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NATIONAL SEMICONDUCTOR REPORTS 22% GROWTH IN REVENUES WITH 19% INCREASE IN NET INCOME FOR SECOND FISCAL QUARTER

Dec 6, 1995

SANTA CLARA, CA, December 6, 1995 - National Semiconductor Corporation (NYSE:NSM) today reported fiscal 1996 second quarter revenues of $711.6 million, a 22 % increase over the comparable quarter last year. Sales of analog and mixed signal products, the core of National's focus on markets for moving and shaping information, grew by 27 % during the quarter.

Net income for the quarter ended November 26, 1995 was $79.8 million, or 57 cents per share (fully diluted), compared with $67.0 million, or 49 cents per share (fully diluted) for the comparable quarter of fiscal 1995. Overall gross margin also increased to 44 %, versus 43.1 % last year.

"It's clear that our focus on analog and mixed signal market opportunities is continuing to drive growth in both revenues and profit," said Gilbert F. Amelio, chairman, president and chief executive officer.

"Analog and mixed signal sales grew to 58 % of total revenues, compared with 56 % a year ago," he added. "These products provide gross margins in excess of 50 %."

Summary of results:

Second quarter ended:         November 26, 1995      November 27, 1994
Net Sales                           $ 711.6                 $ 584.4
Net Income                          $  79.8                 $  67.0
Earnings per share (fully diluted)  $   0.57                $   0.49

(All figures in millions of dollars, except per share amounts)

For the first six months of fiscal 1996, ended November 26, 1995, the company reported revenues of $1,410.4, up 24 % from the first half of fiscal 1995 revenues of $1,138.2 million. Net income for the six-month period was $153.3, or $1.10 per share, (fully diluted) compared with $126.0 million, or 91 cents per share (fully diluted) for the first half of fiscal 1995.

Summary of results:

Six months ended:             November 26 1995       November 27 1994
Net Sales                          $1,410.4                $1,138.2
Net income                         $  153.3                $  126.0
Earnings per share (fully diluted) $    1.10               $    0.91

(All figures in millions of dollars, except per share amounts)

Pre-tax profit as a percent of sales improved to 14.9 % for the second quarter of fiscal 1995, compared with 14.3 % in the second quarter last year. The company continued to fully utilize its wafer fabs while expanding capacity by 26 % since the second quarter of fiscal 1995. This investment in capacity was enhanced by a matching increase in submicron CMOS process development. The company continued to shift research and development resources toward analog and mixed signal products, which received 73 % of total R&D spending in this year's second quarter, versus 69 % last year.

During the quarter, National signed an agreement to sell its wholly owned subsidiary, DynaCraft, Inc. (DCI), to Malaysia Pacific Industries. The sale is expected to close during the third quarter, pending necessary governmental approvals. The company also sold the adapter card segment of its Local Area Network business.

New order rates were up 10 % overall and nearly 25 % for analog and mixed signal products, compared with the second quarter of fiscal 1995. Overall bookings and new orders for analog and mixed signal products were essentially flat with the summer quarter. Within the analog and mixed signal segment, however, particularly strong order increases were booked during the second quarter in Audio products, Analog Telecommunications, Local Area Network products, Wireless Communications and PC Products. Bipolar Logic and EPROM orders were down more than 40 % from their levels in the second quarter of fiscal 1995 and down 25 to 35 % from the summer quarter as the company continues to harvest older logic products and de-emphasize the merchant market for EPROMS.

On a regional basis, orders in North America were up year over year, as well as from the summer quarter. European bookings increased from the comparable quarter last year, but were down from the first quarter of this year. Orders in Japan decreased slightly from fiscal 1995 levels as well as from first quarter levels. Bookings from Southeast Asia increased from both the second quarter of fiscal 1995 and from the summer quarter levels.

