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Components | June 13, 2011

National Semi: Q4 sales increased 9% sequentially

National Semiconductor reported sales of USD 374.1 million and net income of USD 67.1 million, or 26 cents per diluted share, for the fourth quarter of fiscal 2011, which ended May 29, 2011.
National's fourth quarter sales were 9% higher than the third quarter of fiscal 2011, when the company reported USD 343.9 million in sales, and 6% lower than the USD 398.5 million reported in the fourth quarter of fiscal 2010. Increased sales to the broad-based industrial power market, primarily through the distribution channel, and improvements in the automotive and the communications infrastructure areas more than offset flat sales in our wireless handset business and Japan sales that were lower due to the effects of the March earthquake and tsunami.

Fourth quarter net income of USD 67.1 million, or 26 cents per diluted share, was an increase from the USD 59.4 million, or 24 cents per diluted share, in the third quarter of fiscal 2011. In last year's fourth quarter, National reported net income of USD 79.2 million, or 33 cents per diluted share.

Gross margin was 66.5% in the fourth quarter of fiscal 2011 – flat with Q3 and down from the fourth quarter of fiscal 2010. Although revenue increased sequentially, factory utilization dropped slightly in order to reduce days of inventory by 13 in the fourth quarter from 109 days to 96. National reported gross margin of 66.5% in the third quarter of fiscal 2011 and 68.8% in the fourth quarter of fiscal 2010.

"Business conditions were a little better than we expected in the quarter," said Don Macleod, National's chief executive officer. "With bookings up 21%, the first increase for three quarters, we were able to get back to meaningful quarterly revenue growth."

Merger agreement announced during Q4, fiscal 2011

On April 4, 2011 it was announced that National had entered into a definitive agreement to be acquired by Texas Instruments Incorporated for USD 25 per share in an all-cash transaction. Our fourth quarter fiscal 2011 results included approximately USD 14 million of expenses attributable to the planned merger. Nearly all of these costs are included in SG&A expenses.

In addition, our weighted average share count increased from 247 million diluted shares in the third quarter to 256 million diluted shares in the fourth quarter of fiscal 2011. This increase was driven by a number of outstanding stock options that were exercised subsequent to the April 4, 2011 announcement.

Also, under the terms of the merger agreement, National will not be declaring or paying any further dividends during the pendency of the merger transaction. National will hold a special meeting of stockholders on June 21, 2011 to seek stockholder approval of the merger with Texas Instruments. The completion of the merger is also subject to regulatory approval from various international jurisdictions.

Summary of full year fiscal 2011

For fiscal 2011, National reported sales of USD 1.52 billion and net income of USD 298.8 million. In fiscal 2010, National reported sales of USD 1.42 billion and net income of USD 209.2 million. Gross margin in fiscal 2011 was 68.3%, compared to 65.9% in fiscal 2010.

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