UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 27, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to ____.
Commission File Number: 1-6453
NATIONAL SEMICONDUCTOR CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-2095071
(State of incorporation) (I.R.S. Employer Identification Number)
2900 Semiconductor Drive, P.O. Box 58090
Santa Clara, California 95052-8090
(Address of principal executive offices)
Registrant's telephone number, including area code: (408) 721-5000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No __
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Title of Each Class Outstanding at November 27, 1994
Common stock, par value $0.50 per share 123,190,335
<PAGE>
NATIONAL SEMICONDUCTOR CORPORATION
INDEX
Part I. Financial Information Page No.
Condensed Consolidated Statements of Operations
(Unaudited) for the Three Months and Six Months
Ended November 27, 1994 and November 28, 1993 3
Condensed Consolidated Balance Sheets (Unaudited)
as of November 27, 1994 and May 29, 1994 4
Condensed Consolidated Statements of
Cash Flows (Unaudited) for the Six Months
Ended November 27, 1994 and November 28, 1993 5
Notes to Condensed Consolidated
Financial Statements (Unaudited) 6
Management's Discussion and Analysis of
Results of Operations and Financial Condition 9
Part II. Other Information
Legal Proceedings 12
Submission of Matters to Vote of Security Holders 12
Exhibits and Reports on Form 8-K 13
Signature 14
<PAGE>
PART I. FINANCIAL INFORMATION
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share amounts)
Three Months Ended Six Months Ended
------------------ --------------------
Nov. 27, Nov. 28, Nov. 27, Nov. 28,
1994 1993 1994 1993
-------- ------- -------- --------
Net sales $ 584.4 $582.4 $1,138.2 $1,141.3
Operating costs and expenses:
Cost of sales 332.7 338.9 653.3 669.5
Research and development 67.0 65.5 132.9 128.6
Selling, general and
administrative 104.5 104.2 202.6 205.9
------- ------ -------- -------
Total operating costs
and expenses 504.2 508.6 988.8 1,004.0
------- ------ -------- -------
Operating income 80.2 73.8 149.4 137.3
Interest income, net 3.5 2.1 8.0 3.8
------- ------ -------- -------
Income before income
taxes and cumulative effect
of accounting change 83.7 75.9 157.4 141.1
Income taxes 16.7 15.2 31.4 28.2
------- ------ -------- -------
Net income before cumulative
effect of accounting change $ 67.0 $ 60.7 $ 126.0 $ 112.9
Cumulative effect of
accounting change - - - 4.9
------- ------ -------- -------
Net Income $ 67.0 $ 60.7 $ 126.0 $ 117.8
======= ====== ======== =======
Earnings per share before
cumulative effect of
accounting change
Primary $ .51 $ .46 $ .96 $ .86
Fully diluted $ .49 $ .43 $ .91 .80
Earnings per share:
Primary $ .51 $ .46 $ .96 $ .90
Fully diluted $ .49 $ .43 $ .91 $ .84
Weighted average shares:
Primary 124.9 120.1 125.6 119.7
Fully diluted 137.2 140.6 137.9 140.4
Income used in primary
earnings per share
(reflecting preferred
dividends) $ 64.2 $ 55.4 $ 120.4 $ 107.2
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
Nov. 27, May 29,
1994 1994
ASSETS -------- --------
Current assets:
Cash and cash equivalents $ 341.6 $ 398.1
Short-term marketable investments 55.6 68.7
Receivables, net 290.8 289.0
Inventories 227.5 212.7
Deferred tax assets 37.4 -
Other current assets 55.9 47.9
------- -------
Total current assets 1,008.8 1,016.4
Property, plant and equipment 1,871.9 1,765.6
Less accumulated depreciation 1,128.9 1,097.6
------- -------
Net property, plant and equipment 743.0 668.0
Long-term marketable investments - 20.9
Other assets 48.8 42.4
------- -------
Total assets $1,800.6 $1,747.7
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 32.3 $ 15.6
Accounts payable 177.7 213.7
Accrued expenses 229.4 264.6
Income taxes 89.9 83.5
------- -------
Total current liabilities 529.3 577.4
Long-term debt 10.5 14.5
Deferred income taxes 20.7 18.6
Other non-current liabilities 31.5 31.5
Minority interest 1.0 -
------- -------
Total liabilities 593.0 642.0
------- -------
Commitments and contingencies
Shareholders' equity:
Convertible preferred stock 0.2 0.2
Common stock 61.6 61.4
Additional paid-in capital 932.4 912.7
Retained earnings 261.3 140.9
Unrealized losses on securities
available for sale (.1) -
Treasury stock, at cost (47.8) (9.5)
------- -------
Total shareholders' equity 1,207.6 1,105.7
------- -------
Total liabilities and shareholders' equity $1,800.6 $1,747.7
======== ========
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Six Months Ended
--------------------
Nov. 27, Nov. 28,
1994 1993
-------- -------
OPERATIONS:
Net Income $ 126.0 $ 117.8
Adjustments to reconcile net income
with net cash provided by operations:
Depreciation and amortization 84.3 81.8
Other, net 3.4 -
Cumulative effect of accounting change - (4.9)
Gain on sale of investment (4.3) (2.2)
Changes in deferred tax assets (37.4) -
Changes in certain assets and liabilities, net:
Receivables (1.8) 20.2
Inventories (14.8) (17.9)
Other current assets (8.0) (6.0)
Other non-current assets 1.7 -
Accounts payable and accrued expenses (49.4) (18.0)
Current and deferred income taxes 8.5 19.7
Other non-current liabilities and minority
interest 1.0 4.2
-------- -------
Net cash provided by operating activities 109.2 194.7
-------- -------
INVESTING:
Purchases of property, plant and equipment (159.1) (105.6)
Proceeds from the sale and maturity of
marketable investments 450.2 255.4
Purchase of marketable investments (416.3) (299.2)
Proceeds from sale of investments 4.9 8.0
Purchases of investments and other, net (12.3) (2.9)
-------- -------
Net cash used by investing activities (132.6) (144.3)
-------- -------
FINANCING:
Proceeds from the issuance of debt 23.2 -
Repayment of debt (10.5) (5.3)
Issuance of common stock under
employee benefit plans 2.2 9.8
Purchase of treasury stock (42.4) -
Payment of preferred dividends (5.6) (10.6)
-------- -------
Net cash used by financing activities (33.1) (6.1)
-------- -------
Net change in cash and cash equivalents (56.5) 44.3
Cash and cash equivalents at beginning of period 398.1 277.4
-------- -------
Cash and cash equivalents at end of period $ 341.6 $ 321.7
======== =======
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
Note 1. Summary of Significant Accounting Policies
In the opinion of management, the accompanying condensed consolidated
financial statements contain all adjustments, consisting of only normal
recurring adjustments (except as discussed in Note 2 and Note 3),
necessary to present fairly the financial position and results of
operations of National Semiconductor Corporation and its subsidiaries
("National" or the "Company"). Interim results of operations are not
necessarily indicative of the results to be expected for the full year.
