Exhibit 99.1
NATIONAL SEMICONDUCTOR REPORTS 34% YEAR-TO-YEAR REVENUE GROWTH AND RECORD GROSS
MARGIN FOR FOURTH QUARTER OF FISCAL 2004
o Q4 profit is $126.4 million, yielding earnings of 32 cents per share
compared to year-ago fourth quarter loss of 1 cent per share
o Gross margin reached all-time high of 54.4%, a 10-point increase from Q4 of
FY2003
o Revenues hit $571.2 million, a 34% increase year-to-year and 11% from Q3
o Fourth quarter bookings increased 45% year-to-year
SANTA CLARA, Calif., June 10, 2004 - National Semiconductor Corporation
(NYSE:NSM) today reported a GAAP profit of $126.4 million, or 32 cents per
share, on revenues of $571.2 million for the fourth quarter of fiscal 2004,
which ended May 30, 2004. National's fourth quarter sales were 34 percent higher
than the fourth quarter of fiscal 2003 and 11 percent higher sequentially than
the third quarter of fiscal 2004, when the company reported revenues of $513.6
million and earnings of 24 cents per share. (National's fourth quarter included
13 weeks, compared to 14 calendar weeks in the third quarter.) Gross margin rose
to an all-time high of 54.4 percent in the fourth quarter, compared to gross
margin of 44.6 percent for the fourth quarter of fiscal 2003 and 51.4 percent in
the third quarter of fiscal 2004.
"Nationals focus on analog is clearly paying off in the form of higher returns
to our shareholders," said Brian L. Halla, National's chairman, president and
CEO. "Gross margin increased to 54 percent and our return on invested capital
exceeded 32 percent in the fourth quarter."
For the entire 2004 fiscal year, National's gross margin was 51 percent. Last
June, National reported gross margin of 43.4 percent for fiscal 2003. The
consistent improvement in gross margin has been driven by National's focus on
increasing sales and market share in its higher value, higher margin analog
products.
Similar to the prior quarter, National's wafer fab utilization rate was in the
mid-90's.
BOOKINGS HIGHER IN Q4
National's worldwide bookings increased 45 percent year-to-year and 2 percent
sequentially from the third quarter (which had 14 calendar weeks compared to a
normal 13-week quarter). On a weekly run-rate basis, fourth quarter bookings
rose approximately 10 percent from the third quarter. Bookings for analog
products grew more than 50 percent year-to-year, led by strong growth in
National's power management, amplifiers, and data conversion products. New
orders for portable power management products and data converters outperformed
the company's average both year-to-year and sequentially from the third quarter.
With respect to National's different geographies, the Asia Pacific region
experienced the strongest fourth quarter bookings growth both year-to-year and
quarter-to-quarter. Bookings for North America declined from the third quarter,
primarily due to the distribution channel. Bookings in all regions grew
substantially year-to-year. Total company bookings were well above billings in
the fourth quarter.
The Company's bookings strength in the fourth quarter was driven largely by
National's top OEM customers. Bookings from distributors moderated during the
quarter as National's delivery leadtimes returned to more normal levels.
Distributors' resale rates of National products to their end customers increased
sequentially in all regions. Two regions recorded double-digit percentage
increases in resale rates in Q4 compared to Q3.
GUIDANCE FOR Q1, FY2005
During the first quarter of FY2005, National anticipates revenues to be
sequentially flat to up 3 percent from the fourth quarter. Based upon the
revenue range, gross margins are expected to improve and operating expenses are
expected to be comparable to fourth quarter expenses.
"Heading into the typically seasonal August quarter, we are encouraged by the
fact that this year National's bookings were strong and our backlog grew during
the fourth quarter," Halla said. "We will continue to aggressively manage our
business to further improve our gross margins by expanding our position in key
analog areas such as power management, amplifiers and data converters."
SUMMARY OF FISCAL 2004
For fiscal 2004, National reported a GAAP net profit of $315.0 million, or 81
cents per share, on revenues of $1.98 billion. This compares to a net loss of
$33.3 million, or 9 cents per share, on revenues of $1.67 billion for fiscal
2003. National's fiscal 2003 net loss included $43.6 million of special charges
for severances related to workforce reductions and impairments of specific
assets, and $13.8 million in R & D expenses for write-downs of technology
licenses. Without these charges, National would have reported net income of
$24.1 million, or 6 cents per share, for fiscal 2003.
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. These factors include, but are not
restricted to, new orders received and shipped during the first quarter, the
degree of factory utilization, the successful construction of our Suzhou
assembly and test facility, the successful sale of inventories at existing
prices, and the ramp up of recently introduced products. Other risk factors are
included in the Company's 10-K for the year ended May 25, 2003 (see Outlook and
Risk Factors sections of Management's Discussion and Analysis of Financial
Conditions and Results of Operations) and the 10-Q for the quarter ended
February 29, 2004.
