UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 6, 2007
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National Semiconductor Corporation | |
DELAWARE | 95-2095071 |
2900 SEMICONDUCTOR DRIVE, P.O. BOX 58090
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Registrant's telephone number, including area code: (408) 721-5000
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
NATIONAL SEMICONDUCTOR CORPORATION
INDEX
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Section 2 – Financial Information |
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Item 2.02 | Results of Operations and Financial Condition | 3 |
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Section 9 – Financial Statements and Exhibits |
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Item 9.01 | Financial Statements and Exhibits | 3 |
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Signature |
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Exhibits: |
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99.1 | News release dated December 6, 2007 (Earnings) |
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NATIONAL SEMICONDUCTOR CORPORATION
Item 2.02 | RESULTS OF OPERATION AND FINANCIAL CONDITION
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On December 6, 2007, National Semiconductor Corporation issued a news release announcing earnings for the quarter ended November 25, 2007. The earnings news release, which has been attached as Exhibit 99.1, contains unaudited Condensed Consolidated Statements of Income, Balance Sheets, and Statements of Cash Flows that are presented in accordance with United States generally accepted accounting principles, or GAAP. The information in Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
Item 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
| (d) | Exhibits |
Exhibit No. | Description of Exhibit |
99.1 | News release dated December 6, 2007 issued by National Semiconductor Corporation* (Earnings) |
* This exhibit is intended to be furnished and shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: December 6, 2007 |
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/s/ Jamie E. Samath |
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| Jamie E. Samath |
| Media Contact: | Financial: |
| LuAnn Jenkins | Long Ly |
| National Semiconductor | National Semiconductor |
| (408) 721-2440 | (408) 721-5007 |
| luann.jenkins@nsc.com | invest.group@nsc.com |
National Semiconductor Reports Results for Second Quarter Fiscal 2008
• | Q2 sales grew to $499.0 million, up 5.8% from Q1 of fiscal 2008 and down from $501.6 million in Q2 last year |
• | Record gross margin percentage of 64.4%, up from 63.0% in Q1 and 58.9% in Q2 last year |
• | EPS of 33 cents, up from 30 cents in Q1 and 27 cents in Q2 last year |
• | Sales outlook for Q3 of fiscal 2008 expected to be seasonally down 1% to 5% |
SANTA CLARA, Calif. – December 6, 2007 -- National Semiconductor Corporation (NYSE:NSM) today reported sales of $499.0 million and net income of $90.6 million, or 33 cents per share, for the second quarter of fiscal 2008 which ended November 25, 2007.
National’s second quarter fiscal 2008 sales increased 5.8 percent sequentially from the first quarter of fiscal 2008, when the company reported $471.5 million in sales and earnings of 30 cents per share. Increased demand for National’s new analog products, primarily in the wireless handset and personal mobile device markets, drove sales growth in the second quarter.
Gross margin in National’s second quarter of fiscal 2008 increased to 64.4 percent from 63.0 percent in the first quarter. The sequential growth in gross margin percentage was driven by continued improvements in the company’s portfolio of higher-value analog products along with manufacturing performance that benefited from a higher volume of shipments.
Compared to last year’s second quarter, sales were down slightly from the $501.6 million reported in the second quarter of fiscal 2007; however, earnings per share were well above the 27 cents recorded last year. Gross margin in the second quarter of fiscal 2008 was also higher than the 58.9 percent reported in the second quarter of fiscal 2007.
-- more --
“The end market for wireless handsets and personal electronics is enjoying strong growth. We were able to take advantage of that with our new analog products, and this is what drove our increased sales and record gross margins,” said Brian L. Halla, National’s chairman and CEO. “Creating energy-efficient analog solutions is a key differentiator for National. Going forward, we see our PowerWise® products increasingly driving our business in many applications and markets as energy efficiency becomes more critical.”
Bookings for Q2, Fiscal 2008
National’s bookings in the second quarter of fiscal 2008 decreased very slightly from the first quarter of fiscal 2008. The company saw lower orders from its OEM customer base as it enters the seasonally slower third quarter. This was partially offset by bookings from distributors which increased sequentially in the second quarter. Regionally, second quarter bookings increased in the Americas and declined in all other regions.
