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 August 24, 1997
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
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(Exact name of registrant as specified in its charter)
DELAWARE 95-2095071
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(State of incorporation) (I.R.S. Employer Identification Number)
2900 Semiconductor Drive, P.O. Box 58090
Santa Clara, California 95052-8090
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(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 August 24,1997.
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Common stock, par value $0.50 per share 146,912,719
NATIONAL SEMICONDUCTOR CORPORATION
INDEX
Part I. Financial Information Page No.
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Condensed Consolidated Statements of Operations
(Unaudited) for the Three Months Ended
August 24, 1997 and August 25, 1996 3
Condensed Consolidated Balance Sheets (Unaudited)
as of August 24, 1997 and May 25, 1997 4
Condensed Consolidated Statements of Cash Flows
(Unaudited) for the Three Months Ended
August 24, 1997 and August 25, 1996 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 13
Exhibits and Reports on Form 8-K 13
Signature 15
PART I. FINANCIAL INFORMATION
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share amounts)
Three Months Ended
------------------
Aug. 24, Aug. 25,
1997 1996
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Net sales $ 600.8 $ 566.1
Operating costs and expenses:
Cost of sales 351.4 393.9
Research and development 101.7 86.8
Selling, general and administrative 73.9 94.0
Special items:
Restructuring of operations - 256.3
In-process R&D charge - 10.6
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Total operating costs and expenses 527.0 841.6
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Operating income(loss) 73.8 (275.5)
Interest income, net 12.7 1.3
Other income(expense), net 7.0 (2.7)
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Income(loss) before income taxes 93.5 (276.9)
Income tax provision(benefit) 23.4 (69.3)
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Net income(loss) $ 70.1 $(207.6)
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Earnings per common share:
Primary $ 0.47 $(1.51)
Fully diluted $ 0.45 $(1.51)
Weighted average common shares:
Primary 149.9 137.7
Fully diluted 156.7 137.7
Income(loss) used in primary and fully diluted
earnings per common share $ 70.1 $ (207.6)
See accompanying Notes to Condensed Consolidated Financial Statements
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
Aug. 24, May 25,
1997 1997
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ASSETS
Current assets:
Cash and cash equivalents $ 659.6 $ 832.1
Short-term marketable investments 119.1 57.6
Receivables, net 301.8 255.8
Inventories 193.9 181.4
Deferred tax assets 168.5 168.5
Other current assets 51.9 57.2
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Total current assets 1,494.8 1,552.6
Property, plant and equipment 2,455.0 2,271.9
Less accumulated depreciation (1,049.1) (1,008.5)
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Net property, plant and equipment 1,405.9 1,263.4
Other assets 98.4 98.1
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Total assets $2,999.1 $2,914.1
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
portion of long-term debt $ 32.8 $ 12.3
Accounts payable 248.2 248.0
Accrued expenses 270.7 293.4
Income taxes 236.6 237.7
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Total current liabilities 788.3 791.4
Long-term debt 302.6 324.3
Other noncurrent liabilities 53.2 49.6
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Total liabilities 1,144.1 1,165.3
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Commitments and contingencies
Shareholders' equity:
Common stock 73.4 72.6
Additional paid-in capital 1,108.7 1,070.7
Retained earnings 672.9 605.5
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Total shareholders' equity 1,855.0 1,748.8
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Total liabilities and shareholders' equity $2,999.1 $2,914.1
======== ========
See accompanying Notes to Condensed Consolidated Financial Statements
NATIONAL SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Three Months Ended
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Aug. 24, Aug. 25,
1997 1996
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Cash flows from operating activities:
Net income(loss) $ 70.1 $(207.6)
Adjustments to reconcile net income(loss)
with net cash provided by (used in) operations:
Depreciation and amortization 56.8 65.3
(Gain)/loss on sale of investments (6.7) 3.0
Tax benefit associated with stock options 9.0 1.7
In-process research and development charge - 10.6
Loss on disposal of equipment 4.2 0.3
Write down of inventory - 15.1
Restructuring of operations - 256.3
Other, net 0.1 2.7
Changes in certain assets and liabilities, net:
Receivables (46.0) (7.7)
Inventories (12.5) 7.0
Other current assets 5.3 9.1
Accounts payable and accrued expenses (20.0) (108.1)
Current and deferred income taxes (2.2) (78.0)
Other liabilities 4.7 (4.5)
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Net cash provided by (used in) operating 62.8 (34.8)
activities ------- -------
Cash flows from investing activities:
Purchase of property, plant and equipment (196.3) (105.2)
Sale and maturity of marketable investments 524.2 275.0
Purchase of marketable investments (577.0) (252.1)
Business acquisition, net of cash acquired - (15.4)
Purchase of investments and other, net (8.8) (7.1)
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Net cash used in investing activities (257.9) (104.8)
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Cash flows from financing activities:
Issuance of debt 0.4 1.5
Repayment of debt (1.6) (5.3)
Issuance of common stock, net 23.8 8.6
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Net cash provided by financing activities 22.6 4.8
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Net change in cash and cash equivalents (172.5) (134.8)
Cash and cash equivalents at beginning of period 832.1 442.4
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Cash and cash equivalents at end of period $ 659.6 $ 307.6
======= =======
See accompanying Notes to Condensed Consolidated Financial Statements
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"). 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 the
fiscal year ended May 25, 1997.
Earnings Per Share: The Financial Accounting Standards Board
recently issued Statement of Financial Accounting Standards (SFAS) No.
