Exhibit 99.1
News Release
National Reports 5% Sequential Revenue Growth for 4th Qtr 2003
PR Media: Financial:
Jeff Weir Jim Foltz
National Semiconductor National Semiconductor
(408) 721-5199 (408) 721-5693
jeff.weir@nsc.com invest.group@nsc.com
National Semiconductor Reports 5% Sequential Revenue Growth
for Fourth Quarter, 12% Growth for 2003 Fiscal Year
o Fourth quarter revenues rose 5% from Q3 to $425.3 million
o Including special charges in Q4, company reported net loss of $4.4 million,
or 2 cents loss per share
o Excluding special charges in Q4, net income was $22.2 million, or 12 cents
per share
o Gross margin improved 190 basis points to 44.6% in Q4
o Fiscal year 2003 revenues increased 12% to $1.67 billion
o Profit-improvement plan on track to achieve $120 million annualized cost
savings
SANTA CLARA, Calif., June 5, 2003 - National Semiconductor Corporation
(NYSE:NSM) today reported revenues of $425.3 million for the fourth quarter of
fiscal 2003, which ended May 25, 2003, and recorded a net loss of $4.4 million,
or two cents per share. The fourth quarter net loss included $26.6 million of
special charges primarily for severances and asset impairments associated with
actions the company announced on May 21, 2003. Excluding these special charges,
National would have reported net income of $22.2 million, or 12 cents per share.
National's fourth quarter revenues were slightly higher than last year's fourth
quarter revenues of $419.5 million. National's fourth quarter 2002 net income
was $17.1 million, or nine cents per share, which included a tax refund of $11.5
million. Excluding the tax refund, net income in the fourth quarter of 2002 was
$5.6 million, or three cents per share. On a sequential basis, fourth quarter
2003 revenues increased by 5 percent over third quarter revenues of $404.3
million. Fourth quarter gross margins improved to 44.6 percent from 42.7 percent
in the third fiscal quarter 2003.
"Our business has improved," said Brian L. Halla, National's chairman, president
and CEO. "We grew revenues 5 percent in Q4 and made $22 million in operating
profit, or 12 cents per share, before restructuring charges. We're on track with
our plan to create higher returns faster for National's shareholders."
Orders Increased Sequentially in Q4
National reported that orders in the fourth quarter grew more than 3 percent
sequentially from the third quarter. Power management orders outgrew the company
average while display and standard analog products exhibited double digit
growth. This performance was consistent with National's focus to gain additional
content in handsets and display applications. Worldwide bookings exceeded
billings, with Japan showing the strongest bookings improvement.
Outlook for Q1 2004
National's revenues for the first quarter of FY 2004 are expected to be flat to
seasonally down 4 percent from the fourth quarter of 2003, consistent with
historical patterns during the summer quarter. Gross margin percentage is
expected to be flat to slightly down, depending on the level of revenue achieved
during the quarter. Operating expenses are expected to decrease due to the
profit-improvement actions taken in Q3 and Q4.
Fiscal Year 2003 Summary
For the year, National reported a net loss of $33.3 million, or 18 cents per
share on revenues of $1.67 billion. This compares with a net loss for fiscal
2002 of $121.9 million, or $0.69 per diluted share on revenues of $1.49 billion.
National's fiscal 2003 net loss included $43.6 million of special charges
primarily for severances related to the workforce reductions announced in
February and May of this year and impairment of certain assets, and $13.8
million in R&D expense for writedowns of technology licenses. Without these
charges, National's net results for the year would have been income of $24.1
million, or 0.13 cents a share. National's gross margin increased 640 basis
points from 37.0 percent for fiscal 2002 to 43.4 percent for fiscal 2003.
Summary of Results
- --------------------------------------------------------------------------------
For 3 months ended For 12 months ended
May 25, May 26, May 25, May 26,
2003 2002 2003 2002
------------------- --------------------
Net sales $425.3 $419.5 $1,672.5 $1,494.8
Net income (loss) as reported $ (4.4) $ 17.1 $ (33.3) $ (121.9)
Earnings (loss) per diluted $ (0.02) $ 0.09 $ (0.18) $ (0.69)
share as reported
Net income (loss) excluding $22.2 $ 5.6 $ 24.1 $ (133.4)
license writedowns and
special items (2003) and
tax refund (2002)
Net income (loss) per diluted share $ 0.12 $ 0.03 $ 0.13 $ (0.75)
excluding license writedowns
and special items (2003)
and tax refund (2002)
All figures in millions of dollars, except per share amounts.
- -------------------------------------------------------------------------------
Product Highlights During Fiscal Year
National announced several new alliances and product initiatives with key
partners during the 2003 fiscal year. These activities included National's
worldwide alliance with ARM Limited on PowerWiseTM solutions to increase battery
life for portable power products, such as mobile phones; the launch of a new
line of high-voltage power management solutions for communications, industrial
and automotive markets; continued innovations in audio and amplifier technology,
such as National's amp-in-a-mike solution for handsets; production of an
award-winning BluetootTM module and chipset for wireless customers; enhanced,
integrated chipsets for LCD (flat panel) and CRT displays; and National's
alliance with Microsoft to develop Smart Personal Objects Technology (SPOT) for
consumer devices, such as wristwatches.
