- Sales outlook for Q1 of fiscal 2009 expected to range from $460 million to $475 million
National's fourth quarter fiscal 2008 sales of $462 million were 2 percent higher sequentially from the third quarter of fiscal 2008, when the company reported $453.4 million in sales and earnings of 29 cents per share.
Gross margin of 65.9 percent in National's fourth quarter of fiscal 2008 was up from the 64.3 percent gross margin achieved in the third quarter of fiscal 2008. The sequential improvement was driven by strong manufacturing performance and cost efficiencies as well as improved product mix of higher-value analog products.
"Business conditions improved in the quarter, and we were able to turn this into higher gross margins," said Brian L. Halla, National's chairman and CEO. "We are focused on growth, expanding our base business into new, attractive markets leveraging our PowerWise(R) product portfolio to help our customers be much more energy efficient in their systems."
Compared to last year, fourth quarter fiscal 2008 sales were up from the $455.9 million reported in the fourth quarter of fiscal 2007, and earnings per share were above the 28 cents recorded a year ago. Gross margin in the fourth quarter of fiscal 2008 was also higher than the 62.5 percent reported in the fourth quarter of fiscal 2007.
Bookings for Q4, Fiscal 2008
National's total company bookings in the fourth quarter of fiscal 2008 increased by 12 percent sequentially over the third quarter. This increase was primarily driven by higher orders from the distribution channel as well as increased bookings for wireless handsets and other personal mobile devices. Regionally, fourth quarter bookings grew in all regions except Japan. Total company bookings exceeded billings in the fourth quarter.
Summary of Fiscal 2008
Annual sales were $1.89 billion compared to $1.93 billion in fiscal 2007. For fiscal 2008, National reported net income of $332 million, including $90 million of pre-tax stock compensation expenses under FASB Statement 123(R), compared to net income of $375 million in fiscal 2007. Earnings per share for the year were $1.26 compared to $1.12 in fiscal 2007 which included $111.5 million of pre-tax stock compensation expenses. National's gross margin in fiscal 2008 increased to 64.4 percent compared to 60.7 percent in fiscal 2007 reflecting continued improvements in the company's higher-value analog portfolio and strong execution in manufacturing. The company's effective tax rate was 26.4 percent for fiscal 2008 compared to 29.3 percent for fiscal 2007. Return on invested capital for fiscal 2008 was approximately 23 percent compared to approximately 21 percent for fiscal 2007.
Other Notable Items in Q4, Fiscal 2008 Results
Fourth quarter fiscal 2008 net results included approximately $9.1 million in expenses for severances and a factory modernization effort as well as $6 million of discrete tax benefits. Also included in fourth quarter fiscal 2008 results was $20 million in pre-tax stock compensation expense under FASB Statement 123(R). One year ago, the fourth quarter of fiscal 2007 included $25 million of pre-tax stock compensation expense.
Outlook for Q1, Fiscal 2009
National anticipates that sales in the first quarter of fiscal 2009 will range from $460 million to $475 million.
Stock Repurchase Program
During the fourth quarter of fiscal 2008, the company repurchased approximately $224 million of stock under its stock buyback program. As of the end of the fourth quarter of fiscal 2008, National had approximately $256 million of authorization still available under approved programs for future stock repurchases. National Semiconductor's fully diluted weighted average share count for the fourth quarter of fiscal of 2008 was 246.3 million shares, down from 255.5 million shares in the third quarter of fiscal 2008.
Company Declares Dividend
The company announced today that the Board of Directors has declared a cash dividend of $0.06 per outstanding share of common stock. This dividend will be paid on July 7, 2008 to shareholders of record at the close of business on June 16, 2008.
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 27, 2007 under the captions "Outlook", "Risk Factors" and "Management's Discussion and Analysis of Financial Conditions and Results of Operations" contained therein and the 10-Q for the quarter ended February 24, 2008.
About National Semiconductor
National Semiconductor creates energy-efficient analog and mixed-signal semiconductors. Its PowerWise(R) products enable systems that consume less power, extend battery life, and generate less heat. Headquartered in Santa Clara, Calif., National reported sales of $1.89 billion for fiscal 2008 which ended May 25, 2008. Additional company and product information is available at http://www.national.com.
