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 February 26, 1995
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 February 26, 1995
Common stock, par value $0.50 per share 124,132,628
<PAGE>
NATIONAL SEMICONDUCTOR CORPORATION
INDEX
Part I. Financial Information Page No.
Condensed Consolidated Statements of Operations
(Unaudited) for the Three Months and Nine Months
Ended February 26, 1995 and February 27, 1994 3
Condensed Consolidated Balance Sheets (Unaudited)
as of February 26, 1995 and February 27, 1994 4
Condensed Consolidated Statements of
Cash Flows (Unaudited) for the Nine Months
Ended February 26, 1995 and February 27, 1994 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
Exhibits and Reports on Form 8-K 12
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 Nine Months Ended
------------------ --------------------
Feb. 26, Feb. 27, Feb. 26, Feb. 27,
1995 1994 1995 1994
-------- ------- -------- --------
Net sales $ 571.4 $544.7 $1,709.6 $1,686.0
Operating costs and expenses:
Cost of sales 342.1 316.3 995.4 985.8
Research and development 72.5 62.7 205.4 191.3
Selling, general and
administrative 95.7 97.9 298.3 303.8
Restructuring of operations (5.5) - (5.5) -
------- ------ -------- -------
Total operating costs
and expenses 504.8 476.9 1,493.6 1,480.9
------- ------ -------- -------
Operating income 66.6 67.8 216.0 205.1
Interest income, net 4.7 3.1 12.7 6.9
------- ------ -------- -------
Income before income
taxes and cumulative effect
of accounting change: 71.3 70.9 228.7 212.0
Income taxes 14.3 7.1 45.7 35.3
------- ------ -------- -------
Net income before cumulative
effect of accounting change $ 57.0 $ 63.8 $ 183.0 $ 176.7
Cumulative effect of
accounting change - - - 4.9
------- ------ -------- -------
Net Income $ 57.0 $ 63.8 $ 183.0 $ 181.6
======= ====== ======== =======
Earnings per share before
cumulative effect of
accounting change:
Primary $ .43 $ .48 $ 1.39 $1.34
Fully diluted $ .42 $ .45 $ 1.33 $1.25
Earnings per share:
Primary $ .43 $ .48 $ 1.39 $1.38
Fully diluted $ .42 $ .45 $ 1.33 $1.29
Weighted average shares:
Primary 124.7 120.8 125.2 120.1
Fully diluted 136.9 141.7 137.5 140.8
Income used in primary
earnings per share
(reflecting preferred
dividends) $ 54.2 $ 58.5 $ 174.6 $ 165.7
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
Feb. 26, May 29,
1995 1994
ASSETS -------- --------
Current assets:
Cash and cash equivalents $ 288.7 $ 398.1
Short-term marketable investments 80.3 68.7
Receivables, net 310.0 289.0
Inventories 248.0 212.7
Deferred tax assets 58.3 -
Other current assets 52.8 47.9
------- -------
Total current assets 1,038.1 1,016.4
Property, plant and equipment 1,933.5 1,765.6
Less accumulated depreciation 1,154.7 1,097.6
------- -------
Net property, plant and equipment 778.8 668.0
Long-term marketable investments - 20.9
Other assets 74.2 42.4
------- -------
Total assets $1,891.1 $1,747.7
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short term borrowings and current
portion of long-term debt $ 33.6 $ 15.6
Accounts payable 182.5 213.7
Accrued expenses 208.5 264.6
Income taxes 111.8 83.5
------- -------
Total current liabilities 536.4 577.4
Long-term debt 10.1 14.5
Deferred income taxes 20.2 18.6
Other non-current liabilities 31.9 31.5
Minority interest 2.0 -
------- -------
Total liabilities 600.6 642.0
------- -------
Commitments and contingencies
Shareholders' equity:
Convertible preferred stock 0.2 0.2
Common stock 62.1 61.4
Additional paid-in capital 949.9 912.7
Retained earnings 315.4 140.9
Unrealized gain on available-for-
sale securities 20.2 -
Treasury stock, at cost (57.3) (9.5)
------- -------
Total shareholders' equity 1,290.5 1,105.7
------- -------
Total liabilities and shareholders' equity $1,891.1 $1,747.7
======== ========
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Nine Months Ended
--------------------
Feb. 26, Feb. 27,
1995 1994
-------- -------
OPERATIONS:
Net Income $ 183.0 $ 181.6
Adjustments to reconcile net income
with net cash provided by operations:
Depreciation and amortization 131.6 126.1
Other, net 3.6 (1.4)
Cumulative effect of accounting change - (4.9)
Gain on sale of investment (6.9) (2.2)
Changes in deferred tax assets (58.3) -
Changes in certain assets and liabilities, net:
Receivables (21.0) 2.0
Inventories (35.3) (27.0)
Other current assets (4.9) (2.3)
Other non-current assets 1.5 -
Accounts payable and accrued expenses (83.3) (40.8)
Current and deferred income taxes 56.6 11.0
Other non-current liabilities and minority
interest 2.4 5.5
-------- -------
Net cash provided by operating activities 169.0 247.6
-------- -------
INVESTING:
Purchases of property, plant and equipment (240.3) (158.9)
Proceeds from the sale and maturity of
marketable investments 618.6 462.6
Purchase of marketable investments (609.3) (489.1)
Proceeds from sale of investments 7.9 7.7
Purchases of investments and other, net (19.8) (6.4)
-------- -------
Net cash used by investing activities (242.9) (184.1)
-------- -------
FINANCING:
Proceeds from the issuance of debt 62.3 1.9
Repayment of debt (48.7) (12.1)
Issuance of common stock under
employee benefit plans 11.2 20.4
Purchase of treasury stock (51.9) -
Payment of preferred dividends (8.4) (15.9)
-------- -------
Net cash used by financing activities (35.5) (5.7)
-------- -------
Net change in cash and cash equivalents (109.4) 57.8
Cash and cash equivalents at beginning of period 398.1 277.4
-------- -------
Cash and cash equivalents at end of period $ 288.7 $ 335.2
======== =======
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 necessary to present fairly
the financial position and results of operations of National
Semiconductor Corporation and its subsidiaries ("National" or the
"Company"). See Note 2. 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 classified on the balance sheet based upon management's
intent and are carried at fair value, with the unrealized gains and
losses, net of tax, reported as 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 SG&A expenses is net intellectual property income of
$4.8 million for the third quarter and $14.3 million for the nine months
ended, compared to $10.3 million and $13.6 million for the respective
1994 periods. Also included is intellectual property expense of $0.4
million and $7.3 million for third quarter and the nine months ended,
respectively, compared to $5.0 million and $6.3 million for the
comparable 1994 periods. In addition, the Company sold an investment in
the third quarter of fiscal 1995 resulting in a $2.6 million gain. The
nine months ended include gains for the sale of investments of $6.9
million for 1995 and $2.2 million for 1994. The first nine months of
fiscal 1994 include costs of $10.3 million for centralization of certain
sales distribution facilities.
