- Q3 EPS of 9 cents per diluted share down from 16 cents in Q2
- Sales outlook for Q4 of fiscal 2009 expected to be down 5 to 10 percent
- Company announces plan to reduce expenses; will immediately eliminate 850 positions
- National to consolidate manufacturing facilities, impacting an additional 875 positions over next several quarters
SANTA CLARA, Calif., March 11 /PRNewswire-FirstCall/ -- National Semiconductor Corp. (NYSE: NSM) today reported sales of $292 million and net income of $21.1 million, or 9 cents per diluted share, for the third quarter of fiscal 2009, which ended March 1, 2009. In National's second quarter of fiscal 2009, the company reported $422 million in sales and $36 million in net income or 16 cents per diluted share. Gross margin of 57.5 percent in National's third quarter of fiscal 2009 was down from the 65.8 percent gross margin achieved in the second quarter of fiscal 2009.
Compared to last year, sales decreased approximately 36 percent from the $453 million reported in the third quarter of fiscal 2008, and earnings per diluted share declined from the 29 cents recorded one year ago. Gross margin decreased from the 64.3 percent reported in the third quarter of fiscal 2008.
Notable Items in Q3, Fiscal 2009 Results
Third quarter fiscal 2009 results included approximately $11 million of discrete income tax benefits, primarily due to the realization of deferred taxes associated with a former equity investment. In addition, since National's fiscal 2009 is a 53-week year, there were 14 weeks in the third fiscal quarter. The fourth fiscal quarter will be a normal 13-week quarter.
Bookings for Q3, Fiscal 2009
In the third quarter of fiscal year 2009, total bookings decreased by approximately 25 percent compared to the second quarter of fiscal 2009. This decline was primarily driven by lower order rates from the distribution channel, which services a large number of customers across a broad range of industries and markets. Regionally, the third quarter bookings decline was seen broadly across all major geographies. Total company billings exceeded bookings in the third quarter.
Outlook for Q4, Fiscal 2009
National expects sales in the fourth quarter of fiscal 2009 to decrease sequentially by 5 to 10 percent as the company's distribution channel continues to be negatively impacted by the weak economy.
Company Announces Plan to Re-align Spending and Consolidate Manufacturing
In response to economic conditions and related business levels, National will take actions in the fourth quarter of fiscal 2009 to reduce overall expenses and shift more of its R&D investments towards new and emerging growth opportunities. As part of the plan, the company will eliminate approximately 850 positions worldwide in product lines, sales and marketing, manufacturing and support functions. Notification to affected employees will begin immediately.
As part of the manufacturing consolidation plan, the company will close its assembly and test plant in Suzhou, China and its wafer fabrication plant in Arlington, Texas. The closures will occur in phases over several quarters, eventually resulting in the elimination of an additional 875 positions. The volume currently being supported by these two facilities will be transferred primarily to other National locations. After the consolidation, National will have three manufacturing facilities: wafer fabrication plants in South Portland, Maine and Greenock, Scotland and an assembly and test facility in Melaka, Malaysia.
In total, for all of the actions discussed above, it is estimated that the company will ultimately incur between $160 million and $180 million in charges, consisting of severances, asset impairments and other exit-related costs, of which $130 million to $145 million would likely be recorded in the fourth quarter of fiscal 2009 and the remainder in ensuing quarters. National currently employs about 6,500 people worldwide, and these actions will result in the elimination of 26 percent of the company's workforce.
"The worldwide recession has impacted National's business as demand has fallen considerably," said Brian L. Halla, chairman and CEO. "However, the actions we announced today will help us remain competitive as we continue to focus on growing markets that can benefit from our new energy-efficiency initiatives."
Dividend Declaration
The company announced that the Board of Directors has declared a cash dividend of $0.08 per outstanding share of common stock and that the dividend will be paid on April 14, 2009 to shareholders of record at the close of business on March 23, 2009.
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 and cost savings, 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, the timing of certain activities and the costs to be incurred in conducting certain activities, 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 25, 2008 under the captions "Outlook", "Risk Factors" and "Management's Discussion and Analysis of Financial Conditions and Results of Operations" contained therein and the 10-Q for the quarter ended Nov. 23, 2008.
About National Semiconductor
National Semiconductor creates energy-efficient analog and mixed-signal semiconductors. Its PowerWise(R) products enable systems that consume less power, extend battery life, and generate less heat. Headquartered in Santa Clara, Calif., National reported sales of $1.89 billion for fiscal 2008 which ended May 25, 2008. Additional company and product information is available at www.national.com.
Media Contact: Financial:
LuAnn Jenkins Mark Veeh
National Semiconductor National Semiconductor
(408) 721-2440 (408) 721-5007
luann.jenkins@nsc.com invest.group@nsc.com
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In millions, except per share amounts)
Three Months Ended Nine Months Ended
March 1, Feb. 24, March 1, Feb. 24,
2009 2008 2009 2008
Net sales $292.4 $453.4 $1,179.6 $1,423.9
Cost of sales 124.3 161.7 426.9 514.1
Gross margin 168.1 291.7 752.7 909.8
Research and development 72.9 87.1 254.1 272.8
Selling, general and
administrative 66.5 77.4 217.8 235.7
Severance and restructuring
(recovery) expenses (1.4) 19.6 27.8 18.1
Other operating (income)
expense, net (0.2) 0.4 (0.4) -
Operating expenses, net 137.8 184.5 499.3 526.6
Operating income 30.3 107.2 253.4 383.2
Interest income 2.0 7.7 9.6 29.0
Interest expense (18.7) (22.6) (55.7) (65.9)
Other non-operating
income (expense), net 1.0 (5.4) (14.1) (7.3)
Income before taxes 14.6 86.9 193.2 339.0
Income tax (benefit)
expense (6.5) 14.0 56.2 89.9
Net income $21.1 $72.9 $137.0 $249.1
Earnings per share:
Basic $0.09 $0.30 $0.60 $0.96
Diluted $0.09 $0.29 $0.58 $0.92
Selected income statement
ratios as a percentage
of sales:
Gross margin 57.5% 64.3% 63.8% 63.9%
Research and development 24.9% 19.2% 21.5% 19.2%
Selling, general and
administrative 22.7% 17.1% 18.5% 16.6%
Net income 7.2% 16.1% 11.6% 17.5%
Effective tax rate (44.5%) 16.1% 29.1% 26.5%