128, Earnings Per Share. SFAS No. 128 requires the presentation of
basic earnings per share (EPS) and, for companies with complex capital
structures or potentially dilutive securities, such as convertible debt,
options and warrants, diluted EPS. SFAS No. 128 is effective for annual
and interim periods ending after December 15, 1997. As permitted under
SFAS No. 128, the Company is presenting the following pro forma earnings
per common share, as if SFAS No. 128 was effective for the periods
presented:
Three Months Ended
------------------
Aug. 24, Aug. 25,
1997 1996
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Earnings per common share:
Basic $ 0.48 ($1.51)
Diluted $ 0.45 ($1.51)
Weighted average common shares:
Basic 146.0 137.7
Diluted 156.0 137.7
Financial Instruments As more fully described on pages 33-36 in the
Company's 1997 Annual Report on Form 10-K, the Company utilizes various
off-balance sheet financial instruments to manage market risks
associated with fluctuations in certain interest rates and foreign
currency exchange rates. The criteria the Company uses for designating
an instrument as a hedge include the instrument's effectiveness in risk
reduction and direct matching of the financial instrument to the
underlying transaction. Gains and losses on currency forward and option
contracts that are intended to hedge an identifiable firm commitment are
deferred and included in the measurement of the underlying transaction.
Gains and losses on hedges of anticipated transactions are deferred
until such time as the underlying transactions are recognized or
recognized immediately if the transaction is terminated earlier than
initially anticipated. Gains and losses on any instruments not meeting
the above criteria would be recognized in income in the current period.
Subsequent gains or losses on the related financial instrument are
recognized in income in each period until the instrument matures, is
terminated or is sold. Income or expense on swaps is accrued as an
adjustment to the yield of the related investments or debt hedged by the
instrument. Cash flows associated with derivative transactions are
reported as arising from operating activities in the condensed
consolidated statements of cash flows.
Note 2. Components of Inventories
The components of inventories were:
(in millions) Aug. 24, May 25,
1997 1997
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Raw materials $ 16.9 $ 15.4
Work in process 125.5 118.8
Finished goods 51.5 47.2
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Total inventories $ 193.9 $ 181.4
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Note 3. Other Income(Expense), Net
Components of other income(expense), net, were:
(in millions) Aug. 24, Aug. 25,
1997 1996
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Net intellectual property income $ 0.3 $ 0.3
Gain(loss) on investments, net 6.7 (3.0)
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Total other income(expense), net $ 7.0 $ ( 2.7)
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Note 4. Statement of Cash Flow Information
(in millions)
Three Months Ended
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Aug. 24, Aug. 25,
1997 1996
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Supplemental Disclosure of Cash Flow
- ------------------------------------
Information
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Cash paid for:
Interest $ 1.2 $ 2.1
Income taxes 15.2 4.0
Supplemental Schedule of Noncash Investing
- ------------------------------------------
and Financing Activities
------------------------
Issuance of stock for employee benefit plans $ 2.5 $ 3.2
Tax benefit for employee stock option plans 9.0 1.7
Unrealized loss on available-for-sale
securities 2.7 5.0
Unearned compensation charge relating to
restricted stock issuance - 6.7
Restricted stock cancellation 0.2 -
Amortization of unearned compensation charge 3.7 0.3
Note 5. Merger
On July 28, 1997, the Company announced that it had entered into a
definitive merger agreement with Cyrix Corporation (Cyrix). Cyrix
designs, develops and markets IBM personal computer software-compatible
microprocessors for the personal computer industry and is a source of
X86 microprocessors of original design for the personal computer
marketplace.
Under the terms of the agreement, each share of Cyrix common stock will
be exchanged for 0.825 of a share of National common stock. According
to Cyrix, as of June 29, 1997, Cyrix had approximately 19.7 million
shares of common stock outstanding, exclusive of approximately 0.5
million treasury shares. Accordingly, it is expected that approximately
16.2 million shares of National common stock will be issued in the
merger. National will also reserve for issuance approximately 5.6
million shares of National common stock, which may be issued from time
to time to holders of Cyrix convertible notes and stock options, and to
participants in the Cyrix Employees Stock Purchase Plan.
The merger requires the approval of Cyrix's stockholders and is subject
to regulatory approvals and other customary conditions. It is currently
expected that the transaction will be completed in November 1997. The
Company expects to recognize a special charge related to certain
acquisition and related expenses in its second quarter of fiscal 1998
when the transaction is expected to be completed. The transaction is
intended to be accounted for as a pooling of interests and to qualify as
a tax-free reorganization.
Note 6. Contingencies
In fiscal 1997, the Company received notices of assessment totalling
approximately $59.2 million from the Malaysian Inland Revenue Department
relating to the Company's manufacturing operations in Malaysia. The
issues giving rise to the assessments relate to intercompany transfer
pricing, primarily for fiscal 1993. The Company believes the
assessments are without merit and has been contesting them
administratively. The Company believes that adequate accruals have been
recorded for the years in question.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview National Semiconductor Corporation (National or the
Company) recorded net sales of $600.8 million for the first quarter of
fiscal 1998, a 6.1 percent increase from net sales of $566.1 million for
the first quarter of fiscal 1997. Net income was $70.1 million for the
first quarter of fiscal 1998 compared to a net loss of $207.6 million
for the first quarter of fiscal 1997. These results reflect a
comparison to operating results for the first quarter of fiscal 1997
that included the Fairchild Semiconductor operations (Fairchild),
which the Company divested in the fourth quarter of fiscal 1997.
