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): June 9, 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-2b)
[ ] 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
Section 2 - Financial Information
---------------------------------
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
---------------------------------------------
Item 9.01 Financial Statements and Exhibits 3
Signature 4
Exhibits:
99.1 News release dated June 9, 2005 (Earnings)
NATIONAL SEMICONDUCTOR CORPORATION
Item 2.02 RESULTS OF OPERATION AND FINANCIAL CONDITION
On June 9, 2005, National Semiconductor Corporation issued a news release
announcing earnings for the quarter ended May 29, 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.
Item 8.01 OTHER EVENTS
The Company also announced in its news release that it will pay a dividend
of 2 cents per share on July 11 to shareholders of record on June 20, 2005.
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 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c ) Exhibits
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Exhibit No. Description of Exhibit
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99.1 News release dated June 9, 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
//S// Robert E. DeBarr
Dated: June 9, 2005 Robert E. DeBarr
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Controller
Signing on behalf of the registrant and
as principal accounting officer
Exhibit 99.1
News Media: Financial:
Jeff Weir Jennifer Stratiff
National Semiconductor National Semiconductor
(408) 721-5199 (408) 721-5007
jeff.weir@nsc.com invest.group@nsc.com
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National Semiconductor Reports 4% Sequential Revenue Increase, 54.7% Gross
Margin and $132.1 Million Profit for 4th Quarter Fiscal 2005
o Q4 revenues were $467 million, compared to $449 million in Q3 and $571
million a year ago
o Gross margin rose 2 percentage-points sequentially in fourth quarter
o Q4 GAAP earnings are 36 cents per share vs. 21 cents in Q3 and 24 cents a
year ago
o Commitment to analog market drives gains in gross margin
o Company announced sale of PC Super I/O and cordless business units in Q4
o Revenue outlook for Q1 of fiscal 2006 is flat to down 2 percent from Q4
SANTA CLARA, CALIF., June 9, 2005 - National Semiconductor Corporation
(NYSE:NSM) today reported a GAAP net income of $132.1 million, or 36 cents per
share, on revenues of $467 million for the fourth quarter of fiscal 2005, which
ended May 29, 2005.
On a sequential basis, National's Q4 revenues rose 4 percent from the third
quarter, when the company reported $449 million in revenues and earnings of 21
cents per share. Year-to-year, National's fourth quarter sales declined 18
percent from the fourth quarter of fiscal 2004, when the Company reported sales
of $571.2 million, net income of $94.2 million and earnings of 24 cents per
share.
Fourth quarter gross margin rose 2 percentage points to 54.7 percent driven by
increased sales of analog products. This compares to 52.7 percent gross margin
reported in Q3 and 50.6 percent gross margin reported in Q2. In the year-ago
quarter, National posted 54.4 percent gross margin on revenues that were more
than $100 million higher than the just-completed fourth quarter.
"Our focus on higher-value analog products and improved gross margin is
relentless," said Brian L. Halla, National's chairman and CEO. "Regardless of
the market environment, we've significantly strengthened the company's core
analog business and generated 20-plus percent return on invested capital for the
second year in a row."
National's fourth quarter 2005 net results included several notable financial
items, including an $86.1 million write-off of goodwill in connection with our
annual goodwill assessment; a $51.1 million gain from the sale of National's PC
Super /IO business; and a $2.6 million charge for cost reduction actions; all of
these on a pre-tax basis. In addition, the company's income tax provision was a
net tax benefit of $55.9 million, primarily related to deferred tax assets. A
year ago, National's fourth quarter net income included a $30 million pre-tax
special charge for a litigation issue.
Bookings Increased Sequentially in Q4
National's Q4 worldwide bookings increased 12 percent sequentially from Q3.
Year-to-year, bookings declined 29 percent from Q4 of fiscal 2004.
Regionally, bookings increased sequentially in North America, Asia Pacific and
Japan. Weekly booking rates increased month-to-month throughout the quarter.
Bookings from major distributors also improved.
Bookings for National's standard linear analog products rose 19 percent from Q3.
New order rates for power management, interface and data converter products were
substantially higher than the company average. Total company billings exceeded
bookings in Q4.
Outlook for Q1, Fiscal 2006
During the fourth quarter, National Semiconductor announced the sale of its PC
Super I/O and cordless business units. These business dispositions will impact
revenues in the first quarter of fiscal 2006. Overall, the Company anticipates
first quarter revenues will be flat to down 2 percent from fourth quarter
levels. The gross margin for Q1 is anticipated to be similar to Q4.
National to Pay Dividend July 11, 2005
In addition to announcing earnings for Q4, National today also declared a cash
dividend of 2 cents per outstanding share of common stock. The dividend is
payable July 11, 2005 to stockholders of record at the close of business on June
20, 2005.
