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): March 6, 2008
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National Semiconductor Corporation |
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DELAWARE |
95-2095071 |
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2900 SEMICONDUCTOR DRIVE, P.O. BOX 58090 |
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Registrant’s telephone number, including area code: (408) 721-5000
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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):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
NATIONAL SEMICONDUCTOR CORPORATION
INDEX
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Page |
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Section 2 – Financial Information |
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Item 2.02 |
Results of Operations and Financial Condition |
3 |
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Section 8 – Other Events |
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Item 8.01 |
Other Events |
3 |
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Section 9 – Financial Statements and Exhibits |
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Item 9.01 |
Financial Statements and Exhibits |
3 |
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Signature |
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4 |
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Exhibits: |
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99.1 |
News release dated March 6, 2008 (Earnings) |
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2
NATIONAL SEMICONDUCTOR CORPORATION
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Item 2.02 |
RESULTS OF OPERATION AND FINANCIAL CONDITION
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On March 6, 2008, National Semiconductor Corporation issued a news release announcing earnings for the quarter ended February 24, 2008. The earnings news release, which has been attached as Exhibit 99.1, contains unaudited Condensed Consolidated Statements of Income, Balance Sheets, and Statements of Cash Flows that are presented in accordance with United States generally accepted accounting principles, or GAAP. 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.
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Item 8.01 |
OTHER EVENTS |
The Company also announced in its earning press release that on March 6, 2008, its Board of Directors had declared a cash dividend of $0.06 per outstanding share of common stock. The dividend will be paid on April 7, 2008 to shareholders of record at the close of business on March 17, 2008.
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Item 9.01 |
FINANCIAL STATEMENTS AND EXHIBITS |
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(d) |
Exhibits |
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Exhibit No. |
Description of Exhibit |
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99.1 |
News release dated March 6, 2008 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.
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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.
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Date: March 6, 2008 |
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/s/ Jamie E. Samath |
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Jamie E. Samath |
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Media Contact: |
Financial: |
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LuAnn Jenkins |
Long Ly |
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National Semiconductor |
National Semiconductor |
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(408) 721-2440 |
(408) 721-5007 |
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luann.jenkins@nsc.com |
invest.group@nsc.com |
National Semiconductor Reports Results for Third Quarter Fiscal 2008
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Q3 sales were $453.4 million, down 9.1% from Q2 of fiscal 2008 and up 5.2% from Q3 of fiscal 2007 |
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Gross margin percentage of 64.3%, down slightly from 64.4% in Q2 but up from the 59.8% posted in last year’s Q3 |
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EPS of 28 cents, down from 33 cents in Q2 but up from 22 cents in Q3 of fiscal 2007 |
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Sales outlook for Q4 of fiscal 2008 expected to range from $440 million to $460 million |
SANTA CLARA, Calif. – March 6, 2008 -- National Semiconductor Corporation (NYSE:NSM) today reported sales of $453.4 million and net income of $71.2 million, or 28 cents per share, for the third quarter of fiscal 2008 which ended February 24, 2008. National’s third quarter of fiscal 2008 results included $19.6 million of pre-tax severance and restructuring expenses related to a previously announced factory modernization effort. Third quarter results also included approximately $11 million of discrete tax benefits that were recognized in the quarter.
National’s third quarter fiscal 2008 sales decreased 9.1 percent sequentially from the second quarter of fiscal 2008, when the company reported $499.0 million in sales and earnings of 33 cents per share.
“Our business was impacted by lower-than-expected shipments into the wireless handset and personal mobile device markets; however, our margins held up well,” said Brian L. Halla, National’s chairman and CEO.
Gross margin of 64.3 percent in National’s third quarter of fiscal 2008 was down slightly from the 64.4 percent gross margin percentage achieved in the second quarter of fiscal 2008. Notwithstanding the sequential decline in revenues, third quarter gross margin benefited from higher-value product mix as well as manufacturing efficiencies.
Compared to last year, third quarter fiscal 2008 sales were up from the $431.0 million reported in the third quarter of fiscal 2007, and earnings per share were above the 22 cents recorded a year ago. Gross margin in the third quarter of fiscal 2008 was also higher than the 59.8 percent reported in the third quarter of fiscal 2007 due to improvements in both product mix and manufacturing.
Bookings for Q3, Fiscal 2008
National’s bookings in the third quarter of fiscal 2008 declined sequentially by approximately 14 percent, driven primarily by lower orders for wireless handsets and other personal mobile devices. Regionally, the third quarter bookings decrease was most prominent in Asia Pacific and Europe.