<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 based on management's intent for use in 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:
Feb. 26, May 29,
(in millions) 1995 1994
------ ------
Raw materials $ 28.4 $ 17.3
Work in process 146.6 129.4
Finished goods 73.0 66.0
----- ------
Total inventories $ 248.0 $ 212.7
====== ======
<PAGE>
5. Supplemental disclosure of cash flow information
(in millions)
Nine Months Ended
-----------------------
Feb. 26, Feb. 27,
1995 1994
-------- --------
Cash paid for:
Interest $ 3.4 $ 2.6
Interest on tax settlements 30.0 12.2
Income taxes 45.5 20.6
Supplemental disclosure, non-cash items:
Issuance of stock for employee benefit plans $ 4.0 $ 2.0
Tax benefit for employee stock option plans 26.7 -
Unrealized gain on available-for-sale
securities 20.2 -
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Sales Sales grew 5 percent in the third quarter of fiscal 1995
compared to the related 1994 period led by increases in Europe and North
America for analog and mixed signal products, partially offset by
worldwide declines in logic products, concentrated in the Americas
region. Analog and mixed signal product sales grew to 56 percent of net
sales during the third quarter and the nine months ended, compared to 52
percent for the comparable 1994 periods. While orders were up for
analog and mixed signal products, the company's ability to convert the
orders into sales was impacted by wafer fab capacity limitations. For
the nine months ended, sales were essentially flat compared to 1994 as
the 9 percent increase in analog and mixed signal product sales year
over year was offset by a decline in sales of bipolar logic products.
In the Company's Standard Products Group ("SPG"), which represents
approximately 70 percent of the Company's net sales, sales grew 4
percent from a year ago quarter and in the Communications and Computing
Group ("CCG"), which represents approximately 30 percent of the
Company's net sales, sales grew 9 percent.
Gross Margin Gross margin decreased from 42 percent a year ago to 40
percent for the third quarter. Included within gross margin in the
current quarter is a $3.7 million charge for planned headcount and
business repositioning actions. In addition, pricing declines in bi-
polar logic and EPROM products resulted in significantly lower margins
for these products. Margins on analog and mixed signal products
decreased slightly from 50 percent in 1994 to 48 percent in 1995 due to
capacity limitations at plants in Arlington, Texas and Greenock,
Scotland. Gross margins as a percentage of sales were flat for the nine
months ended compared to a year ago at 42 percent. While analog and
mixed signal product margins were flat at 50 percent for the nine months
ended, the increase in the portion of total Company sales from these
higher margin products offset declines in bi-polar logic product
margins.
Research and Development Research and development ("R&D") expenses
were up as a percentage of sales to 13 percent and 12 percent for the
third quarter and the nine months ended compared to 12 percent and 11
percent for the respective 1994 periods. Current quarter and year to
date amounts include a one-time charge of $1.5 million for purchased in-
process technology related to the acquisition of Comlinear Corporation
("Comlinear") in the current quarter and the Company's continued
investment in analog and mixed signal products.
Selling, General, and Administrative While selling, general, and
administrative ("SG&A") expenses have decreased as a percentage of sales
to 17 percent for the third quarter and the nine months ended compared
to 18 percent for the comparable 1994 periods, included within SG&A
expenses is net intellectual property income of $4.8 million for the
third quarter and $14.3 million for the nine months ended, compared to
$10.3 million and $13.6 million for the respective 1994 periods. Also
included is intellectual property expense of $0.4 million and $7.3
million for the third quarter and the nine months ended, respectively,
compared to $5.0 million and $6.3 million for the comparable 1994
periods. In addition, the Company sold an investment in the third
quarter of fiscal 1995 resulting in a $2.6 million gain. The nine
months ended include gains on the sale of investments of $6.9 million
<PAGE>
for 1995 and $2.2 million for 1994. The first nine months of fiscal
1994 include costs of $10.3 million for centralization of certain sales
distribution facilities.
Exclusive of the above items, SG&A expenses in the third quarter and
nine months ended were $102.7 million and $312.2 million for 1995 and
$103.2 million and $303.0 million for 1994 or 18 percent of sales. The
increase in SG&A expense, net of the above items, in absolute dollars
for the nine months ended is primarily attributable to annual increases
in salaries for all employees, additional promotional costs, and
increased costs for certain employee benefit plans.
Restructuring of Operations During the current quarter the Company
released $10.1 million of restructuring reserves originally provided in
1994, which was partially offset by $4.6 million (of which $2.4 million
is non-cash) in additional charges for existing restructuring programs
identified by the Company. The release of the $10.1 million is
attributable to the Company's decision to retain certain facilities and
related support. The additional restructuring requirements include
charges for the Company's wholly owned subsidiary, Dynacraft, Inc.
("DCI"), for continued consolidation of the DCI business and the
decision by the Company to transfer the majority of the military
assembly operations from South Portland, Maine to the assembly
operations in Singapore. The charges for these actions, which are
expected to be completed during fiscal 1996, consist primarily of fixed
asset dispositions, reductions in the work force and costs related to
termination of a non-cancelable commitment for a facility.
