 2006, the Company also announced in its news release that its Board of Directors had declared a cash dividend of $0.03 per outstanding share of common stock. The dividend is payable on July 10, 2006 to stockholders of record on June 19, 2006. In addition, the company announced that its Board of Directors had approved another stock repurchase program of $500 million.

 

 

Item 9.01

FINANCIAL STATEMENTS AND EXHIBITS

                

 

(d)

Exhibits

                

Exhibit No.

Description of Exhibit

 

99.1

News release dated June 8, 2006 issued by National Semiconductor Corporation* (Earnings)

 

*This exhibit is intended to be furnished and shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended.

 

 

 

 


 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

NATIONAL SEMICONDUCTOR CORPORATION

 

 

 

 

Dated: June 8, 2006

 

/S/ Jamie E. Samath

 

 

 

 

 

 

 

Jamie E. Samath

 

 

 

Corporate Controller

 

 

 

Signing on behalf of the registrant and

 

 

 

as principal accounting officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 


 

 

Media Contact:

Financial:

Jeff Weir

Long Ly

National Semiconductor

National Semiconductor

(408) 721-5199

(408) 721-5007

 

 

National Semiconductor Posts 23% Year-to-Year Revenue Growth,

61.4% Gross Margin and Earnings of 34 Cents Per Share for Fourth Quarter of Fiscal Year 2006

 

 

•

Q4 FY06 revenues reached $572.6 million, up 4.5% from Q3 revenues of $547.7 million

 

•

Gross margin was 61.4%, up from 60.7% in Q3 and 54.7% in Q4 of FY2005

 

•

GAAP net income was $118.8 million, compared to $130.1 million in Q3 and $130.2 million in Q4 FY05

 

•

Net income includes a one-time tax charge of approximately $25 million associated with repatriation of accumulated foreign earnings, under the American Jobs Creation Act of 2004. This charge reduced EPS by 7 cents

 

•

Q1 FY07 revenue projected to be seasonally down 2 to 3%

 

SANTA CLARA, Calif. – June 8, 2006 --  National Semiconductor Corporation (NYSE:NSM) today reported GAAP net income of $118.8 million, or 34 cents per share, on revenues of $572.6 million for the fourth quarter of fiscal 2006, which ended May 28, 2006.

 

National’s fourth quarter revenues were 22.6 percent higher than the $467.0 million revenues recorded in the fourth quarter of fiscal 2005, and 4.5 percent higher sequentially than the $547.7 million revenues reported in Q3 FY06.

 

National’s gross margin in Q4 FY06 hit an all-time high of 61.4 percent, up from 60.7 percent in Q3 FY06 and 54.7 percent a year ago. This continuing improvement in gross margin is a direct result of the Company’s focus on growing its higher-value Analog product portfolio.

 

 

 

 


 

 

“National continues to show improvement in margins,” said Brian L. Halla, National’s chairman and CEO. “Our investment in new, value-added analog products, targeting precision, high speed and best power efficiencies, is paying off. These products deliver higher value to our customers and higher margins and sales to National.”

 

Fourth quarter fiscal 2006 net income included a one-time tax charge of $24.5 million related to the repatriation of accumulated foreign earnings, under provisions of the American Jobs Creation Act of 2004. A year ago, National’s fourth quarter net income of $130.2 million, or 36 cents per share, included an $86.1 million goodwill write-off, a $51.1 million gain from the sale of National’s PC Super/IO business, and a $2.6 million charge for cost reductions (all on a pre-tax basis). In addition, the income taxes in last year’s fourth quarter were a net benefit of $57.0 million due to deferred tax assets. The impact of these items, assuming a recent historical FY 2005 tax rate of approximately 20 percent, was a positive contribution to net income of $41.6 million or 11 cents per share in Q4 FY05.

