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NATIONAL SEMICONDUCTOR REPORTS NET INCOME OF 46 CENTS PER SHARE FOR SECOND FISCAL QUARTER, EXCLUDING EFFECTS OF CYRIX MERGER

Dec 9, 1997

December 9, 1997-- National Semiconductor Corporation® today reported net income of $72.5 million, or 46 cents per share, on sales of $640.3 million for its core businesses in the second quarter of fiscal 1998, excluding effects of the merger with Cyrix Corporation. This compares with net income of $21.8 million, or 14 cents per share, on sales of $507.5 million for National's core businesses in the comparable quarter of fiscal 1997.



"I'm pleased with another quarter of strong growth in which our core business revenues increased by 26 percent over last year's second quarter, led by 36 percent growth in analog sales," said Brian L. Halla, National Semiconductor's president and chief executive officer. Halla noted that the company also increased its market share in the standard linear market segment by more than 2 percentage points over the last five quarters, and exhibited a robust recovery in bookings for local area network (LAN) products and continued market share gains for PC products such as its Super I/O‘ family in the most recent quarter.



Summary of results

(Excluding Cyrix merger and one-time charges)

_______________________________________________________________________
 3 months ended:        Nov. 23, 1997    Nov. 24, 1996

			National Core    National + Fairchild
Net Sales		$640.3		 $507.5	    $661.5
Net Income 		$ 72.5 		 $ 21.8	    $ 42.5
Earnings per share      $  0.46		 $  0.14    $  0.30
(All figures in millions of dollars, except per share amounts)

Including Cyrix's operating loss of $17.8 million and one-time charges associated with the Cyrix merger and the acquisition of Future Integrated Systems totaling $25.8 million, the company recorded net income of $28.9 million, or 17 cents per share, on combined sales of $719.9 million, in the second quarter of fiscal 1998. These charges are detailed in the attached financial tables and historical financial results have also been restated in the tables to reflect the merger.



"We are excited about our new Cyrix business and particularly with the progress Cyrix is continuing to make with its MediaGX‘ microprocessor product line," Halla said, pointing out that unit shipments of the MediaGX‘ processor doubled in the November quarter over the August quarter. MediaGX‘ is the only integrated processor driving the sub-$1,000 PC market.



Summary of results

(Including Cyrix merger and one-time charges)

_______________________________________________________________________
3 months ended:                Nov. 23, 1997

		National Core  National + Cyrix  One-Time Charges      Total
Net Sales	  $640.3            $719.9	        --	       $719.9
Net Income (Loss) $ 72.5            $ 54.7          ($ 25.8)	       $ 28.9

(All figures in millions of dollars)



Cyrix results for the second quarter of fiscal 1998 were conformed to National's accounting period by adding together Cyrix's periods of September, October and November through November 23, 1997. Cyrix lost $17.8 million on sales of $79.6 million in the second quarter, which included $14.0 million after-tax of inventory and distributor reserve charges related to the 6x86MX product line. In addition, National had special one-time charges during the second quarter of $2.5 million to write off in-process research and development related to the purchase of Future Integrated Systems (FIS) and Cyrix merger expenses of $30.0 million. The after-tax effect of these $32.5 million pre-tax charges to net income was $25.8 million. Further detail is available in tables immediately following the financial statements.



Second quarter core National bookings maintained the strong summer quarter orders rates. After a seasonal dip in September, orders recovered in October and continued to accelerate through November. Worldwide orders grew just under 10 percent over last year's second quarter. Strong unit demand allowed LAN orders to lead the company in growth compared with the first quarter of fiscal 1998, while matching last year's second quarter record bookings. Audio and video products also grew significantly due to new design-ins into monitors, portable personal computers and telephone handsets. As the company transitioned to the post-Christmas selling season toward the end of the quarter, personal systems bookings slowed compared with the first quarter, but still grew at more than twice the company rate over last year's second quarter, due to new Super I/O products targeted at lower priced personal computers. Wireless orders dipped from the summer quarter as National reduced unusually long lead times on unique frequency synthesizer products but still grew more than 50 percent over last year. Power management products in particular significantly exceeded company growth totals.