Notable Items in Q2, Fiscal 2008 Results
Included in second quarter fiscal 2008 results were $27.6 million in pre-tax stock compensation expenses under FASB Statement 123(R) and a $3.3 million charge for resolution of a litigation matter. One year ago, the second quarter of fiscal 2007 included $33.2 million of pre-tax stock compensation expenses.
Outlook for Q3, Fiscal 2008
National anticipates that sales in the third quarter of fiscal 2008 will decrease 1 percent to 5 percent from the second quarter of fiscal 2008 due primarily to the seasonally slower holiday period. Consistent with lower sales, gross margin is expected to decline, and operating expenses are expected to be relatively comparable to second quarter levels.
Stock Repurchase Program
During the second quarter of fiscal 2008, the company repurchased approximately $280 million of stock under its stock buyback program. As of the end of the second quarter of fiscal 2008, National had approximately $600 million of authorization still available under approved programs for future stock repurchases. National Semiconductor’s diluted weighted average share count for the second quarter of fiscal of 2008 was 271.5 million shares, down from 283.9 million shares in the first quarter of fiscal 2008.
-- more --
Company Declared Dividend
At its annual shareholders’ meeting on September 28, 2007, the company announced that the Board of Directors had declared a cash dividend of $0.06 per outstanding share of common stock, an increase from the prior quarterly cash dividend of $0.04 per share. This dividend will be paid on January 7, 2008 to shareholders of record at the close of business on December 17, 2007.
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, including second quarter fiscal 2008 sales, gross margin, and operating expenses, 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 August 26, 2007.
About National Semiconductor
National Semiconductor, the industry's premier analog company, creates high-value analog devices and subsystems. National's leading-edge products include power management circuits, display drivers, audio and operational amplifiers, interface products and data conversion solutions. National's key analog markets include wireless handsets, displays, communications infrastructure, medical, automotive, industrial, and test and measurement applications. Headquartered in Santa Clara, Calif., National reported sales of $1.93 billion for fiscal 2007, which ended May 27, 2007. Additional company and product information is available at www.national.com.
# # #
NATIONAL SEMICONDUCTOR CORPORATION | |||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | |||||||||||||
(In millions, except per share amounts) | |||||||||||||
| Three Months Ended |
| Six Months Ended |
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| Nov. 25, |
| Nov. 26, |
| Nov. 25, |
| Nov. 26, |
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| 2007 |
| 2006 |
| 2007 |
| 2006 |
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Net sales | $ | 499.0 |
| $ | 501.6 |
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| $ | 970.5 |
| $ | 1,043.0 |
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Cost of sales |
| 177.8 |
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| 206.2 |
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| 352.4 |
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| 413.3 |
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Gross margin |
| 321.2 |
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| 295.4 |
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| 618.1 |
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| 629.7 |
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Research and development |
| 91.9 |
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| 89.5 |
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| 185.7 |
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| 178.3 |
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Selling, general and administrative |
| 82.8 |
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| 80.9 |
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| 158.3 |
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| 159.5 |
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Severance and restructuring (credit) expenses |
| - |
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| 1.3 |
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| (1.5 | ) |
| 4.0 |
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Gain on sale of manufacturing plant assets |
| - |
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| - |
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| (3.1 | ) |
| - |
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Litigation settlement |
| 3.3 |
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| - |
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| 3.3 |
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| - |
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Other operating income, net |
| (0.6 | ) |
| (0.7 | ) |
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| (0.6 | ) |
| (2.0 | ) |
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Operating expenses |
| 177.4 |
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| 171.0 |
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| 342.1 |
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| 339.8 |
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Operating income |
| 143.8 |
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| 124.4 |
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| 276.0 |
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| 289.9 |
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Interest income |
| 10.1 |
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| 9.9 |
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| 21.3 |
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| 20.9 |
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Interest expense |
| (23.7 | ) |
| (0.4 | ) |
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| (43.3 | ) |
| (0.9 | ) |
Other non-operating income (expense), net |
| (0.8 | ) |
| 1.1 |
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| (1.9 | ) |
| 1.0 |
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Income before taxes |
| 129.4 |
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| 135.0 |