This report should be read in conjunction with the consolidated
financial statements and notes thereto included in the annual report on
Form 10-K for fiscal year ended May 29, 1994.
Securities held-to-maturity and available-for-sale: Effective the
beginning of fiscal 1995, the Company prospectively adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" ("FAS 115"). The effect of
adopting FAS 115 was not material to the consolidated financial
statements. Prior to implementing FAS 115, the Company's investments
were carried at the lower of cost or market value. Under FAS 115, the
Company has classified its investments in certain debt and equity
securities as "held-to-maturity" or "available-for-sale".
Debt securities are classified as held-to-maturity when the Company has
the positive intent and ability to hold the securities to maturity.
Held-to-maturity securities are recorded as either short-term or long-
term on the balance sheet based upon the contractual maturity date and
are stated at amortized cost.
Marketable equity securities and debt securities not classified as held-
to-maturity are classified as available-for-sale. Available-for-sale
securities are recorded as short-term securities on the balance sheet
and are carried at fair value, with the unrealized gains and losses, net
of tax, reported in a separate component of shareholders' equity. The
amortized cost of debt securities in this category is adjusted for
amortization of premiums and accretion of discounts to maturity, both of which
are included in interest income. Realized gains and losses and declines
in value judged to be other-than-temporary on available-for-sale
securities are included in interest income. The cost of securities sold
is based on the specific identification method.
Effective the beginning of fiscal 1995, the Company adopted
Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits Other than Pensions" ("FAS 112");
the adoption did not have a material impact on the Company's financial
statements.
Note 2. Results of Operations
Included within selling, general and administrative expense ("SG&A") is
net intellectual property income of $4.7 million for the second quarter
and $9.5 million for the first six months of fiscal 1995, compared to
$2.5 million and $4.6 million for the respective 1994 periods. Also
included is intellectual property expense of $6.7 million for the second
quarter and $6.9 million for the first six months of fiscal 1995,
compared to $1.8 million and $2.5 million for the respective 1994
periods. In addition, the Company sold investments in the second
quarter of both fiscal 1995 and 1994 resulting in a $4.3 million gain
recorded in 1995 and a $2.2 million gain recorded in 1994. The first
six months of fiscal 1994 include centralization costs of $10.3 million
for the sales distribution facilities, of which $3.8 million was
recorded in the second quarter.
<PAGE>
Note 3. Investment Securities
The following is a summary of available-for-sale securities and held-to-
maturity securities at May 30, 1994:
Gross Estimated
Amortized Unrealized Fair
(In millions) Cost Losses Value
------- ------ -------
Available-for-sale securities:
U.S. Treasury securities and
obligations of U.S. government
agencies $43.7 $.2 $43.5
U.S. corporate debt securities 7.4 - 7.4
Foreign corporate debt securities 3.0 - 3.0
----- --- ------
Total available-for-sale securities $54.1 $.2 $53.9
===== === ====
Held-to-maturity securities:
U. S. corporate debt securities $15.9 $ - $15.9
Foreign government securities 3.9 - 3.9
Foreign corporate debt securities 16.2 - 16.2
---- --- ----
Total held-to-maturity securities $36.0 $ - $36.0
==== === ====
The amortized cost and estimated fair value of debt securities at May
30, 1994, by contractual maturity, are shown below. Balance sheet
classification of certain available-for-sale securities may differ from
contractual maturities because management views its available-for-sale
portfolio as available for use in its current operations.
Estimated
Amortized Fair
(in millions) Cost Value
------- -------
Available-for-Sale
Due in one year or less $33.1 $33.0
Due after one year through three years 21.0 20.9
----- ----
$54.1 $53.9
==== ====
The entire held-to-maturity portfolio is due in one year or less.