# # #



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


                            Three Months Ended        Six Months Ended
                            ------------------      -------------------
                            Nov. 23,  Nov. 24,      Nov. 23,   Nov. 24,
                              1997      1996          1997       1996
                            --------  --------      --------   --------
Net sales                    $ 719.9   $ 686.6       1,376.7   $1,301.9
Operating costs and expenses:
 Cost of sales                 436.4     439.8         832.6      860.0
 Research and development      118.0      97.8         230.1      192.3
Selling, general and
  administrative                97.8     120.5         183.7      227.5
Special items:
 Merger costs                   30.0        -           30.0         -
 Restructuring of operations      -         -             -       256.3
 In-process R&D charge           2.5        -            2.5       10.6
                             -------    ------      --------    -------
   Total operating costs
     and expenses              684.7     658.1       1,278.9    1,546.7
                             -------    ------      --------    -------
Operating income(loss)          35.2      28.5          97.8     (244.8)
Interest income(expense), net    3.4      (0.7)         14.9       (1.1)
Other income, net                1.9       3.3           9.3        3.0
                             -------   -------      --------    -------
Income(loss) before
  income taxes                  40.5      31.1         122.0     (242.9)
Income tax provision(benefit)   11.6       5.0          30.5      (63.3)
                             -------    ------      --------    -------
Net income(loss)              $ 28.9    $ 26.1      $   91.5    $(179.6)
                             =======    ======      ========    =======

Earnings per share:
         Primary               $ .17     $ .17       $ .54        $(1.16)
         Fully diluted         $ .17     $ .16       $ .54        $(1.16)




Selected income statement ratios as a percentage of sales:

Gross Margin                   39.4%     35.9%       39.5%         33.9%
Research and Development       16.7%     14.2%       16.9%         15.6%
Selling, general and           13.6%     17.6%       13.3%         17.5%
   administrative
Net income                      4.0%      3.8%        6.6%        (13.8%)

Effective tax rate             28.6%     16.1%       25.0%         26.1%


NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS  (Unaudited)
(in millions)
                                              Nov. 23,       May 25,
                                                1997          1997
ASSETS                                        --------       --------
Current assets:
  Cash and cash equivalents                   $  734.4       $  897.8
  Short-term marketable investments              118.9           79.6
  Receivables, net                               336.0          281.0
  Inventories                                    246.1          205.8
  Deferred tax assets                            176.7          173.3
  Other current assets                            86.9           99.9
                                               -------        -------
  Total current assets                         1,699.0        1,737.4

Property, plant and equipment                  2,753.9        2,420.4
  Less accumulated depreciation               (1,166.1)      (1,071.4)
                                               -------        -------
  Net property, plant and equipment            1,587.8        1,349.0
Long-term marketable investments                   3.4            6.4
Other assets                                     108.9          118.0
                                               -------        -------
Total assets                                  $3,399.1       $3,210.8
                                              ========       ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Short term borrowings and current
    portion of long-term debt                 $   35.7       $   15.4
  Accounts payable                               274.7          265.5
  Accrued expenses                               321.9          306.8
  Income taxes                                   247.0          238.1
                                               -------        -------
  Total current liabilities                      879.3          825.8

Long-term debt                                   432.9          460.5
Deferred income taxes                              9.8           12.1
Other non-current liabilities                     48.0           40.7
                                               -------        -------
  Total liabilities                            1,370.0        1,339.1
                                               -------        -------
Commitments and contingencies

Shareholders' equity:
  Common stock                                    82.1           72.7
  Additional paid-in capital                   1,179.8        1,119.7
  Retained earnings                              767.2          679.3
                                               -------        -------
  Total shareholders' equity                   2,029.1        1,871.7
                                               -------        -------
Total liabilities and shareholders' equity    $3,399.1       $3,210.8
                                              ========       ========

 NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)                                       Six Months Ended
                                                  --------------------
                                                  Nov. 23,     Nov. 24,
                                                   1997         1996
                                                  -------      -------
Cash flows from operating activities:
Net income(loss)                                  $  91.5      $(179.6)
Adjustments to reconcile net income(loss)
  with net cash provided by operations:
  Depreciation and amortization                     129.1        131.1
  (Gain)loss on investments                          (6.7)         3.0
  Tax benefit associated with stock options          15.3          4.5
  In-process research and development charge          2.5         10.6
  Loss on disposal of equipment                       6.1          2.4
  Write-down of inventory                              -          15.1
  Non-cash special charges                           30.0        256.3
  Other, net                                          3.6         (1.6)
  Changes in certain assets and liabilities, net:
    Receivables                                     (71.8)       (18.7)
    Inventories                                     (22.8)        31.6
    Other current assets                            (13.4)         5.5
    Accounts payable and accrued expenses              .4        (70.3)
    Current and deferred income taxes                 7.6        (71.3)
    Other non-current liabilities                     7.3         (1.8)
                                                  --------     --------
Net cash provided by operating activities           178.7        116.8
                                                  --------     --------
Cash flows from investing activities:
Purchase of property, plant and equipment          (366.3)      (240.0)
Sale and maturity of marketable investments         909.2        541.4
Purchase of marketable investments                 (948.7)      (524.7)
Sale of investments                                  12.1           -
Business acquisition, net of cash acquired           (2.8)       (15.4)
Purchase of investments and other, net                (.5)       (12.3)
                                                  --------     --------
Net cash used by investing activities              (397.0)      (251.0)
                                                  --------     --------
Cash flows from financing activities:
Issuance of 5.5% convertible subordinated notes,
  less issuance costs                                  -         126.5
Issuance of debt                                       .4         52.2
Repayment of debt                                    (6.4)       (84.7)
Issuance of common stock, net                        43.3         20.5
                                                  --------     --------
Net cash provided by financing activities            37.3        114.5
                                                  --------     --------
Net change in cash and cash equivalents            (181.0)       (19.7)
Adjustment to conform pooling of interest for
  cash and cash equivalents at beginning of year     17.6           -
Cash and cash equivalents at beginning of period    897.8        486.7
                                                  --------     --------
Cash and cash equivalents at end of period        $ 734.4      $ 467.0
                                                  ========     ========

NATIONAL SEMICONDUCTOR CORPORATION
EARNINGS PER SHARE (Unaudited)
(in millions, except per share amounts)

                            Three Months Ended        Six Months Ended
                            ------------------      --------------------
                            Nov. 23,   Nov. 24,      Nov. 23,   Nov. 24,
                              1997       1996         1997        1996
                            --------   -------      --------    --------

Earnings per share:
         Primary               $ .17     $ .17         $ .54      $(1.16)
         Fully diluted         $ .17     $ .16         $ .54      $(1.16)

Weighted average shares:
         Primary               169.3     157.5         168.0       154.3
         Fully diluted         169.3     158.6         168.4       155.2

Income (loss) used in primary
   earnings per common share
   calculation(reflecting
   preferred dividends,
   if applicable)              $ 28.9    $ 26.1        $91.5     $(179.6)

Income (loss) used in fully
   diluted earnings per share
  (reflecting adjustment for
   interest on convertible
   notes when dilutive)        $ 28.9    $ 26.1        $91.5     $(179.6)





Notes to Financial Tables



Merger

On November 17, 1997, the Company merged with Cyrix Corporation (“Cyrix). Cyrix designs, develops and markets IBM personal computer software-compatible microprocessors for the personal computer industry and is a source of X86 microprocessors of original design for the personal computer marketplace. A total of 16.4 million shares of National common stock will be issued to current holders of Cyrix common stock. In connection with the merger, the Company recorded a one-time charge of $30.0 million related to certain merger and related expenses in the three months ended November 23, 1997. These expenses primarily include transaction fees for investment bankers, attorneys, and accountants; financial printing costs; and costs associated with the elimination of duplicate facilities and operations.



The merger was accounted for as a pooling of interests. The accompanying consolidated balance sheets as of November 23, 1997 and May 25, 1997 and the consolidated statements of operations for the three months and six months ended November 23, 1997 and November 24, 1996, respectively, and the consolidated statements of cash flows for the six months ended November 23, 1997 and November 24, 1996, respectively, have been restated to include Cyrix. Since the fiscal years for National and Cyrix differ, Cyrix has changed its fiscal year-end to coincide with National’s beginning in fiscal 1998. The restatement of prior year financial statements combines National’s fiscal 1997 with Cyrix’s calendar year 1996. The consolidated balance sheet as of May 25, 1997 combines National’s consolidated balance sheet as of May 25, 1997 with Cyrix’s consolidated balance sheet as of December 31, 1996. The consolidated statements of operations for the three months and six months ended November 24, 1996 and the consolidated statement of cash flows for the six months ended November 24, 1996 combine National’s consolidated statements of operations for the three months and six months ended November 24, 1996 and the consolidated statement of cash flows for the six months ended November 24, 1996 with Cyrix’s consolidated statements of operations for the three months and six months ended June 30, 1996 and the consolidated statement of cash flows for the six months ended June 30, 1996. The results of operations and cash flows for the period January 1, 1997 through May 25, 1997 for Cyrix have been recorded as an adjustment to retained earnings.



