- Q1 FY07 revenue projected to be seasonally down 2 to 3%
National's fourth quarter revenues were 22.6 percent higher than the $467.0 million revenues recorded in the fourth quarter of fiscal 2005, and 4.5 percent higher sequentially than the $547.7 million revenues reported in Q3 FY06.
National's gross margin in Q4 FY06 hit an all-time high of 61.4 percent, up from 60.7 percent in Q3 FY06 and 54.7 percent a year ago. This continuing improvement in gross margin is a direct result of the Company's focus on growing its higher-value Analog product portfolio.
"National continues to show improvement in margins," said Brian L. Halla, National's chairman and CEO. "Our investment in new, value-added analog products, targeting precision, high speed and best power efficiencies, is paying off. These products deliver higher value to our customers and higher margins and sales to National."
Fourth quarter fiscal 2006 net income included a one-time tax charge of $24.5 million related to the repatriation of accumulated foreign earnings, under provisions of the American Jobs Creation Act of 2004. A year ago, National's fourth quarter net income of $130.2 million, or 36 cents per share, included an $86.1 million goodwill write-off, a $51.1 million gain from the sale of National's PC Super/IO business, and a $2.6 million charge for cost reductions (all on a pre-tax basis). In addition, the income taxes in last year's fourth quarter were a net benefit of $57.0 million due to deferred tax assets. The impact of these items, assuming a recent historical FY 2005 tax rate of approximately 20 percent, was a positive contribution to net income of $41.6 million or 11 cents per share in Q4 FY05.
Bookings Increased in Q4
National's fourth quarter bookings were slightly higher compared to the third quarter. Bookings also exceeded billings in the fourth quarter of fiscal 2006. Within the company's various product lines, new orders for data converters and interface products grew at a much higher rate than the overall company average. Regionally, bookings increased in Europe, Asia Pacific and Japan. Year-to-year, total company fourth quarter bookings increased 29 percent over last year's fourth quarter.
Outlook for Q1, Fiscal 2007
Based upon current business conditions, National anticipates that Q1 revenues will be seasonally down 2 to 3 percent from fourth quarter revenues. Much of the anticipated decline is attributable to lower foundry revenues for businesses previously sold. Commencing in the first quarter of fiscal 2007, National will begin to report stock compensation expenses in accordance with FASB Statement 123(R). Gross-margin percentage is expected to be similar to the level achieved 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 July 10, 2006 to shareholders of record at the close of business on June 19, 2006.
Board Authorizes Additional Stock Buy-Back Program
Today, National also announced that the Board has approved an additional $500 million to buy back National's common stock beyond previously approved stock-repurchase programs. The Company bought back $200 million of common stock during the fourth quarter and $951 million of stock during the fiscal year. The diluted weighted average shares outstanding for Q4 fiscal 2006 was 352.3 million shares.
Summary of Fiscal 2006
Annual revenues were $2.16 billion compared to $1.91 billion in FY05 and $1.98 billion for FY04. For fiscal 2006, the Company reported net income of $449.2 million. This compares to the $415.3 million net profit reported for FY2005 and the $282.8 million net profit reported for FY2004. Earnings per share for the year were $1.26 compared to $1.11 for fiscal 2005 and 73 cents for fiscal 2004. National's increased profitability has been driven by consistent improvement in gross margin as a result of a growing portfolio of higher-value Analog products. The gross margin was 59.0 percent for fiscal 2006 compared to 53.4 percent in fiscal 2005 and 51.0 percent in fiscal 2004.
"For the year, we achieved 13 percent revenue growth, increased gross margin by 6 points and delivered 25 percent return on invested capital -- our third straight year of better than 20 percent ROIC," said Halla.
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 February 26, 2006.
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, California, National reported sales of $2.16 billion for fiscal 2006, which ended May 28, 2006. Additional company and product information is available at www.national.com.