Interest Income and Interest Expense Net interest income increased
to $5 million and $13 million for the third quarter and nine months
ended compared to $3 million and $7 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 offset by a slightly lower
average cash and investment balance during the first nine months of
fiscal 1995. The increase in interest income was somewhat offset by an
increase in interest expense for the nine months ended, due to the
assumption and retirement of debt related to a facility repurchased in
the second quarter.
Income Taxes The effective tax rate for fiscal year 1995 is 20
percent compared to 15 percent for fiscal year 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 reduced the valuation allowance for specific
deferred tax assets by approximately $19 million based upon continuing
profits recorded in certain jurisdictions.
Financial Condition During the first nine months of 1995, cash and
cash equivalents decreased $109 million. The Company generated $169
million positive cash flow from operations for the nine months ended
despite increased cash used for accounts payable and accrued expenses.
In addition, the Company increased its receivables, inventories and
deferred tax assets. Investing activities used $243 million during the
first nine months of fiscal 1995 driven primarily by purchases of
property, plant and equipment of $240 million and investments of $20
million. In addition, an unrealized gain of $20 million was recorded in
equity for the current quarter to record the market value of an equity
investment.
<PAGE>
Financing activities used $35 million during the first nine months and
include the Company's repurchase, during the second quarter, of 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 retired during the current quarter.
The Company is currently in negotiations to repurchase the equity
interest in another facility it had sold during fiscal 1988 and leased
back and expects to use approximately $40 million to $50 million of cash
and assume $10 million to $20 million of debt during the fourth quarter,
if the transaction is completed. In addition, financing activities
include the draw down on its multicurrency line of $21 million and the
repurchase of 3 million shares of its common stock on the open market
for $52 million. The Company maintains a multicurrency agreement and
revolving finance agreement, both of which 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.
Business Combination On January 5, 1995, the Company completed the
acquisition of Comlinear, a manufacturer of high-performance analog and
mixed signal integrated circuits based in Fort Collins, Colorado. The
acquisition has been recorded using the purchase method of accounting,
whereby the purchase price was allocated to the assets and liabilities
based on the estimated fair values as of the date of acquisition.
Approximately $1.5 million of the total purchase price represented in-
process technology and was charged to the Company's operations during
the quarter. The remaining cost in excess of net assets acquired was
approximately $5.4 million and is being amortized on a straight-line
basis over seven years. Comlinear's results of operations have been
included in the Company's consolidated financial statements from its
acquisition date. Comlinear's operations are not material in relation
to the Company's consolidated financial statements; accordingly, pro
forma financial information has not been presented.
Outlook Despite continued profitability, future trends for revenue
and profitability continue to be difficult to predict. Declines in the
Bi-polar logic and EPROM marketplaces have impacted the Company's
relative growth in the current fiscal year and the Company expects these
markets to continue to decline. While the Company has set aggressive
plans to ramp up capacity during the fourth quarter, the Company
believes it will be constrained in bringing additional capacity on line
until the first quarter of fiscal 1996 with resulting limitations on
fully meeting demand. 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; capacity
limitations; and international economic conditions. The Company
believes sales and gross margins as a percentage of sales in the
foreseeable future will be comparable to the first nine months.
Operating expenses as a percentage of sales are expected to remain at
existing levels. National continues to pursue opportunities to leverage
its intellectual property; however, the timing and amount of future
licensing income cannot be forecast with certainty.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
On December 1, 1992, Hughes Aircraft Company ("Hughes") filed an
action in the U.S. District Court for the Eastern Division of the
Northern District of Illinois alleging the Company had infringed U.S.
Patents Nos. 3,472,712; 3,507,709; and 3,615,934 and seeking unspecified
amounts of damages and costs. The Company was served with the suit on
January 7, 1993. The Company countersued Hughes' parent, General Motors
("GM") and Hughes in the same action alleging infringement of U.S.
Patent Nos. 3,901,735; 4,325,984; and 4,599,634. The case was
transferred to the U.S. District Court for the Northern District of
California. The Company also filed an action in California State Court
seeking declaratory relief and alleging breach of contract by Hughes and
GM in connection with a prior patent cross license agreement entered
into between GM and Fairchild Camera Instrument Corporation
(subsequently renamed Fairchild Semiconductor Corporation and purchased
by the Company in October 1987). In September 1994, the parties agreed
to resolve the dispute in its entirety in a binding mini-trial procedure
structured to handle the primary disputed issue; as part of the
agreement, the Company dismissed with prejudice the related California
State Court action. In December, 1994, the mini-trial was conducted
before a judge selected by the parties on the single issue of whether
claim 2 of the U.S. Patent No. 3,472,712 owned by Hughes was infringed
by one of the Company's semiconductor fabrication processes. For
purposes of the mini-trial, the patent was presumed valid and the
parties agreed in advance to the amounts of damages that would be paid
by the Company, which amount was not disclosed to the judge until after
the judge had issued his findings. The judge found for Hughes on the
single issue presented in the mini-trial. In accordance with the
agreement of the parties, the Company paid to Hughes the sum of $10
million and the Federal Court action was dismissed with prejudice. The
dismissal constituted a full settlement and release of all claims for
past infringement of the patents in issue. In addition, the Company
granted Hughes and GM licenses under its patents at issue; no such
license was granted by Hughes back to the Company because the Hughes
patents at issue had expired.
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 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
--------
10.1 Management Contract or Compensatory Plan or Arrangement:
Stock Option Plan (as amended through January 19, 1995)
10.2 Management Contract or Compensatory Plan or Arrangement:
Key Employee Incentive Plan Agreement (as amended
through January 12, 1995)
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
February 26, 1995.