 

Bookings Increased in Q4

National’s fourth quarter bookings were slightly higher compared to the third quarter. Bookings also exceeded billings in the fourth quarter of fiscal 2006. Within the company’s various product lines, new orders for data converters and interface products grew at a much higher rate than the overall company average. Regionally, bookings increased in Europe, Asia Pacific and Japan. Year-to-year, total company fourth quarter bookings increased 29 percent over last year’s fourth quarter.

 

Outlook for Q1, Fiscal 2007

Based upon current business conditions, National anticipates that Q1 revenues will be seasonally down 2 to 3 percent from fourth quarter revenues. Much of the anticipated decline is attributable to lower foundry revenues for businesses previously sold. Commencing in the first quarter of fiscal 2007, National will begin to report stock compensation expenses in accordance with FASB Statement 123(R). Gross-margin percentage is expected to be similar to the level achieved in Q4.

 

 

 

 

 

 


 

 

Company Declares Dividend

The Company today declared a cash dividend of $0.03 per outstanding share of common stock. This dividend will be paid July 10, 2006 to shareholders of record at the close of business on June 19, 2006.

 

Board Authorizes Additional Stock Buy-Back Program

Today, National also announced that the Board has approved an additional $500 million to buy back National’s common stock beyond previously approved stock-repurchase programs. The Company bought back $200 million of common stock during the fourth quarter and $951 million of stock during the fiscal year. The diluted weighted average shares outstanding for Q4 fiscal 2006 was 352.3 million shares.

 

Summary of Fiscal 2006

Annual revenues were $2.16 billion compared to $1.91 billion in FY05 and $1.98 billion for FY04. For fiscal 2006, the Company reported net income of $449.2 million. This compares to the $415.3 million net profit reported for FY2005 and the $282.8 million net profit reported for FY2004. Earnings per share for the year were $1.26 compared to $1.11 for fiscal 2005 and 73 cents for fiscal 2004. National’s increased profitability has been driven by consistent improvement in gross margin as a result of a growing portfolio of higher-value Analog products. The gross margin was 59.0 percent for fiscal 2006 compared to 53.4 percent in fiscal 2005 and 51.0 percent in fiscal 2004.

 

“For the year, we achieved 13 percent revenue growth, increased gross margin by 6 points and delivered 25 percent return on invested capital --- our third straight year of better than 20 percent ROIC,” said Halla.

 

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 and sale of new analog products. Other risk factors are included in the Company’s 10-K for the year ended May 29, 2005 (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 February 26, 2006. 

 

 

 


 

 

 

About National Semiconductor

National Semiconductor, the industry’s premier analog company, creates high-value analog devices and subsystems. National’s leading-edge products include power management circuits, display drivers, audio and operational amplifiers, interface products and data conversion solutions. National’s key analog markets include wireless handsets, displays and a variety of broad electronics markets, including medical, automotive, industrial, and test and measurement applications. Headquartered in Santa Clara, California, National reported sales of $2.16 billion for fiscal 2006, which ended May 28, 2006. 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

 

Twelve Months Ended

 

May 28, 

2006

May 29, 

2005

 

May 28, 

2006

May 29,

2005

 

 

 

 

 

 

Net sales

$ 572.6

$ 467.0

 

$ 2,158.1

$1,913.1

Operating costs and expenses:

 

 

 

 

 

Cost of sales

221.1

211.4

 

885.4

892.3

Research and development

85.2

84.5

 

326.6

333.0

Selling, general and administrative

68.8

61.7

 

273.9

256.8

Cost reduction and restructuring charges

2.0

2.6

 

33.7

23.9

Goodwill impairment loss

2.4

86.1

 

7.6

86.1

Gain on sale of businesses

(0.6)

(51.1)

 

(28.9)

(59.9)

Other operating income, net

(1.4)

1.7

 

(5.7)

(18.0)

 

Total operating costs and expenses

 

377.5

 

396.9

      

 

1,492.6

 

1,514.2

 

 

 

 

 

 