Summary of Results
- ---------------------------------------------------------------------------------------------
For 3 months ended For 12 months ended
------------------ -------------------
May 30, 2004 May 25, 2003 May 30, 2004 May 25, 2003
Net sales $571.2 $425.3 $1,983.1 $1,672.5
Net income (loss) $126.4 $ (4.4) $ 315.0 $ (33.3)
Earnings (loss) per share $ 0.32 $ (0.01) $ 0.81 $ (0.09)
- ---------------------------------------------------------------------------------------------
All figures in millions of dollars, except for per share amounts
ABOUT NATIONAL SEMICONDUCTOR
National Semiconductor, the industry's premier analog company, creates high
performance analog devices and subsystems. National's leading-edge products
include power management circuits, display drivers, audio and operational
amplifiers, communication interface products and data conversion solutions.
National's key markets include wireless handsets, displays, PCs and laptops. The
company's analog products are also optimized for numerous applications in a
variety of electronics markets, including medical, automotive, industrial and
test and measurement. Headquartered in Santa Clara, California, National
reported sales of $1.98 billion for fiscal 2004, which ended May 30, 2004.
Additional company and product information is available at www.national.com.
National Semiconductor is a registered trademark.
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share amounts)
Three Months Ended Twelve Months Ended
-------------------------- -------------------------
May 30, May 25, May 30, May 25,
2004 2003 2004 2003
------------ ------------- ------------ ------------
Net sales $ 571.2 $ 425.3 $1,983.1 $1,672.5
Operating costs and expenses:
Cost of sales 260.4 235.5 970.8 946.8
Research and development 91.0 98.1 352.8 435.6
Selling, general and administrative 74.4 65.3 287.7 270.3
Special items 2.9 26.6 19.6 44.3
------------ ------------- ------------ ------------
Total operating costs and expenses 428.7 425.5 1,630.9 1,697.0
------------ ------------- ------------ ------------
Operating income (loss) 142.5 (0.2) 352.2 (24.5)
Interest income, net 2.7 3.2 10.4 14.8
Other income (expense), net 1.7 (4.9) 3.3 (13.6)
------------ ------------- ------------ ------------
Income (loss) before taxes and cumulative
effect of a change in accounting principle 146.9 (1.9) 365.9 (23.3)
Income tax expense 20.5 2.5 49.0 10.0
------------ ------------- ------------ ------------
Income (loss) before cumulative effect of a
change in accounting principle 126.4 (4.4) 316.9 (33.3)
Cumulative effect of a change in accounting
principle including tax effect of $0.2 million - - (1.9) -
------------ ------------- ------------ ------------
Net income (loss) $ 126.4 $ (4.4) $ 315.0 $ (33.3)
============ ============= ============ ============
Earnings (loss) per share:
Income before cumulative effect of a change
in accounting principle:
Basic $ 0.35 $ (0.01) $ 0.88 $ (0.09)
Diluted $ 0.32 $ (0.01) $ 0.82 $ (0.09)
Net income (loss):
Basic $ 0.35 $ (0.01) $ 0.87 $ (0.09)
Diluted $ 0.32 $ (0.01) $ 0.81 $ (0.09)
Selected income statement ratios as a percentage of sales:
Gross margin 54.4% 44.6% 51.0% 43.4%
Research and development 15.9% 23.1% 17.8% 26.0%
Selling, general and administrative 13.0% 15.4% 14.5% 16.2%
Net income (loss) 22.1% (1.0)% 15.9% (2.0)%
Effective tax rate 14.0% N/A 13.4% N/A
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
May 30, May 25,
2004 2003
-------------------- -------------------
ASSETS
Current assets:
Cash and cash equivalents $ 642.9 $ 802.2
Short-term marketable investments 139.3 113.2
Receivables 198.9 140.9
Inventories 200.1 142.2
Deferred tax assets 54.9 66.0
Other current assets 52.3 20.5
-------------------- -------------------
Total current assets 1,288.4 1,285.0
Net property, plant and equipment 699.6 680.7
Goodwill 173.3 173.3
Other assets 117.4 109.4
-------------------- -------------------
Total assets $2,278.7 $2,248.4
==================== ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 22.1 $ 2.3
Accounts payable 141.0 107.0
Accrued expenses 202.6 196.1
Income taxes payable 63.4 49.6
-------------------- -------------------
Total current liabilities 429.1 355.0
Long-term debt - 19.9
Other noncurrent liabilities 141.7 167.5
-------------------- -------------------
Total liabilities 570.8 542.4
-------------------- -------------------
Commitments and contingencies
Shareholders' equity:
Common stock 178.8 183.6
Additional paid-in capital 1,030.1 1,359.5
Retained earnings 592.2 277.2
Accumulated other comprehensive loss (93.2) (114.3)
-------------------- -------------------
Total shareholders' equity 1,707.9 1,706.0
-------------------- -------------------
Total liabilities and shareholders' equity $2,278.7 $2,248.4