<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: March 17, 1995 /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>
Exhibit 10.1
NATIONAL SEMICONDUCTOR CORPORATION
STOCK OPTION PLAN
(as amended through January 19, 1995)
1. TITLE OF PLAN
The title of this Plan is the National Semiconductor Corporation
Stock Option Plan, hereinafter referred to as the "Plan", and formerly
known as the National Semiconductor Corporation 1977 Stock Option Plan.
2. PURPOSE
The Plan is intended to align the interests of eligible key
employees of National Semiconductor Corporation (hereinafter called the
"Corporation") and its subsidiaries (as hereinafter defined) with the
interests of the stockholders of the Corporation and to provide
incentives for such employees to exert maximum efforts for the success
of the Corporation. By extending to key employees the opportunity to
acquire proprietary interests in the Corporation and to participate in
its success, the Plan may be expected to benefit the Corporation and its
stockholders by making it possible for the Corporation to attract and
retain the best available talent and by rewarding key management and
technical personnel for their part in increasing the value of the
Corporation's shares. It is further intended that options granted
pursuant to this Plan may be incentive stock options under Section 422A
of the Internal Revenue Code of 1986, as amended (the "Code"), or may be
options which are not incentive stock options (hereinafter called "non-
qualified stock options").
3. STOCK SUBJECT TO THE PLAN
There will be reserved for issue upon the exercise of options
granted under the Plan 32,754,929 shares of the Corporation's $.50 par
value Common Stock, subject to adjustment as provided in Paragraph 8,
which may be unissued shares, reacquired shares, or shares bought on the
market. If any option which shall have been granted shall expire or
terminate for any reason without having been exercised in full, the
unpurchased shares shall again become available for the purposes of the
Plan (unless the Plan shall have been terminated).
4. ADMINISTRATION
(a) The Plan shall be administered by a committee of the Board
of Directors of the Corporation (the "Committee") which shall be
appointed by a majority of the whole Board. The Committee shall be
constituted to permit the Plan to comply with (i) Rule 16b-3 promulgated
under the Securities Exchange Act of 1934 ("Exchange Act") and any
successor rule and (ii) IRS regulations issued under Section 162(m) of
the Code, and shall initially consist of not less than three members of
the Board, all of whom are ineligible for benefits under the Plan and
<PAGE>
none of whom has been so eligible for at least one year prior to serving
on such Committee.
(b) The Committee shall have the plenary power, subject to and
within the limits of the express provisions of the Plan:
(i) To determine from time to time which of the eligible
persons shall be granted options under the Plan; the time or times
(during the term of the option) within which all or portions of each
option may be exercised and the number of shares for which an option or
options shall be granted to each of them. Notwithstanding the
foregoing, no person may be granted more than 500,000 options during any
one fiscal year of the Corporation.
(ii) To construe and interpret the Plan and options
granted under it, and to establish, amend, and revoke rules and
regulations for its administration. The Committee, in the exercise of
this power, shall generally determine all questions of policy and
expediency that may arise, may correct any defect, or supply any
omission or reconcile any inconsistency in the Plan or in any option
agreement in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.
(iii) To prescribe the terms and provisions of each
option granted (which need not be identical).
(iv) To determine whether options granted shall be
incentive stock options or non-qualified stock options.
(v) To determine whether options granted shall be
transferable without consideration to immediate family members or family
trusts for the benefit of optionee's immediate family members. As used
herein, "immediate family" means parents, spouses and children.
(c) The Committee shall not have the authority to grant new
options in exchange for the cancellation of stock options previously
granted under the Plan or under any other stock option plan of the
Corporation.
5. ELIGIBILITY
Options may be granted only to regular salaried officers and key
employees of the Corporation and its subsidiaries. The term
"subsidiary" corporation shall mean any corporation in which the
Corporation controls, directly or indirectly, fifty percent (50%) or
more of the combined voting power of all classes of stock. A director
of the Corporation shall not be eligible for the benefits of the Plan
unless such person also is a regular salaried employee of the
Corporation and/or of any subsidiary.
6. TERMS OF OPTION AND OPTION AGREEMENTS
Each option shall be evidenced by a written Stock Option Agreement
which may expressly identify the options as incentive stock options or
as non-qualified stock options, and be in such form and contain such
provisions as the Committee shall from time to time deem appropriate;
provided, however, that the grant of a non-qualified option pursuant to
<PAGE>
this Plan shall in no way be construed to be an alternative to the right
of an employee to purchase stock pursuant to any incentive stock option
heretofore or hereafter granted to an employee pursuant to any stock
option plans now in existence or hereafter adopted by the Corporation.
The terms of the option agreements need not be identical, but each
option agreement shall include, by appropriate language, or be subject
to, the substance of all of the applicable following provisions:
(a) The purchase price under each option granted shall be as
determined by the Committee but shall in no instance be less than 100%
of fair market value on the date of grant. The fair market value on the
date of grant shall be the opening price of the Common Stock on the New
York Stock Exchange on such date (or if there shall be no trading on
such date, then on the first previous date on which there is such
trading).
(b) The maximum term of any incentive stock option shall be ten
years from the date it was granted.
(c) The maximum term of any non-qualified stock option shall be
ten years and one day from the date it was granted.
(d) An option may not be exercised to any extent, either by the
person to whom it was granted or by the grantee's transferee, or by any
person after the grantee's death, unless the person to whom the option
was granted has remained in the continuous employ of the Corporation, or
of a subsidiary, for not less than six months from the date when the
option was granted. Otherwise, each option shall be exercisable as
determined by the Committee.
(e) The Corporation, during the terms of options granted under
the Plan, at all times will keep available the number of shares of stock
required to satisfy such options.
(f) The Corporation will seek to obtain from each regulatory
commission or agency having jurisdiction such authority as may be
required to issue and sell shares of stock to satisfy such options.
Inability of the Corporation to obtain from any such regulatory
commission or agency authority which counsel for the Corporation deems
necessary for the lawful issuance and sale of its stock to satisfy such
options shall relieve the Corporation from any liability for failure to
issue and sell stock to satisfy such options pending the time when such
authority is obtained or is obtainable.
