National Semiconductor Reports Results for Third Quarter Fiscal 2011

- Q3 sales of $343.9 million decreased 12% from Q2 of fiscal 2011 and decreased 5% from Q3 of fiscal 2010

- GAAP earnings per share of 24 cents was down from 34 cents in Q2 but up from 22 cents one year ago

- Gross margin of 66.5% decreased from 68.9% in Q2 and from the 67.3% posted in Q3 of last year

- Sales outlook for Q4 of fiscal 2011 expected to increase sequentially to a range of $360 million to $370 million

Mar 10, 2011, 16:00 ET from National Semiconductor Corp.

SANTA CLARA, Calif., March 10, 2011 /PRNewswire/ -- National Semiconductor Corp. (NYSE: NSM) today reported sales of $343.9 million and net income of $59.4 million, or 24 cents per diluted share, for the third quarter of fiscal 2011, which ended Feb. 27, 2011. 

National's third quarter sales were 12 percent lower than the $390.4 million in sales reported in the second quarter of fiscal 2011 due to inventory adjustments in the distribution channel and seasonally lower shipments to wireless handset customers following the holiday sales period. Sales in the third quarter of fiscal 2011 were 5 percent lower than the $361.9 million reported in the third quarter of fiscal 2010.

Third quarter net income of $59.4 million, or 24 cents per diluted share, was a decrease from the $83.5 million, or 34 cents per diluted share, in the second quarter of fiscal 2011. One year ago, National reported net income of $53.2 million, or 22 cents per diluted share for the third quarter of fiscal 2010.

Gross margin of 66.5 percent decreased from 68.9 percent in the second quarter of 2011, driven by lower factory utilization in connection with the reduced sales volume. National reported gross margin of 67.3 percent in the third quarter of fiscal 2010.

Bookings for Q3, Fiscal 2011

National's total company bookings in the third quarter of fiscal 2011 were approximately the same as in the preceding quarter.  Bookings were up sequentially in the North America and Asia Pacific regions, and down in Europe and Japan. During the third quarter of fiscal 2011, billings exceeded bookings.

Notable Items in Q3, Fiscal 2011

Third quarter fiscal 2011 results included a $6 million pre-tax impairment charge related to assets held for sale. This amount is included within the $8.2 million of total restructuring expenses associated with previously announced plant closures.

Outlook for Q4, Fiscal 2011

For the fourth quarter of fiscal 2011, National projects the following:

  • Revenues between $360 million and $370 million, an increase of approximately 4 percent to 7 percent sequentially
  • Gross margin percentage between 66 percent and 67 percent  
  • Combined R&D and SG&A expenses between $132 million and $138 million

"As we move beyond the inventory correction, and the post-holiday slowdown in the mobile phone market, we are looking forward to resuming revenue growth," said Don Macleod, National's chief executive officer.  "We see our power management and, in particular, energy efficiency solutions driving revenue growth in broad industrial and mobile device markets."

Company Declares Dividend

The company announced today that the Board of Directors has declared a cash dividend of $0.10 per outstanding share of common stock.  The dividend will be paid on April 11, 2011 to shareholders of record at the close of business on March 21, 2011.

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, 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 30, 2010 under the captions "Outlook," "Risk Factors" and "Management's Discussion and Analysis of Financial Conditions and Results of Operations" contained therein, and the quarterly report on Form 10-Q for the quarter ended Nov. 28, 2010.  

About National Semiconductor

National Semiconductor is a leader in power management technology. Known for its easy-to-use analog integrated circuits and world-class supply chain, National's high-performance analog products enable its customers' systems to be more energy efficient. Headquartered in Santa Clara, Calif., National reported sales of $1.42 billion for fiscal 2010. Additional information is available at www.national.com.