The Company has presented management's discussion and analysis of
financial condition and results of operations to also include comparison
to fiscal 1997 of the Company's core business without Fairchild. The
Company's core business includes the Analog Group, the Communications
and Consumer Group, and the Personal Systems Group. The following
selected financial information is presented for such comparative
purposes. The selected financial information for the quarter ended
August 25, 1996 for the Company's core business excludes special items
and the effect of special charges related to the Company's
reorganization of its operating structure in the first quarter of fiscal
1997:
Three Months Ended
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(in millions) Aug. 24, 1997 Aug. 25, 1996
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Core Total
Business Company
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Net sales $600.8 $433.5 $566.1
Gross profit $249.4 $162.0 $172.2
Gross margin 41.5% 37.4% 30.4%
Research and development $101.7 $82.3 $97.4
Selling, general and administrative $73.9 $75.3 $94.0
Net income (loss) $70.1 $2.8 $(207.6)
Sales Sales of $600.8 million for the first quarter of fiscal 1998
increased 38.6 percent compared to sales of $433.5 million for the same
period of fiscal 1997 for the Company's core business. This growth
resulted from improved new order rates the Company experienced through
the summer period. The increase in sales reflects the continued growth
in sales for wide area network products including wireless communication
products, local area network products and personal computer products,
which grew 18.6 percent, 47.1 percent and 33.3 percent, respectively,
for the first quarter of fiscal 1998 over the first quarter of fiscal
1997. Sales for multimarket analog products also grew 51.1 percent for
the first quarter of fiscal 1998 over the same period of fiscal 1997.
Sales increases for all of these product areas were the result of
increased unit shipments. Overall, increased unit shipments resulted in
increased sales despite some modest price declines, particularly in the
LAN Ethernet products.
Gross Margin Gross margin as a percentage of sales was 41.5 percent
for the first quarter of fiscal 1998 compared to 30.4 percent for the
same period of fiscal 1997. Gross margin for the first quarter of fiscal
1998 improved over gross margin of 37.4 percent for the Company's core
business which excludes the effect of Fairchild and special charges of
$18.7 million related to the Company's reorganization in the first
quarter of fiscal 1997. The primary factor contributing to the
improvement was increased factory utilization which reached 87 percent
in the first quarter of fiscal 1998 as new orders continued to grow
during the summer.
Research and Development Research and development (R&D) expenses for
the first quarter of fiscal 1998 increased by 4.4 percent from the first
quarter of fiscal 1997. Excluding the effect of Fairchild and a $10.6
million special charge for in-process R&D related to the acquisition of
the PicoPower division of Cirrus Logic Inc. from the first quarter of
fiscal 1997, R&D expenses for the first quarter of fiscal 1998 increased
by 23.6 percent over R&D expenses of $82.3 million for the Company's
core business. Although the Company increased its investment in R&D for
the first quarter of fiscal 1998 over the same quarter of fiscal 1997
for the core business, R&D expenses as a percentage of sales decreased
to 16.9 percent from 19.0 percent as the increase in sales of 38.6
percent exceeded the increase in R&D expenses. Overall, the increase in
R&D expenses reflects the Company's accelerated investment in advanced
submicron CMOS process technology that is part of the Company's focus on
state-of-the-art process technology, which has been set as one of the
Company's strategic imperatives. The increase also reflects the
Company's continued investment in the development of new analog and mixed
signal based products for applications in the personal systems,
communications and consumer markets.
Selling, General and Administrative Selling, general and
administrative (SG&A) expenses for the first quarter of fiscal 1998
decreased by 21.4 percent from the first quarter of fiscal 1997.
Excluding the Fairchild SG&A expenses from the first quarter of fiscal
1997, SG&A expenses for the first quarter of fiscal 1998 decreased by
1.9 percent from SG&A expenses of $75.3 million for the Company's core
business. While the Company held expenses relatively flat year to year,
as a percentage of sales, SG&A expenses decreased to 12.3 percent from
17.4 percent for the same quarter of fiscal 1997 for the core business
as sales grew by 38.6 percent. The decrease reflects the effect of
centralization initiatives implemented in connection with the Company's
fiscal 1997 reorganization that have reduced the Company's
infrastructure.
Interest Income and Interest Expense Net interest income was $12.7
million for the first quarter of fiscal 1998 compared to $1.3 million in
the first quarter of fiscal 1997. The increase was primarily
attributable to interest earned on higher cash balances. In addition,
the Company capitalized $5.4 million of interest associated with capital
expansion projects for the first quarter of fiscal 1998, compared to 1.6
million for the same quarter of fiscal 1997.
Other Income, Net Other income, net was $7.0 million for the first
quarter of fiscal 1998 compared to other expense, net of $2.7 million
for the first quarter of fiscal 1997. Included in other income, net for
the first quarter of fiscal 1998 was $0.3 million of net intellectual
property income and a $6.7 million net gain from the sale of stock from
the Company's investment holdings. Other expense, net for the first
quarter of fiscal 1997 includes $0.3 million of net intellectual
property income offset by a $3.0 million net loss on investments
primarily attributable to the write down of an investment to net
realizable value.
Income Tax Expense Income tax expense for the first quarter of fiscal
1998 is based on the Company's expected effective tax rate for fiscal
1998 of 25 percent.
Financial Condition During the first quarter of fiscal 1998, cash and
cash equivalents decreased $172.5 million compared to a $134.8 million
decrease for the first quarter of fiscal 1997. The decrease was
primarily the result of the Company's continued investment in property,
plant and equipment of $196.3 million and net purchases of marketable
investments of $52.8 million that offset cash flows generated from
operating activities of $62.8 million and proceeds from issuance of
common stock of $23.8 million. This compares to $105.2 million of
investment in property, plant and equipment together with $34.8 million
of cash used in operating activities for the first quarter of fiscal
1997.
