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): March 9, 2006
NATIONAL SEMICONDUCTOR CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-6453 95-2095071
-------- ------ ----------
(State of Incorporation) (Commission (I.R.S. Employer
File Number) Identification Number)
2900 SEMICONDUCTOR DRIVE, P.O. BOX 58090
SANTA CLARA, CALIFORNIA 95052-8090
(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:
[ ] 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 March 9, 2006 (Earnings)
NATIONAL SEMICONDUCTOR CORPORATION
Item 2.02 RESULTS OF OPERATION AND FINANCIAL CONDITION
On March 9, 2006, National Semiconductor Corporation issued a
news release announcing earnings for the quarter ended Febuary
26, 2006. 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 March 9, 2006, the Company also announced in its news release
that its Board of Directors had declared a cash dividend of $0.03
per outstanding share of common stock. The dividend is payable on
April 10, 2006 to stockholders of record on March 20, 2006.
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 March 9, 2006 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: March 9, 2006 /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 22 Percent Year-to-Year Revenue Growth, 60.7% Gross
Margin and Earnings of 37 Cents Per Share for Third Quarter of Fiscal Year 2006
o Q3 FY06 revenues were $547.7 million, slightly higher than Q2 FY06
o Gross margin reached 60.7%, up from 57.2% in Q2 and 52.7% in Q3 FY05
o GAAP net income rose to $130.1 million, up from $114.7 million in Q2 and $77.4
million in Q3 FY05
o Outlook for Q4 FY06 revenue is 2% to 4% up sequentially from Q3
SANTA CLARA, Calif., March 9, 2006 -- National Semiconductor Corporation
(NYSE:NSM) today reported GAAP net income of $130.1 million, or 37 cents per
share, on revenues of $547.7 million for the third quarter of fiscal 2006, which
ended February 26, 2006.
National's third quarter revenues were 22 percent higher than the $449.2 million
revenues recorded in the third quarter of fiscal 2005, and $3.7 million higher
than the $544.0 million revenues reported in Q2 FY06. During the third quarter,
revenues from broader markets served through National's distribution channel
were strong, which more than offset an expected seasonal decline in revenues
from products that serve wireless handsets.
National's Q3 GAAP net income was 13 percent higher sequentially and 68 percent
higher year-to-year. The Company previously reported net income of $114.7
million, or 32 cents per share, for the prior quarter and $77.4 million, or 21
cents per share, for the third quarter of fiscal 2005. The Company's
profitability improvement in Q3 was driven primarily by a significant increase
in quarterly gross margin, which exceeded the 60 percent milestone for the first
time in National's history.
The Company's gross margin of 60.7 percent in Q3 FY06 compares with gross margin
of 57.2 percent last quarter and 52.7 percent in the third quarter of last year.
The continued improvement in National's gross margin is a direct result of the
Company's focus on growing its higher-value Analog product portfolio. In the
third quarter, gross margin was also aided by improvements in manufacturing
volume and efficiencies.
"Business conditions were stronger than we had originally anticipated," said
Brian L. Halla, chairman and CEO of National Semiconductor. "We reached our
interim goal of 60 percent gross margin earlier than we expected and at the same
time continued to gain market share in the analog standard linear market."
Bookings Increased in Q3
National's third quarter bookings increased 2 percent sequentially from the
second quarter. Bookings for analog standard linear products grew 8 percent in
Q3. New orders for amplifiers, interface and power management products grew at a
much higher rate than the overall company average. Bookings for products that
serve wireless handsets also increased in Q3. Regionally, bookings increased in
Asia Pacific and Europe. Year-to-year, total company bookings increased by more
than 40 percent over last year's third quarter. Total company bookings exceeded
billings in Q3 FY06.
Outlook for Q4, Fiscal 2006
Based upon current business conditions, National anticipates that revenues will
grow 2 to 4 percent during the fourth quarter of fiscal 2006. In this revenue
range, gross margin percentage would also be expected to improve slightly in Q4.
Company Declares Dividend
The Company today declared a cash dividend of $0.03 per outstanding share of
common stock. This dividend will be paid April 10, 2006 to shareholders of
record at the close of business on March 20, 2006.
