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National Semiconductor Reports Results for First Quarter Fiscal 2008

Q1 sales grew to $471.5 million, up 3.4% from Q4 of fiscal 2007

Record gross margin percentage of 63.0%, up from 62.5% in Q4

EPS of 30 cents, up from 28 cents in Q4

Sales outlook for Q2 of fiscal 2008 expected to be up 4% to 7% sequentially

Sep 6, 2007

September 6, 2007 -- National Semiconductor Corporation (NYSE:NSM) today reported sales of $471.5 million and net income of $85.6 million, or 30 cents per share, for the first quarter of fiscal 2008 which ended August 26, 2007. 

National’s first quarter fiscal 2008 sales increased 3.4 percent sequentially from the fourth quarter of fiscal 2007, when the company reported $455.9 million in sales and earnings of 28 cents per share.  Sales growth in the first quarter was attributable to increased demand for National’s new analog products, primarily in the wireless handset and portable device markets.

Gross margin in National’s first quarter of fiscal 2008 increased to 63.0 percent, driven by the company’s portfolio of higher-value analog products, together with strong execution in manufacturing.  The gross margin improvement was achieved at the same time that the company was able to lower its inventories by about $10 million during the quarter.

"Our growth this quarter was driven by highly featured wireless mobile devices, where energy efficiency is critical and happens to be the strong suit of our portfolio," said Brian L. Halla, National’s chairman and CEO.  "Looking forward, the theme of energy efficiency is becoming more and more pervasive beyond just handsets.  We see this as a major opportunity."

Bookings for Q1, Fiscal 2008
National’s bookings in the first quarter of fiscal 2008 increased by 6 percent sequentially over the fourth quarter of fiscal 2007.  This increase was primarily driven by higher orders from the company’s OEM customer base.  Regionally, the first quarter bookings improvement was most prominent in Asia Pacific and Europe.  From a product perspective, new orders for interface and power management products grew at a higher rate than the overall company average.  Total company bookings exceeded billings in the first quarter.

Notable Items in Q1, Fiscal 2008 Results
Included in first quarter fiscal 2008 results were a $3.1 million gain from sale of property in Singapore and a $1.5 million credit related to a vacant lease buyout that was completed during the quarter, both on a pre-tax basis.

First quarter of fiscal 2008 results also included $20.0 million in pre-tax stock compensation expenses under FASB Statement 123(R).  National began accounting for stock compensation under FASB 123(R) in the first quarter results of fiscal 2007, which included $23.9 million of pre-tax stock compensation expenses.

Outlook for Q2, Fiscal 2008
National anticipates that sales in the second quarter of fiscal 2008 will be up 4 to 7 percent over the first quarter of fiscal 2008.  Gross margin is expected to improve while operating expenses are also projected to increase.

Stock Repurchase Program
In the early part of the first quarter of fiscal 2008, National announced that the Board of Directors had authorized a program to repurchase $2 billion of National’s common stock.  This, combined with the $380 million in pre-existing repurchase approvals, brought the total available approved repurchase programs to about $2.4 billion at that time.  Subsequent to that announcement, during the first quarter of fiscal 2008, the company executed $1.5 billion of the approved buy back through a leveraged accelerated share repurchase program, financed through a combination of unsecured bonds and bank facilities.  As a result, National’s diluted weighted average share count for the first quarter of fiscal 2008 was 283.9 million shares, down from 327.5 million shares in the preceding fourth quarter.  As of the end of the first quarter of fiscal 2008, National had approximately $880 million still available under approved programs for future stock repurchases. 

Company Declares Dividend
The company today announced that the Board of Directors has declared a cash dividend of $0.04 per outstanding share of common stock.  This dividend will be paid October 9, 2007 to shareholders of record at the close of business on September 17, 2007.

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, including second quarter fiscal 2008 sales, gross margin, and operating expenses, 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 27, 2007 under the captions "Outlook", "Risk Factors" and "Management's Discussion and Analysis of Financial Conditions and Results of Operations" contained therein.

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, communications infrastructure, medical, automotive, industrial, and test and measurement applications. Headquartered in Santa Clara, Calif., National reported sales of $1.93 billion for fiscal 2007, which ended May 27, 2007.  Additional company and product information is available at www.national.com.

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