National Semiconductor Reports Results for Third Quarter Fiscal 2010
- Q3 sales of $362 million were up 5% from Q2 of fiscal 2010 and up 24% from Q3 of fiscal 2009
- GAAP earnings per share of 22 cents was up from 20 cents in Q2 and 9 cents one year ago
- Gross margin was 67.3%, up from 65.3% in Q2 and 57.5% in last year's Q3
- Sales outlook for Q4 of fiscal 2010 expected to be $375 million to $390 million, or up approximately 4 to 8 percent sequentially
SANTA CLARA, Calif., March 11 /PRNewswire-FirstCall/ -- National Semiconductor Corp. (NYSE: NSM) today reported sales of $362 million and net income of $53.2 million, or 22 cents per diluted share, for the third quarter of fiscal 2010, which ended Feb. 28, 2010.
National's third quarter sales were 5 percent higher than the second quarter of fiscal 2010, when the company reported $345 million in sales, and 24 percent higher than the $292 million reported in last year's third fiscal quarter. There were 13 weeks in National's second and third quarters of fiscal 2010 and 14 weeks in the third quarter of fiscal 2009. Stronger demand for National's analog products in industrial markets, served primarily through distributors, drove the increase in third quarter revenues, while sales to wireless handset customers were down seasonally following the holidays.
Third quarter net income of $53.2 million, or 22 cents per diluted share, was an increase from the $47.0 million, or 20 cents per share, in the second quarter of fiscal 2010. Third quarter fiscal 2010 results included a pre-tax $6.4 million restructuring charge. In last year's third quarter, National reported net income of $21.1 million, or 9 cents per share, which included approximately $11 million of discrete income tax benefits.
Stronger product mix from higher sales into industrial markets drove gross margin improvement in the quarter. In addition, the company continued to improve its manufacturing cost performance. Gross margin of 67.3 percent in the third quarter increased from the 65.3 percent gross margin achieved in the second quarter of fiscal 2010 and the 57.5 percent gross margin reported one year ago.
Bookings for Q3, Fiscal 2010
National's total company bookings increased 5 percent sequentially, as order rates increased from direct OEM customers as well as from distributors. Bookings exceeded billings in the quarter.
"Driving revenue growth is our new charter here at National Semiconductor," said Don Macleod, National's president and chief executive officer. "Our sequential and year-on-year revenue growth demonstrates top-line improvement, driven by both our core analog business and traction in several new emerging areas."
Outlook for Q4, Fiscal 2010
National is projecting revenues to be between $375 million and $390 million (up approximately 4 to 8 percent sequentially) in the fourth quarter of fiscal 2010.
Company Declares Dividend
The company announced today that the Board of Directors has declared a cash dividend of $0.08 per outstanding share of common stock. This dividend will be paid on April 12, 2010 to shareholders of record at the close of business on March 22, 2010.
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. Except for historical information contained herein, the matters set forth in this press release, including management's expectations regarding future performance, are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Potential risks and uncertainties include, but are not restricted to, such factors as 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 annual report on Form 10-K for the fiscal year ended May 31, 2009 under the captions "Outlook," "Risk Factors" and "Management's Discussion and Analysis of Financial Conditions and Results of Operations" contained therein and the quarterly report on Form 10-Q for the quarter ended Nov. 29, 2009.
About National Semiconductor
National Semiconductor is a leader in analog power management technology. Its products include easy-to-use integrated circuits, PowerWise products that enable more energy-efficient systems, and SolarMagic products which improve the energy output of solar arrays. The company celebrated its 50th anniversary last May. Headquartered in Santa Clara, Calif., National reported sales of $1.46 billion for fiscal 2009. Additional information is available at www.national.com.