Summary of Fiscal 2005
For fiscal 2005, National reported a GAAP net income of $417.2 million, compared
to the $282.8 million profit for fiscal 2004. Earnings per share were $1.12 for
fiscal 2005 compared to 73 cents for fiscal 2004. Fiscal 2005 revenues were
$1.91 billion compared to $1.98 billion for fiscal 2004. The Company's
profitability was driven by its continued improvement in gross margin, which was
53.4 percent for fiscal 2005 vs. 51 percent in fiscal 2004.
"We ended the year with over a billion dollars in cash reserves, a 21 percent
return on invested capital and a stronger analog portfolio," Halla said. "Our
goal in fiscal 2006 is to drive gross margins even higher."
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 30, 2004 (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 27, 2005.
Summary of Results
For the 3 months ended For the 12 months ended
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May 29, 2005 May 30, 2004 May 29, 2005 May 30, 2004
------------ ------------ ------------ ------------
Net sales $467.0 million $571.2 million $1,913.1 million $1,983.1 million
Net income $132.1 million $ 94.2 million $ 417.2 million $ 282.8 million
Earnings per diluted share $0.36 $0.24 $1.12 $0.73
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 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 Twelve Months Ended
-------------------------- -------------------------
May 29, May 30, May 29, May 30,
2005 2004 2005 2004
------------ ------------- ------------ ------------
Net sales $ 467.0 $ 571.2 $1,913.1 $1,983.1
Operating costs and expenses:
Cost of sales 211.4 260.4 892.3 970.8
Research and development 84.5 92.1 333.0 357.1
Selling, general and administrative 62.7 73.3 256.5 283.4
Goodwill impairment 86.1 - 86.1 -
Sale of businesses (51.1) - (59.9) -
Cost reduction and restructuring charges 2.6 2.9 23.9 19.6
Other operating (income)/expense, net (1.6) 30.0 (21.3) 22.0
------------ ------------- ------------ ------------
Total operating costs and expenses 394.6 458.7 1,510.6 1,652.9
------------ ------------- ------------ ------------
Operating income 72.4 112.5 402.5 330.2
Interest income, net 5.5 2.7 15.9 10.4
Other non-operating expense, net (1.7) (0.5) (5.5) (6.9)
------------ ------------- ------------ ------------
Income before taxes and cumulative
effect of a change in accounting principle 76.2 114.7 412.9 333.7
Income tax (benefit)/expense (55.9) 20.5 (4.3) 49.0
------------ ------------- ------------ ------------
Income before cumulative effect of a
change in accounting principle 132.1 94.2 417.2 284.7
Cumulative effect of a change in accounting
principle including tax effect of $0.2 million - - - (1.9)
------------ ------------- ------------ ------------
Net income $ 132.1 $ 94.2 $ 417.2 $ 282.8
============ ============= ============ ============
Earnings per share:
Income before cumulative effect of a change
in accounting principle:
Basic $ 0.38 $ 0.26 $ 1.18 $ 0.79
Diluted $ 0.36 $ 0.24 $ 1.12 $ 0.73
Net income:
Basic $ 0.38 $ 0.26 $ 1.18 $ 0.78
Diluted $ 0.36 $ 0.24 $ 1.12 $ 0.73
Selected income statement ratios as a percentage of sales:
Gross margin 54.7% 54.4% 53.4% 51.0%
Research and development 18.1% 16.1% 17.4% 18.0%
Selling, general and administrative 13.4% 12.8% 13.4% 14.3%
Net income 28.3% 16.5% 21.8% 14.3%
Effective tax rate N/A 17.9% N/A 14.7%
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
May 29, May 30,
2005 2004
-------------------- -------------------
ASSETS
Current assets:
Cash and cash equivalents $ 867.1 $ 642.9
Short-term marketable investments 155.1 139.3
Receivables 123.9 198.9
Inventories 170.2 200.1
Deferred tax assets 99.3 8.0
Other current assets 25.2 56.6
-------------------- -------------------
Total current assets 1,440.8 1,245.8
Net property, plant and equipment 605.1 699.6
Goodwill 87.2 173.3
Deferred tax assets 217.6 73.3
Other assets 106.2 88.4
-------------------- -------------------
Total assets $2,456.9 $2,280.4
==================== ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ - $ 22.1
Accounts payable 64.7 141.0
Accrued expenses 140.6 234.8
Income taxes 26.2 63.4
-------------------- -------------------
Total current liabilities 231.5 461.3
Long-term debt 23.0 -
Other noncurrent liabilities 151.2 138.6
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Total liabilities 405.7 599.9
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Commitments and contingencies
Shareholders' equity:
Common stock 174.0 178.8