"With great technology and world-class partners, we continue to build National's
position in key markets, including handsets, flat panel displays and notebook
PCs," Halla said. "As we focus on profitability and greater returns, we continue
to leverage our strength in core analog technologies like power management and
amplifiers. Power management circuits now represent about 30 percent of our
sales."
Aggressive Execution on Profit-Improvement Plan
On February 20, 2003, National launched a series of profit-improvement
activities designed to improve shareholder returns by prioritizing R&D spending
on the company's 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.
To date, under that profit-improvement plan, the company has taken the following
steps:
o Revised its technology and manufacturing agreement with Taiwan
Semiconductor Manufacturing Corporation (TSMC) at the end of Q3.
o Reduced its workforce by 500 at the end of Q3 and 340 at the end of Q4, for
a total of 8 percent of National's workforce. These reductions bring
National's workforce to 9,200.
o Closed the cellular baseband business unit at the end of Q4.
o Launched efforts in Q4 to sell the Information Appliance (IA) business
unit, which consists primarily of the GeodeTM family of microprocessor
products.
The impact of these activities to date has provided National with approximately
$25 million in cost-savings toward the $30 million-per-quarter target. The
remaining cost-savings would be achieved upon completion of the sale or closure
of the Information Appliance business unit. If a sale cannot be consummated,
National intends to close the business unit and discontinue product development.
Although the company is engaged in discussions about a potential sale, it cannot
give assurance that a transaction will take place.
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, PCs, networks and a broad range of portable
applications. With headquarters in Santa Clara, California, National reported
sales of $1.67 billion for its most recent fiscal year. Additional company and
product information is available on the World Wide Web at www.national.com.
National Semiconductor is a registered trademark. PowerWise and Geode are
trademarks of National Semiconductor Corporation. All other brand or product
names are trademarks or registered trademarks of their respective holders.
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share amounts)
Three Months Ended Twelve Months Ended
------------------ -------------------
May 25, May 26, May 25, May 26,
2003 2002 2003 2002
------- ------- -------- --------
Net sales $425.3 $419.5 $1,672.5 $1,494.8
Operating costs and expenses:
Cost of sales 235.5 239.0 946.8 941.4
Research and development 98.1 111.3 435.6 441.0
Selling, general and
administrative 65.3 67.1 270.3 260.9
Special items 26.6 8.2 44.3 9.3
------- ------- -------- --------
Total operating costs
and expenses 425.5 425.6 1,697.0 1,652.6
------- ------- -------- --------
Operating loss (0.2) (6.1) (24.5) (157.8)
Interest income, net 3.1 4.5 14.1 21.3
Other income(expense), net (4.8) 9.7 (12.9) 13.1
------- ------- -------- --------
Income(loss) before income taxes (1.9) 8.1 (23.3) (123.4)
Income tax expense(benefit) 2.5 (9.0) 10.0 (1.5)
------- ------- -------- --------
Net income(loss) $ (4.4) $ 17.1 $ (33.3) $ (121.9)
======= ======= ======== ========
Earnings(loss) per share:
Basic $(0.02) $0.10 $(0.18) $(0.69)
Diluted $(0.02) $0.09 $(0.18) $(0.69)
Selected income statement ratios as a percentage of sales:
Gross margin 44.6% 43.0% 43.4% 37.0%
Research and development,
excluding IPR&D charge 23.1% 26.5% 26.0% 29.5%
Selling, general and
administrative 15.4% 16.0% 16.2% 17.5%
Net income(loss) (1.0%) 4.1% (2.0%) (8.2%)
Effective tax rate N/A N/A N/A N/A
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
May 25, May 26,
2003 2002
ASSETS -------- --------
Current assets:
Cash and cash equivalents $ 802.2 $ 681.3
Short-term marketable debt securities 113.2 153.1
Receivables, net 137.1 131.7
Inventories 142.2 145.0
Deferred tax assets 66.0 58.7
Other current assets 20.5 38.3
-------- --------
Total current assets 1,281.2 1,208.1
Net property, plant and equipment 680.7 737.1
Long-term marketable debt securities - 10.0
Goodwill 173.3 173.3
Other assets 109.4 160.3
-------- --------
Total assets $2,244.6 $2,288.8
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 2.3 $ 5.5
Accounts payable 107.0 123.7
Accrued expenses 208.5 226.7
Income taxes 49.6 47.9
-------- --------
Total current liabilities 367.4 403.8
Long-term debt 19.9 20.4
Other non-current liabilities 151.3 83.5
