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National Semiconductor Reports Results for Fourth Quarter Fiscal 2011

Q4 sales of $374.1 million increased 9% from Q3 of fiscal 2011 and decreased 6% from Q4 of fiscal 2010

Gross margin of 66.5% was flat with Q3 and down from 68.8% in Q4 of fiscal 2010

GAAP earnings per share of 26 cents was up from 24 cents in Q3 and down from 33 cents in last year's Q4

Q4 results include about $14 million of merger-related expenses and an increase in diluted share count of 9 million shares

Jun 9, 2011

SANTA CLARA, Calif., June 9, 2011 – National Semiconductor Corp. (NYSE:NSM) today reported sales of $374.1 million and net income of $67.1 million, or 26 cents per diluted share, for the fourth quarter of fiscal 2011, which ended May 29, 2011.

National's fourth quarter sales were 9 percent higher than the third quarter of fiscal 2011, when the company reported $343.9 million in sales, and 6 percent lower than the $398.5 million reported in the fourth quarter of fiscal 2010. Increased sales to the broad-based industrial power market, primarily through the distribution channel, and improvements in the automotive and the communications infrastructure areas more than offset flat sales in our wireless handset business and Japan sales that were lower due to the effects of the March earthquake and tsunami.

Fourth quarter net income of $67.1 million, or 26 cents per diluted share, was an increase from the $59.4 million, or 24 cents per diluted share, in the third quarter of fiscal 2011. In last year's fourth quarter, National reported net income of $79.2 million, or 33 cents per diluted share.

Gross margin was 66.5 percent in the fourth quarter of fiscal 2011 – flat with Q3 and down from the fourth quarter of fiscal 2010. Although revenue increased sequentially, factory utilization dropped slightly in order to reduce days of inventory by 13 in the fourth quarter from 109 days to 96. National reported gross margin of 66.5 percent in the third quarter of fiscal 2011 and 68.8 percent in the fourth quarter of fiscal 2010.

"Business conditions were a little better than we expected in the quarter," said Don Macleod, National's chief executive officer. "With bookings up 21%, the first increase for three quarters, we were able to get back to meaningful quarterly revenue growth."

Merger Agreement Announced During Q4, Fiscal 2011
On April 4, 2011 it was announced that National had entered into a definitive agreement to be acquired by Texas Instruments Incorporated for $25 per share in an all-cash transaction. Our fourth quarter fiscal 2011 results included approximately $14 million of expenses attributable to the planned merger. Nearly all of these costs are included in SG&A expenses.

In addition, our weighted average share count increased from 247 million diluted shares in the third quarter to 256 million diluted shares in the fourth quarter of fiscal 2011. This increase was driven by a number of outstanding stock options that were exercised subsequent to the April 4, 2011 announcement.  Also, under the terms of the merger agreement, National will not be declaring or paying any further dividends during the pendency of the merger transaction. National will hold a special meeting of stockholders on June 21, 2011 to seek stockholder approval of the merger with Texas Instruments. The completion of the merger is also subject to regulatory approval from various international jurisdictions.

Summary of Full Year Fiscal 2011
For fiscal 2011, National reported sales of $1.52 billion and net income of $298.8 million or $1.20 per diluted share. In fiscal 2010, National reported sales of $1.42 billion and net income of $209.2 million or 87 cents per diluted share. Gross margin in fiscal 2011 was 68.3 percent, compared to 65.9 percent in fiscal 2010.

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. Except for historical information contained herein, the matters set forth in this press release, including management's expectations regarding future performance, are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Potential risks and uncertainties include, but are not restricted to, such factors as 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 annual report on Form 10-K for the fiscal year ended May 30, 2010 under the captions "Outlook," "Risk Factors" and "Management's Discussion and Analysis of Financial Conditions and Results of Operations" contained therein and the quarterly report on Form 10-Q for the quarter ended Feb. 27, 2011.

About National Semiconductor
National Semiconductor is a leader in power management technology. Known for its easy-to-use analog integrated circuits and world-class supply chain, National's high-performance analog products enable its customers' systems to be more energy efficient. Headquartered in Santa Clara, Calif., National reported sales of $1.52 billion for fiscal 2011. Additional information is available at www.national.com.

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