Note 4. Components of Inventories
The components of inventories were:
Nov. 27, May 29,
(in millions) 1994 1994
------ ------
Raw materials $ 22.1 $ 17.3
Work in process 126.8 129.4
Finished goods 78.6 66.0
----- ------
Total inventories $ 227.5 $ 212.7
====== ======
<PAGE>
5. Supplemental disclosure of cash flow information
(in millions)
Six Months Ended
-----------------------
Nov. 27, Nov. 28,
1994 1993
-------- --------
Cash paid for:
interest $ 1.5 $ 2.0
interest on tax settlements 26.3 12.2
income taxes 43.4 9.0
Supplemental disclosure, non-cash items:
Issuance of stock for employee benefit plans $ 4.0 $ 2.0
Tax benefit for employee stock option plans 17.8 -
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Sales Sales were flat during the second quarter and first six months
of fiscal 1995 compared to the 1994 periods, led by a slowdown in sales
of bipolar logic products. In addition, current quarter sales reflect
the effects of continued efforts to prune older commodity logic products
from the product offerings, replacing them with higher margin products
serving vertical markets. Analog and mixed signal product sales, which
include standard linear products, analog, telecommunications, local area
network, and wireless chips, mass storage devices, and many other mixed
signal solutions, continue to grow and represent 56 percent of net sales
during the second quarter and first six months of fiscal 1995, compared
to 52 percent in the 1994 periods. Sales were flat from a year ago
quarter in both the Company's Standard Products Group ("SPG"), which
represents approximately 70 percent of the Company's net sales, and in
the Communications and Computing Group ("CCG"), which represents
approximately 30 percent of the Company's net sales. Sales in the
European region were stronger in the current quarter compared to a year
ago; however, this increase was offset by a softness in the Southeast
Asia region.
Gross Margin During both the second quarter and first six months of
fiscal 1995, gross margins increased to 43 percent from 42 percent and
41 percent for the respective 1994 periods. The improvement reflects
the continued shift in the product portfolio towards higher margin
analog and mixed signal products and increased utilization of wafer
fabrication capacity. Current quarter gross margin includes a one-time
vendor credit and a foreign government grant totaling $6.5 million.
Gross margins for analog and mixed signal products were approximately 52
percent for the second quarter and first six months of fiscal 1995,
compared to 51 percent and 50 percent for the respective 1994 periods.
Research and Development Research and development ("R&D") expenses
were up slightly as a percentage of sales for the second quarter and
first six months of fiscal 1995 to 11.5 percent and 11.7 percent
compared to 11.2 percent and 11.3 percent for the respective 1994
periods. The Company directs 70 percent of its R&D efforts toward
analog and mixed signal products.
Selling, General, and Administrative Selling, general, and
administrative ("SG&A") expenses were relatively flat as a percentage of
sales at approximately 18 percent for the second quarter and first six
months of fiscal 1995 compared to the 1994 periods. Included within
SG&A expense is net intellectual property income of $4.7 million for the
second quarter and $9.5 million for the first six months of fiscal 1995,
compared to $2.5 million and $4.6 million for the respective 1994
periods. Also included is intellectual property expense of $6.7 million
for the second quarter and $6.9 million for the first six months of
fiscal 1995, compared to $1.8 million and $2.5 million for the
respective 1994 periods. In addition, the Company sold investments in
the second quarter of both fiscal 1995 and 1994 resulting in a $4.3
million gain recorded in 1995 and a $2.2 million gain recorded in 1994.
The first six months of fiscal 1994 include centralization costs of
$10.3 million for the sales distribution facilities, of which $3.8
million was recorded in the second quarter. Exclusive of the above
items, SG&A expenses were $106.8 million and $209.5 million for the
second quarter and first six months of fiscal 1995 or 18 percent of
<PAGE>
sales and $103.3 million and $199.9 million for the second quarter and
first six months of fiscal 1994 or 18 percent of sales. The increase in
SG&A expense in absolute dollars is primarily attributable to annual
increases in salaries for all employees, additional promotional costs,
and increased costs for certain employee benefit plans.
Interest Income and Interest Expense Net interest income increased
to $4 million and $8 million for the second quarter and first six months
of fiscal 1995 compared to $2 million and $4 million for the respective
1994 periods. The increase in net interest income relates to an
increase in average interest rates compared to a year ago and a slightly
higher cash and investment balance during the first six months of fiscal
1995. The increase in interest income was somewhat offset with an
increase in interest expense compared to the second quarter of fiscal
1994 due to the assumption of debt related to a facility repurchased in
the quarter.
Income Taxes The effective tax rate for fiscal 1995 is 20 percent
compared to 15 percent for fiscal 1994. The increase in the annual
effective tax rate primarily relates to the exhaustion of certain net
operating loss and tax credit carry forwards. In the current quarter,
the Company reversed the valuation allowance reserve against specific
deferred tax assets based upon continuing profits recorded in certain
jurisdictions.
Financial Condition During the first six months of 1995, cash and
cash equivalents decreased $57 million. The Company generated $109
million positive cash flow from operations for the six months ended
despite increased cash used for accounts payable and accrued expenses
including cash paid for income taxes. In addition, the Company recorded
$37 million in deferred tax assets related to the recognition of
anticipated tax benefits associated with such deferred assets. Investing
activities used $133 million during the first six months of fiscal 1995
driven primarily by purchases of property, plant and equipment of $159
million and investments of $12 million. During the quarter, the Company
repurchased the equity interest in one of the facilities it had sold during
fiscal 1988 and leased back, using approximately $12 million in cash and
assuming $23 million in debt. The debt was paid in full at the
beginning of the third quarter.