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| 252.1 |
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| 310.9 |
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Income tax expense |
| 38.8 |
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| 43.6 |
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| 75.9 |
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| 99.4 |
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Net income | $ | 90.6 |
| $ | 91.4 |
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| $ | 176.2 |
| $ | 211.5 |
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Earnings per share: |
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Basic | $ | 0.35 |
| $ | 0.28 |
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| $ | 0.67 |
| $ | 0.65 |
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Diluted | $ | 0.33 |
| $ | 0.27 |
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| $ | 0.63 |
| $ | 0.62 |
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Selected income statement ratios as a percentage of sales: | |||||||||||||
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Gross margin |
| 64.4 | % |
| 58.9 | % |
| 63.7 | % |
| 60.4 | % | |
Research and development |
| 18.4 | % |
| 17.8 | % |
| 19.1 | % |
| 17.1 | % | |
Selling, general and administrative |
| 16.6 | % |
| 16.1 | % |
| 16.3 | % |
| 15.3 | % | |
Net income |
| 18.2 | % |
| 18.2 | % |
| 18.2 | % |
| 20.3 | % | |
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Effective tax rate |
| 30.0 | % |
| 32.3 | % |
| 30.1 | % |
| 32.0 | % | |
-- more --
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions)
Nov. 25, |
| May 27, | |||||
ASSETS |
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Current assets: |
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Cash and cash equivalents | $ | 833.9 |
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| $ | 828.6 |
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Receivables |
| 189.3 |
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| 150.6 |
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Inventories |
| 149.8 |
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| 176.0 |
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Deferred tax assets |
| 100.9 |
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| 73.2 |
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Other current assets |
| 44.9 |
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| 62.1 |
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Total current assets |
| 1,318.8 |
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| 1,290.5 |
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Net property, plant and equipment |
| 572.0 |
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| 583.5 |
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Goodwill |
| 63.6 |
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| 63.6 |
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Deferred tax assets |
| 226.3 |
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| 194.4 |
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Other assets |
| 79.5 |
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| 69.9 |
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Total assets | $ | 2,260.2 |
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| $ | 2,201.9 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Current portion of long-term debt | $ | 62.5 |
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| $ | - |
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Accounts payable |
| 57.3 |
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| 59.9 |
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Accrued expenses |
| 166.7 |
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| 122.7 |
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Income taxes payable |
| 6.4 |
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| 117.4 |
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Total current liabilities |
| 292.9 |
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| 300.0 |
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Long-term debt |
| 1,442.7 |
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| 20.6 |
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Long-term income taxes payable |
| 147.6 |
|
|
| - |
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Other non-current liabilities |
| 99.7 |
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| 132.5 |
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Total liabilities |
| 1,982.9 |
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| 453.1 |
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Commitments and contingencies |
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Shareholders’ equity: |
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Common stock of $0.50 par value |
| 127.4 |
|
|
| 155.1 |
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Retained earnings |
| 242.2 |
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| 1,685.7 |
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Accumulated other comprehensive loss |
| (92.3 | ) |
|
| (92.0 | ) |
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Total shareholders’ equity |
| 277.3 |
|
|
| 1,748.8 |
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Total liabilities and shareholders’ equity | $ | 2,260.2 |
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| $ | 2,201.9 |
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-- more --
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
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| Six Months Ended | ||||||
| Nov. 25, |
| Nov. 26, | |||||
Cash flows from operating activities: |
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Net income |
| $ | 176.2 |
|
| $ | 211.5 |
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Adjustments to reconcile net income with net cash |
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provided by operating activities: |
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Depreciation and amortization |
|
| 65.4 |
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| 74.6 |
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Share-based compensation expense |
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| 47.6 |
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| 57.1 |