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NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In millions, except per share amounts)
Q3 FY10 Q2 FY10 Q3 FY09 YTD 2010 YTD 2009
Three Months Ended Nine Months Ended
----------------------- -------------------
Feb. 28, Nov. 29, Mar. 1, Feb. 28, Mar. 1,
2010 2009 2009 2010 2009
----------------------- -------------------
Net sales $361.9 $344.6 $292.4 $1,020.9 $1,179.6
Cost of sales 118.2 119.6 124.3 360.0 426.9
----- ----- ----- ----- -----
Gross margin 243.7 225.0 168.1 660.9 752.7
Research and development 69.0 68.2 72.9 202.5 254.1
Selling, general and
administrative 81.7 81.0 66.5 235.7 217.8
Severance and
restructuring expenses
(recovery) 6.4 0.7 (1.4) 12.8 27.8
Other operating expense
(income), net 0.6 1.1 (0.2) (0.3) (0.4)
--- --- ---- ---- ----
Operating expenses 157.7 151.0 137.8 450.7 499.3
----- ----- ----- ----- -----
Operating income 86.0 74.0 30.3 210.2 253.4
Interest income 0.4 0.4 2.0 1.3 9.6
Interest expense (14.8) (15.0) (18.7) (45.5) (55.7)
Other non-operating
income (expense), net 0.8 2.0 1.0 6.1 (14.1)
--- --- --- --- -----
Income before taxes 72.4 61.4 14.6 172.1 193.2
Income tax expense
(benefit) 19.2 14.4 (6.5) 42.1 56.2
---- ---- ---- ---- ----
Net income $53.2 $47.0 $21.1 $130.0 $137.0
===== ===== ===== ====== ======
Earnings per share:
Basic $0.22 $0.20 $0.09 $0.55 $0.60
Diluted $0.22 $0.20 $0.09 $0.54 $0.58
Selected income
statement ratios as a
percentage of sales:
Gross margin 67.3% 65.3% 57.5% 64.7% 63.8%
Research and development 19.1% 19.8% 24.9% 19.8% 21.5%
Selling, general and
administrative 22.6% 23.5% 22.7% 23.1% 18.5%
Net income 14.7% 13.6% 7.2% 12.7% 11.6%
Effective tax rate 26.5% 23.5% 44.5% 24.5% 29.1%
Percentage change in Q3 FY10 Q3 FY10 YTD FY10
selected items: vs vs vs
Increase (decrease) Q2 FY10 Q3 FY09 YTD FY09
------- ------- --------
Net sales 5.0% 23.8% (13.5%)
Net income 13.2% 152.1% (5.1%)
Diluted earnings
per share 10.0% 144.4% (6.9%)
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions)
Feb. 28, May 31,
2010 2009
-------- -------
ASSETS
Current assets:
Cash and cash equivalents $868.6 $700.3
Receivables 87.4 71.7
Inventories 113.9 134.6
Deferred tax assets 73.0 72.6
Other current assets 112.9 108.0
----- -----
Total current assets 1,255.8 1,087.2
Net property, plant and
equipment 419.2 461.8
Goodwill 66.1 61.5
Deferred tax assets, net 258.5 251.5
Other assets 103.3 101.3
----- -----
Total assets $2,102.9 $1,963.3
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-
term debt $339.0 $62.5
Accounts payable 45.8 40.3
Accrued expenses 165.1 144.6
Income taxes payable 14.3 28.2
---- ----
Total current liabilities 564.2 275.6
Long-term debt 906.2 1,227.4
Long-term income taxes
payable 169.3 162.6
Other non-current
liabilities 115.9 120.7
----- -----
Total liabilities 1,755.6 1,786.3
------- -------
Commitments and contingencies
Shareholders' equity:
Common stock of $0.50 par
value 119.0 116.3
Additional paid-in-
capital 161.9 67.6
Retained earnings 190.1 116.8
Accumulated other
comprehensive loss (123.7) (123.7)
------ ------
Total shareholders' equity 347.3 177.0
----- -----
Total liabilities and
shareholders' equity $2,102.9 $1,963.3
======== ========
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
Nine Months Ended
---------------------
Feb. 28, Mar. 1,
2010 2009
-------- -------
Cash flows from operating activities:
Net income $130.0 $137.0
