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NATIONAL SEMICONDUCTOR REPORTS EARNINGS OF 37 CENTS PER SHARE EXCLUDING ONE-TIME GAINS FOR SECOND QUARTER OF FISCAL 2000

Dec 9, 1999

December 9, 1999-National Semiconductor Corporation today reported net earnings of $70.4 million, or 37 cents per share, on sales of $513.9 million for the second quarter of fiscal 2000, which ended Nov. 28, 1999. This number excludes net one-time after tax gains of $21.6 million. Including these one-time gains the company had net income of $92.0 million or 49 cents per share. In the comparable quarter of fiscal 1999, which ended Nov. 29, 1998, the company reported a net loss of $48.6 million, or 29 cents per share, on sales of $510.1 million, also excluding one-time items. 

"This quarter gets us off to a good start, not only from the overall market robustness but also as a direct result of our strategic positioning and our solid execution on cost initiatives," said Brian L. Halla, chairman, president and CEO. "Bookings, sales and earnings were well up, led by our analog business," Halla added. 
Summary of results
3 months ended:                              Nov. 28, 1999     Nov. 29, 1998
Net sales                                    $  513.9          $  510.1
Net income (loss)                            $   92.0          $  (94.4)
Net income (loss) excluding one-time items   $   70.4          $  (48.6)
Earnings (loss) per share diluted            $    0.37         $   (0.29)
    excluding one-time items
All figures in millions of dollars, except per share amounts

The net gains from one-time items consisted of after tax gains of $28.4 million, or $29.9 million pre-tax, related to the sale of the Cyrix PC processor business and release of an excess restructuring accrual for Greenock, Scotland, offset partially by an after tax $6.8 million extraordinary charge resulting from the early repayment of $259 million in convertible bonds during the quarter.

Excluding the Cyrix PC processor business sold at the beginning of the quarter, revenues grew 11 percent over Q1, led by an 11 percent growth in the analog segment.

National reported that worldwide bookings grew 43 percent over last year's second quarter, and grew 18 percent over the August quarter of the current fiscal year. Monthly bookings improved throughout the second quarter with the November monthly run rate at the highest level in the last two years. Every region grew orders significantly compared with last year and with the August quarter. Bookings significantly exceeded billings.

Second quarter Analog segment bookings were up approximately 60 percent compared with last year. Orders were particularly strong for Power Management, Amplifiers and Wireless Application Specific products. Analog orders grew in the mid-teen percentage range over the August quarter. Information Appliance segment orders also increased by nearly 50 percent compared with last year, and in the high 30-percent range compared with the first quarter of fiscal 2000. Historical order comparisons exclude all orders for Cyrix PC processors.

"Our ongoing strong bookings make me increasingly confident that we can offset the usual holiday seasonal weakness and sequentially grow sales in our third fiscal quarter," Halla said. "Our excellent position in this market, coupled with lower operating expenses and increasing factory efficiencies should drive continued improvement in gross margins and earnings per share," he added.

Summary of results
6 months ended:                              Nov. 28, 1999     Nov. 29, 1998
Net sales                                    $  995.7          $  979.7
Net income (loss)                            $  139.1          $ (199.2)
Net income (loss) excluding one-time items   $   71.5          $ (153.4)
Earnings (loss) per share diluted            $    0.38         $   (0.92)
    excluding one-time items
All figures in millions of dollars, except per share amounts

This outlook contains forward looking statements dependent on a number of risks and uncertainties including such factors as, but not restricted to, new orders received and shipped during the remainder of the third quarter, the degree of factory utilization, and the ramp up of recently introduced products. Other risk factors are included in the company's 10-Q for the quarter ended August 29, 1999 (see the Outlook section of Management's Discussion and Analysis of Results of Operations and Financial Conditions).