During the current quarter, the Company renewed its multicurrency and
revolving financing agreements which provide funds in the form of
multicurrency loans, letters of credit and standby letters of credit in
favor of the Company. The multicurrency agreement ($30 million) expires
December 31, 1995, and the revolving financing agreement ($200 million)
expires December 31, 1997. These agreements contain restrictive
covenants, conditions and default provisions which, among others,
require the maintenance of financial ratios and certain levels of
tangible net worth. Management believes existing cash and investment
balances, existing financing agreements, cash provided by operations,
and cash generated from issuance of stock to employees will be
sufficient to fund anticipated capital expenditures and other investing
and financing activities through the foreseeable future.
<PAGE>
Outlook Despite continued improvement in the financial results,
future trends for revenue and profitability continue to be difficult to
predict. Risks and uncertainties facing the Company include business
conditions and the rate of growth in the personal computer industry and
the general economy, competitive factors and price pressures, market
acceptance and timing of new products, and international economic
conditions. The Company believes it has the product portfolio and the
financial and technical resources necessary for success; however, future
revenue and profitability cannot be precisely determined at this time.
National continues to pursue opportunities to leverage its intellectual
property; however, the timing and amount of future licensing income
cannot be forecast with certainty at this time.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
Reference is made to Item 3, Legal Proceedings, in the Company's
Annual Report on Form 10-K for the year ended May 29, 1994, which
information is incorporated herein by reference.
Item 4. Submission of Matters to Vote of Security Holders
- ----------------------------------------------------------
(a) The Registrant's Annual Meeting was held on September 30, 1994.
(b) The following directors were elected at the Meeting:
AUTHORITY
DIRECTOR FOR WITHHELD
-------- --- ---------
Peter J. Sprague 102,866,926 4,510,290
Gilbert F. Ameilo 103,087,119 4,290,057
Gary P. Arnold 103,072,809 4,304,407
Robert Beshar 103,075,831 4,301,385
Modesto A. Maidique 103,250,670 4,126,546
J. Tracy O'Rourke 103,257,065 4,120,151
Charles E. Sporck 103,047,256 4,329,960
Donald E. Weeden 103,223,602 4,153,614
(c) Among the matters voted on at the Meeting were the following:
(i) To approve the amendment to Article FOURTH of the
Company's Certificate of Incorporation to increase the
authorized Common Stock of the Company from 200,000,000
shares to 300,000,000 shares:
FOR: 99,079,469
AGAINST: 7,645,719
ABSTAIN: 625,028
(ii) To approve an amendment to the Company's by-laws to
provide for the classification of the Company's Board of
Directors into three classes:
FOR: 47,499,003
AGAINST: 45,391,010
ABSTAIN: 841,678
BROKERS' NON VOTES: 13,645,525
(iii) To Approve the adoption of the amended and restated Employee
Stock Purchase Plan:
FOR: 88,797,765
AGAINST: 4,083,689
ABSTAIN: 850,147
BROKERS' NON VOTES: 13,645,525
<PAGE>
(iv) To approve the adoption of the Global Employee Stock
Purchase Plan:
FOR: 89,026,956
AGAINST: 3,824,457
ABSTAIN: 880,188
BROKER'S NON VOTES: 13,645,615
(v) To approve the adoption of the amended and restated Stock
Option Plan:
FOR: 68,485,101
AGAINST: 24,453,097
ABSTAIN: 1,151,632
BROKER'S NON VOTES: 13,287,386
(vi) To approve the adoption of the Executive Officer Incentive
Plan:
FOR: 98,561,866
AGAINST 7,524,465
ABSTAIN 1,290,885
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
--------
10.1 Management Contract or Compensatory
Plan or Arrangement: Amendment No. 1 to
Airplane Use Agreement with Gilbert F.
Amelio doing business as Aero Ventures
10.2 Management Contract or Compensatory Plan
or Arrangement: Benefit Restoration Plan
(as amended, effective June 1, 1994)
11.0 Additional Fully Diluted Calculation of Earnings
Per Share
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the fiscal quarter ended
November 27, 1994.
<PAGE>
SIGNATURE
- ---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
NATIONAL SEMICONDUCTOR CORPORATION
Date: December 14, 1994 /S/ DONALD MACLEOD
----------------------------------
Donald Macleod
Senior Vice President, Finance and
Chief Financial Officer
Signing on behalf of the registrant
and as principal financial officer
<PAGE>
AMENDMENT NO. 1
AIRPLANE USE AGREEMENT
RECITAL
- -------
This Amendment No. 1 ("Amendment") to the Airplane Use Agreement
("Agreement") dated September 28, 1993 entered into by and between
National Semiconductor Corporation, a Delaware corporation having its
principal place of business at 2900 Semiconductor Drive, Santa Clara, CA
95051 (the "Company") and Gilbert F. Amelio, dba Aero Ventures, 13416
Middle Fork Lane, Los Altos Hills, CA 94022 ("Amelio"), is made and is
effective as of the 30th day of September, 1994.
RECITALS
WHEREAS, the Company and Amelio entered into the Agreement on
September 28, 1993; and
WHEREAS, the Company and Amelio desire to amend certain provisions
of the Agreement;
NOW, THEREFORE, the Parties hereto agree as follows:
1. RECITALS. The Recitals herein above are made a part of this
Amendment.