NATIONAL SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In millions, except per share amounts)

Q3 FY11

Q2 FY11

Q3 FY10

YTD 2011

YTD 2010

Three Months Ended

Nine Months Ended

Feb. 27,

2011

Nov. 28,

2010

Feb. 28,

2010

Feb. 27,

2011

Feb. 28,

2010

Net sales

$

343.9

$

390.4

$

361.9

$

1,146.3

$

1,020.9

Cost of sales

115.2

121.5

118.2

356.7

360.0

Gross margin

228.7

268.9

243.7

789.6

660.9

Research and development

65.6

69.5

69.0

206.4

202.5

Selling, general and administrative

63.1

69.4

81.7

202.5

235.7

Severance and restructuring expenses

8.2

6.5

6.4

24.5

12.8

Other operating expense (income), net

0.4

-

0.6

0.5

(0.3)

Operating expenses

137.3

145.4

157.7

433.9

450.7

Operating income

91.4

123.5

86.0

355.7

210.2

Interest income

0.6

0.6

0.4

1.8

1.3

Interest expense

(14.1)

(13.8)

(14.8)

(40.9)

(45.5)

Other non-operating income, net

1.8

3.3

0.8

2.7

6.1

Income before taxes

79.7

113.6

72.4

319.3

172.1

Income tax expense

20.3

30.1

19.2

87.6

42.1

Net income

$

59.4

$

83.5

$

53.2

$

231.7

$

130.0

Earnings per share:

Basic

$

0.25

$

0.35

$

0.22

$

0.97

$

0.55

Diluted

$

0.24

$

0.34

$

0.22

$

0.94

$

0.54

Selected income statement ratios as a

percentage of sales:

Gross margin

66.5%

68.9%

67.3%

68.9%

64.7%

Research and development

19.1%

17.8%

19.1%

18.0%

19.8%

Selling, general and administrative

18.3%

17.8%

22.6%

17.7%

23.1%

Net income

17.3%

21.4%

14.7%

20.2%

12.7%

Effective tax rate

25.5%

26.5%

26.5%

27.4%

24.5%

Percentage (decrease) increase in selected items:

Q3 FY11

vs

Q2 FY11

Q3 FY11

vs

Q3 FY10

YTD FY11

vs

YTD FY10

Net sales

(11.9%)

(5.0%)

12.3%

Net income

(28.9%)

11.7%

78.2%

Diluted earnings per share

(29.4%)

9.1%

74.1%

NATIONAL SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions)

Feb. 27,

2011

May 30,

2010

ASSETS

Current assets:

Cash and cash equivalents

$

860.3

$

1,027.0

Short-term investments

40.0

-

Receivables

91.4

98.2

Inventories

138.2

118.6

Deferred tax assets

75.1

70.3

Other current assets

140.5

156.8

Total current assets

1,345.5

1,470.9

Net property, plant and equipment

420.4

390.1

Goodwill

68.3

66.1

Deferred tax assets, net

239.2

245.5

Other assets

98.8

102.2

Total assets

$

2,172.2

$

2,274.8

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt

$

-

$

276.5

Accounts payable

50.5

49.8

Accrued liabilities

104.3

204.5

Income taxes payable

6.6

17.6

Total current liabilities

161.4

548.4

Long-term debt

1,042.6

1,001.0

Long-term income taxes payable

189.0

175.3

Other non-current liabilities

129.5

124.2

Total liabilities

1,522.5

1,848.9

Commitments and contingencies

Shareholders' equity:

Common stock of $0.50 par value

121.4

119.5

Additional paid-in-capital

246.3

188.3

Retained earnings

414.7

250.3

Accumulated other comprehensive loss

(132.7)

(132.2)

Total shareholders' equity

649.7

425.9

Total liabilities and shareholders' equity

$

2,172.2

$

2,274.8

NATIONAL SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)

Nine Months Ended

Feb. 27,

2011

Feb. 28,

2010

Cash flows from operating activities:

Net income

$

231.7

$

130.0

Adjustments to reconcile net income with net cash provided by operating activities:

Depreciation and amortization

59.8

69.5

Share-based compensation

40.2

49.9

Excess tax benefit from share-based payment arrangements

(0.8)

(0.2)

Tax benefit (expense) associated with stock options

6.6

(6.7)

Gain on investments

(5.5)

(6.1)