# # #

NATIONAL SEMICONDUCTOR CORPORATION 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share amounts)

                            Three Months Ended        Six Months Ended
                            ------------------      -------------------
                            Nov. 28,  Nov. 29,      Nov. 28,   Nov. 29,
                              1999      1998          1999       1998
                            --------  --------      --------   --------
Net sales                    $ 513.9   $ 510.1       $ 995.7   $  979.7

Operating costs and expenses:
  Cost of sales                281.5     417.1         578.2      831.7
  Research and development      85.0     112.9         200.1      235.0
  Selling, general and 
   administrative               75.1      84.9         151.1      157.9
  Special items:
   Restructuring of operations  (3.1)     12.5          (3.1)      12.5
   Gain on disposition of Cyrix
     PC processor business     (26.8)       -          (26.8)        - 
                             -------    ------       --------   -------
   Total operating costs
     and expenses              411.7     627.4         899.5    1,237.1
                             -------    ------      --------    -------
Operating income(loss)         102.2    (117.3)         96.2     (257.4)
Interest income(expense), net    1.6      (0.3)          0.2       (0.2)
Other income(expense), net       0.2      (8.3)         57.2       (8.0)
                             -------   -------      --------    -------
Income(loss) before 
  income taxes                 104.0    (125.9)        153.6     (265.6)
Income tax provision(benefit)    5.2     (31.5)          7.7      (66.4)
                             -------    ------      --------    -------
Net income(loss) before
  extraordinary item            98.8     (94.4)        145.9     (199.2)

Extraordinary loss on early
  extinguishment of debt, net
  of taxes of $0.4 million       6.8        -            6.8         -                 
                             -------    ------      --------    -------
Net income(loss)             $  92.0   $ (94.4)      $ 139.1   $ (199.2)
                             =======    ======      ========    =======

Earnings(loss) per share: 
         Basic               $  0.53   $ (0.57)      $  0.81   $  (1.20)
         Diluted             $  0.49   $ (0.57)      $  0.74   $  (1.20)


Selected income statement ratios as a percentage of sales:

Gross margin                   45.2%     18.2%         41.9%      15.1%
Research and development       16.5%     22.1%         20.1%      24.0%
Selling, general and           14.6%     16.6%         15.2%      16.1%
   administrative
Net income(loss)               17.9%    (18.5%)        14.0%     (20.3%)

Effective tax rate              5.0%     25.0%          5.0%      25.0% 

NATIONAL SEMICONDUCTOR CORPORATION 
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)

                                              Nov. 28,       May 30,
                                                1999          1999   
ASSETS                                        --------       --------
Current assets:
  Cash and cash equivalents                   $  402.8       $  418.7
  Short-term marketable investments               59.2          107.2
  Receivables, net                               218.9          171.9
  Inventories                                    157.6          141.3
  Deferred tax assets                            117.9          117.9
  Other current assets                            36.8           32.2
                                              --------       --------
  Total current assets                           993.2          989.2

Property, plant and equipment                  2,265.9        2,319.1
  Less accumulated depreciation               (1,458.0)      (1,403.1)
                                              --------       --------
  Net property, plant and equipment              807.9          916.0
Other assets                                     307.3          139.1
                                              --------       --------
Total assets                                  $2,108.4       $2,044.3
                                              ========       ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Short term borrowings and current 
    portion of long-term debt                 $   48.5       $   49.3
  Accounts payable                               157.0          189.8
  Accrued expenses                               328.6          348.1
  Income taxes payable                            96.1           77.8
                                              --------       --------
  Total current liabilities                      630.2          665.0

Long-term debt                                   124.1          416.3
Other non-current liabilities                     66.0           62.2
                                              --------       --------
  Total liabilities                              820.3        1,143.5
                                              --------       --------
Commitments and contingencies                                        

Shareholders' equity:
  Common stock                                    86.5           84.5
  Additional paid-in capital                   1,313.2        1,253.1
  Retained deficit                              (295.0)        (434.1)
  Accumulated other comprehensive
    income (loss)                                183.4           (2.7)
                                              --------       --------
  Total shareholders' equity                   1,288.1          900.8 
                                              --------       --------
Total liabilities and shareholders' equity    $2,108.4       $2,044.3
                                              ========       ========

NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)

