- Q4 sales grew to $455.9 million, up 5.8% from Q3 of fiscal 2007
- Record gross margin percentage of 62.5%, up from 59.8% in Q3
- EPS of 28 cents, up from 22 cents in Q3
- Sales outlook for Q1 of fiscal 2008 expected to be up 1% to 4%
sequentially
- Announced additional $2 billion new stock repurchase program
SANTA CLARA, Calif., June 7 /PRNewswire-FirstCall/ -- National
Semiconductor Corporation (NYSE: NSM) today reported net income of $90.1
million, or 28 cents per share, on sales of $455.9 million for the fourth
quarter of fiscal 2007, which ended May 27, 2007.
On a sequential basis, National's fourth quarter fiscal 2007 sales
increased 5.8 percent from the third quarter, when the company reported
$431.0 million in sales and earnings of 22 cents per share. Increased
demand for National's power management, audio, amplifier, data converter
and display products (that serve vertical markets such as wireless
handsets, networking and other portable electronics) were the primary
drivers of sales growth in the fourth quarter. Year over year, National's
fourth quarter sales were 20.4 percent lower from the fourth quarter of
fiscal 2006, when the company reported sales of $572.6 million and earnings
of 34 cents per share.
Gross margin in National's fourth quarter of fiscal 2007 was 62.5
percent, a new record for the company and up from last quarter's gross
margin of 59.8 percent. Ongoing improvement in National's higher-value
analog product portfolio was a key factor driving the increase in gross
margin. One year ago, gross margin in the fourth quarter of fiscal 2006 was
61.4 percent. The fourth quarter of fiscal 2007 included the impact of $5.4
million in pre-tax stock compensation expenses under FASB Statement 123(R).
National began accounting for stock compensation in the first quarter of
fiscal 2007.
"Our sales growth this quarter was driven mainly by newer, higher-
performance analog products," said Brian L. Halla, National's chairman and
CEO. "This enabled us to enjoy record gross margins."
Bookings for Q4, Fiscal 2007
National's total company bookings in the fourth quarter of fiscal 2007
increased by 6 percent sequentially over the third quarter. This increase
was primarily driven by higher orders from the company's OEM customer base.
Regionally, the fourth quarter bookings were particularly strong in Asia
Pacific. From a product perspective, new orders for data converter and
amplifier products grew at a higher rate than the overall company average.
Total company bookings exceeded billings in the fourth quarter.
Notable Items in Q4, Fiscal 2007 Results
National's fourth quarter fiscal 2007 results included $24.9 million in
pre-tax stock compensation expenses accounted for under FASB Statement
123(R). The company's effective tax rate of 28 percent reflected tax
benefits and credits that, in aggregate, were higher than originally
projected.
Outlook for Q1, Fiscal 2008
Based upon current business conditions, National anticipates that sales
in the first quarter of fiscal 2008 will be up 1 to 4 percent over the
fourth quarter of fiscal 2007. Gross margin is expected to improve while
operating expenses are also projected to increase.
Board Authorizes Stock Repurchase Program
National also announced today that the Board of Directors has
authorized a new program to repurchase $2 billion of National's common
stock. This combined with the $380 million in pre-existing repurchase
approvals that remained available as of the end of the fourth quarter of
fiscal 2007 brings the total approved repurchase programs to about $2.4
billion. The company will execute $1.5 billion of this buy back through a
leveraged accelerated share repurchase program, which will be financed
through a senior unsecured bridge facility. Details are contained in a
separate press release issued today.
"The accelerated share repurchase program is an indication of
confidence in the company and our robust business model," said Brian Halla.
"We are on the right track as our higher-value analog products continue to
differentiate our customers' products, driving sales growth and solid
margins."
In the past three years, National has purchased approximately $2
billion worth of common stock through its buy-back programs. During the
fourth quarter of fiscal 2007, National repurchased $170 million in common
stock, approximately 7 million shares. At the end of the fourth quarter of
fiscal 2007, there were 310.3 million shares outstanding.
Company Declares Dividend
The company today announced that the Board of Directors has declared a
cash dividend of $0.04 per outstanding share of common stock. This dividend
will be paid July 9, 2007 to shareholders of record at the close of
business on June 18, 2007.