Selected Financial Information

The following table presents selected financial information for National Core and Cyrix excluding Fairchild Semiconductor in fiscal 1997. Special charges include the $30 million for merger costs and $2.5 million for an in-process R&D charge in fiscal 1998 and $275 million for one-time charges in connection with the Company’s first quarter fiscal 1997 reorganization of its operating structure and $10.6 million for an in-process R&D charge in fiscal 1997. The $275 million one-time charges related to the reorganization in fiscal 1997 consisted of a $256.3 million restructure charge and charge to cost of sales of $18.7 million.



                                           Three Months Ended
                              ---------------------------------------------
                              National                Special      Total
                                Core        Cyrix     Charges    Core+Cyrix
                              --------    --------    --------   ----------
November 23, 1997:
      Net sales               $  640.3    $   79.6    $     -     $  719.9
      Gross profit            $  279.2    $    4.3    $     -     $  283.5
      Gross margin                43.6%        5.4%        N/A        39.4%
      Research & development  $  106.8    $   11.2    $    2.5    $  120.5
      Selling, gen. & admin.  $   81.4    $   16.4    $     -     $   97.8
      Net income              $   72.5    $  (17.8)   $  (25.8)   $   28.9
      Earnings per share-
       Fully diluted,
       as reported:           $   0.43    $  (0.11)   $  (0.15)   $   0.17
      Pro forma fully
       diluted (1):
       Earnings per share     $   0.46
       Weighted average
        shares                   158.4

November 24, 1996:
      Net sales               $  507.5    $   25.1    $     -     $  532.6
      Gross profit            $  194.6    $   (1.3)         -     $  193.3
      Gross margin                38.3%       (5.2)%       N/A        36.3%
      Research & development  $   84.6    $    8.8    $     -     $   93.4
      Selling, gen. & admin.  $   85.9    $   14.1    $     -     $  100.0
      Net income              $   21.8    $  (16.4)   $     -     $    5.4
      Earnings per share-
       Fully diluted,
       as reported:           $   0.14    $  (0.11)   $     -     $   0.03

(1) Proforma fully diluted earnings per share represents fully diluted earnings per share for National Core before the effect from dilution from 16.4 million shares issued in connection with the Cyrix merger and assuming the dilutive effect of the Company’s convertible debt.



                                            Six Months Ended
                              ---------------------------------------------
                              National                Special      Total
                                Core        Cyrix     Charges    Core+Cyrix
                              --------    --------    --------   ----------
November 23, 1997:
      Net sales               $1,241.1    $  135.6    $    -      $1,376.7
      Gross profit            $  528.7    $   15.4    $    -      $  544.1
      Gross margin                42.6%       11.4%        N/A        39.5%
      Research & development  $  208.6    $   21.5    $    2.5    $  232.6
      Selling, gen. & admin.  $  155.3    $   28.4    $     -     $  183.7
      Net income              $  144.5    $  (28.6)   $  (24.4)   $   91.5
      Earnings per share-
       Fully diluted,
       as reported:           $   0.86    $  (0.17)   $  (0.15)   $   0.54

November 24, 1996:
      Net sales               $  941.0    $   74.3    $     -     $1,015.3
      Gross profit            $  356.6    $   21.6    $  (18.7)   $  359.5
      Gross margin                37.9%       29.1%        N/A        35.4%
      Research & development  $  166.9    $   16.5    $   10.6    $  194.0
      Selling, gen. & admin.  $  161.2    $   27.1    $     -     $  188.3
      Net income              $   24.6    $  (14.5)   $ (214.2)   $ (204.1)
      Earnings per share-
       Fully diluted,
       as reported:           $   0.16    $  (0.09)   $  (1.39)   $  (1.32)

The selected financial information presented above for the three months and six months ended November 24, 1996 is pro forma and includes certain expenses for research and development, selling and marketing, and headquarter functions which were allocated from central corporate cost centers to National Core and Fairchild Semiconductor.

Other Income, Net
----------------------------
Components of other             Three Months Ended    Six Months Ended
income,net were:                ------------------   ------------------
(in millions)                   Nov. 23,  Nov. 24,   Nov. 23,  Nov. 24,
                                  1997      1996       1997      1996
                                --------  --------   --------  --------
Net intellectual property income $   1.9   $   3.4    $   2.6   $   6.1
Gain(loss)on investments, net         -         -         6.7      (3.0)
Other                                 -        (.1)        -        (.1)
                                 -------   -------    -------   -------
     Total other income, net     $   1.9   $   3.3    $   9.3   $   3.0
                                 =======   =======    =======   =======