Management foresees significant cash outlays for plant and equipment
throughout fiscal 1998. The capital expenditure level for fiscal 1998
is expected to be slightly higher than the fiscal 1997 level.
Existing cash and investment balances, together with existing lines of
credit, are expected to be sufficient to finance planned fiscal 1998
capital investments.
Outlook The statements contained in this Outlook and in the Financial
Condition section of Management's Discussion and Analysis are forward
looking based on current expectations and management's estimates. Actual
results may differ materially from those set forth in such forward
looking statements. In addition to the risk factors discussed in the
Outlook and Financial Condition sections of Management's Discussion and
Analysis of Results of Operations and Financial Condition on pages 23
through 25 of the Company's 1998 Annual Report on Form 10-K filed with
the Securities and Exchange Commission, the following factors may also
affect the Company's operating results for fiscal 1998.
As business conditions for the semiconductor industry improved in
calendar 1997, the Company experienced significant improvement in new
order rates. New orders were strong and continued to grow through the
summer period. Although the Company expects this trend to continue
through fiscal 1998, there is a risk that the improvement in new order
rates may be temporary. If the rate of new orders does not continue to
increase, the Company may be unable to sustain the level of revenue
growth expected for fiscal 1998 and operating results will be
unfavorably affected. Additionally, the rate of orders and product
pricing may be affected by continued and increasing competition and by
growth rates in the personal computer and networking industries.
The Company expects to continue to pursue opportunities to acquire key
technology to augment its technical capability or to achieve faster time
to market as an alternative to internally developing such technology.
In addition to the Company's regular involvement in licensing
arrangements and joint venture relationships, these opportunities are
expected to include business acquisitions. With such acquisitions,
there is the risk that future operating performance may be unfavorably
impacted due to acquisition related costs, such as but not limited to,
in-process R&D charges, added R&D expenses, lower gross margins from
acquired product portfolios and restructure costs associated with
duplicate facilities.
In July 1997, the Company entered into a definitive merger agreement
with Cyrix Corporation (Cyrix). Cyrix designs, develops and markets
IBM personal computer software-compatible microprocessors and is a
supplier of high-performance microprocessors to the personal computer
industry. Under the terms of the agreement, each share of Cyrix common
stock will be exchanged for 0.825 of a share of National common stock.
It is expected that approximately 16.2 million shares of National common
stock will be issued in the merger and an additional 5.6 million shares
of National common stock will be reserved for issuance in the future to
holders of Cyrix convertible notes and stock options, and to participants in
the Cyrix Employees Stock Purchase Plan. The merger, which is expected
to be completed in November 1997, is also intended to be accounted for
as a pooling of interests. While the Company expects to recognize
special charges related to certain acquisition and related expenses
associated with the transaction in its second quarter when the
transaction is expected to be completed, the amount of these costs and
its impact to the Company's operating results have not yet been
determined. The Company believes the technologies and capabilities of
each company are complementary and the separate operations compatible,
however, the integration of the companies may have an unfavorable impact
on future operating results if the Company encounters unforeseen
obstacles or is unable to successfully execute its integration plan.
Since the merger is expected to be accounted for as a pooling of
interests, the assets and liabilities of Cyrix will be combined with the
Company's consolidated financial statements and the Company will restate
its historical financial statements to include the Cyrix financial
statements as if the two companies had been previously combined.
The Company has received notices of tax assessments from certain
governments of countries within which the Company operates. There can
be no assurance that these governments or other government entities will
not serve future notices of assessments on the Company, or that the
amounts of such assessments and the failure of the Company to favorably
resolve such assessments would not have a material adverse effect on the
Company's financial condition or results of operations. In addition,
the Company is engaged in administrative tax appeals with the IRS and
the Company's tax returns for certain years are under examination in the
U.S. and Malaysia. There can be no assurance that the ultimate outcome
of the tax appeals or tax examinations would not have a material adverse
effect on the Company's future financial condition or results of
operations.
The forward looking statements discussed or incorporated by reference in
this outlook section involve a number of risks and uncertainties. Other
risks and uncertainties include, but are not limited to, the general
economy, regulatory and international economic conditions, the changing
environment of the semiconductor industry, competitive products and
pricing, growth in the personal computer and communications industries,
the effects of legal and administrative cases and proceedings, and such
other risks and uncertainties as may be detailed from time to time in
the Company's SEC reports and filings.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
There have been no material developments in the legal proceedings
reported in Item 3 in the Company's Annual Report on Form 10-K for the
year ended May 25, 1997.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
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2.1 Agreement and Plan of Merger by and among National
Semiconductor Corporation, Nova Acquisition Corporation and Cyrix
Corporation dated as of July 28, 1997 (incorporated by reference
from the Exhibits to the 10-K for the fiscal year ended May 25, 1997
filed August 6, 1997).
3.1 Second Restated Certificate of Incorporation of the Company as
amended (incorporated by reference from the Exhibits to the Company's
Registration Statement on Form S-3 Registration No.33-52775, which
became effective March 22, 1994); Certificate of Amendment of
Certificate of Incorporation dated September 30, 1994 (incorporated
by reference from the Exhibits to the Company's Registration Statement
on Form S-8 Registration No. 333-09957, which became effective
August 12, 1996).
3.2 By Laws for the Company (incorporated by reference from the
Registration Statement on Form S-8 Registration No. 333-36733,
which became effective September 30, 1997).
