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 8, 2005
NATIONAL SEMICONDUCTOR CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-6453 95-2095071
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(State of Incorporation) (Commission (I.R.S. Employer
File Number) Identification Number)
2900 SEMICONDUCTOR DRIVE, P.O. BOX 58090
SANTA CLARA, CALIFORNIA 95052-8090
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(Address of Principal Executive Offices)
(408) 721-5000
(Registrant's telephone number, including area code)
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):
[ ] Written communication pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
NATIONAL SEMICONDUCTOR CORPORATION
Table of Contents
Page
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Section 2 - Financial Information
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Item 2.02 Results of Operations and Financial Condition 3
Section 8 - Other Events
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Item 8.01 Other Events 3
Section 9 - Financial Statements and Exhibits
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Item 9.01 Financial Statements and Exhibits 3
Signature 4
Exhibits:
99.1 News release dated December 8, 2005 (Earnings)
NATIONAL SEMICONDUCTOR CORPORATION
Item 2.02 RESULTS OF OPERATION AND FINANCIAL CONDITION
On December 8, 2005, National Semiconductor Corporation issued a news release
announcing earnings for the quarter ended November 27, 2005. The earnings news
release, which has been attached as Exhibit 99.1, contains unaudited Condensed
Consolidated Statements of Operations, 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 8.01 OTHER EVENTS
On December 8, 2005, the Company also announced in its news release that its
Board of Directors had approved another $400 million stock repurchase program.
Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
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Exhibit No. Description of Exhibit
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99.1 News release dated December 8, 2005 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.
NATIONAL SEMICONDUCTOR CORPORATION
Dated: December 8, 2005 /S/ Jamie E. Samath
-----------------------------
Jamie E. Samath
Corporate Controller
Signing on behalf of the registrant
and as principal accounting officer
Exhibit 99.1
Media Contact: Financial:
Jeff Weir Long Ly
National Semiconductor National Semiconductor
(408) 721-5199 (408) 721-5007
jeff.weir@nsc.com invest.group@nsc.com
National Semiconductor Posts 10 Percent Sequential Revenue Growth and Earnings
of 32 Cents Per Share for Second Quarter of FY 2006
o Q2 FY06 revenues were $544 million, up 10% from Q1 FY06 and up 21% from last
year's Q2
o GAAP net income was $114.7 million, or 32 cents per share
o Gross margin was 57.2%, up from 56.2% in Q1 FY06 and 50.6% in Q2 FY05
o Revenue outlook for Q3 FY06 is sequentially flat to down 3%
o Announcing additional $400 million stock buyback program
SANTA CLARA, Calif. -- December 8, 2005 -- National Semiconductor Corporation
(NYSE:NSM) today reported GAAP net income of $114.7 million, or 32 cents per
share, on revenues of $544.0 million for the second quarter of fiscal 2006,
which ended November 27, 2005.
National's second quarter revenues were 10 percent higher than the first quarter
of fiscal 2006, and 21 percent higher than the year-ago Q2 revenues of fiscal
2005. The sequential revenue growth was driven by strong demand from National's
wireless handset customers as well as the broader markets served through the
distribution channel.
In the first quarter of fiscal 2006, National posted revenues of $493.8 million,
net income of $85.6 million and earnings of 24 cents per share. Those first
quarter results included a $28 million pre-tax charge for severances, a $24.3
million pre-tax gain from the sale of a business, and $5 million of additional
one-time income tax expense.
A year ago, in the second quarter of FY2005, National recorded sales of $448.9
million and net income of $90.0 million, or 24 cents per share. Last year's Q2
results included an $8.8 million pre-tax gain from the sale of assets, a $10.0
million pre-tax gain related to litigation, and a $4.2 million benefit from an
income tax matter.
The Company's second quarter FY06 gross margin was 57.2 percent, a new record
for the company. This Q2 gross margin is 1.0 percentage point higher than the
first quarter gross margin and 6.6 percentage points higher than last year's
second quarter gross margin of 50.6 percent. The improvement in gross margin has
been driven by the company's focus on growing its higher-value Analog product
portfolio.
"The wireless and handheld consumer electronics markets are strong," said Brian
L. Halla, National's chairman and CEO. "Analog technology, such as our
leading-edge power management products, makes these electronic devices possible.
That's what's driving our growth right now."
Bookings Increased Sequentially in Q2
National's total company bookings in Q2 fiscal 2006 increased 6 percent
sequentially from Q1. Within the Analog Standard Linear product categories, new
orders for interface and data conversion products grew at a much higher rate
than the overall company average.