Adjustments to reconcile net income with
net cash provided by
operating activities:
Depreciation and amortization 71.6 92.0
Share-based compensation 49.9 52.4
Excess tax benefit from share-based
payment arrangements (0.2) (4.4)
Tax (expense) benefit associated with
stock options (6.7) 6.8
(Gain) loss on investments (6.1) 14.1
Non-cash restructuring recovery (5.6) (0.5)
Loss (gain) on disposal of equipment 1.0 (0.3)
Other, net 0.9 2.1
Changes in certain assets and
liabilities, net:
Receivables (17.4) 52.2
Inventories 20.3 (1.2)
Other current assets (3.5) 0.5
Accounts payable and accrued expenses 14.6 (57.3)
Current and deferred income taxes (15.5) 30.3
Other non-current liabilities 12.9 (31.5)
---- -----
Net cash provided by operating activities 246.2 292.2
----- -----
Cash flows from investing activities:
Purchase of property, plant and equipment (25.9) (75.7)
Proceeds from sale of property, plant and
equipment 2.0 1.0
Business acquisition, net of cash
acquired (4.8) -
Funding of benefit plan (1.5) (6.2)
Redemption and net realized losses of
benefit plan 7.6 10.4
Other, net (2.2) 0.7
---- ---
Net cash used in investing activities (24.8) (69.8)
----- -----
Cash flows from financing activities:
Repayment of bank borrowing (46.8) (47.0)
Payment on software license obligations (6.3) -
Excess tax benefit from share-based
payment arrangements 0.2 4.4
Minimum tax withholding paid on behalf of
employees for net share settlements (1.7) (0.2)
Issuance of common stock 59.5 35.1
Cash payments in connection with stock
option exchange program (1.3) -
Purchase and retirement of treasury stock - (128.4)
Cash dividends declared and paid (56.7) (46.0)
----- -----
Net cash used in financing activities (53.1) (182.1)
----- ------
Net change in cash and cash equivalents 168.3 40.3
Cash and cash equivalents at beginning of
period 700.3 736.8
----- -----
Cash and cash equivalents at end of
period $868.6 $777.1
====== ======
PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(In millions, except per share amounts)
Q3 FY10 Q2 FY10 Q3 FY09 YTD 2010 YTD 2009
Three Months Ended Nine Months Ended
----------------------- -------------------
Feb. 28, Nov. 29, Mar. 1, Feb. 28, Mar. 1,
2010 2009 2009 2010 2009
----------------------- -------------------
Net income used in
basic and diluted
earnings per share
calculation $53.2 $47.0 $21.1 $130.0 $137.0
Earnings per share:
Basic $0.22 $0.20 $0.09 $0.55 $0.60
Diluted $0.22 $0.20 $0.09 $0.54 $0.58
Weighted-average shares
outstanding:
Basic 237.3 236.6 228.4 235.8 228.7
Diluted 242.5 241.0 231.3 240.5 235.5
OTHER FINANCIAL STATEMENT DETAIL
(In millions)
Q3 FY10 Q2 FY10 Q3 FY09 YTD 2010 YTD 2009
Three Months Ended Nine Months Ended
----------------------- -------------------
Feb. 28, Nov. 29, Mar. 1, Feb. 28, Mar. 1,
2010 2009 2009 2010 2009
----------------------- -------------------
Other operating expense
(income), net:
Net intellectual
property income $- $- $(0.2) $- $(0.4)
Litigation settlement - 1.5 - (0.5) -
Other 0.6 (0.4) - 0.2 -
--- ---- --- --- ---
Total other operating
expense (income), net $0.6 $1.1 $(0.2) $(0.3) $(0.4)
==== ==== ===== ===== =====
Other non-operating
income (expense), net:
Gain (loss) on
investments $0.8 $2.0 $1.0 $6.1 $(14.1)
---- ---- ---- ---- ------
Total other non-operating
income (expense), net $0.8 $2.0 $1.0 $6.1 $(14.1)
==== ==== ==== ==== ======
SOURCE National Semiconductor Corp.
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