4.1 Rights Agreements (incorporated by reference from the Exhibits to
the Company's Registration Form 8-A filed August 10, 1988). First
Amendment to the Rights Agreement (incorporated by reference from the
Exhibits to the Amendment No. 1 to the Company's Registration Statement
on Form 8-A filed December 11, 1995). Second Amendment to the Rights
Agreement dated as of December 17, 1996 (incorporated by reference from
the Exhibits to the Company's Amendment No. 2 to the Registration
Statement on Form 8-A filed January 17, 1997).
4.2 Form of Common Stock Certificate (incorporated by reference from
the Exhibits to the Company's Registration Statement on Form S-3
Registration No. 33-48935, which became effective October 5, 1992).
4.3 Indenture dated as of September 15, 1995 (incorporated by reference
from the Exhibits to the Company's Registration Statement on Form S-3
Registration No.33-63649, which became effective November 6, 1995).
4.4 Registration Rights Agreement dated as of September 21, 1995
(incorporated by reference from the Exhibits to the Company's
Registration Statement on Form S-3 Registration No.33-63649, which
became effective November 6, 1995).
4.5 Form of Note (incorporated by reference from the Exhibits to the
Company's Registration Statement on Form S-3 Registration No.33-63649,
which became effective November 6, 1995).
10.1 Management Contract or Compensatory Plan or Agreement: Director
Stock Plan, as amended through June 26, 1997 (incorporated by reference
from the Exhibits to Company's definitive Proxy Statement for the Annual
Meeting of Stockholders held September 26, 1997 filed on August 12,
1997).
10.2 Management Contract or Compensatory Plan or Agreement: Director
Stock Option Plan (incorporated by reference from the Exhibits to the
Company's definitive Proxy Statement for the Annual Meeting held
September 26, 1997 filed on August 12, 1997).
10.3 Management Contract or Compensatory Plan or Agreement: FY 1998
Executive Officer Incentive Plan Agreement.
10.4 Management Contractor Compensatory Plan or Agreement: Long Term
Disability Coverage Plan Summary, National Semiconductor Corporate
Executive Staff.
10.5 Management Contract or Compensatory Plan or Agreement: Long Term
Disability Plan Summary, National Semiconductor Executive Employees.
10.6 Stock Option Agreement between National Semiconductor Corporation
and Cyrix Corporation (incorporated by reference from the Exhibits
to the Company's 10-K for the fiscal year ended May 25, 1997
filed August 6, 1997).
11.0 Statement re computation of earnings per share
27.0 Financial Data Schedule
(b) A report on Form 8-K was filed May 30, 1997 announcing the Company's
revision of its net income for the second and third quarters of fiscal
1997 in response to a Securities and Exchange Commission ('SEC') review
of the Company's disposition of its Fairchild businesses. No financial
statements were filed with the Form 8-K. A Form 10Q/A for the
quarterly period ended February 23, 1997 was separately filed on
May 30, 1997 in connection with the SEC review.
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: October 6, 1997 /s/ Richard D. Crowley, Jr.
----------------------------------
Richard D. Crowley, Jr.
Vice President and Controller
Signing on behalf of the registrant
and as principal accounting officer
Exhibit 10.3
NATIONAL SEMICONDUCTOR CORPORATION
1998 EXECUTIVE OFFICER INCENTIVE PLAN AGREEMENT
ARTICLE 1
Definitions
-----------
Whenever used in the Agreement, unless otherwise indicated, the
following terms shall have the respective meanings set forth below:
Agreement: This Executive Officer Incentive Plan Agreement.
- ---------
Award: The amount to be paid to a Plan Participant.
- -----
Award Date: The date set by the Committee for payment of
- ---------- Awards, usually approximately forty days after
the Company makes public its consolidated
financial statements for the fiscal year.
Base Salary: Generally, the annualized base remuneration
- ----------- received by a Participant from the Company at
the end of the fiscal year. Base Salary
includes salary continuation and sick leave paid
by the Company. Extraordinary items, including
but not limited to prior awards, relocation
expenses, international assignment allowances
and tax adjustments, sales incentives, amounts
recognized as income from stock or stock
options, disability benefits (whether paid by
the Company or a third party) and other similar
kinds of extra or additional remuneration are
excluded from the computation of Base Salary.
Company: National Semiconductor Corporation ("NSC"), a
- ------- Delaware corporation, and any other corporation
in which NSC controls directly or indirectly
fifty percent (50%) or more of the combined
voting power of voting securities, and which
has adopted this Plan.
Committee: A committee comprised of directors of National
- --------- who are not employees of the Company, as more
fully defined in the Executive Officer Incentive
Plan.
Disability: 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.
Executive Officer: An officer of the Company who is subject to the
- ----------------- reporting and liability provisions of Section 16
of the Securities and Exchange Act of 1934.
Incentive Levels: Percentage of Base Salary assigned to a
- ---------------- Participant as a Target Award.
Participant: An Executive Officer designated as 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, which shall be
based on one or more of the business criteria
listed in Section 5(b) of the Plan.
Performance Goals will have four 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, as established
by the Committee, reflecting a degree of
difficulty which has a reasonable
probability of achievement.
(iii)Stretch -- Better than Target performance
and reflecting a degree of difficulty with
only a moderate probability of achievement.
(iv) Best Expected -- Exceptional performance
far exceeding the Target level because of
the great degree of difficulty and the
limited probability of achievement.