Other Notable Items in Q3, Fiscal 2008 Results
Included in third quarter fiscal 2008 results was $22.4 million in pre-tax stock compensation expense under FASB Statement 123(R). One year ago, the third quarter of fiscal 2007 included $29.5 million of pre-tax stock compensation expense. Third quarter fiscal 2008 net results also included approximately $11 million of discrete tax benefits.
Outlook for Q4, Fiscal 2008
National anticipates that sales in the fourth quarter of fiscal 2008 will range from $440 million to $460 million.
Stock Repurchase Program
During the third quarter of fiscal 2008, the company repurchased approximately $120 million of stock under its stock buyback program. As of the end of the third quarter of fiscal 2008, National had approximately $480 million of authorization still available under approved programs for future stock repurchases. National Semiconductor’s fully diluted weighted average share count for the third quarter of fiscal of 2008 was 255.5 million shares, down from 271.5 million shares in the second quarter of fiscal 2008.
Company Declares Dividend
The company announced that the Board of Directors today has declared a cash dividend of $0.06 per outstanding share of common stock. This dividend will be paid on April 7, 2008 to shareholders of record at the close of business on March 17, 2008.
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 27, 2007 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 November 25, 2007.
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, communications infrastructure, 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 www.national.com.
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NATIONAL SEMICONDUCTOR CORPORATION |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
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(In millions, except per share amounts) |
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Three Months Ended |
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Nine Months Ended |
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Feb. 24, |
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Feb. 25, |
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Feb. 24, |
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Feb. 25, |
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2008 |
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2007 |
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2008 |
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2007 |
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Net sales |
$ |
453.4 |
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$ |
431.0 |
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$ |
1,423.9 |
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$ |
1,474.0 |
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Cost of sales |
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161.7 |
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173.3 |
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514.1 |
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586.6 |
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Gross margin |
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291.7 |
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257.7 |
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909.8 |
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887.4 |
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Research and development |
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87.1 |
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89.7 |
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272.8 |
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268.0 |
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Selling, general and administrative |
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77.4 |
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76.4 |
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235.7 |
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235.9 |
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Severance and restructuring expenses |
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19.6 |
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- |
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18.1 |
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4.0 |
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Gain on sale of manufacturing plant assets |
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- |
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- |
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(3.1 |
) |
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- |
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Litigation settlement |
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- |
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- |
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3.3 |
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- |
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In-process research and development charge |
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- |
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6.1 |
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- |
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6.1 |
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Other operating (income) expense, net |
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0.4 |
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(0.2 |
) |
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(0.2 |
) |
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(2.2 |
) |
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Operating expenses |
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184.5 |
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172.0 |
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526.6 |
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511.8 |
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Operating income |
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107.2 |
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85.7 |
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383.2 |
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375.6 |
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Interest income |
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7.7 |
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9.4 |
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29.0 |
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30.3 |
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Interest expense |
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(22.6 |
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(0.4 |
) |
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(65.9 |
) |
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(1.3 |
) |
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Other non-operating income (expense), net |
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(5.4 |
) |
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0.1 |
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(7.3 |
) |
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1.1 |