Operating income 

195.1

70.1

 

665.5

398.9

Interest income, net

8.7

5.5

 

31.8

15.9

Other non-operating expense, net

(0.2)

(2.4)

 

(2.1)

(4.9)

 

 

 

 

 

 

Income before taxes  

203.6

73.2

 

695.2

409.9

Income tax expense (benefit)

84.8

(57.0)

 

246.0

(5.4)

 

Net income 

 

$   118.8

 

$   130.2

 

 

$    449.2

 

$   415.3

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

Basic

$  0.35

$  0.37

 

$   1.32

$     1.17

Diluted 

$  0.34

$  0.36  

 

$   1.26

$     1.11

 

 

 

 

 

 

Selected income statement ratios as a percentage of sales:

 

 

 

 

Gross margin

61.4%

54.7%

 

59.0%

53.4%

Research and development

14.9%

18.1%

 

15.1%

17.4%

Selling, general and administrative

12.0%

13.2%

 

12.7%

13.4%

Net income

20.7%

27.9%

 

20.8%

21.7%

 

 

 

 

 

 

Effective tax rate

41.7%

N/A

 

35.4%

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

NATIONAL SEMICONDUCTOR CORPORATION 

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) 

(In millions)

 

 

May 28,

 

May 29,

 

2006

 

2005

ASSETS 

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$   932.2

 

$   867.1

Short-term marketable investments

110.3

 

155.1

Receivables

208.6

 

123.9

Inventories

189.4

 

170.2

Deferred tax assets

74.7

 

126.9

Other current assets

25.3

 

70.3

 

 

 

 

Total current assets

1,540.5

 

1,513.5

 

 

 

 

Net property, plant and equipment

627.7

 

605.1

Goodwill

57.3

 

87.2

Deferred tax assets

185.7

 

192.2

Other assets

99.9

 

106.2

 

 

 

 

Total assets

$2,511.1

 

$2,504.2

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$    108.8

 

$    64.7

Accrued expenses

191.0

 

143.6

Income taxes payable

98.5

 

76.7

 

 

 

 

Total current liabilities

398.3

 

285.0

 

 

 

 

Long-term debt

21.1

 

23.0

Other noncurrent liabilities

165.6

 

142.1

 

 

 

 

Total liabilities

585.0

 

450.1

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

Common stock

167.8

 

174.0

Additional paid-in capital

504.2

 

1,024.5

Retained earnings

1,376.2

 

961.2

Unearned compensation

(8.6)

 

(7.4)

Accumulated other comprehensive loss

(113.5)

 

(98.2)

 

 

 

 

Total shareholders’ equity

1,926.1

 

2,054.1

 

 

 

 

Total liabilities and shareholders’ equity

$2,511.1

 

$2,504.2

 

 

 

 

 

 

 


 

 

NATIONAL SEMICONDUCTOR CORPORATION 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)  

 

 

Twelve Months Ended

 

May 28,

 

May 29,

 

2006

 

2005

Cash flows from operating activities:

 

 

 

Net income

$  449.2

 

$  415.3

Adjustments to reconcile net income with net cash  

 

 

 

provided by operating activities:

 

 

 

Depreciation and amortization

166.3

 

194.4

Impairment of goodwill

7.6

 

86.1

Gain on investments

(8.3)

 

(1.3)

Share in net losses of equity-method investments

0.7

 

5.7

Loss on disposal of equipment

2.7

 

1.1

Gain on sale of business

(28.9)

 

(59.9)

Noncash other operating income, net

1.9

 

(11.1)

Tax benefit associated with stock options

104.5

 

20.1

Other, net

8.2

 

2.4

Changes in certain assets and liabilities, net:

 

 

 

Receivables

(84.3)

 

76.7

Inventories

(19.2)

 

29.8

Other current assets

45.0

 

(18.7)

Accounts payable and accrued expenses

70.7

 

(144.4)

Current and deferred income taxes

87.3

 