Retirement: Permanent termination of employment with the
- ---------- Company, and (a) the Participant's age is
either sixty-five (65) or age is at least
fifty-five (55) and age plus years of service
in the employ of the Company is sixty-five (65)
or more, and (b) the retiring Participant
certifies 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 at the assigned Incentive Level, that
may be earned by a Participant for achievement
of the Target level of performance.
All capitalized terms used in this Agreement and not otherwise
defined herein have the meanings assigned to them in the Executive
Officer Incentive Plan.
ARTICLE 2
Effective Date
--------------
The Agreement will become effective as of May 26, 1997, to be
effective for the Company's fiscal year 1998.
ARTICLE 3
Eligibility for Plan Participation
----------------------------------
A. Within ninety (90) days after the commencement of the Company's
fiscal year, the Committee shall designate those Executive Officers who
shall be Plan Participants for the fiscal year and their respective
Incentive Levels.
B. Participants will be notified once the Committee has designated
Participants for the fiscal year. Continued participation will be re-
evaluated by the Committee annually pursuant to Article 3A supra at the
beginning of each fiscal year.
C. Newly hired Executive Officers and persons who are promoted to
Executive Officers may be added as Participants to the Plan by the
Committee during the fiscal year. Such Participants will receive a
prorated Award based on time of participation in the Plan.
D. Participants may be removed from the Plan during the fiscal year at
the discretion of the Committee. Participants so removed will receive a
prorated Award based on length of participation in the Plan.
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.
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, associated weights and levels of performance
will be established by the Committee within ninety (90) days after the
start of the fiscal year. Each Performance Goal will have defined
Threshold, Target, Stretch and Best Expected levels of performance.
Performance Goals and their associated weights may change from one fiscal
year to another fiscal year to reflect the Company's operational and
strategic goals, but must be based on one or more of the business
criteria listed in Section 5(b) of the Plan.
B. Actual Award amounts may range between 0% and 200% of Target. 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 from Threshold to Best
Expected for the Performance Goals, with Awards ranging from 50% of the
Target Award at the Threshold level to 200% of the Target Award at the
Best Expected level. Each Performance Goal will be scored at end of the
fiscal year with a rating from 0% to 200%. The sum of the scoring on the
Performance Goals will determine the total performance level for the
year, which shall be subject to calculation as provided in Attachment A.
ARTICLE 6
Calculation and Payment of Awards
A. The Committee shall set a limit on the maximum amount available for
Awards for the fiscal year. Subject to this maximum amount, 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 fiscal year.
2) The performance of each Participant is scored at the end of
the fiscal year.
3) The overall performance of the Participants creates an
incentive pool.
4) The Participants' incentive pool may then be divided by the
Committee among some or all Participants, based on
individual performance scores. No one individual Award may
exceed 200% of the Participant's Target Award amount.
5) Total Awards may not exceed the maximum limit set for Awards
for the fiscal year. As a result, some or all Award amounts
may be adjusted in order not to exceed the maximum limit.
B. The Committee will score the performance of the Plan Participants.
Awards will be paid only after the Committee certifies in writing that the
ratings on the Performance Goals have been attained.
C. Awards will be paid in cash on or about the Award Date.
D. Awards will reflect the Participant's Base Salary in effect at the
end of the fiscal year. Participants who take an unpaid leave of absence
during the fiscal year for good cause shown to the satisfaction of the
Committee will have their Awards prorated to reflect actual pay earned
during the fiscal year.
E. Any Awards that are prorated for any reason under the terms of the
Plan or this Agreement will be prorated based on the start dates of the
Company's fiscal accounting periods. By way of example but not of
limitation, if a Participant changes Incentive Levels in the middle of a
fiscal accounting period, the Award will be prorated using the first day
of the accounting period following the period in which the change
occurred.
ARTICLE 7
Termination of Employment
A. To be eligible to receive an Award, the Participant must be
employed by the Company on the last day of the fiscal year. A
Participant whose employment has terminated prior to that date will
forfeit the Award, except as otherwise provided in this Article 7.
B. If a Participant's employment is terminated during the fiscal year
by Disability, Retirement, or death, the Participant will receive an
Award reflecting the Participant's performance and actual period of
full-time employment during the fiscal year.
C. Unless local law or regulation provides otherwise, payments of
Awards made upon termination of employment by death shall be made 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.
D. Participants whose employment is terminated by reduction in force
during the fiscal year will receive no Award. If a Participant's
employment is terminated by reduction in force after the fiscal year but
before the Award Date, the Participant will receive the Award on the
Award Date.
E. The Committee reserves the right to reduce an Award to reflect a
Participant's absence from work during a fiscal year. A Participant
absent on the Award Date will not receive an Award until he or she
returns from the absence and satisfies the Committee the absence was for
good cause shown.
F. The right of a Participant to receive an Award, including Awards
deferred pursuant to the provisions of Article 8, shall be forfeited if
the Participant's employment is terminated for good cause shown such as
acts of moral turpitude, a reckless disregard of the rights of other
employees or because of or the Participant is discovered to have engaged
in fraud, embezzlement, dishonesty against the Company, obtaining funds
or property under false pretenses, assisting a competitor without
permission, or interfering with the relationship of the Company with a
customer. A Participant's Award will be forfeited for any of the above
reasons regardless of whether such act is discovered prior to or
subsequent to the Participant's termination of employment or payment of
an Award. If an Award has been paid, such payment shall be repaid to the
Company by the Participant.
ARTICLE 8
Deferral of Awards
------------------
A. If permitted by local law and regulations, a Participant is
entitled to make an irrevocable election to defer receipt of all or any
portion of any Award. For any fiscal year, the Notice of Election must
be completed prior to thirty (30) days before the end of the fiscal year.