==================== ===================
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Twelve Months Ended
--------------------------------------
May 30, May 25,
2004 2003
---------------- ---------------
Cash flows from operating activities:
Net income (loss) $ 315.0 $ (33.3)
Adjustments to reconcile net income with net cash
provided by operating activities:
Cumulative effect of a change in accounting principle 1.9 -
Depreciation, amortization, and accretion 209.9 228.5
Gain on investments (4.5) 3.9
Share in net losses of equity-method investments 14.1 15.9
Loss on disposal of equipment 6.2 2.9
Tax benefit associated with stock options 22.2 -
Impairment of technology licenses - 13.8
Noncash special items 1.4 12.8
Other, net 3.6 0.8
Changes in certain assets and liabilities, net:
Receivables (50.4) (9.1)
Inventories (62.5) 2.8
Other current assets (31.6) 3.4
Accounts payable and accrued expenses 46.3 (32.9)
Income taxes payable 12.1 5.3
Other noncurrent liabilities (3.5) 6.8
---------------- ---------------
Net cash provided by operating activities 480.2 221.6
---------------- ---------------
Cash flows from investing activities:
Purchase of property, plant and equipment (215.3) (154.9)
Sale and maturity of available-for-sale securities 359.0 892.6
Purchase of available-for-sale securities (386.7) (843.4)
Sale of investments 9.6 18.0
Sale of equipment - 2.3
Business acquisition, net of cash aquired - (11.0)
Investment in nonpublicly traded companies (1.8) (21.8)
Funding of benefit plan (4.6) (3.6)
Security deposits on leased equipment (20.1) -
Other, net 5.2 (1.6)
---------------- ---------------
Net cash used by investing activities (254.7) (123.4)
---------------- ---------------
Cash flows from financing activities:
Repayment of debt (2.1) (5.4)
Payment on CAD license obligations (22.7) (14.6)
Issuance of common stock 211.9 42.7
Net advances s to acquire treasury stock (29.4) -
Purchase and retirement of treasury stock (542.5) -
---------------- ---------------
Net cash (used by) provided by financing activities (384.8) 22.7
---------------- ---------------
Net change in cash and cash equivalents (159.3) 120.9
Cash and cash equivalents at beginning of period 802.2 681.3
---------------- ---------------
Cash and cash equivalents at end of period $ 642.9 $ 802.2
================ ===============
PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(in millions, except per share amounts)
Three Months Ended Twelve Months Ended
--------------------------- -------------------------
May 30, May 25, May 30, May 25,
2004 2003 2004 2003
-------------- ------------ ------------ ------------
Earnings (loss) per share:
Basic $ 0.35 $ (0.01) $ 0.87 $ (0.09)
Diluted $ 0.32 $ (0.01) $ 0.81 $ (0.09)
Net income (loss) used in basic and diluted
earnings per share calculation $126.4 $ (4.4) $315.0 $(33.3)
Weighted-average shares:
Basic 357.3 366.0 361.0 363.6
Diluted 389.6 366.0 388.5 363.6
NOTES TO FINANCIAL STATEMENTS
(in millions, except per share amounts)
The following table provides a reconciliation of net loss as reported to net
income excluding special items and license write-downs for fiscal 2003. Only
GAAP amounts are discussed and presented for fiscal 2004:
Twelve Months Ended
---------------------
May 25,
2003
---------------------
Net loss as reported $(33.3)
Add back:
Special item - Cost reduction charge 43.6
Write-downs of technology licenses 13.8
---------------------
Net income excluding special items and licenses
write-downs in fiscal 2003 $ 24.1
=====================
Earnings per share:
Basic $ 0.07
Diluted $ 0.06
Weighted-average shares:
Basic 363.6
Diluted 370.8
Three Months Ended Twelve Months Ended
--------------------------- -------------------------
May 30, May 25, May 30, May 25,
Special items 2004 2003 2004 2003
-------------- ------------ ------------ ------------
Cost reduction items $ 2.9 $ 26.6 $ 19.6 $ 43.6
In-process research and development charges - - - 0.7
-------------- ------------ ------------ ------------
Total special items $ 2.9 $ 26.6 $ 19.6 $ 44.3
============== ============ ============ ============
Interest income, net
Interest income $ 3.1 $ 3.4 $ 11.6 $ 16.3
Interest expense (0.4) (0.2) (1.2) (1.5)
-------------- ------------ ------------ ------------
Interest income, net $ 2.7 $ 3.2 $ 10.4 $ 14.8
============== ============ ============ ============
Other income (expense), net
Net intellectual property income $ 2.4 $ 2.5 $ 11.1 $ 6.1
Gain(loss) on investments 2.8 (1.6) 7.0 (1.6)
Share in net losses of equity-method
investments (3.3) (5.4) (14.1) (15.9)
Other (0.2) (0.4) (0.7) (2.2)
-------------- ------------ ------------ ------------
Total other income (expense), net $ 1.7 $ (4.9) $ 3.3 $ (13.6)
============== ============ ============ ============
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