2. TERM. Section 8, of the Agreement, TERM is amended in full to
read as follows:
8. TERM. This Agreement shall become effective as of
September 28, 1993, subject to approval by the Board
of Directors of the Company and shall continue
thereafter until terminated as provided herein. This
Agreement shall be terminated automatically upon
Amelio's termination of employment with the Company
and may also be terminated immediately by the Company
upon notice to Amelio for reasonable cause, which
reasonable cause shall include but not be limited to:
(i) any breach of Amelio's obligations under this
Agreement, or (ii) the payment to Amelio by the
Company under this Agreement of a net sum exceeding
$225,000 in any 12-month period. This Agreement may
also be terminated by either party for any reason upon
thirty days advance written notice.
<PAGE>
3. NO OTHER AMENDMENTS. Except as provided herein,
no other amendments are made to the Agreement.
4. CONSENT OF SPOUSE. Charlene Amelio, wife of Gilbert F.
Amelio, consents and agrees to the terms and conditions
contained herein.
/S/ GILBERT F. AMELIO
---------------------
Gilbert F. Amelio dba
Aero Ventures
/S/ CHARLENE AMELIO
-------------------
Charlene Amelio
Accepted and agreed to
NATIONAL SEMICONDUCTOR CORPORATION
By /S/ JOHN M. CLARK III
---------------------
John M. Clark III
Senior Vice President,
General Counsel and Secretary
<PAGE>
BENEFIT RESTORATION PLAN - PLAN DOCUMENT
THIS BENEFIT RESTORATION PLAN ("Plan") originally adopted by National
Semiconductor Corporation, a corporation organized and existing under
the laws of the State of Delaware, (hereinafter referred to as the
"Employer") effective as of June 1, 1992, is hereby amended effective as
of June 1, 1994.
WITNESSETH:
WHEREAS, the Employer desires to establish a benefit restoration income
plan for the exclusive benefit of certain participants in the National
Semiconductor Corporation Retirement and Savings Program ("RASP") so as
to reward them for their loyal and faithful service to the Employer and
to aid them in increasing their economic security by providing
additional funds at retirement with respect to those benefits that are
reduced because of the limitations of sections 401(a)(17), 402(g)(1),
401(k) and 415 of the Internal Revenue Code of 1986; and
WHEREAS, the Employer has been authorized by its Board of Directors to
adopt this Plan in order to provide for the benefits specified;
NOW, THEREFORE, in consideration of the premises herein contained, it is
hereby declared as follows:
ARTICLE 1
Definitions
When used herein, the words and phrases defined hereinafter shall have
the following meaning unless a different meaning is clearly required by
the context.
1.01 "Account" shall mean the Accounts and subaccounts established
pursuant to Section 3.05 of the Plan.
1.02 "Annual Matching Restoration Amount" shall mean the amount
determined in accordance with Section 3.04 of the Plan.
1.03 "Annual Profit Sharing Restoration Amount" shall mean the amount
determined in accordance with Section 3.02 of the Plan.
1.04 "Annual Savings Restoration Amount" shall mean the amount
determined in accordance with Section 3.03 of the Plan.
<PAGE>
1.05 "Beneficiary" shall mean the person or persons last designated by
a Participant, by written notice filed with the Committee, to receive a
Plan benefit upon his or her death. In the event a Participant fails to
designate a person or persons as provided above or if no Beneficiary so
designated survives the Participant, then for all purposes of this Plan,
the Beneficiary shall be the person(s) designated as the beneficiaries
by the Participant under the RASP, and, if none, the Participant's
estate.
1.06 "Board" shall mean the Board of Directors of National
Semiconductor Corporation.
1.07 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.08 "Committee" shall mean The Retirement and Savings Program
Administrative Committee, as determined by the Board.
1.09 "Elected Contribution" shall mean the amount the Participant
agrees to defer under this Plan pursuant to procedures established
by the Committee up to the maximum permitted deferral pursuant to
Section 3.03 of the Plan.
1.10 "Employer" shall mean National Semiconductor Corporation.
1.11 "Interest" shall mean the rate for long-term A-rated corporate
bonds, reported by the investment banking firm of Salomon Brothers
of New York City (or such other investment banking firm as the
Committee may specify) during the first week of each Plan Year.
The interest rate will be reset at the beginning of each Plan
Year.
1.12 "Participant" shall mean an employee of the Employer participating
in the RASP, who satisfies the eligibility requirements of Section
2.01 of the Plan and such other conditions that are established
from time to time by the Committee.
1.13 "Plan" shall mean the National Semiconductor Corporation Benefit
Restoration Plan, as amended from time to time.
1.14 "Plan Year" shall mean the twelve consecutive month period ending
on the last day of May.
1.15 "RASP" shall mean the National Semiconductor Corporation
Retirement and Savings Program.
1.16 Capitalized Terms not defined herein shall have the meaning
attributed to them in the RASP.
<PAGE>
ARTICLE II
Eligibility
2.01 Eligibility
A Participant or Beneficiary shall be eligible to receive an Annual
Profit Sharing Restoration Amount in any Plan Year in which he qualifies
for an allocation of the Employer's Annual Profit Sharing Contribution
under the RASP but the amount of the benefit to which he is entitled is
reduced by reason of the application of the limitations set forth in
Sections 401(a)(17) or 415(c)(1)(A) of the Code. A Participant or
Beneficiary shall be eligible to receive an Annual Savings Restoration
Amount in any Plan Year in which he makes the maximum permitted deferral
under the RASP, as determined by the Committee, and his compensation is
in excess of an amount determined by the Committee for such Plan Year.