(g) Neither a person to whom an option is granted nor his or
her transferee, legal representative, heir, legatee, or distributee,
shall be deemed to be the holder of, or to have any of the rights of a
holder with respect to, any shares subject to such option unless and
until he or she has exercised his or her option pursuant to the terms
thereof.
(h) In order to be exempt under Section 16 of the Exchange Act,
the option may not be transferable except by will or by the laws of
descent or distribution, and during the lifetime of the person to whom
the option is granted he or she alone may exercise it.
(i) An option shall terminate and may not be exercised if the
person to whom it is granted ceases to be continuously employed by the
Corporation, or by a subsidiary of the Corporation, except (subject
nevertheless to the last sentence of this subparagraph (h)): (1) if the
<PAGE>
grantee's continuous employment is terminated for any reason other than
(i) retirement, (ii) permanent disability, or (iii) death, the grantee
or the grantee's transferee may exercise the option to the extent that
the grantee was entitled to exercise such option at the date of such
termination at any time within a period of three (3) months following
the date of such termination, or if the grantee shall die within the
period of three (3) months following the date of such termination
without having exercised such option, the option may be exercised within
a period of one year following the grantee's death by the grantee's
transferee or the person or persons to whom the grantee's rights under
the option pass by will or by the laws of descent or distribution but
only to the extent exercisable at the date of such termination; (2) if
the grantee's continuous employment is terminated by (i) retirement,
(ii) permanent disability, or (iii) death, the option may be exercised
in accordance with its terms and conditions at any time within a period
of five (5) years following the date of such termination by the grantee
or the grantee's transferee, or in the event of the grantee's death, by
the persons to whom the grantee's rights under the option shall pass by
will or by the laws of descent or distribution; (3) if the grantee's
continuous employment is terminated and within a period of ninety (90)
days thereafter the grantee is recalled to the active payroll, the
Committee may reinstate any portion of the option previously granted but
not exercised. Nothing contained in this subparagraph (h) is intended
to extend the stated term of the option and in no event may an option be
exercised by anyone after the expiration of its stated term.
(j) Option agreements evidencing incentive stock options shall
contain such terms and provisions as may be necessary to render them
incentive stock options pursuant to Section 422A of the Code and the
Income Tax Regulation thereunder, as the same or any successor statute
or regulations may at the time be in effect.
(k) Nothing in this Plan or in any option granted hereunder
shall confer on any optionee any right to continue in the employ of the
Corporation or any of its subsidiaries, or to interfere in any way with
the right of the Corporation or any of its subsidiaries to terminate his
or her employment at any time.
7. TIME OF GRANTING OPTION
The Committee shall determine the date on which options are
granted under the Plan. All options granted must be approved at a
meeting of the Committee by a majority of the members of the Committee.
If an option agreement is not executed by an employee and returned to
the Corporation on or prior to ninety (90) days after the date the
option is granted (or such earlier date as the Committee may specify),
such option shall terminate.
8. ADJUSTMENT IN NUMBER OF SHARES AND IN OPTION PRICE
In the event there is any change in the shares of the Corporation
through the declaration of stock dividends or a stock split-up, or
through recapitalization resulting in share split-ups, or combinations
or exchanges of shares, or otherwise, the number of shares available for
<PAGE>
option, as well as the shares subject to any option and the option price
thereof, shall be appropriately adjusted by the Committee.
9. PAYMENT OF PURCHASE PRICE AND WITHHOLDING TAXES
(a) The purchase price for all shares purchased pursuant to
options exercised must be either paid in full in cash, or paid in full,
with the consent of the Committee, in Common Stock of the Corporation
valued at fair market value on the date of exercise or a combination of
cash and Common Stock. Fair market value on the date of exercise is the
opening price of the Common Stock on the New York Stock Exchange on such
date, or if there shall be no trading on such date, then on the first
previous date on which there was such trading.
(b) The Committee may permit the payment of all or part of the
applicable withholding taxes due upon exercise of an option, up to the
highest marginal rates then in effect, by the withholding of shares
otherwise issuable upon exercise of the option. Option shares withheld
in payment of such taxes shall be valued at the fair market value of the
Corporation's Common Stock on the date of exercise as defined herein.
10. CHANGE IN CONTROL
In the event the Corporation is merged into or acquired by another
entity in a transaction involving a change in control, the Committee
shall have the complete authority and discretion, but not the
obligation, to accelerate the vesting of any outstanding options granted
hereunder. The Committee may also ask the Board of Directors to
negotiate, as part of any agreement involving a sale or merger of the
Corporation, a sale of substantially all the Corporation's assets or
similar transaction, terms providing protection for employees holding
options under the Plan.
11. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN
(a) The Board may amend, modify, suspend or terminate the Plan
for the purpose of meeting or addressing any changes in legal
requirements or for any other purpose permitted by law. The Board will
seek stockholder approval of an amendment if determined to be required
by or advisable under regulations of the Securities and Exchange
Commission or the Internal Revenue Service, the rules of any stock
exchange on which the Corporation's stock is listed, or other applicable
law or regulation.
(b) The Plan shall continue in effect until all shares
available for issuance under the Plan have been issued. An option may
not be granted while the Plan is suspended or after it is terminated.
(c) The rights and obligations under any options granted while
the Plan is in effect shall not be altered or impaired by amendment,
suspension or termination of the Plan, except with the consent of the
person to whom the option was granted or the grantee's transferee or to
whom rights under an option shall have passed by will or by the laws of
descent and distribution.
<PAGE>
12. EFFECTIVE DATE
The Plan, as amended and restated, shall become effective on April
22, 1994, subject to approval by the stockholders of the Corporation
within twelve (12) months after said date.
<PAGE>
Exhibit 10.2
NATIONAL SEMICONDUCTOR CORPORATION
1995 KEY EMPLOYEE INCENTIVE PLAN AGREEMENT
(as amended through January 12, 1995)
ARTICLE 1
Definitions
Whenever used in the Agreement, unless otherwise indicated, the
following terms shall have the respective meanings set forth below:
Agreement: This Key Employee Incentive Plan Agreement.