Non-cash restructuring recovery

(0.1)

(5.7)

(Gain) loss on disposal of equipment

(0.5)

1.0

Impairment of equipment and other assets

10.0

0.1

Other, net

5.1

3.0

Changes in certain assets and liabilities, net:

Receivables

7.1

(17.4)

Inventories

(19.5)

20.3

Other current assets

0.9

(3.5)

Accounts payable and accrued liabilities

(97.6)

14.6

Current and deferred income taxes

(15.5)

(15.5)

Other non-current liabilities

5.1

12.9

Net cash provided by operating activities

227.0

246.2

Cash flows from investing activities:

Purchase of property, plant and equipment

(81.0)

(25.9)

Proceeds from sale of property, plant and equipment

4.3

2.0

Purchase of short-term investments

(40.0)

-

Business acquisition, net of cash acquired

(4.1)

(4.8)

Funding of benefit plan

(3.5)

(1.5)

Redemption of benefit plan

8.5

7.6

Other, net

(0.5)

(2.2)

Net cash used in investing activities

(116.3)

(24.8)

Cash flows from financing activities:

Repayment of bank borrowing

(250.0)

(46.8)

Proceeds from liquidation of derivative instrument in fair value hedge

13.0

-

Payment on software license obligations

(6.6)

(6.3)

Excess tax benefit from share-based payment arrangements

0.8

0.2

Minimum tax withholding paid on behalf of employees for net share settlements

(2.8)

(1.7)

Issuance of common stock

35.5

59.5

Cash payments in connection with stock option exchange program

-

(1.3)

Cash dividends declared and paid

(67.3)

(56.7)

Net cash used in financing activities

(277.4)

(53.1)

Net change in cash and cash equivalents

(166.7)

168.3

Cash and cash equivalents at beginning of period

1,027.0

700.3

Cash and cash equivalents at end of period

$

860.3

$

868.6

PART I.  FINANCIAL INFORMATION

EARNINGS PER SHARE (Unaudited)

(In millions, except per share amounts)

Q3 FY11

Q2 FY11

Q3 FY10

YTD 2011

YTD 2010

Three Months Ended

Nine Months Ended

Feb. 27,

2011

Nov. 28,

2010

Feb. 28,

2010

Feb. 27,

2011

Feb. 28,

2010

Net income used in basic and diluted

earnings per share calculation

$

59.4

$

83.5

$

53.2

$

231.7

$

130.0

Earnings per share:

Basic

$

0.25

$

0.35

$

0.22

$

0.97

$

0.55

Diluted

$

0.24

$

0.34

$

0.22

$

0.94

$

0.54

Weighted-average shares outstanding:

Basic

241.5

239.9

237.3

240.1

235.8

Diluted

247.0

244.8

242.5

245.5

240.5

OTHER FINANCIAL STATEMENT DETAIL

(In millions)

Q3 FY11

Q2 FY11

Q3 FY10

YTD 2011

YTD 2010

Three Months Ended

Nine Months Ended

Feb. 27,

2011

Nov. 28,

2010

Feb. 28,

2010

Feb. 27,

2011

Feb. 28,

2010

Other operating expense (income), net:

Litigation settlement

$

-

$

-

$

-

$

-

$

(0.5)

Other

0.4

-

0.6

0.5

0.2

Total other operating expense (income), net

$

0.4

$

-

$

0.6

$

0.5

$

(0.3)

Other non-operating income, net:

Gain on investments

$

1.8

$

3.7

$

0.8

$

5.5

$

6.1

Net gain (loss) on derivative instrument in

fair value hedge

-

0.3

-

(2.1)

-

Loss on liquidation of derivative instrument

in fair value hedge

-

(0.7)

-

(0.7)

-

Total other non-operating income, net

$

1.8

$

3.3

$

0.8

$

2.7

$

6.1

Media Contact:

Financial:

Lee Ann Schlatter

Mark Veeh

(408) 721-7680

(408) 721-5007

LeeAnn.Schlatter@nsc.com

invest.group@nsc.com

SOURCE National Semiconductor Corp.



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