A Participant or Beneficiary shall be eligible to receive an Annual
Matching Restoration Amount in any Plan Year in which his compensation
exceeds the limitations set forth in Section 401(a)(17) of the Code and
he elects to defer at least 6% of his compensation under Section 5.02 A.
of the RASP.
ARTICLE III
Benefits
3.01 Benefits.
The maximum benefits under this Plan to which an eligible Participant or
Beneficiary shall be entitled shall be equal to the sum of the vested
Annual Profit Sharing Restoration Amount, the Annual Savings Restoration
Amount, and the Annual Matching Restoration Amount, plus Interest on
such sum.
3.02 Annual Profit Sharing Restoration Amount.
The Annual Profit Sharing Restoration Amount to which an eligible
Participant or Beneficiary shall be entitled shall be an amount equal to
the difference, if any, between (a) and (b) below:
(a) The amount of the Employer's Annual Profit Sharing
Contribution which would have been allocated to a
Participant or Beneficiary under the RASP if the Annual
Profit Sharing Contribution were determined pursuant to
Section 5.01 B.3. of the RASP and the allocation were
determined pursuant to Section 6.03 A. of the RASP without
giving any effect to the limitations imposed by Sections
401(a)(17) and 415 of the Code, as now or hereafter in
effect; less
(b) The amount of the Employer's Annual Profit Sharing
Contribution allocated to the Participant or Beneficiary
under the RASP.
<PAGE>
3.03 Annual Savings Restoration Amount.
The maximum Annual Savings Restoration Amount from which an eligible
Participant or Beneficiary may make an Elected Contribution shall be
equal to the difference, if any, between (a) and (b) below:
(a) The amount that the Participant could defer if the maximum
percentage deferral determined by the Committee under
Section 5.02 A. of the RASP were applied to the
Participant's Compensation, and the Participant's Elected
Contribution under the RASP were not subject to Sections
401(k), 402(g)(1) or 415 of the Code, as now or hereafter in
effect; less
(b) The amount of the Participant's Elected Contribution under
the RASP.
The Participant's Annual Savings Restoration Amount shall be equal to
the Participant's Elected Contribution.
3.04 Annual Matching Restoration Amount.
The Annual Matching Restoration Amount to which an eligible Participant
or Beneficiary shall be entitled shall be an amount equal to the
difference, if any, between (a) and (b) below:
(a) The lesser of (1) 6% of the Participant's Compensation,
without giving any effect to the limitations imposed by
Section 401(a)(17) of the Code, as now or hereafter in
effect, or (2) the limit imposed by Section 402(g) of the
Code; and
(b) 6% of the Participant's Compensation as limited by Section
401(a)(17) of the Code,
multiplied by 50%, or any other percentage as the Board may determine
for a given Plan Year under Section 5.03 A. of the RASP.
Notwithstanding the foregoing, to the extent that the matching
contribution that would otherwise be made on behalf of a Participant
under Section 5.03 of the RASP is reduced in accordance with the
requirements of Section 401(m) of the Code, such Participant's Annual
Matching Restoration Amount shall be likewise limited in accordance with
rules established by the Committee.
3.05 Participant's Account.
The Employer shall create and maintain adequate records to reflect the
interest of each Participant in the Plan. Such records shall be in the
form of individual Accounts. When appropriate, a Participant's Account
shall consist of a profit sharing restoration subaccount, a savings
restoration subaccount, and a matching restoration subaccount. Such
Accounts shall be kept for recordkeeping purposes only and shall not be
construed as providing for assets to be held in trust or escrow or any
other form of asset segregation for the Participant or Beneficiary to
whom benefits are to be paid pursuant to the terms of the Plan.
<PAGE>
3.06 Allocation to Participant Account and Interest.
The Participant's Annual Savings Restoration Amount shall be credited to
the Participant's Account as of the date such amount would have been
paid to such Participant as remuneration for services, and the
Participant's Annual Profit Sharing Restoration Amount and Annual
Matching Restoration Amount shall be credited to the Participant's
Account as of the last day of a Plan Year. The Participant's balance in
his Account shall be credited with Interest at such times and in such
manner as determined in the sole discretion of the Committee.
3.07 Vested Percentage.
Notwithstanding anything herein to the contrary, a Participant shall be
100% vested at all times in the amounts credited to his savings
restoration subaccount and his matching restoration subaccount. A
Participant shall be vested in the amount credited to his profit sharing
restoration subaccount to the same extent as the Participant is vested
in his Profit Sharing Accounts, in accordance with Article VIII of the
RASP; provided, however, that forfeited amounts shall not be reallocated
among Plan Participants but shall be restored to the forfeiting
Participant upon reemployment, in accordance with the procedures set
forth in Article VIII of the RASP.
ARTICLE IV
Distribution of Benefit
4.01 Separation from Service.
The benefits attributable to the Annual Profit Sharing Restoration
Amount plus Interest thereon and the Annual Matching Restoration Amount
plus Interest thereon shall be distributed in a lump sum upon
termination of employment for any reason (including retirement,
disability or death) and the benefits attributable to the Annual Savings
Restoration Amount plus Interest shall be distributed in a lump sum upon
the earlier of termination of employment for any reason (including
retirement, disability or death) or a date preselected by the
Participant either upon eligibility to participate under the Plan or
upon such date or dates as may be determined by the Committee.
