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National Semiconductor Reports Results for Second Quarter Fiscal 2009
Posted by: gurufocus (IP Logged)
Date: December 8, 2008 11:06PM

National Semiconductor Corp. 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. National Semiconductor Corp. has a market cap of $2.52 billion; its shares were traded at around $10.29 with a P/E ratio of 8.4 and P/S ratio of 1.34. The dividend yield of National Semiconductor Corp. stocks is 2.18%. National Semiconductor Corp. had an annual average earning growth of 19% over the past 5 years.

Gurus' Positions with NSM

National Semiconductor Corp. is owned by 2 Gurus. 1 Guru Initiated Positions in NSM: Joel Greenblatt bought 28,000 shares in the quarter that ended on 09/30/2008, which is 0.76% of the $63 million portfolio of Gotham Capital.

1 Guru Increased Positions in NSM: HOTCHKIS & WILEY owns 704,100 shares as of 09/30/2008, an increase of 244.98% from the previous quarter. This position accounts for 0.08% of the $15.02 billion portfolio of HOTCHKIS & WILEY Capital Management LLC.

SANTA CLARA, Calif., Dec. 8 /PRNewswire-FirstCall/ -- NationalSemiconductor Corp. (NYSE: NSM) today reported sales of $422 million and netincome of $34 million, or 14 cents per diluted share, for the second quarterof fiscal 2009, which ended Nov. 23, 2008. In National's first quarter offiscal 2009, the company reported $466 million in sales, $80 million in netincome and 33 cents per diluted share. Gross margin of 65.6 percent inNational's second quarter of fiscal 2009 was down from the 66.0 percent grossmargin achieved in the first quarter of fiscal 2009.

Compared to last year, sales decreased approximately 15 percent from the$499.0 million reported in the second quarter of fiscal 2008, and earnings perdiluted share declined from the 33 cents recorded one year ago. Gross marginincreased from the 64.4 percent reported in the second quarter of fiscal 2008.

Notable Items in Q2, Fiscal 2009 Results

Included in second quarter fiscal 2009 results were approximately $28million of pre-tax severance and restructuring expenses related primarily to apreviously announced action, and approximately $7 million of discrete incometax expenses, which consisted primarily of a write-down of foreign deferredtaxes, offset partially by tax benefits associated with the recent restorationof the federal R&D tax credit.

Bookings for Q2, Fiscal 2009

During the second quarter of fiscal year 2009, total bookings decreased by33 percent compared to the first fiscal quarter. New order rates fellsignificantly from customers in the wireless handset market (which representsabout one third of National's sales) as well as from distributors, whichservice a large number of customers across a broad range of industries andmarkets. Regionally, the second quarter bookings decline was most prominentin Asia Pacific and Europe. Total company billings exceeded bookings in thesecond quarter.

Outlook for Q3, Fiscal 2009

National anticipates that sales in the third quarter of fiscal 2009 willbe down sequentially by approximately 30 percent depending on turns ordersreceived in the quarter. The sales outlook is being impacted by significantlylower-than-usual demand levels in the post-holiday season, especially forpersonal mobile devices. In addition, the company expects gross margins todecline as the company plans to significantly lower its manufacturing activityin the third quarter of fiscal 2009.

Stock Repurchase and Cash Balances

During the second quarter of fiscal 2009, the company repurchasedapproximately $23 million of stock under its stock buyback program. As of theend of the second quarter of fiscal 2009, National had approximately $127million of authorization still available under an approved program for futurestock repurchases. National Semiconductor's fully diluted weighted averageshare count for the second quarter of fiscal of 2009 was 234 million shares,down from 241 million shares in the first quarter of fiscal 2009. The companyended the second quarter of fiscal 2009 with approximately $786 million incash and cash equivalents which was up from the approximately $693 millionthat the company had at the end of the previous quarter.

Dividend Declaration

The company had previously announced on September 25, 2008 that the Boardof Directors had declared a cash dividend of $0.08 per outstanding share ofcommon stock and that the dividend will be paid on Jan. 5, 2009 toshareholders of record at the close of business on Dec. 15, 2008.