Media Contact: Financial:
LuAnn Jenkins Mark Veeh
National Semiconductor National Semiconductor
(408) 721-2440 (408) 721-5007
luann.jenkins@nsc.com invest.group@nsc.com
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In millions, except per share amounts)
Three Months Ended Twelve Months Ended
May 25, May 27, May 25, May 27,
2008 2007 2008 2007
Net sales $462.0 $455.9 $1,885.9 $1,929.9
Cost of sales 157.4 171.1 671.5 757.7
Gross margin 304.6 284.8 1,214.4 1,172.2
Research and
development 90.2 95.7 363.0 363.7
Selling, general
and administrative 79.8 75.0 315.5 310.9
Severance and
restructuring
expenses 9.1 0.6 27.2 4.6
Gain on sale of
manufacturing plant
assets - - (3.1) -
Litigation settlement - - 3.3 -
In-process research
and development
charge - - - 6.1
Other operating income,
net (0.4) (0.6) (0.6) (2.8)
Operating expenses 178.7 170.7 705.3 682.5
Operating income 125.9 114.1 509.1 489.7
Interest income 4.8 9.8 33.8 40.1
Interest expense (19.6) 0.1 (85.5) (1.2)
Other non-operating
income (expense), net 1.1 0.9 (6.2) 2.0
Income before taxes 112.2 124.9 451.2 530.6
Income tax expense 29.0 34.8 118.9 155.3
Net income $83.2 $90.1 $332.3 $375.3
Earnings per share:
Basic $0.35 $0.29 $1.31 $1.17
Diluted $0.34 $0.28 $1.26 $1.12
Selected income
statement ratios as a
percentage of sales:
Gross margin 65.9% 62.5% 64.4% 60.7%
Research and development 19.5% 21.0% 19.2% 18.8%
Selling, general and
administrative 17.3% 16.5% 16.7% 16.1%
Net income 18.0% 19.8% 17.6% 19.4%
Effective tax rate 25.8% 27.9% 26.4% 29.3%
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions)
May 25, May 27,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $736.8 $828.6
Receivables 137.3 150.6
Inventories 148.6 176.0
Deferred tax assets 80.2 73.2
Other current assets 66.0 62.1
Total current assets 1,168.9 1,290.5
Net property, plant and equipment 557.3 583.5
Goodwill 60.5 63.6
Deferred tax assets 208.7 197.8
Other assets 112.2 69.9
Total assets $2,107.6 $2,205.3
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $62.5 $-
Accounts payable 53.5 59.9
Accrued expenses 180.3 122.7
Income taxes payable 12.3 117.4
Total current liabilities 308.6 300.0
Long-term debt 1,414.8 20.6
Long-term income taxes payable 143.4 -
Other non-current liabilities 85.4 157.7
Total liabilities $1,952.2 $478.3
Commitments and contingencies
Shareholders' equity:
Common stock of $0.50 par value $116.3 $155.1
Retained earnings 125.9 1,685.7
Accumulated other comprehensive loss (86.8) (113.8)
Total shareholders' equity 155.4 1,727.0
Total liabilities and shareholders' equity $2,107.6 $2,205.3
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
Twelve Months Ended
May 25, May 27,
2008 2007
Cash flows from operating activities:
Net income $332.3 $375.3
Adjustments to reconcile net income with net
cash provided by operating activities:
Depreciation and amortization 132.7 144.7
Share-based compensation expense 89.7 111.5
Excess tax benefit from share-based
payment arrangements (17.0) (12.6)
Tax benefit associated with stock options 27.5 29.6
Loss (gain) on investments 6.0 (2.0)
Loss on disposal of equipment 3.3 0.7
Non-cash restructuring expenses 4.5 -
Gain on sale of manufacturing plant assets (3.1) -
In-process research and development charge - 6.1
Other, net 4.0 2.4
Changes in certain assets and liabilities,
net:
Receivables 13.3 57.9
Inventories 27.1 15.7
Other current assets (19.3) 7.9
Accounts payable and accrued expenses 44.5 (126.0)
Income taxes 29.4 2.7
Other non-current liabilities (30.6) 4.4
Net cash provided by operating activities 644.3 618.3
Cash flows from investing activities:
Purchase of property, plant and equipment (111.3) (106.6)
Business acquisition, net of cash acquired - (8.2)
Proceeds from sale of property, plant, and
equipment 16.6 1.2
Sale and maturity of available-for-sale securities - 110.8
Proceeds from sale of investments 0.2 -
Funding of benefit plan (5.6) (8.5)
Other, net (1.9) 2.9
Net cash used in investing activities (102.0) (8.4)
Cash flows from financing activities:
Proceeds from unsecured senior notes, net of
issuance costs 992.9 -
Proceeds from bank borrowings, net of issuance
costs 1,996.5 -
Repayment of bank borrowing (1,546.8) -
Payment on software license obligations (8.7) (8.7)
Excess tax benefit from share-based payment
arrangements 17.0 12.6
Minimum tax withholding paid on behalf of
employees for net share settlements (14.6) (1.4)
Issuance of common stock 103.7 103.1
Purchase and retirement of treasury stock (2,123.5) (774.0)
Cash dividends declared and paid (50.6) (45.1)
Net cash used in financing activities (634.1) (713.5)
Net decrease in cash and cash equivalents (91.8) (103.6)
Cash and cash equivalents at beginning of year 828.6 932.2
Cash and cash equivalents at end of year $736.8 $828.6
PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(In millions, except per share amounts)
Three Months Ended Twelve Months Ended
May 25, May 27, May 25, May 27,
2008 2007 2008 2007
Earnings per share:
Basic $0.35 $0.29 $1.31 $1.17
Diluted $0.34 $0.28 $1.26 $1.12
Net income used in
basic and diluted
earnings per share
calculation $83.2 $90.1 $332.3 $375.3
Weighted-average
shares outstanding:
Basic 236.8 312.0 252.8 319.5
Diluted 246.3 327.5 264.3 334.2
OTHER FINANCIAL STATEMENT DETAIL
(In millions)
Other operating Three Months Ended Twelve Months Ended
income, net May 25, May 27, May 25, May 27,
2008 2007 2008 2007
Net intellectual
property income $(0.4) $(0.6) $(0.6) $(1.8)
Other - - - (1.0)
Total other
operating
income, net $(0.4) $(0.6) $(0.6) $(2.8)
Other non-operating
income (expense), net
Gain (loss) on
investments $1.1 $0.9 $(6.0) $2.0
Charitable contribution - - (0.2) -
Total other
non-operating income
(expense), net $1.1 $0.9 $(6.2) $2.0
Web site: http://www.national.com/