Regionally, bookings increased in North America, Europe and Japan. Bookings from
distributors also increased sequentially in Q2 from Q1. Bookings associated with
foundry services for two recently divested businesses decreased in Q2 compared
to Q1.
Total company bookings exceeded billings in the second quarter.
Outlook for Q3, Fiscal 2006
Based on turns expectations and considering typical seasonal patterns, National
anticipates that revenues will be sequentially flat to down 3 percent in the
third quarter of fiscal 2006. Assuming this revenue range, gross margin
percentage is expected to increase slightly in Q3 FY06.
Stock Buyback and Dividends
Today, the company also announced that National's Board of Directors has
authorized a new program to buy back an additional $400 million of National's
common stock beyond what previously has been approved. During Q2, the company
bought back $275 million of common stock under a previously approved repurchase
program. The diluted weighted-average shares outstanding for Q2 FY06 were 356.7
million shares.
During the second quarter, at National's Annual Shareholders Meeting on
September 30, 2005, the company also announced a cash dividend of $0.03 per
outstanding share of common stock. This represents a 50 percent increase from
the prior quarterly cash dividend of $0.02 per share. This new dividend will be
paid January 9, 2006 to shareholders of record at the close of business on
December 19, 2005.
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, communication interface products and data conversion solutions.
National's key analog markets include wireless handsets, displays and a variety
of broad electronics markets, including medical, automotive, industrial, and
test and measurement applications. Headquartered in Santa Clara, California,
National reported sales of $1.91 billion for fiscal 2005, which ended May 29,
2005. Additional company and product information is available at
www.national.com.
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except per share amounts)
Three Months Ended Six Months Ended
-------------------------- -------------------------
Nov. 27, Nov. 28, Nov. 27, Nov. 28,
2005 2004 2005 2004
------------ ------------- ------------- -----------
Net sales $ 544.0 $ 448.9 $ 1,037.8 $ 996.9
Operating costs and expenses:
Cost of sales 232.7 221.9 448.8 468.3
Research and development 80.7 82.1 161.2 167.8
Selling, general and administrative 69.6 64.6 136.3 132.2
Cost reduction and restructuring charges 2.7 - 30.7 1.2
Gain on sale of business - (8.8) (24.3) (8.8)
Other operating income, net (2.4) (10.8) (3.4) (12.3)
------------ ------------- ------------- -----------
Total operating costs and expenses 383.3 349.0 749.3 748.4
------------ ------------- ------------- -----------
Operating income 160.7 99.9 288.5 248.5
Interest income, net 7.5 3.5 14.6 6.1
Other non-operating income (expense), net 0.6 (0.5) (1.9) (2.7)
------------ ------------- ------------- -----------
Income before taxes 168.8 102.9 301.2 251.9
Income tax expense 54.1 12.9 100.9 44.2
------------ ------------- ------------ ------------
Net income $ 114.7 $ 90.0 $ 200.3 $ 207.7
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Net income:
Basic $ 0.34 $ 0.25 $ 0.58 $ 0.58
Diluted $ 0.32 $ 0.24 $ 0.56 $ 0.55
Selected income statement ratios as a percentage of sales:
Gross margin 57.2% 50.6% 56.8% 53.0%
Research and development 14.8% 18.3% 15.5% 16.8%
Selling, general and administrative 12.8% 14.4% 13.1% 13.3%
Net income 21.1% 20.0% 19.3% 20.8%
Effective tax rate 32.0% 12.5% 33.5% 17.5%
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions)
Nov. 27, May 29,
2005 2005
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ASSETS
Current assets:
Cash and cash equivalents $ 814.4 $ 867.1
Short-term marketable investments 155.6 155.1
Receivables 168.7 123.9
Inventories 160.7 170.2
Deferred tax assets 126.9 126.9
Other current assets 53.1 70.3
-------------------- -------------------
Total current assets 1,479.4 1,513.5
Net property, plant and equipment 588.9 605.1
Goodwill 64.9 87.2
Deferred tax assets 196.0 192.2
Other assets 117.0 106.2
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Total assets $2,446.2 $2,504.2
==================== ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 91.3 $ 64.7
Accrued expenses 169.7 143.6
Income taxes payable 112.7 76.7
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Total current liabilities 373.7 285.0
Long-term debt 21.1 23.0
Other noncurrent liabilities 158.4 142.1
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Total liabilities 553.2 450.1