Award: The amount to be paid to a Plan Participant at
the end of the Plan Period.
Award Date: The date forty days after the Company makes its
consolidated financial statements for the
fiscal year generally available to the press.
Base Salary: The annualized base remuneration received by a
Participant from the Company at the end of the
Bonus Period. Extraordinary items, including
but not limited to prior awards, relocation
expenses, expatriate premiums, allowances and
tax adjustments, sales incentives, amounts
recognized as income from stock options and
other similar kinds of extra or additional
remuneration are excluded from the computation
of Base Salary.
Company: National Semiconductor Corporation, a Delaware
corporation, or any other Corporation that
has adopted this Plan as its own Plan.
Committee: A committee comprised of directors of National
who are not employees of the Company, as more
fully defined in the Key Employee Incentive
Plan.
Corporation: The Company and any other corporation in which
the Company controls directly or indirectly,
fifty percent (50%) or more of the combined
voting power of all classes of voting
securities.
Disabled: Inability to perform any services for the
Company and eligible to receive disability
benefits under the standards used by the
Company's disability benefit plan or any
successor plan thereto.
Employee: An individual in the employ of the Company at
any time during the Plan Period.
<PAGE>
Executive Officer: An Employee of the Company who is subject to
the reporting and liability provisions of
Section 16 of the Securities and Exchange Act
of 1934.
Extraordinary
Occurrences: Events that, in the opinion of the Committee,
are beyond the significant influence of Plan
Participants or the Company and cause a
significant unintended effect, positive or
negative, on Company operating and financial
results.
Incentive Levels: The grouping of those Employees designated as
Participants as set forth in Article 4.
Participant: An Employee who at the time shall be a
Participant in accordance with the provisions
of Article 3.
Performance
Goal: Factors considered and scored to determine the
amount of a Participant's Award and consisting
of three levels of performance as follows:
(i) Threshold - the minimum acceptable level of
performance for which an Award may be earned
on a particular Performance Goal.
(ii) Target - good performance, usually set at
a level equal to the Strategic Business Plan
("SBP II") for financial measures, reflecting
a degree of difficulty which has a reasonable
probability of achievement.
(iii) Superior - exceptional performance far
exceeding the Target level because of the
great degree of difficulty and the limited
(10% - 20%) probability of achievement.
Plan Period: The fiscal year of the Company.
Retired: Permanent termination of employment with the
Company, and (a) age is either sixty-five (65)
or age is at least fifty-five (55) and years
of service in the employ of the Company is ten
(10) or more, and (b) the terminating
employee has certified to the Vice President-
Finance of the Company that he or she does
not intend to engage in a full-time vocation.
Target Award: The Award, expressed as a percentage of Base
Salary, that is earned by a Participant for
achievement of the Target Performance Measure.
All capitalized terms used in this Agreement and not otherwise
defined herein have the meanings assigned to them in the Key Employee
Incentive Plan.
<PAGE>
ARTICLE 2
Effective Date
The Agreement will become effective as of May 29, 1994, to be
effective for the Company's fiscal year 1995.
ARTICLE 3
Eligibility for Plan Participation
A. Prior to the commencement of each Plan Period, members of the
Company's management committee will recommend to the President of the
Company potential Participants for the Plan Period and their Incentive
Level. The President of the Company shall then designate Plan
Participants and their Incentive Level for the Plan Period. Executive
Officers may not participate in the plan.
B. Participants will be notified of their eligibility before the
beginning of each Plan Period. Continued participation will be re-
evaluated at the beginning of each Plan Period.
C. Newly hired Employees may be added as Participants to the Plan
during the Plan Period. Other non-participating Employees may be
considered for participation in the Plan after the beginning of the Plan
Period, provided they have assumed significantly greater responsibility
during the Plan Period. Participants who are added to the Plan during a
Plan Period will receive a prorated Award based on months of
participation in the Plan, provided they have at least six months of
Plan participation.
ARTICLE 4
Target Awards
A. Each Participant will be assigned an Incentive Level with
associated Target Awards expressed as percentages of the Participant's
Base Salary. Target Awards will be the same for all Participants at any
given Incentive Level.
B. In the event that a Participant changes positions during the Plan
Period and the change results in a change in Incentive Level, whether
due to promotion or demotion, the Incentive Level will be prorated to
reflect the time spent in each position.
ARTICLE 5
Plan Performance Goals
A. Performance Goals and associated weights will be established at
the start of each Plan Period. Each Performance Goal will have a
defined Threshold, Target and Superior level of performance.
Performance Goals and their associated weights may change from one Plan
Period to another Plan Period to reflect the Company's operational and
strategic goals.
<PAGE>
B. Weights for corporate and business unit financial Performance
Measures will be established at the start of each Plan Period and will
be equal unless otherwise approved in advance by the President of the
Company.
C. Awards will range between 0% and 200% of Target Award. A scale
showing the amount of the Participant's Award relative to the Target
Award at the various performance levels will be developed for each
Performance Goal. Performance levels and associated Awards (as a
percent of the Target Award) will be set generally in a straight linear
relationship from Threshold to Superior Performance Goals, with Awards
at the Superior level being 150% of the Target Award, Awards at the
Target level being 100% of the Target Award and Awards at the Threshold
level being 50% of the Target Award. Performances at less than the
Threshold level or more than the Superior level are subject to
discretionary adjustments that may not necessarily follow a linear
progression.
D. Financial and strategic Performance Goals and Target Performance
Goals will be recommended by the responsible group manager for each
specific group or business unit and approved by the President of the
Company.
E. Under exceptional circumstances, revisions to financial
performance targets may be proposed at the midpoint of the Plan Period
if the business environment or key planning assumptions change
significantly from conditions assumed at the start of the Plan Period.
Such revisions are subject to approval by the President of the Company.