                                                    Six Months Ended
                                                  --------------------
                                                  Nov. 28,     Nov. 29,
                                                   1999         1998 
                                                  -------      -------
Cash flows from operating activities:
Net income(loss)                                  $ 139.1      $(199.2)
Adjustments to reconcile net income(loss)
  with net cash provided by operations:
  Depreciation and amortization                     137.7        187.4
  (Gain)loss on investments                         (48.4)         0.1 
  Tax benefit associated with stock options            -           0.4
  Loss on disposal of equipment                       5.0         35.5
  Non-cash special items                            (29.9)        12.5
  Other, net                                          2.9         (1.4)
  Changes in certain assets and liabilities, net:
    Receivables                                     (42.0)         2.5 
    Inventories                                     (21.7)       104.2
    Other current assets                             (4.6)        28.1 
    Accounts payable and accrued expenses           (60.5)       (31.2)
    Income taxes payable                             18.3        (32.2)
    Other liabilities                                 3.8          0.3
                                                  --------     --------
Net cash provided by operating activities            99.7        107.0
                                                  --------     --------
Cash flows from investing activities:
Purchase of property, plant and equipment           (58.7)      (156.1)
Sale and maturity of marketable investments         137.0         73.3
Purchase of marketable investments                  (89.0)       (64.7)
Sale of investments                                  52.2          0.1
Disposition of Cyrix PC processor business           70.0           -
Sale of equipment                                     8.1           -  
Purchase of investments and other, net                2.2         (5.9)
                                                  --------     --------
Net cash provided by (used by) 
  investing activities                              121.8       (153.3)
                                                  --------     --------
Cash flows from financing activities:
Proceeds from bank borrowing                           -          10.0
Redemption of 6.5% convertible subordinated notes  (265.8)          -  
Repayment of debt                                   (22.1)       (16.3)
Issuance of common stock, net                        50.5         12.9
                                                  --------     --------
Net cash provided by (used by) 
  financing activities                             (237.4)         6.6
                                                  --------     --------
Net change in cash and cash equivalents             (15.9)       (39.7)
Cash and cash equivalents at beginning of period    418.7        460.8
                                                  --------     --------
Cash and cash equivalents at end of period        $ 402.8      $ 421.1
                                                  ========     ========

PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(in millions, except per share amounts)

                            Three Months Ended        Six Months Ended
                            ------------------      --------------------
                            Nov. 28,   Nov. 29,      Nov. 28,   Nov. 29,
                              1999       1998         1999        1998  
                            --------   -------      --------    --------

Earnings(loss) per share: 
         Basic              $ 0.53     $(0.57)      $ 0.81      $(1.20)
         Diluted            $ 0.49     $(0.57)      $ 0.74      $(1.20)

Weighted average shares: 
         Basic               172.2      166.6        171.3       166.2
         Diluted             189.5      166.6        187.5       166.2
   
Income(loss) used in basic 
   and diluted earnings(loss)
   per common share 
   calculation              $ 92.0     $(94.4)      $ 139.1     $(199.2)

NOTES TO FINANCIAL SCHEDULES

                                  Three Months Ended    Six Months Ended
                                  ------------------   ------------------
                                  Nov. 28,  Nov. 29,   Nov. 28,  Nov. 29,
                                    1999      1998       1999      1998   
                                  --------  --------   --------  --------
Interest income(expense), Net
-----------------------------
Interest income                    $   7.6   $   6.5    $  13.5   $  13.5
Interest expense                      (6.0)     (6.8)     (13.3)    (13.7)
                                  --------  --------   --------  --------
  Interest income(expense), net    $   1.6   $  (0.3)   $   0.2   $  (0.2)
                                  ========  ========   ========  ========

Other income, net
-----------------
Net intellectual property income   $   0.1   $   0.1    $   6.9   $   0.4
Gain(loss)on investments, net          0.1      (0.1)      48.5      (0.1)
Other                                   -       (8.3)       1.8      (8.3)
                                  --------  --------   --------  --------
  Total other income(expense), net $   0.2   $  (8.3)   $  57.2   $  (8.0)
                                  ========  ========   ========  ========