Additional paid-in capital 1,017.1 1,030.1
Retained earnings 963.1 560.0
Accumulated other comprehensive loss (103.0) (88.4)
-------------------- -------------------
Total shareholders' equity 2,051.2 1,680.5
-------------------- -------------------
Total liabilities and shareholders' equity $2,456.9 $2,280.4
==================== ===================
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Twelve Months Ended
--------------------------------------
May 29, May 30,
2005 2004
---------------- ---------------
Cash flows from operating activities:
Net income $ 417.2 $ 282.8
Adjustments to reconcile net income with net cash
provided by operating activities:
Cumulative effect of a change in accounting principle - 1.9
Impairment of goodwill 86.1 -
Depreciation, amortization and accretion 194.4 209.9
Gain on investments (0.7) (7.0)
Share in net losses of equity-method investments 5.7 14.1
Loss on disposal of equipment 1.1 6.2
Gain on sale of businesses (59.9) -
Tax benefit associated with stock options 184.5 22.2
Noncash other operating (income)/expense, net (11.1) 1.2
Other, net 2.4 3.6
Changes in certain assets and liabilities, net:
Receivables 76.7 (50.4)
Inventories 29.8 (62.5)
Other current assets 26.4 (31.6)
Accounts payable and accrued expenses (147.4) 78.7
Income taxes (269.2) 13.6
Other noncurrent liabilities (7.4) (5.0)
---------------- ---------------
Net cash provided by operating activities 528.6 477.7
---------------- ---------------
Cash flows from investing activities:
Purchase of property, plant and equipment (96.6) (215.3)
Sale of businesses 71.5 -
Sale and maturity of available-for-sale securities - 359.0
Purchase of available-for-sale securities (16.8) (386.7)
Sale of investments 0.7 12.1
Investment in nonpublicly traded companies (0.3) (1.8)
Funding of benefit plan (6.9) (4.6)
Security deposits on leased equipment (21.8) (20.1)
Other, net 0.2 5.2
---------------- ---------------
Net cash used by investing activities (70.0) (252.2)
---------------- ---------------
Cash flows from financing activities:
Repayment of debt - (2.1)
Payment on software license obligations (15.2) (22.7)
Issuance of common stock 118.4 211.9
Net advances to acquire treasury stock - (29.4)
Purchase and retirement of treasury stock (323.5) (542.5)
Cash dividends declared and paid (14.1) -
---------------- ---------------
Net cash used by financing activities (234.4) (384.8)
---------------- ---------------
Net change in cash and cash equivalents 224.2 (159.3)
Cash and cash equivalents at beginning of year 642.9 802.2
---------------- ---------------
Cash and cash equivalents at end of year $ 867.1 $ 642.9
================ ===============
PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(in millions, except per share amounts)
Three Months Ended Twelve Months Ended
--------------------------- -------------------------
May 29, May 30, May 29, May 30,
2005 2004 2005 2004
-------------- ------------ ------------ ------------
Earnings per share:
Basic $ 0.38 $ 0.26 $ 1.18 $ 0.78
Diluted $ 0.36 $ 0.24 $ 1.12 $ 0.73
Net income used in basic and diluted
earnings per share calculation $ 132.1 $ 94.2 $ 417.2 $ 282.8
Weighted-average shares:
Basic 349.2 357.3 353.9 361.0
Diluted 365.8 389.6 373.9 388.5
Three Months Ended Twelve Months Ended
--------------------------- -------------------------
May 29, May 30, May 29, May 30,
Other operating (income)/expense, net 2005 2004 2005 2004
-------------- ------------ ------------ ------------
Litigation $ (0.4) $ 30.0 $ (10.4) $ 30.0
Manufacturer's Investment Credit refund - - (7.4) -
Net intellectual property income (1.2) (2.4) (5.2) (11.1)
Intellectual property settlements - 2.4 1.7 3.1
-------------- ------------ ------------ ------------
Total other operating (income)/expense, net $ (1.6) $ 30.0 $ (21.3) $ 22.0
============== ============ ============ ============
Interest income, net
Interest income $ 5.8 $ 3.1 $ 17.4 $ 11.6
Interest expense (0.3) (0.4) (1.5) (1.2)
-------------- ------------ ------------ ------------
Interest income, net $ 5.5 $ 2.7 $ 15.9 $ 10.4
============== ============ ============ ============
Other non-operating expense, net
Gain on investments $ - $ 2.8 $ 0.7 $ 7.0
Share in net losses of equity-method
Investments (1.7) (3.3) (5.7) (14.1)
Other - - (0.5) 0.2
-------------- ------------ ------------ ------------
Total other non-operating expense, net $ (1.7) $ (0.5) $ (5.5) $ (6.9)
============== ============ ============ ============