CORP95010FIN


PART I. FINANCIAL INFORMATION NATIONAL SEMICONDUCTOR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

                            Three Months Ended        Six Months Ended
                            ------------------      --------------------
                            Nov. 26,   Nov. 27,      Nov. 26,   Nov. 27,
                              1995       1994          1995       1994
                            --------   -------      --------    --------
Net sales                    $ 711.6   $ 584.4      $1,410.4    $1,138.2

Operating costs and expenses:
 Cost of sales                 398.6     332.7         796.3       653.3
 Research and development       88.7      67.0         173.6       132.9
 Selling, general and
  administrative               128.8     108.5         258.0       211.4
                             -------    ------      --------     -------
   Total operating costs
     and expenses              616.1     508.2       1,227.9       997.6
                             -------    ------      --------     -------
Operating income                95.5      76.2         182.5       140.6
Interest income, net             2.7       3.5           5.8         8.0
Other income, net                8.0       4.0          16.0         8.8
                              -------    ------      --------     ------
Income before income
  taxes                        106.2      83.7         204.3       157.4
Income taxes                    26.4      16.7          51.0        31.4
                             -------    ------      --------     -------
Net income                    $ 79.8    $ 67.0      $  153.3     $ 126.0
                             =======    ======      ========     =======

Earnings per share:

         Primary              $ .61     $ .51         $ 1.16      $  .96
         Fully diluted        $ .57     $ .49         $ 1.10      $  .91


Selected income statement ratios as a percentage of sales:
Gross Margin                   44.0%     43.1%        43.5%        42.6%
Research and Development       12.5%     11.5%        12.3%        11.7%
Selling, general and           18.1%     18.6%        18.3%        18.6%
   administrative
Net income                     11.2%     11.5%        10.9%        11.1%

Effective tax rate             25.0%     20.0%        25.0%        20.0%

(All figures in millions of dollars, except per share amounts)


NATIONAL SEMICONDUCTOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

                                              Nov. 26,        May 28,
                                                1995          1995
ASSETS                                        --------       --------
Current assets:
  Cash and cash equivalents                   $  497.9       $  420.3
  Short-term marketable investments               59.8           47.1
  Receivables, net                               354.3          318.0
  Inventories                                    303.6          263.0
  Deferred tax assets                             79.0           77.4
  Other current assets                            87.7           52.5
                                               -------        -------
  Total current assets                         1,382.3        1,178.3

Property, plant and equipment                  2,359.3        2,147.6
  Less accumulated depreciation                1,225.5        1,185.2
                                               -------        -------
Net property, plant and equipment              1,133.8          962.4
Long-term marketable investments                  20.2           20.2
Other assets                                      76.8           74.8
                                               -------        -------
Total assets                                  $2,613.1       $2,235.7
                                              ========       ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Short term borrowings and current
    portion of long-term debt                 $   23.4       $   23.6
  Accounts payable                               217.5          272.0
  Accrued expenses                               227.6          230.7
  Income taxes                                   183.9          159.6
                                               -------        -------
  Total current liabilities                      652.4          685.9

Long-term debt                                   363.3           82.5
Deferred income taxes                             20.0           20.1
Other non-current liabilities                     42.3           40.5
                                               -------        -------
  Total liabilities                            1,078.0          829.0
                                               -------        -------
Commitments and contingencies

Shareholders' equity:
  Convertible preferred stock                      0.2            0.2
  Common stock                                    61.7           63.1
  Additional paid-in capital                     919.8          992.3
  Retained earnings                              558.2          411.0
  Treasury stock, at cost                         (4.8)         (59.9)
                                               -------        -------
  Total shareholders' equity                   1,535.1        1,406.7
                                               -------        -------
Total liabilities and shareholders' equity    $2,613.1       $2,235.7
                                              ========       ========

(in millions)