4.02 Hardship.
Payment of part or all of the benefits under this Plan may be
accelerated in the case of severe hardship, which shall mean an
emergency or unexpected situation in the Participant's financial
affairs, including, but not limited to, illness or accident involving
the Participant or any of the Participant's dependents. All payments in
case of hardship must be approved by the Committee.
<PAGE>
ARTICLE V
Administration; Amendments and Termination; Rights Against the Company
5.01 Administration.
The Committee shall administer this Plan. With respect to the Plan, the
Committee shall have, and shall exercise and perform, all the powers,
rights, authorities and duties set forth in the RASP with the same
effect as if set forth in full herein with respect to this Plan. Except
as expressly set forth herein, any determination or decision by the
Committee shall be conclusive and binding on all persons who at any time
have or claim to have any interest whatever under this Plan.
5.02 Amendment and Termination Prior to a Change in Control.
The Employer, solely, and without the approval of the Committee or any
Participant or Beneficiary, shall have the right to amend this Plan at
any time and from time to time, by resolution adopted by it. Any such
amendment shall become effective upon the date stated therein.
Notwithstanding the foregoing, no amendment shall adversely affect the
rights of any Participant or Beneficiary who was previously receiving
benefits under this Plan to continue to receive such benefits or of all
other Participants and Beneficiaries to receive the benefits promised
under the Plan immediately prior to the later of the effective date or
the date of adoption of the amendment.
The Employer has established this Plan with the bonafide intention and
expectation that from year to year it will deem it advisable to continue
it in effect. However, circumstances not now foreseen or circumstances
beyond the Employer's control may make it impossible or inadvisable to
continue the Plan. Therefore, the Employer, in its sole discretion,
reserves the right to terminate the Plan in its entirety at any time;
provided, however, that in such event any Participant or Beneficiary who
was receiving benefits under this Plan as of the termination date, shall
continue to receive such benefits, and all other Participants and
Beneficiaries shall remain entitled to receive the benefits promised
under the Plan immediately prior to the termination of the Plan.
5.03 Rights Against the Employer.
The establishment of this Plan shall not be construed as giving to any
Participant, Beneficiary, employee or any person whomsoever, any legal,
equitable or other rights against the Employer, or its officers,
directors, agents or shareholders, except as specifically provided for
herein, or its giving to any Participant any equity or other interest in
the assets, business or shares of the Employer or giving any employee
the right to be retained in the employment of the Employer. All
employees and Participants shall be subject to discharge to the same
extent that they would have been if this Plan had never been adopted.
Subject to the rights of the Employer to terminate this Plan or any
benefit hereunder, the rights of a Participant hereunder shall be solely
those of an unsecured creditor of the Employer.
<PAGE>
ARTICLE VI
General and Miscellaneous
6.01 Spendthrift Clause.
No right, title or interest of any kind in the Plan shall be
transferable or assignable by any Participant or Beneficiary or any
other person or be subject to alienation, anticipation, encumbrance,
garnishment, attachment, execution or levy of any kind, whether
voluntary or involuntary. Any attempt to alienate, sell, transfer,
assign, pledge, garnish, attach or otherwise encumber or dispose of any
interest in the Plan shall be void.
6.02 Severability.
In the event that any provision of this Plan shall be declared illegal
or invalid for any reason, said illegality or invalidity shall not
affect the remaining provisions of this Plan but shall be fully
severable, and this Plan shall be construed and enforced as if said
illegal or invalid provision had never been inserted herein.
6.03 Construction of Plan.
The article and section headings and numbers are included only for
convenience of reference and are not to be taken as limiting or
extending the meaning of any of the terms and provisions of this Plan.
Whenever appropriate, words used in the singular shall include the
plural or the plural may be read as the singular.
6.04 Gender.
The personal pronoun of the masculine gender shall be understood to
apply to women as well as men except where specific reference is made to
one or the other.
6.05 Governing Law.
THE VALIDITY AND EFFECT OF THIS PLAN AND THE RIGHTS AND OBLIGATIONS OF
ALL PERSONS AFFECTED HEREBY SHALL BE CONSTRUED AND DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE UNITED STATES AND THE LAWS OF THE STATE
OF CALIFORNIA, WITHOUT REGARD TO ITS OTHERWISE APPLICABLE PRINCIPLES OF
CONFLICTS OF LAWS.
6.06 Unfunded Top Hat Plan.
It is the Employer's intention that this Plan be a Top Hat Plan, defined
as an unfunded plan maintained primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employees, as provided in Sections 201(2), 301(a)(3), and
401(a)(1) of the Employee Retirement Income Security Act of 1974, as
amended from time to time. The Employer may establish and fund one or
more trusts for the purpose of paying some or all of the benefits
promised to Participants and Beneficiaries under the Plan; provided,
however, that (i) any such trust(s) shall at all times be subject to the
claims of the Employer's general creditors in
<PAGE>
the event of the insolvency or bankruptcy of the Employer, and
(ii) notwithstanding the creation or funding of any such trust(s), the
Employer shall remain primarily liable for any obligation hereunder.
Notwithstanding the establishment of any such trust(s), the Participants
and Beneficiaries shall have no preferred claim on, or any beneficial
ownership interest in, any assets of any such trust or of the Employer.