F. Performance Goals, performance scales and Awards may be adjusted
in the event the Committee or the President determine there has been an
Extraordinary Occurrence during the Plan Period that (i) affects one or
more Performance Goals; (ii) unreasonably distorts Award calculations;
or (iii) results in undue benefit or detriment to the Plan Participants.
Such adjustments will be made solely for the purpose of neutralizing the
effect of the Extraordinary Occurrence.
ARTICLE 6
Calculation and Payment of Awards
A. A Participant's Award will be calculated as a percentage of Base
Salary as follows:
1) The Participant's Target Award is determined prior to the
beginning of the Plan Period.
2) The performance of the Participant's group is scored on an
overall basis at the end of the Plan Period.
3) The group's overall performance score creates an incentive
pool.
4) The group's incentive pool is divided among the Participants
within the group, based on individual contributions toward
the group's overall performance score. No one individual
Award may exceed 200% of the Participant's Target Award
amount.
<PAGE>
B. Measurement of performance on Performance Goals for Participants
will be scored by the Company.
C. Awards will be paid in cash.
D. All or any portion of the Award may be deferred if the Participant
makes a voluntary irrevocable election to defer payment to a future date
pursuant to the deferral terms contained in Article 8.
ARTICLE 7
Termination of Employment
A. To be eligible to receive an Award, the Participant must be
employed by the Company on the Award Date. A Participant who terminates
employment prior to the Award Date will result in forfeiture of the
Award, except as otherwise provided in this Article 7.
Disability: If a Participant is Disabled, the Participant will
receive an Award on the Award Date representing 1/12 of the total Award
for each month of employment in the Plan Period.
Retirement: A Retired Participant will receive on the Award Date
an Award representing 1/12 of the total Award for each month of
employment in the Plan Period.
Death: If a Participant dies, Awards will be paid on the Award
Date to: (a) beneficiaries designated by the Participant; if none, then
(b) to a legal representative of the Participant; if none, then (c) to
the persons entitled thereto as determined by a court of competent
jurisdiction. The amount of the Award will be 1/12 of the total Award
for each month of employment in the Plan Period.
Reduction in Force: Participants whose employment is terminated
by a reduction in force during the Plan Period will receive an Award on
the Award Date representing 1/12 of the total Award for each month of
employment in the fiscal year. If a Participant's employment is
terminated by a reduction in force after the Plan Period but before the
Award Date, the Participant will receive the full Award on the Award
Date.
B. The Committee reserves the right to reduce an Award on a pro-rata
basis to reflect a Participant's leave of absence during a Plan Period.
ARTICLE 8
Deferral of Awards
A. Each Participant is entitled to make an irrevocable election (in
the form of the Notice of Election attached) to defer receipt of all or
any portion of any Award. For any Plan Period, the Notice of Election
must be completed prior to thirty (30) days before the end of the Plan
Period. Notices of Election are not self-renewing and must be completed
for each Plan Period if deferral is desired for the applicable Plan
Period.
<PAGE>
B. For each Participant who elects deferral, the Company will
establish and maintain book entry accounts which will reflect the
deferred Award and any interest credited to the account.
C. For deferred Awards, Participant deferred accounts will be
credited each Award Date with interest set at the rate for long-term A-
rated corporate bonds, as reported by the investment banking firm of
Salomon Brothers Inc of New York City (or such other investment banking
firm as the Committee may specify) during the first week of each
calendar year. The interest rate will be reset at the beginning of each
calendar year. Interest will begin to accrue on the Award Date and will
be credited each Award Date until the date payment is actually made. If
a Participant's Award is distributed at any time other than on an Award
Date, the Participant's account will be credited with interest until the
date of distribution.
D. Participants will not receive deferred Awards until the earlier of
termination of employment for any reason (including retirement,
disability, or death) or a date pre-selected by the Participant. The
account balance will be paid in a lump sum in the month following the
earlier of termination of employment for any reason or the pre-selected
date unless installment payments are permitted and have been elected as
follows: Upon termination of employment by reason of retirement or
disability, a Participant who has previously elected to defer an Award
may irrevocably elect to have the balance of the deferred Award plus
accrued interest paid to the Participant in periodic annual installments
over a period of ten (10) years. Payments shall commence or be made
annually on a day each year that is within thirty (30) days of the
anniversary date following Participant's retirement or disability.
E. If the Participant's employment is terminated for any reason other
than death, disability or retirement, the Participant will be paid the
entire account balance in a lump sum in the month after termination. If
a Participant has requested installment payments and dies either before
or after distribution has begun, the unpaid balance will be paid in a
lump sum in the month following the Participant's death.
F. Payment of part or all of the deferred Award 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
specifically approved by the Company.
G. No Participant may borrow against his or her account.
H. The Participant may designate a beneficiary to receive deferred
Awards in the event of the Participant's death. If the Participant is
married at the time of designation, the Participant's spouse must
consent to the beneficiary designation. The Participant's beneficiary
may be changed without the consent of any prior beneficiary except that,
for married Participants, the Participant's spouse must consent to any
change in beneficiary. If no beneficiary is chosen or the beneficiary
does not survive the Participant, the Award account balance will be paid
in accordance with the terms of the Plan.
<PAGE>
ARTICLE 9
Interpretations and Rule-Making
The Company shall have the right and power to: (i) interpret the
provisions of the Agreement, and resolve questions thereunder, which
interpretations and resolutions shall be final and conclusive; (ii)
adopt such rules and regulations with regard to the administration of
the Plan as are consistent with the terms of the Agreement, and (iii)
generally take all action to equitably administer the operation of the
Plan and this Agreement.
ARTICLE 10
Declaration of Incentives, Amendment, or Discontinuance
The President of the Company acting within his sole discretion may
on or before the Award Date: (i) determine not to make any Awards to any
or all Participants for any Plan Period; (ii) make any modification or
amendment to this Agreement for any or all Participants; or (iii)
discontinue this Agreement for any or all Participants.
ARTICLE 11
Miscellaneous
A. Except as provided in Article 8 H, no right or interest in the
Plan is transferable or assignable except by will or the laws of descent
and distribution.