Special Note

This release contains forward-looking statements dependent on a number ofrisks and uncertainties pursuant to the safe harbor provisions of the PrivateSecurities Litigation Reform Act of 1995. Except for historical informationcontained herein, the matters set forth in this press release, includingmanagement's expectations regarding future performance, are forward-lookingstatements that involve certain risks and uncertainties that could causeactual results to differ materially from those forward-looking statements.Potential risks and uncertainties include, but are not restricted to, suchfactors as new orders received and shipped during the quarter, the degree offactory utilization, the sale of inventories at existing prices, and the rampup and sale of new analog products. Other risk factors are included in theCompany's Annual Report on Form 10-K for the fiscal year ended May 25, 2008under the captions "Outlook", "Risk Factors" and "Management's Discussion andAnalysis of Financial Conditions and Results of Operations" contained thereinand the 10-Q for the quarter ended Aug. 24, 2008.

About National Semiconductor

National Semiconductor creates energy-efficient analog and mixed-signalsemiconductors. Its PowerWise(R) products enable systems that consume lesspower, extend battery life, and generate less heat. Headquartered in SantaClara, Calif., National reported sales of $1.89 billion for fiscal 2008 whichended May 25, 2008. Additional company and product information is availableat :28c4:http://www.national.com:/28c4:.

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         Six Months Ended
                               Nov. 23,     Nov. 25,     Nov. 23,     Nov. 25,
                                 2008         2007         2008         2007
    Net sales                   $421.6       $499.0       $887.2       $970.5
    Cost of sales                144.9        177.8        303.3        352.4
    Gross margin                 276.7        321.2        583.9        618.1

    Research and development      93.5         91.9        183.1        185.7
    Selling, general and
     administrative               70.6         82.8        152.4        158.3
    Severance and restructuring
     expenses (recovery)          28.1            -         29.2         (1.5)
    Other operating (income)
     expense, net                 (0.1)         2.7         (0.2)        (0.4)

    Operating expenses, net      192.1        177.4        364.5        342.1

    Operating income              84.6        143.8        219.4        276.0
    Interest income                3.8         10.1          7.6         21.3
    Interest expense             (18.7)       (23.7)       (37.0)       (43.3)
    Other non-operating expense,
     net                         (12.3)        (0.8)       (15.1)        (1.9)

    Income before taxes           57.4        129.4        174.9        252.1
    Income tax expense            23.5         38.8         61.4         75.9

    Net income                   $33.9        $90.6       $113.5       $176.2

    Earnings per share:
    Basic                        $0.15        $0.35        $0.50        $0.67
    Diluted                      $0.14        $0.33        $0.48        $0.63

    Selected income statement
     ratios as a percentage of
     sales:

    Gross margin                  65.6%        64.4%        65.8%        63.7%
    Research and development      22.2%        18.4%        20.6%        19.1%
    Selling, general and
     administrative               16.7%        16.6%        17.2%        16.3%
    Net income                     8.0%        18.2%        12.8%        18.2%

    Effective tax rate            40.9%        30.0%        35.1%        30.1%



    NATIONAL SEMICONDUCTOR CORPORATION
    CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
    (In millions)

                                                     Nov. 23,        May 25,
                                                       2008           2008
    ASSETS
    Current assets:
      Cash and cash equivalents                       $785.9         $736.8
      Receivables                                      125.9          137.3
      Inventories                                      154.5          148.6
      Deferred tax assets                               82.6           82.9
      Other current assets                              36.4           66.0

      Total current assets                           1,185.3        1,171.6

    Net property, plant and equipment                  559.3          557.3
    Goodwill                                            60.5           60.5
    Deferred tax assets                                236.5          247.5
    Other assets                                       108.2          112.2

    Total assets                                    $2,149.8       $2,149.1

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Current portion of long-term debt                $62.5          $62.5
      Accounts payable                                  61.9           53.5
      Accrued expenses                                 187.9          180.3
      Income taxes payable                              11.6           12.3

      Total current liabilities                        323.9          308.6

    Long-term debt                                   1,383.4        1,414.8
    Long-term income taxes payable                     155.9          143.4
    Other non-current liabilities                       75.9           85.4

      Total liabilities                              1,939.1        1,952.2

    Commitments and contingencies

    Shareholders' equity:
      Common stock of $0.50 par value                  114.7          116.3
      Additional paid-in-capital                         7.4              -
      Retained earnings                                175.9          167.4
      Accumulated other comprehensive loss             (87.3)         (86.8)

