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National Semiconductor Reports 34% Year-to-Year Revenue Growth and Record Gross Margin for Fourth Quarter of Fiscal 2004

Q4 profit is $126.4 million, yielding earnings of 32 cents per share compared to year-ago fourth quarter loss of 1 cent per share

Gross margin reached all-time high of 54.4%, a 10-point increase from Q4 of FY2003

Revenues hit $571.2 million, a 34% increase year-to-year and 11% from Q3

Fourth quarter bookings increased 45% year-to-year

Jun 10, 2004

June 10, 2004 - National Semiconductor Corporation (NYSE:NSM) today reported a GAAP profit of $126.4 million, or 32 cents per share, on revenues of $571.2 million for the fourth quarter of fiscal 2004, which ended May 30, 2004.  National’s fourth quarter sales were 34 percent higher than the fourth quarter of fiscal 2003 and 11 percent higher sequentially than the third quarter of fiscal 2004, when the company reported revenues of $513.6 million and earnings of 24 cents per share.  (National’s fourth quarter included 13 weeks, compared to 14 calendar weeks in the third quarter.)  Gross margin rose to an all-time high of 54.4 percent in the fourth quarter, compared to gross margin of 44.6 percent for the fourth quarter of fiscal 2003 and 51.4 percent in the third quarter of fiscal 2004.

“National’s focus on analog is clearly paying off in the form of higher returns to our shareholders,” said Brian L. Halla, National’s chairman, president and CEO. “Gross margin increased to 54 percent and our return on invested capital exceeded 32 percent in the fourth quarter.”

For the entire 2004 fiscal year, National’s gross margin was 51 percent.  Last June, National reported gross margin of 43.4 percent for fiscal 2003.  The consistent improvement in gross margin has been driven by National’s focus on increasing sales and market share in its higher value, higher margin analog products.

Similar to the prior quarter, National’s wafer fab utilization rate was in the mid-90’s.

Bookings Higher in Q4
National's worldwide bookings increased 45 percent year-to-year and 2 percent sequentially from the third quarter (which had 14 calendar weeks compared to a normal 13-week quarter).   On a weekly run-rate basis, fourth quarter bookings rose approximately 10 percent from the third quarter.  Bookings for analog products grew more than 50 percent year-to-year, led by strong growth in National’s power management, amplifiers, and data conversion products.   New orders for portable power management products and data converters outperformed the company's average both year-to-year and sequentially from the third quarter. 

With respect to National’s different geographies, the Asia Pacific region experienced the strongest fourth quarter bookings growth both year-to-year and quarter-to-quarter. Bookings for North America declined from the third quarter, primarily due to the distribution channel.  Bookings in all regions grew substantially year-to-year.  Total company bookings were well above billings in the fourth quarter.

The Company’s bookings strength in the fourth quarter was driven largely by National’s top OEM customers.  Bookings from distributors moderated during the quarter as National’s delivery leadtimes returned to more normal levels.  Distributors’ resale rates of National products to their end customers increased sequentially in all regions.  Two regions recorded double-digit percentage increases in resale rates in Q4 compared to Q3.

Guidance for Q1, FY2005
During the first quarter of FY2005, National anticipates revenues to be sequentially flat to up 3 percent from the fourth quarter. Based upon the revenue range, gross margins are expected to improve and operating expenses are expected to be comparable to fourth quarter expenses.

“Heading into the typically seasonal August quarter, we are encouraged by the fact that this year National’s bookings were strong and our backlog grew during the fourth quarter,” Halla said.  “We will continue to aggressively manage our business to further improve our gross margins by expanding our position in key analog areas such as power management, amplifiers and data converters.”

Summary of Fiscal 2004
For fiscal 2004, National reported a GAAP net profit of $315.0 million, or 81 cents per share, on revenues of $1.98 billion.  This compares to a net loss of $33.3 million, or 9 cents per share, on revenues of $1.67 billion for fiscal 2003.  National’s fiscal 2003 net loss included $43.6 million of special charges for severances related to workforce reductions and impairments of specific assets, and $13.8 million in R & D expenses for write-downs of technology licenses.  Without these charges, National would have reported net income of $24.1 million, or 6 cents per share, for fiscal 2003.

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 first quarter, the degree of factory utilization, the successful construction of our Suzhou assembly and test facility, the successful 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 25, 2003 (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 29, 2004.

Summary of Results    

For 3 months ended

For 12 months ended


May 30, 2004

May 25, 2003

May 30, 2004

May 25, 2003

Net sales


$ 425.3    $1,983.1  


Net income (loss)


$ (4.4)   $ 315.0  

$   (33.3)  

Earnings (loss) per share


$ (0.01) $   0.81

$     (0.09)

All figures in millions of dollars, except for per share amounts

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