National Semi Reports Results For Third Quarter & Fiscal 2009; Announces Workforce & Other Expense Reductions
National Semiconductor Corp. reported sales of $292 million and net income of $21.1 million, or 9 cents per diluted share, for the third quarter of fiscal 2009, which ended March 1, 2009. In National’s second quarter of fiscal 2009, the company reported $422 million in sales and $36 million in net income or 16 cents per diluted share. Gross margin of 57.5% in National’s third quarter of fiscal 2009 was down from the 65.8% gross margin achieved in the second quarter of fiscal 2009.
Compared to last year, sales decreased approximately 36% from the $453 million reported in the third quarter of fiscal 2008, and earnings per diluted share declined from the 29 cents recorded one year ago. Gross margin decreased from the 64.3% reported in the third quarter of fiscal 2008.
Third quarter fiscal 2009 results included approximately $11 million of discrete income tax benefits, primarily due to the realization of deferred taxes associated with a former equity investment. In addition, since National’s fiscal 2009 is a 53-week year, there were 14 weeks in the third fiscal quarter. The fourth fiscal quarter will be a normal 13-week quarter.
In response to economic conditions and related business levels, National will take actions in the fourth quarter of fiscal 2009 to reduce overall expenses and shift more of its R&D investments towards new and emerging growth opportunities. As part of the plan, the company will eliminate approximately 850 positions worldwide in product lines, sales and marketing, manufacturing and support functions. Notification to affected employees will begin immediately.
As part of the manufacturing consolidation plan, the company will close its assembly and test plant in Suzhou, China and its wafer fabrication plant in Arlington, Texas. The closures will occur in phases over several quarters, eventually resulting in the elimination of an additional 875 positions. The volume currently being supported by these two facilities will be transferred primarily to other National locations. After the consolidation, National will have three manufacturing facilities: wafer fabrication plants in South Portland, Maine and Greenock, Scotland and an assembly and test facility in Melaka, Malaysia.
In total, for all of the actions discussed above, it is estimated that the company will ultimately incur between $160 million and $180 million in charges, consisting of severances, asset impairments and other exit-related costs, of which $130 million to $145 million would likely be recorded in the fourth quarter of fiscal 2009 and the remainder in ensuing quarters. National currently employs about 6,500 people worldwide, and these actions will result in the elimination of 26% of the company’s workforce.