Summary of Fiscal 2007
Annual sales were $1.93 billion compared to $2.16 billion in fiscal
2006. For fiscal 2007, National reported net income of $375.3 million,
including $111.5 million of pre-tax stock compensation expenses under FASB
Statement 123(R), compared to net income of $449.2 million in fiscal 2006.
Earnings per share for the year were $1.12 compared to $1.26 in fiscal
2006. National's gross margin in fiscal 2007 increased to 60.7 percent
compared to 59.0 percent in fiscal 2006 reflecting continued improvements
in the company's higher-value analog portfolio and strong execution in
manufacturing.
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, including
first quarter fiscal 2008 sales, gross margin, and operating expenses, 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 28, 2006 and the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended February 25,
2007 under the captions "Outlook", "Risk Factors" and "Management's
Discussion and Analysis of Financial Conditions and Results of Operations"
contained therein.
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, 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, Calif.,
National reported sales of $1.93 billion for fiscal 2007, which ended May
27, 2007. Additional company and product information is available at
http://www.national.com.
Contact: Media, LuAnn Jenkins, +1-408-721-2440, or
luann.jenkins@nsc.com, or Financial, Long Ly, +1-408-721-5007, or
invest.group@nsc.com, both of National Semiconductor.
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In millions, except per share amounts)
Three Months Ended Twelve Months Ended
May 27, May 28, May 27, May 28,
2007 2006 2007 2006
Net sales $455.9 $572.6 $1,929.9 $2,158.1
Cost of sales 171.1 221.1 757.7 885.4
Gross margin 284.8 351.5 1,172.2 1,272.7
Research and development 95.7 85.2 363.7 326.6
Selling, general
and administrative 75.0 68.8 310.9 273.9
In-process research and
development charge - - 6.1 -
Severance and restructuring
expenses 0.6 2.0 4.6 33.7
Goodwill impairment loss - 2.4 - 7.6
Gain on sale of business - (0.6) - (28.9)
Other operating income, net (0.6) (1.4) (2.8) (5.7)
Operating expenses 170.7 156.4 682.5 607.2
Operating income 114.1 195.1 489.7 665.5
Interest income, net 9.9 8.7 38.9 31.8
Other non-operating income
(expense), net 0.9 (0.2) 2.0 (2.1)
Income before taxes 124.9 203.6 530.6 695.2
Income tax expense 34.8 84.8 155.3 246.0
Net income $90.1 $118.8 $375.3 $449.2
Earnings per share:
Basic $0.29 $0.35 $1.17 $1.32
Diluted $0.28 $0.34 $1.12 $1.26
Selected income statement ratios
as a percentage of sales:
Gross margin 62.5% 61.4% 60.7% 59.0%
Research and development 21.0% 14.9% 18.8% 15.1%
Selling, general and
administrative 16.5% 12.0% 16.1% 12.7%
Net income 19.8% 20.7% 19.4% 20.8%
Effective tax rate 27.9% 41.7% 29.3% 35.4%
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions)
May 27, May 28,
2007 2006
ASSETS
Current assets:
Cash and cash equivalents $828.6 $932.2
Short-term marketable investments - 110.3
Receivables 150.6 208.6
Inventories 176.0 189.4
Deferred tax assets 69.1 74.7
Other current assets 62.1 25.3
Total current assets 1,286.4 1,540.5
Net property, plant and equipment 583.5 627.7
Goodwill 63.6 57.3
Deferred tax assets 198.5 185.7
Other assets 69.9 99.9
Total assets $2,201.9 $2,511.1
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $59.9 $108.8
Accrued expenses 122.7 191.0
Income taxes payable 117.4 98.5
Total current liabilities 300.0 398.3
Long-term debt 20.6 21.1
Non-current liabilities 132.5 165.6
Total liabilities 453.1 585.0
Commitments and contingencies
Shareholders' equity:
Common stock of $0.50 par value. 155.1 167.8
Additional paid-in capital - 504.2
Retained earnings 1,685.7 1,376.2
Unearned compensation - (8.6)
