Exhibit 99.1
News Release
Jeff Weir
National Semiconductor
Office (408) 721-5199
Cell (408) 242-4827
jeff.weir@nsc.com
NATIONAL SEMICONDUCTOR PROVIDES UPDATE ON STRATEGIC ACTIONS TO INCREASE
PROFITABILITY FOR SHAREHOLDERS
o Company on track to achieve $120 million annualized cost savings
o Progressing on sale of Information Appliance business unit
o Closing Cellular Baseband business
SANTA CLARA, CA - May 21, 2003 -- National Semiconductor Corporation (NYSE:NSM)
today announced that it is on track in implementing a series of strategic
profit-improvement actions that were launched on February 20, 2003. These
actions are designed to streamline National's cost structure and enhance
shareholder value by prioritizing R&D spending on higher-margin analog
businesses. Total cost savings from these profit-improvement activities are
expected to be approximately $30 million per quarter, or approximately $120
million annually.
As part of that plan, the company had indicated it would seek to sell its
Information Appliance (IA) unit, which consists primarily of the GeodeTM family
of microprocessor products, and its Cellular Baseband business unit.
Approximately $16 million of the $30 million total targeted cost savings is
related to the exit of the IA and baseband business units. The Geode product
family and baseband businesses account for less than 5 percent of National's
total revenue.
Since February, the company has conferred with several prospective buyers of the
IA business unit and is actively pursuing a sale. In the meantime, National
continues to support existing customer programs. Although the company is engaged
in discussions with potential buyers, it cannot give assurance that a sales
transaction will take place.
In addition, the company announced that effective immediately, it is closing its
cellular baseband business unit. In connection with these steps, the company is
reducing its worldwide workforce by approximately 340 positions for the business
units affected and related support functions as well as for various
infrastructure reductions consistent with the company's overall
profit-improvement objectives. Because of these actions, the company will incur
charges of approximately $25 to $30 million in the fourth quarter, which ends
May 25, 2003, for severance and impairment of certain assets.
To date, under the profit-improvement plan, the company has taken the following
steps:
o Revised its technology and manufacturing agreement with Taiwan
Semiconductor Manufacturing Corporation (TSMC) in Q3.
o Reduced its workforce by 500 in Q3 and 340 in Q4, for a total of 8 percent
of National's workforce. After these actions are completed, National will
have approximately 9,200 employees.
o Announced the closure of its cellular baseband business unit effective in
Q4.
Approximately $15 million of the $30 million in planned quarterly cost savings
was achieved through actions implemented in the third quarter. The actions
announced today will provide an additional $9 to $10 million towards the $30
million target. The remainder would be achieved upon completion of the sale of
the Information Appliance business unit.
"We are moving quickly to execute our plans to provide higher returns sooner to
shareholders," said Brian L. Halla, National's chairman, president and CEO.
"These steps increase our operating margins as we focus our investments in
National's high-value, high-margin analog products such as power management,
portable power, displays, audio and op amp solutions."
National also indicated that it has not changed its revenue guidance for the
fourth quarter. The original guidance in March was for fourth quarter revenues
to increase 4 to 7 percent from the third quarter, equating to a range of
approximately $420 to $432 million.
An update about these strategic profit-improvement actions will be available
June 5, when National Semiconductor announces fourth quarter and year-end
financial results for its 2003 fiscal year.
This release contains forward-looking statements dependent on a number of risks
and uncertainties. These factors include, but are not restricted to, new orders
received and shipped during the remainder of the fourth quarter, the degree of
factory utilization, the successful sale of existing inventories at existing
prices, the ramp up of recently introduced products, and the timely completion
of the actions updated above. Other risk factors are included in the company's
10-Q for the third quarter ended February 23, 2003, and the 10-K for the year
ended May 26, 2002 (see the Outlook section of Management's Discussion and
analysis of Results of Operations and Financial Conditions) and the Annual
Report dated May 26, 2002.
About National Semiconductor
National Semiconductor is the premier analog company driving the information
age. Combining real-world analog and state-of-the-art digital technology, the
company is focused on analog-based semiconductor products, which include
stand-alone devices and subsystems in the areas of power management, imaging,
display drivers, audio, amplifiers and data conversion. The company targets key
markets such as wireless, displays, information infrastructure and a broad range
of portable applications. With headquarters in Santa Clara, California, National
reported sales of $1.5 billion for its most recent fiscal year. Additional
company and product information is available on the World Wide Web at
www.national.com.
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National Semiconductor is a registered trademark and Geode is a trademark of
National Semiconductor Corporation. All other brand or product names are
trademarks or registered trademarks of their respective holders.