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National Semiconductor Reports Results for Third Quarter Fiscal 2010

Q3 sales of $362 million were up 5% from Q2 of fiscal 2010 and up 24% from Q3 of fiscal 2009

GAAP earnings per share of 22 cents was up from 20 cents in Q2 and 9 cents one year ago

Gross margin was 67.3%, up from 65.3% in Q2 and 57.5% in last year's Q3

Sales outlook for Q4 of fiscal 2010 expected to be $375 million to $390 million, or up approximately 4 to 8 percent sequentially

Mar 11, 2010

March 11, 2010 -- National Semiconductor Corp. (NYSE:NSM) today reported sales of $362 million and net income of $53.2 million, or 22 cents per diluted share, for the third quarter of fiscal 2010, which ended Feb. 28, 2010.

National's third quarter sales were 5 percent higher than the second quarter of fiscal 2010, when the company reported $345 million in sales, and 24 percent higher than the $292 million reported in last year’s third fiscal quarter. There were 13 weeks in National’s second and third quarters of fiscal 2010 and 14 weeks in the third quarter of fiscal 2009. Stronger demand for National’s analog products in industrial markets, served primarily through distributors, drove the increase in third quarter revenues, while sales to wireless handset customers were down seasonally following the holidays.

Third quarter net income of $53.2 million, or 22 cents per diluted share, was an increase from the $47.0 million, or 20 cents per share, in the second quarter of fiscal 2010. Third quarter fiscal 2010 results included a pre-tax $6.4 million restructuring charge. In last year's third quarter, National reported net income of $21.1 million, or 9 cents per share, which included approximately $11 million of discrete income tax benefits.

Stronger product mix from higher sales into industrial markets drove gross margin improvement in the quarter. In addition, the company continued to improve its manufacturing cost performance. Gross margin of 67.3 percent in the third quarter increased from the 65.3 percent gross margin achieved in the second quarter of fiscal 2010 and the 57.5 percent gross margin reported one year ago.
Bookings for Q3, Fiscal 2010

National’s total company bookings increased 5 percent sequentially, as order rates increased from direct OEM customers as well as from distributors. Bookings exceeded billings in the quarter.

"Driving revenue growth is our new charter here at National Semiconductor," said Don Macleod, National’s president and chief executive officer. "Our sequential and year-on-year revenue growth demonstrates top-line improvement, driven by both our core analog business and traction in several new emerging areas."

Outlook for Q4, Fiscal 2010
National is projecting revenues to be between $375 million and $390 million (up approximately 4 to 8 percent sequentially) in the fourth quarter of fiscal 2010.

Company Declares Dividend
The company announced today that the Board of Directors has declared a cash dividend of $0.08 per outstanding share of common stock. This dividend will be paid on April 12, 2010 to shareholders of record at the close of business on March 22, 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 31, 2009 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 Nov. 29, 2009.

About National Semiconductor
National Semiconductor is a leader in analog power management technology. Its products include easy-to-use integrated circuits, PowerWise products that enable more energy-efficient systems, and SolarMagic products which improve the energy output of solar arrays. The company celebrated its 50th anniversary last May. Headquartered in Santa Clara, Calif., National reported sales of $1.46 billion for fiscal 2009. Additional information is available at www.national.com.

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