National Semiconductor Reports Results for First Quarter Fiscal 2009

- Q1 sales were $466 million, up 1% from Q4 of fiscal 2008 and down 1% from Q1
of fiscal 2008

SANTA CLARA, Calif., Sept. 5 /PRNewswire-FirstCall/ -- National
Semiconductor Corp. (NYSE: NSM) today reported sales of $466 million and net
income of $80 million, or 33 cents per share, for the first quarter of fiscal
2009 which ended August 24, 2008. In National's fourth quarter of fiscal
2008, the company reported $462 million in sales, $83 million in net income
and 34 cents per share.
Gross margin of 66.0 percent in National's first quarter of fiscal 2009
set a new record for the company and was up from the 65.9 percent gross margin
achieved in the fourth quarter of fiscal 2008. Gross margin was considerably
higher than the gross margin of 63.0% reported in the first quarter of fiscal
2008. Strength in gross margin continues to be driven by strong manufacturing
performance and cost efficiencies as well as improved product mix of
higher-value analog products.
"The global energy crisis is a problem that needs solving, and with our
leadership position in power management technology, this is our focus for
growth," said Brian L. Halla, National's chairman and CEO. "For example, we
recently announced our SolarMagic technology, which significantly improves the
efficiency of new or existing solar panel installations by recouping lost
energy caused by shading or other sub-optimal conditions."
Bookings for Q1, Fiscal 2009
National's total company bookings in the first quarter of fiscal 2009 were
down seasonally by about 7 percent compared to the prior quarter. This lower
level of bookings was seen primarily in the distribution channel. It was also
impacted by some truncation of longer-term backlog in our Japan region, which
did not have any notable effect on near-term sales trends for that region;
however, total company opening 13-week backlog for the second quarter was
higher than the first quarter. Total company billings exceeded bookings in
the first quarter.
Other Notable Items in Q1, Fiscal 2009 Results
Included in first quarter fiscal 2009 results was $1 million in severance
and restructuring expense related to previously announced actions and $19
million in stock compensation expense under FASB Statement 123(R). One year
ago, the first quarter of fiscal 2008 included a $1 million credit in
severance and restructuring and $20 million of stock compensation expense.
All of these amounts are on a pre-tax basis.
Outlook for Q2, Fiscal 2009
National anticipates that sales in the second quarter of fiscal 2009 will
range from $470 million to $480 million. Operating expenses are expected to
increase sequentially to a range of $178 million to $183 million primarily due
to seasonally higher stock compensation expense and annual employee wage
increases that went into effect around the beginning of September.
Stock Repurchase Program
During the first quarter of fiscal 2009, the company repurchased
approximately $105 million of stock under its stock buyback program. As of
the end of the first quarter of fiscal 2009, National had approximately $151
million of authorization still available under approved programs for future
stock repurchases. National Semiconductor's fully diluted weighted average
share count for the first quarter of fiscal of 2009 was 241 million shares,
down from 246 million shares in the fourth quarter of fiscal 2008.
Company Declares Dividend
The company announced today that the Board of Directors has declared a
cash dividend of $0.06 per outstanding share of common stock. This dividend
will be paid on October 6, 2008 to shareholders of record at the close of
business on September 18, 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 25, 2008
under the captions "Outlook", "Risk Factors" and "Management's Discussion and
Analysis of Financial Conditions and Results of Operations" contained therein.
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 http://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
Aug. 24, Aug. 26,
2008 2007
Net sales $465.6 $471.5
Cost of sales 158.4 174.6
Gross margin 307.2 296.9

Research and development 89.6 93.8
Selling, general and administrative 81.8 75.5

Severance and restructuring expenses 1.1 (1.5)
Other operating income, net (0.1) (3.1)

Operating expenses 172.4 164.7

Operating income 134.8 132.2
Interest income 3.8 11.2
Interest expense (18.3) (19.6)
Other non-operating expense, net (2.8) (1.1)

Income before taxes 117.5 122.7
Income tax expense 37.9 37.1

Net income $79.6 $85.6

Earnings per share:
Basic $0.34 $0.32
Diluted $0.33 $0.30

Selected income statement ratios as a percentage
of sales:

Gross margin 66.0% 63.0%
Research and development 19.2% 19.9%
Selling, general and administrative 17.6% 16.0%
Net income 17.1% 18.2%