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Income before taxes |
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86.9 |
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94.8 |
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339.0 |
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405.7 |
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Income tax expense |
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15.7 |
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21.1 |
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91.6 |
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120.5 |
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Net income |
$ |
71.2 |
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$ |
73.7 |
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$ |
247.4 |
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$ |
285.2 |
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Earnings per share: |
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Basic |
$ |
0.29 |
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$ |
0.23 |
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$ |
0.96 |
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$ |
0.89 |
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Diluted |
$ |
0.28 |
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$ |
0.22 |
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$ |
0.92 |
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$ |
0.85 |
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Selected income statement ratios as a percentage of sales: |
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Gross margin |
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64.3 |
% |
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59.8 |
% |
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63.9 |
% |
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60.2 |
% |
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Research and development |
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19.2 |
% |
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20.8 |
% |
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19.2 |
% |
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18.2 |
% |
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Selling, general and administrative |
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17.1 |
% |
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17.7 |
% |
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16.6 |
% |
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16.0 |
% |
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Net income |
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15.7 |
% |
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17.1 |
% |
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17.4 |
% |
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19.3 |
% |
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Effective tax rate |
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18.1 |
% |
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22.3 |
% |
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27.0 |
% |
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29.7 |
% |
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NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions)
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Feb. 24, |
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May 27, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
871.0 |
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$ |
828.6 |
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Receivables |
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153.5 |
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150.6 |
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Inventories |
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146.4 |
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176.0 |
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Deferred tax assets |
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100.9 |
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73.2 |
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Other current assets |
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25.5 |
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62.1 |
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Total current assets |
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1,297.3 |
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1,290.5 |
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Net property, plant and equipment |
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564.8 |
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583.5 |
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Goodwill |
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60.5 |
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63.6 |
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Deferred tax assets |
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233.6 |
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|
194.4 |
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Other assets |
|
91.7 |
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|
69.9 |
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|
|
|
|
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Total assets |
$ |
2,247.9 |
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$ |
2,201.9 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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|
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|
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Current portion of long-term debt |
$ |
62.5 |
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$ |
- |
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Accounts payable |
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71.0 |
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|
59.9 |
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Accrued expenses |
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161.2 |
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|
122.7 |
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Income taxes payable |
|
26.8 |
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|
|
117.4 |
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|
|
|
|
|
|
|
|
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Total current liabilities |
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321.5 |
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|
|
300.0 |
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|
|
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|
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Long-term debt |
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1,428.8 |
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|
20.6 |
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Long-term income taxes payable |
|
143.8 |
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|
|
- |
|
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Other non-current liabilities |
|
96.2 |
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|
|
132.5 |
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|