6.07 Divestment for Cause.
Notwithstanding any other provisions of this Plan to the contrary, the
right of any Participant, former Participant or Beneficiary of either to
receive or to have paid to any other person, or the right of any such
other person to receive any benefits attributable to the Annual Profit
Sharing Restoration Amount plus Interest hereunder or the Annual
Matching Restoration Amount plus Interest hereunder, shall be forfeited,
if such Participant's employment with the Employer is terminated because
of or the Participant is discovered to have engaged in fraud,
embezzlement, dishonesty against the Employer, obtaining funds or
property under false pretenses, assisting a competitor without
permission, or interfering with the relationship of the Employer or any
subsidiary or affiliate thereof with a customer. A Participant's or
Beneficiary's benefits shall be forfeited for any of the above reasons
regardless of whether such act is discovered prior to or subsequent to
the Participant's termination from the Employer or the payment of
benefits under the Plan. If payment has been made, such payment shall
be restored to the Employer by the Participant or Beneficiary.
<PAGE>
ERISA Rights
This Plan is intended to provide benefits for a select group of highly-
compensated employees within the meaning of the Employee Retirement
Income Security Act of 1974 (ERISA). However, it is not subject to most
of the requirements of ERISA nor is the Plan eligible for insurance
under Title IV of ERISA. Furthermore, the Plan is considered to be an
unfunded, non-qualified plan for purposes of complying with the Internal
Revenue Code.
If you believe your benefit under the Plan has been denied, in whole or
in part, you should file a claim with the Retirement and Savings Program
Administrative Committee. Your claim will be reviewed using the same
procedures as those described in the Summary Plan Description for the
RASP.
The following information identifies the benefit plan described in this
booklet and gives other important administrative data.
Plan Name:
The Benefit Restoration Plan
Plan Sponsor: Employer I.D. Number (EIN):
National Semiconductor Corporation EIN: 95-2095071
2900 Semiconductor Drive
P.O.Box 58090
Santa Clara, CA 95052-8090
(408) 721-2383
Dyna-Craft, Inc. EIN: 94-1682796
2919 San Ysidro
Santa Clara, CA 95051
(408) 721-6855
Plan Number:
005
Plan Year:
The twelve consecutive month period ending on May 31. Plan records are
maintained on the basis of this Plan Year.
<PAGE>
Plan Administrator:
Retirement and Savings Program Administrative Committee
c/o Retirement Plans Administration
National Semiconductor Corporation
2900 Semiconductor Drive
P. O. Box 58090
Santa Clara, CA 95052-8090
(408) 721-2383
Type of Plan:
The Plan is a non-qualified deferred compensation plan for selected key
employees of National Semiconductor.
Agent for Service of Legal Process:
Legal process should be served on the company's Corporate Secretary or
the Plan Administrator in care of the Retirement Plans Administration
Office at the company's address.
Funding Medium:
The Plan is unfunded and benefits are paid from the Plan sponsor's
general assets.
<PAGE>
Exhibit 11.0
Page 1 of 1
NATIONAL SEMICONDUCTOR CORPORATION
ADDITIONAL FULLY DILUTED CALCULATION OF EARNINGS PER SHARE
(in millions, except per share amounts)
Three Months Ended Six Months Ended
------------------ ------------------
Nov. 27, Nov. 28, Nov. 27, Nov. 28,
1994 1993 1994 1993
------- ------- ------- -------
Net Income $ 67.0 $ 60.7 $ 126.0 $ 117.8
Number of shares:
Weighted average common
shares outstanding 121.1 111.4 121.5 110.9
Weighted average common
equivalent shares, net of
tax benefit 3.8 8.7 4.1 8.8
------ ------ ------ ------
Weighted average common and
common equivalent shares 124.9 120.1 125.6 119.7
Additional weighted average
common equivalent shares
assuming full dilution - .1 - .3
Shares issuable from
assumed conversion
of preferred shares 12.2 20.4 12.2 20.4
------ ------ ------ ------
Weighted average common and
common equivalent shares
assuming full dilution 137.1 140.6 137.8 140.4
===== ===== ===== =====
Income per share
assuming full dilution $ .49 $ .43 $ .91 $ .84
====== ====== ====== ======
FIRST DRAFT FORM 10Q 12/12/94 06:36 PM
16 of 15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Accounts receivable balances are shown net of allowancs consistent with
the balance sheet presentation. Interest expense amounts are shown net
consistent with the income statement presentation.
</LEGEND>
<CIK> 0000070530
<NAME> NATIONAL SEMICONDUCTOR
<MULTIPLIER> 1000000
<CURRENCY> U.S. DOLLAR
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> MAY-27-1995 MAY-27-1995
<PERIOD-START> SEP-29-1994 MAY-30-1994
<PERIOD-END> NOV-27-1994 NOV-27-1994
<EXCHANGE-RATE> 1 1
<CASH> 342 342
<SECURITIES> 56 56
<RECEIVABLES> 291 291
<ALLOWANCES> 0 0
<INVENTORY> 228 228
<CURRENT-ASSETS> 1009 1009
<PP&E> 1872 1872
<DEPRECIATION> 1129 1129
<TOTAL-ASSETS> 1801 1801
<CURRENT-LIABILITIES> 529 529
<BONDS> 0 0
<COMMON> 62 62
0 0
0 0
<OTHER-SE> 1146 1146
<TOTAL-LIABILITY-AND-EQUITY> 1801 1801
<SALES> 584 1138
<TOTAL-REVENUES> 584 1138
<CGS> 333 653
<TOTAL-COSTS> 333 653
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 4 8
<INCOME-PRETAX> 84 157
<INCOME-TAX> 17 31
<INCOME-CONTINUING> 67 126
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 67 126
<EPS-PRIMARY> .51 .96
<EPS-DILUTED> .49 .91
</TABLE>