Stock Buy-Back Program Update
During the third quarter, National bought back $200 million of common stock
under a previously approved stock repurchase program. The diluted weighted
average shares outstanding for Q3 fiscal 2006 was 354.6 million shares.
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 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 10-K for the year ended May 29, 2005 (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 November 27, 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 Nine Months Ended
-------------------------- --------------------------
Feb. 26, Feb. 27, Feb. 26, Feb. 27,
2006 2005 2006 2005
------------ ------------- ------------- ------------
Net sales $ 547.7 $ 449.2 $ 1,585.5 $1,446.1
Operating costs and expenses:
Cost of sales 215.5 212.6 664.3 680.9
Research and development 80.2 80.7 241.4 248.5
Selling, general and administrative 68.8 62.9 205.1 195.1
Cost reduction and restructuring charges 1.0 20.1 31.7 21.3
Goodwill impairment loss 5.2 - 5.2 -
Gain on sale of businesses (4.0) - (28.3) (8.8)
Other operating income, net (0.9) (7.4) (4.3) (19.7)
------------ ------------- ------------- ------------
Total operating costs and expenses 365.8 368.9 1,115.1 1,117.3
------------ ------------- ------------- ------------
Operating income 181.9 80.3 470.4 328.8
Interest income, net 8.5 4.3 23.1 10.4
Other non-operating income (expense), net - 0.2 (1.9) (2.5)
------------ ------------- ------------- ------------
Income before taxes 190.4 84.8 491.6 336.7
Income tax expense 60.3 7.4 161.2 51.6
------------ ------------- ------------- ------------
Net income $ 130.1 $ 77.4 $ 330.4 $ 285.1
============ ============= ============= ============
Earnings per share:
Basic $ 0.39 $ 0.22 $ 0.97 $ 0.80
Diluted $ 0.37 $ 0.21 $ 0.92 $ 0.76
Selected income statement ratios as a percentage of sales:
Gross margin 60.7% 52.7% 58.1% 52.9%
Research and development 14.6% 18.0% 15.2% 17.2%
Selling, general and administrative 12.6% 14.0% 12.9% 13.5%
Net income 23.8% 17.2% 20.8% 19.7%
Effective tax rate 31.7% 8.7% 32.8% 15.3%
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions)
Feb. 26, May 29,
2006 2005
-------------------- -------------------
ASSETS
Current assets:
Cash and cash equivalents $ 852.1 $ 867.1
Short-term marketable investments 156.3 155.1
Receivables 187.8 123.9
Inventories 179.7 170.2
Deferred tax assets 137.6 126.9
Other current assets 27.2 70.3
-------------------- -------------------
Total current assets 1,540.7 1,513.5
Net property, plant and equipment 601.5 605.1
Goodwill 59.7 87.2
Deferred tax assets 187.7 192.2
Other assets 108.6 106.2
-------------------- -------------------
Total assets $2,498.2 $2,504.2
==================== ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 93.3 $ 64.7
Accrued expenses 179.5 143.6
Income taxes payable 107.3 76.7
-------------------- -------------------
Total current liabilities 380.1 285.0
Long-term debt 21.1 23.0
Other noncurrent liabilities 159.0 142.1
-------------------- -------------------
Total liabilities 560.2 450.1
-------------------- -------------------
Commitments and contingencies
Shareholders' equity:
Common stock 168.8 174.0
Additional paid-in capital 607.4 1,024.5
Retained earnings 1,267.6 961.2
Unearned compensation (6.7) (7.4)
Accumulated other comprehensive loss (99.1) (98.2)
-------------------- -------------------
Total shareholders' equity 1,938.0 2,054.1
-------------------- -------------------
Total liabilities and shareholders' equity $2,498.2 $2,504.2
==================== ===================
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
Nine Months Ended
----------------------------------------
Feb. 26, Feb. 27,
2006 2005
--------------- ----------------
Cash flows from operating activities:
Net income $ 330.4 $ 285.1
Adjustments to reconcile net income with net cash
provided by operating activities:
Impairment of goodwill 5.2 -
Impairment of technology license - 0.5
Depreciation, amortization, and accretion 126.9 147.6
Gain on investments (8.4) (2.0)
Share in net losses of equity-method investments 0.6 4.0
Loss on disposal of equipment 2.7 1.0
Gain on sale of business (28.3) (8.8)
Noncash other operating income, net 1.6 (10.6)
Tax benefit associated with stock options 84.4 3.9
Other, net 6.3 2.5
Changes in certain assets and liabilities, net:
Receivables (63.9) 55.5
Inventories (9.5) 14.6
Other current assets 43.0 8.3
Accounts payable and accrued expenses 44.6 (131.6)
Current and deferred income taxes 24.5 (16.3)
Other noncurrent assets (9.0) -
Other noncurrent liabilities 16.9 5.8
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Net cash provided by operating activities 568.0 359.5
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Cash flows from investing activities:
Purchase of property, plant and equipment (100.0) (83.3)
Sale of equipment 1.1 -
Sale of businesses 64.0 10.0
Sale of investments 10.8 0.7
Investment in nonpublicly traded companies - (0.3)
Funding of benefit plan (2.4) (7.1)
Security deposits on leased equipment - (17.4)
Other, net (1.9) 1.7
--------------- ----------------
Net cash used by investing activities (28.4) (95.7)
--------------- ----------------
Cash flows from financing activities:
Payment on software license obligations (13.1) (13.6)
Issuance of common stock 233.2 72.2
Purchase and retirement of treasury stock (750.7) (225.5)
Cash dividends declared and paid (24.0) (7.1)
--------------- ----------------
Net cash used by financing activities (554.6) (174.0)
--------------- ----------------
Net change in cash and cash equivalents (15.0) 89.8
Cash and cash equivalents at beginning of period 867.1 642.9
--------------- ----------------
Cash and cash equivalents at end of period $ 852.1 $ 732.7
=============== ================
PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(In millions, except per share amounts)
Three Months Ended Nine Months Ended
----------------------------- -------------------------
Feb. 26, Feb. 27, Feb. 26, Feb. 27,
2006 2005 2006 2005
-------------- -------------- ------------ ------------
Earnings per share:
Basic $ 0.39 $ 0.22 $ 0.97 $ 0.80
Diluted $ 0.37 $ 0.21 $ 0.92 $ 0.76
Net income used in basic and diluted
earnings per share calculation $ 130.1 $ 77.4 $ 330.4 $ 285.1
Weighted-average shares:
Basic 337.5 353.2 341.0 355.5
Diluted 354.6 374.0 358.3 376.6
NOTES TO FINANCIAL STATEMENTS:
(In millions)
Three Months Ended Nine Months Ended
------------------------- --------------------------
Feb. 26, Feb. 27, Feb. 26, Feb. 27,
2006 2005 2006 2005
------------ ------------ ------------ -------------
Other operating income, net
---------------------------
Net intellectual property income $ (1.9) $ (1.7) $ (3.3) $ (4.0)
Intangible asset impairment 1.8 - 1.8 -
Release of litigation accrual - - - (10.0)
Manufacturer's Investment Credit refund - (7.4) - (7.4)
Other (0.8) 1.7 (2.8) 1.7
------------ ------------ ------------ -------------
Total other operating income, net $ (0.9) $ (7.4) $ (4.3) $ (19.7)
============ ============ ============ =============
Interest income, net
--------------------
Interest income $ 9.0 $ 4.7 $ 24.3 $ 11.6
Interest expense (0.5) (0.4) (1.2) (1.2)
------------ ------------ ------------ -------------
Interest income, net $ 8.5 $ 4.3 $ 23.1 $ 10.4
============ ============ ============ =============
Other non-operating income (expense), net
-----------------------------------------
Gain on investments $ 9.7 $ 0.9 $ 8.4 $ 2.0
Share in net losses of equity-method
investments - (0.7) (0.6) (4.0)
Charitable contribution (9.7) - (9.7) -
Other - - - (0.5)
------------ ------------ ------------ -------------
Total other non-operating income (expense), net $ - $ 0.2 $ (1.9) $ (2.5)
============ ============ ============ =============