Restucturing costs eat into National's growth

National Semiconductor has reported revenues of $425.3 million for the fourth quarter of fiscal 2003, which ended 25th May 2003, and recorded a net loss of $4.4 million, or two cents per share.

National Semiconductor has reported revenues of $425.3 million for the fourth quarter of fiscal 2003, which ended 25th May 2003, and recorded a net loss of $4.4 million, or two cents per share.

The fourth quarter net loss included $26.6 million of special charges primarily for severances and asset impairments associated with actions the company announced on 21st May 2003.

Excluding these special charges, National would have reported net income of $22.2 million, or 12 cents per share.

National's fourth quarter revenues were slightly higher than last year's fourth quarter revenues of $419.5 million.

National's fourth quarter 2002 net income was $17.1 million, or nine cents per share, which included a tax refund of $11.5 million.

Excluding the tax refund, net income in the fourth quarter of 2002 was $5.6 million, or three cents per share.

On a sequential basis, fourth quarter 2003 revenues increased by 5% over third quarter revenues of $404.3 million.

Fourth quarter gross margins improved to 44.6% from 42.7% in the third fiscal quarter 2003.

"Our business has improved", said Brian L Halla, National's Chairman, President and CEO.

"We grew revenues 5% in Q4 and made $22 million in operating profit, or 12 cents per share, before restructuring charges.

We're on track with our plan to create higher returns faster for National's shareholders".

National reported that orders in the fourth quarter grew more than 3% sequentially from the third quarter.

Power management orders outgrew the company average while display and standard analogue products exhibited double digit growth.

This performance was consistent with National's focus to gain additional content in handsets and display applications.

Worldwide bookings exceeded billings, with Japan showing the strongest bookings improvement.

National's revenues for the first quarter of FY 2004 are expected to be flat to seasonally down 4% from the fourth quarter of 2003, consistent with historical patterns during the summer quarter.

Gross margin percentage is expected to be flat to slightly down, depending on the level of revenue achieved during the quarter.

Operating expenses are expected to decrease due to the profit-improvement actions taken in Q3 and Q4.

For the year, National reported a net loss of $33.3 million, or 18 cents per share on revenues of $1.67 billion.

This compares with a net loss for fiscal 2002 of $121.9 million, or $0.69 per diluted share on revenues of $1.49 billion.

National's fiscal 2003 net loss included $43.6 million of special charges primarily for severances related to the workforce reductions announced in February and May of this year and impairment of certain assets, and $13.8 million in R and D expense for write downs of technology licences.

Without these charges, National's net results for the year would have been income of $24.1 million, or 0.13 cents a share.

National's gross margin increased 640 basis points from 37.0% for fiscal 2002 to 43.4% for fiscal 2003.

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