|
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Total liabilities |
|
1,990.3 |
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|
453.1 |
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|
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Commitments and contingencies |
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Shareholders’ equity: |
|
|
|
|
|
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Common stock of $0.50 par value |
|
121.3 |
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|
155.1 |
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Retained earnings |
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228.6 |
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|
1,685.7 |
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Accumulated other comprehensive loss |
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(92.3 |
) |
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|
(92.0 |
) |
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|
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|
|
|
|
|
|
Total shareholders’ equity |
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257.6 |
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|
|
1,748.8 |
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|
|
|
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|
|
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Total liabilities and shareholders’ equity |
$ |
2,247.9 |
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|
$ |
2,201.9 |
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NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
|
|
|
Nine Months Ended |
||||||
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|
|
Feb. 24, 2008 |
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Feb. 25, |
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Cash flows from operating activities: |
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|
|
|
|
|
|
|
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Net income |
|
$ |
247.4 |
|
|
$ |
285.2 |
|
|
Adjustments to reconcile net income with net cash |
|
|
|
|
|
|
|
|
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provided by operating activities: |
|
|
|
|
|
|
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|
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Depreciation and amortization |
|
|
99.7 |
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|
|
110.5 |
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|
Share-based compensation expense |
|
|
70.0 |
|
|
|
86.6 |
|
|
Excess tax benefit from share-based payment arrangements |
|
|
(13.8 |
) |
|
|
(7.0 |
) |
|
Tax benefit associated with stock options |
|
|
23.5 |
|
|
|
18.4 |
|
|
Loss (gain) on investments |
|
|
7.1 |
|
|
|
(1.1 |
) |
|
Loss on disposal of equipment |
|
|
2.9 |
|
|
|
0.9 |
|
|
Non-cash restructuring expenses |
|
|
4.5 |
|
|
|
- |
|
|
Gain on sale of manufacturing plant assets |
|
|
(3.1 |
) |
|
|
- |
|
|
In-process research and development charge |
|
|
- |
|
|
|
6.1 |
|
|
Other, net |
|
|
2.3 |
|
|
|
0.8 |
|
|
Changes in certain assets and liabilities, net: |
|
|
|
|
|
|
|
|
|
Receivables |
|
|
(3.0 |
) |
|
|
41.8 |
|
|
Inventories |
|
|
29.8 |
|
|
|
20.2 |
|
|
Other current assets |
|
|
21.5 |
|
|
|
(6.8 |
) |
|
Accounts payable and accrued expenses |
|
|
35.8 |
|
|
|
(122.4 |
) |
|
Income taxes |
|
|
21.9 |
|
|
|
(17.4 |
) |
|
Other non-current liabilities |
|
|
(28.4 |
) |
|
|
15.4 |
|
|
Net cash provided by operating activities |
|
|
518.1 |
|
|
|
431.2 |
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(79.3 |
) |
|
|
(88.3 |
) |
|
Business acquisition, net of cash acquired |
|
|
- |
|
|
|
(8.2 |
) |
|
Proceeds from sale of property, plant, and equipment |
|
|
16.5 |
|
|
|
0.6 |
|
|
Sale and maturity of available-for-sale securities |
|
|
- |
|
|
|
110.8 |
|
|
Proceeds from sale of investments |
|
|
0.2 |
|
|
|
- |
|
|
Funding of benefit plan |
|
|
(5.5 |
) |
|
|
(7.9 |
) |
|
Other, net |
|
|
(1.9 |
) |
|
|
1.9 |
|
|
Net cash (used in) provided by investing activities |
|
|
(70.0 |
) |
|
|
8.9 |
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Proceeds from unsecured senior notes, net of issuance costs |
|
|
992.9 |
|
|
|
- |
|
|
Proceeds from bank borrowings, net of issuance costs |
|
|
1,996.5 |
|
|
|
- |
|
|
Repayment of bank borrowing |
|
|
(1,531.2 |
) |
|
|
- |
|
|
Payment on software license obligations |
|
|
(8.7 |
) |
|
|
(8.7 |
) |
|
Excess tax benefit from share-based payment arrangements |
|
|
13.8 |
|
|
|
7.0 |
|
|
Minimum tax withholding paid on behalf of employees for net share settlements |
|
|
(14.2 |
) |
|
|
(1.1 |
) |
|
Issuance of common stock |
|
|
81.2 |
|
|
|
44.5 |
|
|
Purchase and retirement of treasury stock |
|
|
(1,899.8 |
) |
|
|
(603.8 |
) |
|
Cash dividends declared and paid |
|
|
(36.2 |
) |
|
|
(32.5 |
) |
|
Net cash used in financing activities |
|
|
(405.7 |
) |
|
|
(594.6 |
) |
|
Net change in cash and cash equivalents |
|
|
42.4 |
|
|
|
(154.5 |
) |
|
Cash and cash equivalents at beginning of period |
|
|
828.6 |
|
|
|
932.2 |
|
|
Cash and cash equivalents at end of period |
|
$ |
871.0 |
|
|
$ |
777.7 |
|
PART I. FINANCIAL INFORMATION
EARNINGS PER SHARE (Unaudited)
(In millions, except per share amounts)
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
|
|
Feb. 24, 2008 |
|
Feb. 25, 2007 |
|
Feb. 24, 2008 |
|
Feb. 25, 2007 |
||||
|
|
||||||||||||
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.29 |
|
$ |
0.23 |
|
$ |
0.96 |
|
$ |
0.89 |
|
Diluted |
|
$ |
0.28 |
|
$ |
0.22 |
|
$ |
0.92 |
|
$ |
0.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income used in basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
earnings per share calculation |
|
$ |
71.2 |
|
$ |
73.7 |
|
$ |
247.4 |
|
$ |
285.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
245.4 |
|
|
315.7 |
|
|
258.2 |
|
|
322.0 |
|
Diluted |
|
|
255.5 |
|
|
330.1 |
|
|
270.3 |
|
|
336.4 |
OTHER FINANCIAL STATEMENT DETAIL
(In millions)
|
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||
|
Other operating (income ) expense, net |
Feb. 24, 2008 |
|
Feb. 25, 2007 |
|
Feb. 24, 2008 |
|
Feb. 25, 2007 |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net intellectual property income |
$ |
(0.1 |
) |
|
$ |
(0.2 |
) |
|
$ (0.2 |
) |
|
$ |
(1.2 |
) |
|
Other |
|
0.5 |
|
|
|
- |
|
|
- |
|
|
|
(1.0 |
) |
|
Total other operating (income) expense, net |
$ |
0.4 |
|
|
$ |
(0.2 |
) |
|
$ (0.2 |
) |
|
$ |
(2.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-operating income (expense), net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on investments |
$ |
(5.4 |
) |
|
$ |
0.1 |
|
|
$ (7.1 |
) |
|
$ |
1.1 |
|
|
Charitable contribution |
|
- |
|
|
|
- |
|
|
(0.2 |
) |
|
|
- |
|
|
Total other non-operating income (expense), net |
$ |
(5.4 |
) |
|
$ |
0.1 |
|
|
$ (7.3 |
) |
|
$ |
1.1 |
|
The loss on investments of $5.4 million in the third quarter of fiscal 2008 represents a decline in the market value of the investment assets held in a trust for the employee deferred compensation plan. The decline in the market value of the investment assets in this same trust for the first nine months of fiscal 2008 was $7.3 million, which was partially offset by a $0.2 million gain from other investments not associated with the deferred compensation plan.