Media Contact: Financial:
Jeff Weir Long Ly
National Semiconductor National Semiconductor
408-721-5199 408-721-5007
Email Contact
Email Contact
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except per share amounts)
Three Months Ended Twelve Months Ended
May 28, May 29, May 28, May 29,
2006 2005 2006 2005
Net sales $572.6 $467.0 $2,158.1 $1,913.1
Operating costs and
expenses:
Cost of sales 221.1 211.4 885.4 892.3
Research and development 85.2 84.5 326.6 333.0
Selling, general and
administrative 68.8 61.7 273.9 256.8
Cost reduction and
restructuring charges 2.0 2.6 33.7 23.9
Goodwill impairment loss 2.4 86.1 7.6 86.1
Gain on sale of businesses (0.6) (51.1) (28.9) (59.9)
Other operating income, net (1.4) 1.7 (5.7) (18.0)
Total operating costs
and expenses 377.5 396.9 1,492.6 1,514.2
Operating income 195.1 70.1 665.5 398.9
Interest income, net 8.7 5.5 31.8 15.9
Other non-operating
expense, net (0.2) (2.4) (2.1) (4.9)
Income before taxes 203.6 73.2 695.2 409.9
Income tax expense (benefit) 84.8 (57.0) 246.0 (5.4)
Net income $118.8 $130.2 $449.2 $415.3
Earnings per share:
Basic $0.35 $0.37 $1.32 $1.17
Diluted $0.34 $0.36 $1.26 $1.11
Selected income statement
ratios as a percentage
of sales:
Gross margin 61.4% 54.7% 59.0% 53.4%
Research and development 14.9% 18.1% 15.1% 17.4%
Selling, general and
administrative 12.0% 13.2% 12.7% 13.4%
Net income 20.7% 27.9% 20.8% 21.7%
Effective tax rate 41.7% N/A 35.4% N/A
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions)
May 28, May 29,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $932.2 $867.1
Short-term marketable investments 110.3 155.1
Receivables 208.6 123.9
Inventories 189.4 170.2
Deferred tax assets 74.7 126.9
Other current assets 25.3 70.3
Total current assets 1,540.5 1,513.5
Net property, plant and equipment 627.7 605.1
Goodwill 57.3 87.2
Deferred tax assets 185.7 192.2
Other assets 99.9 106.2
Total assets $2,511.1 $2,504.2
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $108.8 $64.7
Accrued expenses 191.0 143.6
Income taxes payable 98.5 76.7
Total current liabilities 398.3 285.0
Long-term debt 21.1 23.0
Other noncurrent liabilities 165.6 142.1
Total liabilities 585.0 450.1
Commitments and contingencies
Shareholders' equity:
Common stock 167.8 174.0
Additional paid-in capital 504.2 1,024.5
Retained earnings 1,376.2 961.2
Unearned compensation (8.6) (7.4)
Accumulated other comprehensive loss (113.5) (98.2)
Total shareholders' equity 1,926.1 2,054.1
Total liabilities and shareholders' equity $2,511.1 $2,504.2
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
Twelve Months Ended
May 28, May 29,
2006 2005
Cash flows from operating activities:
Net income $449.2 $415.3
Adjustments to reconcile net income with net cash
provided by operating activities:
Depreciation and amortization 166.3 194.4
Impairment of goodwill 7.6 86.1
Gain on investments (8.3) (1.3)
Share in net losses of equity-method
investments 0.7 5.7
Loss on disposal of equipment 2.7 1.1
Gain on sale of business (28.9) (59.9)
Noncash other operating income, net 1.9 (11.1)
Tax benefit associated with stock options 104.5 20.1
Other, net 8.2 2.4
Changes in certain assets and liabilities, net:
Receivables (84.3) 76.7
Inventories (19.2) 29.8
Other current assets 45.0 (18.7)
Accounts payable and accrued expenses 70.7 (144.4)
Current and deferred income taxes 87.3 (51.8)
Other noncurrent assets (9.0) --
Other noncurrent liabilities 1.4 (16.5)
Net cash provided by operating activities 795.8 527.9
Cash flows from investing activities:
Purchase of property, plant and equipment (163.3) (96.6)
Sale of equipment 1.2 --
Purchase of available-for-sale securities -- (16.8)
Sale and maturity of available-for-sale
securities 46.9 --
Sale of businesses 71.0 71.5
Sale of investments 11.6 0.7
Investment in nonpublicly traded companies -- (0.3)
Funding of benefit plan (3.0) (6.9)
Security deposits on leased equipment -- (21.8)
Other, net (0.4) 0.9
Net cash used by investing activities (36.0) (69.3)
Cash flows from financing activities:
Payment on software license obligations (13.1) (15.2)
Issuance of common stock 303.3 118.4
Purchase and retirement of treasury stock (950.7) (323.5)
Cash dividends declared and paid (34.2) (14.1)
Net cash used by financing activities (694.7) (234.4)
Net change in cash and cash equivalents 65.1 224.2
Cash and cash equivalents at beginning
of the year 867.1 642.9
Cash and cash equivalents at end of the year $932.2 $867.1
PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(In millions, except per share amounts)
Three Months Ended Twelve Months Ended
May 28, May 29, May 28, May 29,
2006 2005 2006 2005
Earnings per share:
Basic $0.35 $0.37 $1.32 $1.17
Diluted $0.34 $0.36 $1.26 $1.11
Net income used in basic
and diluted earnings per
share calculation $118.8 $130.2 $449.2 $415.3
Weighted-average shares:
Basic 336.3 349.2 339.8 353.9
Diluted 352.3 365.8 357.0 373.9
NOTES TO FINANCIAL STATEMENTS:
(In millions)
Three Months Ended Twelve Months Ended
Other operating May 28, May 29, May 28, May 29,
income, net 2006 2005 2006 2005
Net intellectual property
income $(0.8) $(1.2) $(4.1) $(5.2)
Intangible asset impairment -- -- 1.8 --
Litigation settlements -- 2.9 -- (7.1)
Manufacturer's Investment
Credit refund -- -- -- (7.4)
Other (0.6) -- (3.4) 1.7
Total other operating
income, net $(1.4) $1.7 $(5.7) $(18.0)
Interest income, net
Interest income $9.4 $5.8 $33.7 $17.4
Interest expense (0.7) (0.3) (1.9) (1.5)
Interest income, net $8.7 $5.5 $31.8 $15.9
Other non-operating expense, net
Gain on investments $(0.1) $(0.7) $8.3 $1.3
Share in net losses of
equity-method Investments (0.1) (1.7) (0.7) (5.7)
Charitable contribution -- -- (9.7) --
Other -- -- -- (0.5)
Total other non-operating
expense, net $(0.2) $(2.4) $ (2.1) $(4.9)
CONTACT: Media Contact, Jeff Weir, +1-408-721-5199, or
Email Contact,
or Financial, Long Ly, +1-408-721-5007, or
Email Contact, both of
National Semiconductor
Web site: http://www.national.com//