Accumulated other comprehensive loss (92.0) (113.5)
Total shareholders' equity 1,748.8 1,926.1
Total liabilities and shareholders' equity $2,201.9 $2,511.1
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
Twelve Months Ended
May 27, May 28,
2007 2006
Cash flows from operating activities:
Net income $375.3 $449.2
Adjustments to reconcile net income with net
cash provided by operating activities:
Depreciation and amortization 144.7 160.9
Impairment of goodwill - 7.6
Share-based compensation expense 111.5 16.1
Excess tax benefit from share-based
payment arrangements (12.6) -
Tax benefit associated with stock options 29.6 104.5
Gain on investments (2.0) (8.3)
Share in net losses of equity-method investments - 0.7
Loss on disposal of equipment 0.7 2.7
Gain on sale of businesses - (28.9)
In-process research and development charge 6.1 -
Non-cash other operating income, net - 1.9
Other, net 2.4 (2.5)
Changes in certain assets and liabilities, net:
Receivables 57.9 (84.3)
Inventories 15.7 (19.2)
Other current assets 7.9 45.0
Accounts payable and accrued expenses (127.4) 70.7
Current and deferred income taxes 2.7 87.3
Other non-current assets - (9.0)
Other non-current liabilities 4.4 1.4
Net cash provided by operating activities 616.9 795.8
Cash flows from investing activities:
Purchase of property, plant and equipment (106.6) (163.3)
Sale of equipment 1.2 1.2
Sale of businesses - 71.0
Sale and maturity of available-for-sale
securities 110.8 46.9
Sale of investments - 11.6
Funding of benefit plan (8.5) (3.0)
Business acquisitions, net of cash acquired (8.2) -
Other, net 2.9 (0.4)
Net cash used in investing activities (8.4) (36.0)
Cash flows from financing activities:
Payment on software license obligations (8.7) (13.1)
Excess tax benefit from share-based
payment arrangements 12.6 -
Issuance of common stock 103.1 303.3
Purchase and retirement of treasury stock (774.0) (950.7)
Cash dividends declared and paid (45.1) (34.2)
Net cash used in financing activities (712.1) (694.7)
Net change in cash and cash equivalents (103.6) 65.1
Cash and cash equivalents at beginning of period 932.2 867.1
Cash and cash equivalents at end of period $828.6 $932.2
Q4FY07Financials
PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(In millions, except per share amounts)
Three Months Ended Twelve Months Ended
May 27, May 28, May 27, May 28,
2007 2006 2007 2006
Earnings per share
Basic $0.29 $0.35 $1.17 $1.32
Diluted $0.28 $0.34 $1.12 $1.26
Net income used in basic and
diluted earnings per share $90.1 $118.8 $375.3 $449.2
Weighted-average shares:
Basic 312.0 336.3 319.5 339.8
Diluted 327.5 352.3 334.2 357.0
OTHER FINANCIAL STATEMENT DETAIL
(In millions)
Three Months Ended Twelve Months Ended
May 27, May 28, May 27, May 28,
2007 2006 2007 2006
Other operating income, net
Net intellectual property income $(0.6) $(0.8) $(1.8) $(4.1)
Intangible asset impairment - - - 1.8
Other - (0.6) (1.0) (3.4)
Total other operating income, net $(0.6) $(1.4) $(2.8) $(5.7)
Interest income, net
Interest income $9.8 $9.4 $40.1 33.7
Interest expense 0.1 (0.7) (1.2) (1.9)
Total interest income, net $9.9 $8.7 $38.9 $31.8
Other non-operating income
(expense), net
Gain (loss) on investments $0.9 $(0.1) $2.0 8.3
Share in net losses of
equity-method investments - (0.1) - (0.7)
Charitable contribution - - - (9.7)
Total other non-operating income
(expense), net $0.9 $(0.2) $2.0 $(2.1)
SOURCE National Semiconductor Corporation
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Related links:
http://www.national.com/
CONTACT:
Media, LuAnn Jenkins, +1-408-721-2440, or
luann.jenkins@nsc.com, or Financial, Long Ly, +1-408-721-5007, or
invest.group@nsc.com, both of National Semiconductor
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