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Excess tax benefit from share-based payment arrangements |
|
| (13.0 | ) |
|
| (4.6 | ) |
Tax benefit associated with stock options |
|
| 22.2 |
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| 9.3 |
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Loss (gain) on investments |
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| 1.7 |
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| (1.0 | ) |
Loss on disposal of equipment |
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| 2.6 |
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| 0.7 |
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Gain on sale of manufacturing plant assets |
|
| (3.1 | ) |
|
| - |
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Other, net |
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| 0.5 |
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| 0.7 |
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Changes in certain assets and liabilities, net: |
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Receivables |
|
| (38.9 | ) |
|
| 23.9 |
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Inventories |
|
| 26.6 |
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| 14.9 |
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Other current assets |
|
| 15.6 |
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|
| (0.6 | ) |
Accounts payable and accrued expenses |
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| 32.9 |
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|
| (107.1 | ) |
Current and deferred income taxes |
|
| 14.2 |
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|
| (18.7 | ) |
Other non-current liabilities |
|
| (25.1 | ) |
|
| 5.1 |
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Net cash provided by operating activities |
|
| 325.4 |
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| 265.8 |
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Cash flows from investing activities: |
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Purchase of property, plant and equipment |
|
| (52.5 | ) |
|
| (70.6 | ) |
Proceeds from sale of property, plant, and equipment |
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| 16.0 |
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|
| - |
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Sale and maturity of available-for-sale securities |
|
| - |
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|
| 110.8 |
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Proceeds from sale of investments |
|
| 0.2 |
|
|
| - |
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Funding of benefit plan |
|
| (5.1 | ) |
|
| (8.2 | ) |
Other, net |
|
| (2.6 | ) |
|
| 0.8 |
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Net cash (used in) provided by investing activities |
|
| (44.0 | ) |
|
| 32.8 |
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Cash flows from financing activities: |
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Proceeds from unsecured senior notes, net of issuance costs |
|
| 992.9 |
|
|
| - |
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Proceeds from bank borrowings, net of issuance costs |
|
| 1,996.5 |
|
|
| - |
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Repayment of bank borrowing |
|
| (1,515.6 | ) |
|
| - |
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Payment on software license obligations |
|
| (8.4 | ) |
|
| (8.4 | ) |
Excess tax benefit from share-based payment arrangements |
|
| 13.0 |
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|
| 4.6 |
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Minimum tax withholding paid on behalf of employees for net share settlements |
|
| (14.1 | ) |
|
| (0.4 | ) |
Issuance of common stock |
|
| 76.3 |
|
|
| 36.6 |
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Purchase and retirement of treasury stock |
|
| (1,780.1 | ) |
|
| (462.8 | ) |
Cash dividends declared and paid |
|
| (36.6 | ) |
|
| (19.8 | ) |
Net cash used in financing activities |
|
| (276.1 | ) |
|
| (450.2 | ) |
Net change in cash and cash equivalents |
|
| 5.3 |
|
|
| (151.6 | ) |
Cash and cash equivalents at beginning of period |
|
| 828.6 |
|
|
| 932.2 |
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Cash and cash equivalents at end of period |
| $ | 833.9 |
|
| $ | 780.6 |
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-- more --
PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(In millions, except per share amounts)
|
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| Three Months Ended |
| Six Months Ended | ||
| Nov. 25, 2007 | Nov. 26, 2006 |
| Nov. 25, 2007 | Nov. 26, 2006 |
|
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Earnings per share: |
|
|
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Basic | $ 0.35 | $ 0.28 |
| $ 0.67 | $ 0.65 |
Diluted | $ 0.33 | $ 0.27 |
| $ 0.63 | $ 0.62 |
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|
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Net income used in basic and diluted |
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earnings per share calculation | $ 90.6 | $ 91.4 |
| $176.2 | $211.5 |
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|
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Weighted-average shares: |
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|
|
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Basic | 258.9 | 320.9 |
| 264.5 | 325.2 |
Diluted | 271.5 | 335.6 |
| 277.7 | 339.6 |
OTHER FINANCIAL STATEMENT DETAIL
(In millions)
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| Three Months Ended |
| Six Months Ended | ||
Other operating income, net | Nov. 25, 2007 | Nov. 26, 2006 |
| Nov. 25, 2007 | Nov. 26, 2006 |
|
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Net intellectual property income | $ (0.1) | $ (0.4) |
| $ (0.1) | $ (1.0) |
Other | (0.5) | (0.3) |
| (0.5) | (1.0) |
Total other operating income, net | $ (0.6) | $ (0.7) |
| $ (0.6) | $ (2.0) |
Other non-operating income (expense), net |
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| |||
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Gain (loss) on investments | $ (0.6) | $ 1.1 |
| $ (1.7) | $ 1.0 |
Charitable contribution | (0.2) | - |
| (0.2) | - |
Total other non-operating income (expense), net | $ (0.8) | $ 1.1 |
| $ (1.9) | $ 1.0 |
# # #