-------- --------
Total liabilities 538.6 507.7
-------- --------
Commitments and contingencies
Shareholders' equity:
Common stock 91.8 90.2
Additional paid-in capital 1,451.3 1,402.5
Retained earnings 277.2 310.5
Accumulated other comprehensive loss (114.3) (22.1)
-------- --------
Total shareholders' equity 1,706.0 1,781.1
-------- --------
Total liabilities and shareholders' equity $2,244.6 $2,288.8
======== ========
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Twelve Months Ended
---------------------
May 25, May 26,
2003 2002
------- -------
Cash flows from operating activities:
Net loss $ (33.3) $(121.9)
Adjustments to reconcile net loss
with net cash provided by operations:
Depreciation, amortization and accretion 228.5 230.4
Net gain (loss) on investments 5.9 (9.4)
Writedowns of R&D technology licenses 13.8 -
Loss on disposal of equipment 2.9 4.4
Non-cash special items 12.8 (2.3)
Other, net 0.8 0.2
Changes in certain assets and liabilities, net:
Receivables (5.3) (6.4)
Inventories 2.8 51.0
Other current assets 3.4 -
Accounts payable and accrued expenses (34.9) (32.9)
Current and deferred income taxes 3.7 12.8
Other noncurrent liabilities 8.4 (25.6)
------- -------
Net cash provided by operating activities 209.5 100.3
------- -------
Cash flows from investing activities:
Purchase of property, plant and equipment (171.3) (138.0)
Sale and maturity of available-for-sale securities 892.6 88.6
Purchase of available-for-sale securities (843.4) (200.1)
Sale of investments 18.0 11.2
Sale of equipment 2.3 -
Business acquisitions, net of cash acquired (11.0) (42.1)
Purchase of nonmarketable investments (16.8) (26.3)
Funding of benefit plan (3.6) (14.9)
Other, net 7.3 (1.7)
------- -------
Net cash used by investing activities (125.9) (323.3)
------- -------
Cash flows from financing activities:
Repayment of debt (5.4) (20.6)
Issuance of common stock, net 42.7 107.1
------- -------
Net cash provided by financing activities 37.3 86.5
------- -------
Net change in cash and cash equivalents 120.9 (136.5)
Cash and cash equivalents at beginning of year 681.3 817.8
------- -------
Cash and cash equivalents at end of year $ 802.2 $681.3
======= =======
PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(in millions, except per share amounts)
Three Months Ended Twelve Months Ended
------------------ -------------------
May 25, May 26, May 25, May 26,
2003 2002 2003 2002
------- ------- ------- -------
Net Earnings(loss) per share:
Basic $(0.02) $0.10 $(0.18) $(0.69)
Diluted $(0.02) $0.09 $(0.18) $(0.69)
Weighted-average shares:
Basic 183.0 179.8 181.8 177.5
Diluted 183.0 190.6 181.8 177.5
Income(loss) used in basic and
diluted earnings per share
calculation $(4.4) $17.1 $(33.3) $(121.9)
RECONCILIATION OF NET LOSS AS REPORTED TO NET INCOME(LOSS) EXCLUDING
LICENSE WRITEDOWNS AND SPECIAL ITEMS (2003) AND TAX REFUND (2002)
(in millions)
Three Months Ended Twelve Months Ended
------------------ -------------------
May 25, May 26, May 25, May 26,
2003 2002 2003 2002
------- ------- -------- --------
Net income(loss)as reported $ (4.4) $ 17.1 $ (33.3) $(121.9)
Add back:
Special items - Cost reduction 26.6 - 43.6 -
Charge
Writedowns of technology
licenses - - 13.8 -
Deduct:
Income tax refund - (11.5) - (11.5)
------- ------- -------- --------
Net income(loss)excluding license
writedowns and special items
(2003) and tax refund (2002) $ 22.2 $ 5.6 $ 24.1 $(133.4)
======= ======= ======== ========
Net earnings(loss) per share:
Basic $0.12 $0.03 $0.13 $(0.75)
Diluted $0.12 $0.03 $0.13 $(0.75)
Weighted-average shares:
Basic 183.0 179.8 181.8 177.5
Diluted 188.2 190.6 185.4 177.5
Income statement detail:
Three Months Ended Twelve Months Ended
------------------ -------------------
May 25, May 26, May 25, May 26,
2003 2002 2003 2002
------- ------- ------- -------
Special items
- -------------
In-process reseach and
development charges $ 0.0 $ 0.2 $ 0.7 $ 1.3
Cost reduction actions 26.6 8.0 43.6 8.0
------- ------- ------- -------
Total special items $26.6 $ 8.2 $ 44.3 $ 9.3
======= ======= ======= =======
Interest income, net
- --------------------
Interest income $3.3 $ 5.1 $ 15.6 $25.2
Interest expense (0.2) (0.6) (1.5) (3.9)
------- ------- ------- -------
Interest income, net $3.1 $ 4.5 $ 14.1 $21.3
======= ======= ======= =======
Other income(expense), net
- --------------------------
Net intellectual property income $ 2.6 $ 8.9 $ 6.8 $11.6
Gain(loss)on investments, net (7.4) 0.8 (19.7) 2.1
Other - - - (0.6)
------- ------- ------- -------
Total other income
(expense), net $(4.8) $9.7 $(12.9) $13.1
======= ======= ======= =======