B. Participation in this Plan does not guarantee any right to
continued employment and management reserves the right to dismiss
Participants for any reason whatsoever. Participation in one Plan
Period does not guarantee the Participant the right to participation in
any subsequent Plan Period.
C. The Company reserves the right to deduct from all Awards under
this Plan any taxes or other amounts required by law to be withheld
with respect to Award payments.
D. This Plan constitutes an unfunded Plan of deferred compensation.
As such, any amounts payable hereunder will be paid out of the general
corporate assets of the Company and shall not be transferred into a
trust or otherwise set aside. All accounts under the Plan will be for
bookkeeping purposes only and shall not represent a claim against
specific assets of the Company. The Participant will be considered a
general creditor of the Company and the obligation of the Company is
purely contractual and shall not be funded or secured in any way.
E. Maintenance of financial information relevant to measuring
performance during the Plan Period will be the responsibility of the
Chief Financial Officer of the Company.
F. The provisions of the Plan shall not limit, or restrict, the right
or power of the Board to continue to adopt such other plans or programs,
or to make salary, bonus, incentive, or other payments, with respect to
compensation of officers or Employees, as in its sole judgment it may
deem proper.
<PAGE>
G. Except to the extent superseded by federal law, this Agreement
shall be construed in accordance with the laws of the State of
California.
H. No member of the Company's board of directors or any officer,
employee, or agent of the Company shall have any liability to any
person, firm or corporation based on or arising out of this Agreement or
the Plan.
<PAGE>
NATIONAL SEMICONDUCTOR CORPORATION
KEY EMPLOYEE INCENTIVE PLAN
Notice of Election
If you are a Participant in the Company's Key Employee Incentive
Plan ("KEIP") and receive an Award under the KEIP for fiscal year 1995,
you may accept payment in calendar year 1995 or you may defer payment
until a later date which is at least one year after the Award Date. If
you want to defer payment, complete this election form and return it to
Donald Macleod, Senior Vice President, Finance, or his designee by
April 27, 1995.
If you do not complete this form, you will receive payment in
calendar year 1995. For further details, refer to the National
Semiconductor Corporation Key Employee Incentive Plan documents and
Agreement.
* * * * *
DEFERRAL ELECTION:
In accordance with the National Semiconductor Corporation KEIP, I
hereby elect to defer all or part of the Award as specified below, which
Award would otherwise be paid to me under the terms of the KEIP.
1. Please defer ------% or $------ of my KEIP Award. If the
dollar amount selected is greater than the total KEIP Award, the entire
Award will be deferred.
2. The amounts deferred will be payable on the earliest of:
termination of employment for any reason (including retirement,
disability, or death) or on ----------------- (specify pre-selected
distribution date at least one year after the 1995 Award Date.)
3. In the event of death, my primary beneficiary is:
-----------------------------------------------
(Print name)
Print address: ------------------------------------------------
-----------------------------------------------
My secondary beneficiary (to receive benefits only in the event of death
of my primary beneficiary) is:
-----------------------------------------------
(Print name)
Print address: -----------------------------------------------
-----------------------------------------------
<PAGE>
I UNDERSTAND THIS ELECTION IS IRREVOCABLE FOR THE 1995 KEIP AWARD AND IS
SUBJECT TO THE TERMS OF THE NATIONAL SEMICONDUCTOR KEIP DOCUMENT.
Consent of spouse (required for
married participants designating
beneficiaries other than spouse)
Signature: -------------------------- Signature-----------------------
Print Name: -------------------------- Print Name: --------------------
Date: --------------------------------
Received by National Semiconductor Corporation
Date: --------------------------------
By: --------------------------------
Print Name: --------------------------
Title: -------------------------------
<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 Nine Months Ended
------------------ ------------------
Feb. 26, Feb. 27, Feb. 26, Feb. 27,
1995 1994 1995 1994
------- ------- ------- -------
Net Income $ 57.0 $ 63.8 $ 183.0 $ 181.6
Number of shares:
Weighted average common
shares outstanding 120.6 112.1 121.2 111.3
Weighted average common
equivalent shares, net of
tax benefit 4.1 8.7 4.0 8.8
------ ------ ------ ------
Weighted average common and
common equivalent shares 124.7 120.8 125.2 120.1
Additional weighted average
common equivalent shares
assuming full dilution (.1) .5 - .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 136.8 141.7 137.4 140.8
===== ===== ===== =====
Income per share
assuming full dilution $ .42 $ .45 $ 1.33 $ 1.29
====== ====== ====== ======
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Accounts Receivable and Interest amounts are shown net consistent with
financial statment presentation.
</LEGEND>
<CIK> 0000070530
<NAME> NATIONAL SEMICONDUCTOR CORPORATION
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLAR
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> MAY-28-1995 MAY-28-1995
<PERIOD-START> NOV-28-1994 MAY-30-1994
<PERIOD-END> FEB-26-1995 FEB-26-1995
<EXCHANGE-RATE> 1 1
<CASH> 289 289
<SECURITIES> 80 80
<RECEIVABLES> 310 310
<ALLOWANCES> 0 0
<INVENTORY> 248 248
<CURRENT-ASSETS> 1038 1038
<PP&E> 1994 1994
<DEPRECIATION> 1155 1155
<TOTAL-ASSETS> 1891 1891
<CURRENT-LIABILITIES> 536 536
<BONDS> 0 0
<COMMON> 62 62
0 0
0 0
<OTHER-SE> 1228 1228
<TOTAL-LIABILITY-AND-EQUITY> 1891 1891
<SALES> 571 1710
<TOTAL-REVENUES> 571 1710
<CGS> 342 995
<TOTAL-COSTS> 342 995
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 5 13
<INCOME-PRETAX> 71 229
<INCOME-TAX> 14 46
<INCOME-CONTINUING> 57 183
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 57 183
<EPS-PRIMARY> .43 1.39
<EPS-DILUTED> .42 1.33
</TABLE>