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Commitments and contingencies
Shareholders' equity:
Common stock 168.7 174.0
Additional paid-in capital 680.5 1,024.5
Retained earnings 1,147.6 961.2
Unearned compensation (7.2) (7.4)
Accumulated other comprehensive loss (96.6) (98.2)
-------------------- -------------------
Total shareholders' equity 1,893.0 2,054.1
-------------------- -------------------
Total liabilities and shareholders' equity $2,446.2 $2,504.2
==================== ===================
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
Six Months Ended
----------------------------------------
Nov. 27, Nov. 28,
2005 2004
--------------- ----------------
Cash flows from operating activities:
Net income $ 200.3 $ 207.7
Adjustments to reconcile net income with net cash
provided by operating activities:
Depreciation, amortization, and accretion 86.3 98.4
(Gain) loss on investments 1.3 (1.1)
Share in net losses of equity-method investments 0.6 3.3
Loss on disposal of equipment 1.4 0.7
Gain on sale of business (24.3) -
Tax benefit associated with stock options 45.0 3.9
Noncash other operating income, net (0.2) (18.3)
Other, net 2.5 0.4
Changes in certain assets and liabilities, net:
Receivables (44.8) 52.3
Inventories 9.5 (1.2)
Other current assets 17.2 (1.4)
Accounts payable and accrued expenses 33.4 (106.2)
Current and deferred income taxes 31.3 (9.1)
Other noncurrent assets (9.6) -
Other noncurrent liabilities 16.3 2.2
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Net cash provided by operating activities 366.2 231.6
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Cash flows from investing activities:
Purchase of property, plant and equipment (46.4) (73.5)
Sale of equipment 0.7 -
Sale of business 60.0 10.0
Sale of investments 0.3 0.6
Funding of benefit plan (3.0) (6.1)
Security deposits on leased equipment - (12.9)
Investment in nonpublicly traded companies - (0.3)
Other, net (2.0) -
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Net cash provided by (used by) investing activities 9.6 (82.2)
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Cash flows from financing activities:
Payment on software license obligations (13.1) (12.2)
Issuance of common stock 149.1 45.9
Purchase and retirement of treasury stock (550.6) (74.9)
Cash dividends declared and paid (13.9) -
--------------- ----------------
Net cash used by financing activities (428.5) (41.2)
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Net change in cash and cash equivalents (52.7) 108.2
Cash and cash equivalents at beginning of period 867.1 642.9
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Cash and cash equivalents at end of period $ 814.4 $ 751.1
=============== ================
PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(In millions, except per share amounts)
Three Months Ended Six Months Ended
----------------------------- -------------------------
Nov. 27, Nov. 28, Nov. 27, Nov. 28,
2005 2004 2005 2004
-------------- -------------- ------------ ------------
Earnings per share:
Basic $ 0.34 $ 0.25 $ 0.58 $ 0.58
Diluted $ 0.32 $ 0.24 $ 0.56 $ 0.55
Net income used in basic and diluted
earnings per share calculation $114.7 $ 90.0 $ 200.3 $207.7
Weighted-average shares:
Basic 339.7 356.0 342.8 356.7
Diluted 356.7 374.2 360.2 378.0
NOTES TO FINANCIAL STATEMENTS:
(In millions)
Three Months Ended Six Months Ended
------------------------- --------------------------
Nov. 27, Nov. 28, Nov. 27, Nov. 28,
2005 2004 2005 2004
------------ ------------ ------------ -------------
Other operating income, net
---------------------------
Release of litigation accrual $ (1.3) $ (10.0) $ (1.3) $ (10.0)
Net intellectual property income (0.7) (0.8) (1.4) (2.3)
Other (0.4) - (0.7) -
------------ ------------ ------------ -------------
Total Other operating income, net $ (2.4) $ (10.8) $ (3.4) $ (12.3)
============ ============ ============ =============
Interest income, net
--------------------
Interest income $ 7.9 $ 3.8 $ 15.3 $ 6.9
Interest expense (0.4) (0.3) (0.7) (0.8)
------------ ------------ ------------ -------------
Interest income, net $ 7.5 $ 3.5 $ 14.6 $ 6.1
============ ============ ============ =============
Other non-operating income (expense), net
- -----------------------------------------
Gain (loss) on investments $ 0.9 $ 1.2 $ (1.3) $ 1.1
Share in net losses of equity-method
Investments (0.3) (1.7) (0.6) (3.3)
Other - - - (0.5)
------------ ------------ ------------ -------------
Total other non-operating income (expense), net $ 0.6 $ (0.5) $ (1.9) $ (2.7)
============ ============ ============ =============