      Total shareholders' equity                       210.7          196.9

    Total liabilities and shareholders' equity      $2,149.8       $2,149.1



    NATIONAL SEMICONDUCTOR CORPORATION
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
    (In millions)
                                                         Six Months Ended
                                                     Nov. 23,       Nov. 25,
                                                       2008           2007
    Cash flows from operating activities:
    Net income                                        $113.5         $176.2
    Adjustments to reconcile net income with net
     cash provided by operating activities:
      Depreciation and amortization                     61.5           65.4
      Share-based compensation                          35.5           47.6
      Excess tax benefit from share-based payment
       arrangements                                     (4.3)         (13.0)
      Tax benefit associated with stock options          6.5           22.2
      Loss on investments                               15.1            1.7
      Gain on disposal of equipment                     (0.6)          (0.5)
      Other, net                                         0.4            0.5
    Changes in certain assets and liabilities, net:
      Receivables                                        8.9          (38.9)
      Inventories                                       (5.7)          26.6
      Other current assets                               0.4           15.6
      Accounts payable and accrued expenses             (1.2)          17.6
      Current and deferred income taxes                 48.8           14.2
      Other non-current liabilities                    (24.8)         (25.1)

    Net cash provided by operating activities          254.0          310.1

    Cash flows from investing activities:
      Purchase of property, plant and equipment        (55.1)         (52.5)
      Proceeds from sale of property, plant, and
       equipment                                         0.6           16.0
      Proceeds from sale of investments                    -            0.2
      Funding of benefit plan                           (0.5)          (5.1)
      Other, net                                           -           (2.6)

    Net cash used in investing activities              (55.0)         (44.0)

    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                      (31.4)      (1,515.6)
      Payment on software license obligations              -           (8.4)
      Excess tax benefit from share-based payment
       arrangements                                      4.3           13.0
      Minimum tax withholding paid on behalf of
       employees for net share settlements              (0.2)         (14.1)
      Issuance of common stock                          33.5           76.3
      Purchase and retirement of treasury stock       (128.4)      (1,780.1)
      Cash dividends declared and paid                 (27.7)         (21.3)

    Net cash used in financing activities             (149.9)        (260.8)

    Net change in cash and cash equivalents             49.1            5.3
    Cash and cash equivalents at beginning of period   736.8          828.6

    Cash and cash equivalents at end of period        $785.9         $833.9



    PART I.  FINANCIAL INFORMATION
    EARNINGS PER SHARE (Unaudited)
    (In millions, except per share amounts)

                                 Three Months Ended        Six Months Ended
                               Nov. 23,     Nov. 25,     Nov. 23,     Nov. 25,
                                 2008         2007         2008         2007

    Earnings per share:
      Basic                      $0.15        $0.35        $0.50        $0.67
      Diluted                    $0.14        $0.33        $0.48        $0.63

    Net income used in basic
     and diluted earnings per
     share calculation           $33.9        $90.6       $113.5       $176.2

    Weighted-average shares
     outstanding:
      Basic                      228.0        258.9        228.9        264.5
      Diluted                    234.0        271.5        237.6        277.7


    OTHER FINANCIAL STATEMENT DETAIL
    (In millions)

                                 Three Months Ended        Six Months Ended
    Other operating (income)   Nov. 23,     Nov. 25,     Nov. 23,    Nov. 25,
     expense, net                2008         2007         2008        2007

    Net intellectual property
     income                      $(0.1)       $(0.1)       $(0.2)      $(0.1)
    Gain on sale of manufacturing
     plant assets                    -            -            -        (3.1)
    Litigation settlement            -          3.3            -         3.3
    Other                            -         (0.5)           -        (0.5)
      Total other operating
       (income) expense, net     $(0.1)        $2.7        $(0.2)      $(0.4)

    Other non-operating
     expense, net

    Trading securities:
      Change in net unrealized
       holding losses           $(12.3)       $(0.8)      $(15.1)      $(1.9)
    Non-marketable investments:
      Gain from sale                 -          0.2            -         0.2
    Charitable contribution          -         (0.2)           -        (0.2)
      Total other non-operating
       expense, net             $(12.3)       $(0.8)      $(15.1)      $(1.9)

    Share-based compensation
     expense                     $16.1        $27.6        $35.5       $47.6
Source: PRNewsWire


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