Notices of Election are not self-renewing and must be completed for each
fiscal year if deferral is desired for the applicable fiscal year.
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 that is within thirty (30) days of the anniversary date
following the Participant's Retirement or Disability.
E. Subject to Section 7.F., 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, less any sums due the Company. 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, less any sums due the
Company.
F. Payment of part or all of the deferred Award may be accelerated in
the case of severe hardship for good cause shown to the satisfaction of
the Committee, which shall mean an emergency or unexpected situation
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 Committee.
G. No Participant may assign, pledge or borrow against his or her
account except as provided in this Agreement.
H. If permitted by local law and regulations, the Participant may
designate a beneficiary to receive deferred Awards in the event of the
Participant's death. The Participant's beneficiary may be changed
without the consent of any prior beneficiary except as follows: In those
jurisdictions where spouses are granted rights by law in a Participant's
earnings, if the Participant is married at the time of designation, the
Participant's spouse must consent to the beneficiary designation and 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 Article 7C or as otherwise required by
local law or regulation.
ARTICLE 9
Interpretations and Rule-Making
-------------------------------
The Committee shall have the sole 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 Plan and 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 Committee 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 provided such modification or amendment is in accordance
with the terms of the Plan; or (iii) discontinue this Agreement for any
or all Participants provided such modification or amendment is otherwise
in accordance with the Plan.
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 the Committee and management reserve the right to dismiss
Participants for any reason whatsoever. Participation in one fiscal year
does not guarantee a Participant the right to participation in any
subsequent fiscal year.
C. The Company reserves the right to deduct from all Awards under this
Plan any sums due the Company as well as any taxes or other amounts
required by law to be withheld with respect to Award payments.
D. Awards that are deferred under Article 8 constitute an unfunded Plan
of deferred compensation. As such, any amounts payable thereunder 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 fiscal year 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 Committee to continue to adopt such other plans or
programs, or to make salary, bonus, incentive, or other payments, with
respect to compensation of Executive Officers, as in its sole judgment it
may deem proper.
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.
I. Any dispute relating to or arising from this Agreement shall be
determined by binding arbitration by a three member panel chosen under
the auspices of the American Arbitration Association and acting pursuant
to its Commercial Rules, sitting in San Jose, California. The panel may
assess all fees, costs and other expenses, including reasonable counsel
fees, as the panel sees fit. Notwithstanding the parties' election to
use arbitration to resolve disputes under this Agreement, nothing
contained in that election shall preclude either party, if the
circumstances warrant, from seeking extraordinary relief, such as
injunction and attachment, from any court of competent jurisdiction in
California.
ATTACHMENT A
Incentive |
Award as |
% of |
Target 200%---| |-------.
Award Max | | .
| | .
| | .
150%---| |-------.
| | .
| | .
| | .
100%---| |-------.
| | .
| | .
| | .
50%---|--------.
| .
| .
| .
|._______|________|________|________|________
50% 100% 150% 200%
Threshold Target Superior Best
Expected
Chart illustrates the manner in which awards are to be calculated
under the Executive Officer Incentive Plan. Achievement of performance
against goals between the Threshold Level and fifty percent of Target
Level results in an Incentive Award of 50% of Target, with the Committee
having discretion to adjust downward when it deems appropriate.
Similarly, performance levels against goals of between 50% and 100%
result in an Incentive Award of 100% of Target, while performance against
goals of between 100% and 150% result in an Incentive Award of 150% of
Target (in each case, subject to downward - but not upward - adjustment
by the Committee). Finally, performance against goals of more than 150%
will result in the maximum incentive award of 200% of Target award,
subject to downward adjustment.
In summary, while the Plan formula sets the incentive awards upon
achievement of each level of performance, the shaded areas of the chart
reflect the areas of discretion on award payment that is vested with the
Committee.
Exhibit 10.4
LONG TERM DISABILITY COVERAGE PLAN SUMMARY
NATIONAL SEMICONDUCTOR CORPORATION
EXECUTIVE STAFF
- --------------------------------------------------------------------------
Group Long Term Disability Plan Definitions
Eligibility You are eligible for LTD coverage if you are: a
full-time active employee, earning over $160,000
annually, working a minimum of 30 hours per week,
and are a member of the Company's Executive
staff.
Elimination Period The Elimination Period is the length of time of
continuous disability which must be satisfied
before you are eligible to receive benefits.
LTD benefits will begin after 360 consecutive
days of total or partial disability, as described
in the definition below.
Definition of Disability LTD Definition:
You will be considered disabled and eligible for
benefits if, because of injury or sickness:
you are limited from performing the material
and substantial duties of your regular
occupation; and
have a 20% or more loss in indexed monthly
earnings due to the same sickness or injury.
Benefit Amount Monthly LTD Benefit:
60% of your basic monthly earnings
to a maximum of $20,000
Benefit Integration Your LTD Benefits may be reduced by the amount
of other income replacement benefits you receive
for the same disability, such as benefits from
Social Security, Workers' Compensation, etc.
How does LTD coverage If you are disabled according to your policy's
work? definition of disability, you will be eligible
to receive a monthly benefit based on 60% of
your basic monthly earnings. Benefits will
begin after an "Elimination Period" of 360 days
and will be paid for as long as you continue to
meet the policy's definition of disability for
the benefit duration specified. You will not be
required to pay your premium during the time you
are receiving benefits.