Effective tax rate 32.3% 30.2%

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

Aug. 24, May 25,
2008 2008
ASSETS
Current assets:
Cash and cash equivalents $692.5 $736.8
Receivables 156.2 137.3
Inventories 148.9 148.6
Deferred tax assets 82.6 82.9
Other current assets 45.5 66.0

Total current assets 1,125.7 1,171.6

Net property, plant and equipment 554.0 557.3
Goodwill 60.5 60.5
Deferred tax assets 250.6 247.5
Other assets 117.3 112.2

Total assets $2,108.1 $2,149.1

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $62.5 $62.5
Accounts payable 62.4 53.5
Accrued expenses 127.8 180.3
Income taxes payable 17.3 12.3

Total current liabilities 270.0 308.6

Long-term debt 1,397.4 1,414.8
Long-term income taxes payable 143.4 143.4
Other non-current liabilities 95.2 85.4

Total liabilities 1,906.0 1,952.2

Commitments and contingencies

Shareholders' equity:
Common stock of $0.50 par value 114.8 116.3
Retained earnings 174.1 167.4
Accumulated other comprehensive loss (86.8) (86.8)

Total shareholders' equity 202.1 196.9

Total liabilities and shareholders' equity $2,108.1 $2,149.1

NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)

Three Months Ended
Aug. 24, Aug. 26,
2008 2007
Cash flows from operating activities:
Net income $79.6 $85.6
Adjustments to reconcile net income with net cash
provided by operating activities:
Depreciation and amortization 31.2 32.6
Share-based compensation 19.4 20.0
Excess tax benefit from share-based payment
arrangements (4.1) (11.5)
Tax benefit associated with stock options 6.2 20.1
Loss on investments 2.8 1.1
Loss on disposal of equipment - 2.8
Gain on sale of manufacturing plant assets - (3.1)
Noncash other operating income (0.4) -
Other, net (1.7) (0.8)
Changes in certain assets and liabilities, net:
Receivables (21.2) (25.3)
Inventories (0.3) 10.6
Other current assets (8.7) (11.0)
Accounts payable and accrued expenses (39.4) 7.2
Current and deferred income taxes 27.9 23.4
Other non-current liabilities 0.8 (26.2)

Net cash provided by operating activities 92.1 125.5

Cash flows from investing activities:
Purchase of property, plant and equipment (22.3) (23.9)
Proceeds from sale of property, plant, and
equipment - 13.0
Funding of benefit plan (3.2) (3.4)
Other, net 0.6 0.4

Net cash used in investing activities (24.9) (13.9)

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 (15.6) (1,500.0)
Payment on software license obligations - (8.4)
Excess tax benefit from share-based payment
arrangements 4.1 11.5
Minimum tax withholding paid on behalf of
employees for net share settlements (0.1) (13.9)
Issuance of common stock 19.2 53.8
Purchase and retirement of treasury stock (105.1) (1,500.0)
Cash dividends declared and paid (14.0) (10.8)

Net cash (used in) provided by financing
activities (111.5) 21.6
Net change in cash and cash equivalents (44.3) 133.2
Cash and cash equivalents at beginning of period 736.8 828.6

Cash and cash equivalents at end of period $692.5 $961.8

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

Three Months Ended
Aug. 24, Aug. 26,
2008 2007

Earnings per share:
Basic $0.34 $0.32
Diluted $0.33 $0.30

Net income used in basic and diluted
earnings per share calculation $79.6 $85.6

Weighted-average shares outstanding:
Basic 230.8 270.1
Diluted 241.3 283.9

OTHER FINANCIAL STATEMENT DETAIL
(In millions)

Three Months Ended
Other operating income, net Aug. 24, Aug. 26,
2008 2007

Net intellectual property income $0.1 $ -
Gain on sale of manufacturing plant assets - (3.1)
Total other operating income, net $0.1 $(3.1)

Other non-operating income (expense), net

Loss on investments $(2.8) $(1.1)
Total other non-operating expense, net $(2.8) $(1.1)

SOURCE National Semiconductor Corp.

Media, LuAnn Jenkins, +1-408-721-2440, luann.jenkins@nsc.com, or Financial,
Mark Veeh, +1-408-721-5007, invest.group@nsc.com, both of National
Semiconductor Corp.