NATIONAL SEMICONDUCTOR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

                                                    Six Months Ended
                                                  --------------------
                                                  Nov. 26,     Nov. 27,
                                                   1995         1994
                                                  --------     -------
Cash flows from operating activities:
Net Income                                        $ 153.3      $ 126.0
Adjustments to reconcile net income
  with net cash provided by operations:
  Depreciation and amortization                     108.8         84.3
  Gain on sale of investments                        (5.2)        (4.3)
  Tax benefit associated with stock options          12.0           -
  Other, net                                          2.0          3.4
  Changes in certain assets and liabilities, net:
    Receivables                                     (36.3)        (1.8)
    Inventories                                     (40.6)       (14.8)
    Other current assets                            (35.2)        (8.0)
    Accounts payable and accrued expenses           (53.3)       (49.4)
    Current and deferred income taxes                23.2        (28.9)
    Other non-current liabilities                     1.8          1.0
                                                  --------     --------
Net cash provided by operating activities           130.5        107.5
                                                  --------     --------
Cash flows from investing activities:
Purchases of property, plant and equipment         (277.3)      (159.1)
Proceeds from the sales and maturities of
   marketable investments                           305.2        450.2
Purchases of marketable investments                (318.1)      (416.3)
Proceeds from sale of investments                     7.8          4.9
Purchases of investments and other, net             (10.4)       (10.6)
                                                  --------     --------
Net cash used by investing activities              (292.8)      (130.9)
                                                  --------     --------
Cash flows from financing activities:
Proceeds from issuance of convertible subordinated
   notes, less issuance costs                       253.3           -
Proceeds from the issuance of debt                   42.0         23.2
Repayment of debt                                   (14.7)       (10.5)
Issuance of common stock, net                        22.3          2.2
Purchase of treasury stock                          (57.4)       (42.4)
Payment of preferred dividends                       (5.6)        (5.6)
                                                  --------     --------
Net cash provided by (used by) financing
  activities:                                       239.9        (33.1)
                                                  --------     --------
Net change in cash and cash equivalents              77.6        (56.5)
Cash and cash equivalents at beginning of period    420.3        398.1
                                                  --------     --------
Cash and cash equivalents at end of period        $ 497.9      $ 341.6
                                                  ========     ========

(in millions)


PART I. FINANCIAL INFORMATION EARNINGS PER SHARE

(Unaudited)

                            Three Months Ended        Six Months Ended
                            ------------------      --------------------
                            Nov. 26,   Nov. 27,      Nov. 26,   Nov. 27,
                              1995       1994         1995        1994
                            --------   -------      --------    --------

Earnings per share:

         Primary              $ .61     $ .51         $ 1.16       $ .96
         Fully diluted        $ .57     $ .49         $ 1.10       $ .91

Weighted average shares:
         Primary              126.9     124.9         127.2       125.6
         Fully diluted        143.1     137.2         141.4       137.9

Income used in primary
   earnings per share
  (reflecting preferred
   dividends)                $ 77.0    $ 64.2       $ 147.7     $ 120.4

Income used in fully diluted
   earnings per share
   (reflecting adjustment
   for interest on
   convertible debt)         $ 81.9    $ 67.0       $ 155.4     $ 126.0


Major Product Sales as a Percent of Total Sales:

Analog                         17.5%     16.3%        17.5%        16.3%
Analog Rich Mixed Signal       20.7%     21.8%        21.4%        21.4%
Mixed Signal                   20.1%     17.7%        20.0%        18.1%
                              ------    ------       ------       ------
Analog/Mixed Signal            58.3%     55.8%        58.9%        55.8%

Bipolar Logic                   7.0%      8.8%         7.3%         8.3%
Cmos Logic                      6.5%      6.2%         6.4%         6.6%
Digital Other                   8.5%     11.9%         8.6%        12.0%
Discretes                       6.7%      4.7%         6.6%         4.5%
Non-Volatile Memory             7.2%      7.6%         7.0%         7.8%
DCI/Corporate                   5.8%      5.0%         5.2%         5.0%
                              ------    ------       ------       ------
Total                         100.0%    100.0%       100.0%       100.0%

(in millions, except per share amount)