(51.8)

Other noncurrent assets

(9.0)

 

-

Other noncurrent liabilities

1.4

 

(16.5)

 

 

 

 

Net cash provided by operating activities

795.8

 

527.9

 

 

 

 

Cash flows from investing activities:

 

 

 

Purchase of property, plant and equipment

(163.3)

 

(96.6)

Sale of equipment 

1.2

 

-

Purchase of available-for-sale securities

-

 

(16.8)

Sale and maturity of available-for-sale securities

46.9

 

-

Sale of businesses 

71.0

 

71.5

Sale of investments

11.6

 

0.7

Investment in nonpublicly traded companies

-

 

(0.3)

Funding of benefit plan

(3.0)

 

(6.9)

Security deposits on leased equipment

-

 

(21.8)

Other, net

(0.4)

 

0.9

 

 

 

 

Net cash used by investing activities

(36.0)

 

(69.3)

 

 

 

 

Cash flows from financing activities:

 

 

 

Payment on software license obligations

(13.1)

 

(15.2)

Issuance of common stock

303.3

 

118.4

Purchase and retirement of treasury stock

(950.7)

 

(323.5)

Cash dividends declared and paid

(34.2)

 

(14.1)

 

 

 

 

Net cash used by financing activities

(694.7)

 

(234.4)

 

 

 

 

Net change in cash and cash equivalents

65.1

 

224.2

Cash and cash equivalents at beginning of the year

867.1

 

642.9

Cash and cash equivalents at end of the year

$ 932.2

 

$ 867.1

 

 

 

 


 

 

PART I. FINANCIAL INFORMATION

EARNINGS PER SHARE (Unaudited)

(In millions, except per share amounts)

 

 

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

May 28,

2006

May 29,

2005

 

May 28,

2006

May 29,

2005

Earnings per share:

Basic

 

$  0.35

 

$   0.37

 

 

$    1.32

 

$    1.17

Diluted

$  0.34

$   0.36

 

$    1.26

$    1.11

 

 

 

 

 

 

Net income used in basic and diluted

earnings per share calculation

 

$118.8

 

$130.2

 

 

$ 449.2

 

$ 415.3

 

 

 

 

 

 

Weighted-average shares:

Basic

 

336.3

 

349.2

 

 

339.8

 

353.9

Diluted

352.3

365.8

 

357.0

373.9

 

 

NOTES TO FINANCIAL STATEMENTS:

(In millions)

 

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

Other operating income, net

May 28,

2006

May 29,

2005

 

May 28,

2006

May 29,

2005

 

 

 

 

 

 

Net intellectual property income

$  (0.8)

$   (1.2)

 

$  (4.1)

$   (5.2)

Intangible asset impairment

-

-

 

1.8

-

Litigation settlements

-

2.9

 

-

(7.1)

Manufacturer’s Investment Credit refund

-

-

 

-

(7.4)

Other

(0.6)

-

 

(3.4)

1.7

Total other operating income, net

$  (1.4)

$  1.7

 

$  (5.7)

$  (18.0)

 

Interest income, net

 

 

 

 

 

 

 

 

 

 

 

Interest income

$  9.4

$  5.8

 

$  33.7

$ 17.4

Interest expense

(0.7)

(0.3)

 

(1.9)

(1.5)

Interest income, net

$  8.7

$  5.5

 

$  31.8

$  15.9

 

Other non-operating expense, net

 

 

 

 

 

 

 

 

 

 

 

Gain on investments

$   (0.1)

$   (0.7)

 

$  8.3

$    1.3

Share in net losses of equity-method

 

 

 

 

 

Investments

(0.1)

(1.7)

 

(0.7)

(5.7)

Charitable contribution

-

-

 

(9.7)

-

Other

-

-

 

-

(0.5)

Total other non-operating expense, net

$    (0.2)

$   (2.4)

 

$ (2.1)

$   (4.9)