Benefit Duration Age at Disability Maximum Period of Payment
----------------- -------------------------
Less than age 60 To age 65, but not less than
5 years
Age 60 60 months
Age 61 48 months
Age 62 42 months
Age 63 36 months
Age 64 30 months
Age 65 24 months
Age 66 21 months
Age 67 18 months
Age 68 15 months
Age 69 and over 12 months
Instances when benefits Benefits will not be paid for disabilities
would not be paid caused by, contributed to by, or resulting from:
intentionally self-inflicted injuries;
active participation in a riot;
war, declared or undeclared, or any act of
war;
conviction of a crime under state or federal
law;
loss of professional license, occupational
license or certification;
pre-existing conditions (see definition).
Benefit will not be paid for any period of
disability during which you are incarcerated.
Pre-existing Condition A pre-existing condition is a sickness or injury
Exclusion for First for which you received medical treatment,
$15,000 of Monthly consultation, care or services including
Benefit diagnostic measures or took prescribed drugs or
medicines, or if you had symptoms for which an
ordinary prudent person would have consulted a
health care provider in the 3 months prior to
your effective date of coverage.
If you suffer a disability caused by,
contributed to by or resulting from a pre-
existing condition and it begins in the first 12
months after your effective date, that
disability will be limited to a monthly benefit
of $7,500.
Pre-existing Condition A pre-existing condition is a sickness or injury
Exclusion for Monthly for which you received medical treatment,
benefit amounts over consultation, care or services including
$15,000 diagnostic measures, or took prescribed drugs or
medicines, or if you had symptoms for which an
ordinary prudent person would have consulted a
health care provider in the 24 months prior to
your effective date of coverage.
Any disability caused or contributed to by a
pre-existing condition will be limited to a
$15,000 monthly benefit unless the employee
remains treatment free for 12 consecutive months
beginning or after the effective date of
coverage.
Mental and Nervous Disabilities due to a sickness or injury which
are primarily based on self-reported symptoms
and disabilities due to mental illness have a
limited payment period of 24 months per
lifetime. Mental and nervous benefits will
continue beyond 24 months only if you are
institutionalized or hospitalized as a result of
the disability.
Survivor Benefit When the insurer receives proof that you have
died, it will pay your eligible survivor a lump
sum benefit equal to 3 months of your gross
disability payment if, on the date of your
death, you disability had continued for 180 or
more consecutive days and you were receiving or
were entitled to receive benefit payments under
the plan.
Work Incentive Benefit The Plan provides a financial incentive to help
you return to work. Return-to-work earnings will
not be deducted from your disability benefit.
Instead, for the first 12 months after you
return to work, there will be no deductions from
your disability benefit until your earnings plus
your benefit exceed your pre-disability
earnings. After 12 months, your benefit will be
reduced in proportion to your loss in earnings.
Cost of Coverage You pay for the cost of coverage through payroll
deductions.
This plan highlight summary is provided to help you understand your
insurance coverage. If the terms of this plan highlight summary and the
policy differ, the policy will govern.
Exhibit 10.5
LONG TERM DISABILITY COVERAGE PLAN SUMMARY
NATIONAL SEMICONDUCTOR CORPORATION
EXECUTIVE EMPLOYEES
- -------------------------------------------------------------------------
Group Long Term Disability Plan Definitions
Eligibility You are eligible for LTD coverage if you are: a
full-time active employee, earning over $160,000
annually, working a minimum of 30 hours per week.
Elimination Period The Elimination Period is the length of time of
continuous disability which must be satisfied
before you are eligible to receive benefits.
LTD benefits will begin after 360 consecutive
days of total or partial disability, as described
in the definition below.
Definition of Disability LTD Definition:
You would be considered disabled and eligible
for LTD benefits if, because of injury or
sickness:
you cannot perform each of the material
duties of your regular occupation, and
after benefits have been paid for 24
months, you cannot perform each of
material duties of any gainful occupation
for which you are reasonably fitted by
education, training or experience.
while unable to perform all the material
duties of your regular occupation on a
full-time basis are:
a. performing at least one of the
material duties of your regular
occupation or another occupation on a
part-time or full-time basis; and
b. earning at least 20% less per month
than you indexed pre-disability
earning due to that same injury or
sickness.
Gainful Occupation Gainful occupation means an occupation that is
or can be expected to provide you with an income
of at least equal to your gross disability
payment within 12 months of your return to work.
Benefit Amount Monthly LTD Benefit:
60% of your basic monthly earnings
to a maximum of $20,000
Benefit Integration Your LTD Benefits may be reduced by the amount
of other income replacement benefits you receive
for the same disability, such as benefits from
Social Security, Workers' Compensation, etc.
How does LTD coverage If you are disabled according to your policy's
work? definition of disability, you will be eligible
to receive a monthly benefit based on 60%
your basic monthly earnings. Benefits will
begin after an "Elimination Period" of 360 days
and will be paid for as long as you continue to
meet the policy's definition of disability for
the benefit duration specified. You will not be
required to pay your premium during the time you
are receiving benefits.
Benefit Duration Age at Disability Maximum Period of Payment
----------------- ----------------------------
Less than age 60 To age 65, but not less than
5 years
Age 60 60 months
Age 61 48 months
Age 62 42 months
Age 63 36 months
Age 64 30 months
Age 65 24 months
Age 66 21 months
Age 67 18 months
Age 68 15 months
Age 69 and over 12 months
Instances when benefits Benefits will not be paid for disabilities
would not be paid caused by, contributed to by, or resulting from:
intentionally self-inflicted injuries;
active participation in a riot;
war, declared or undeclared, or any act of
war;
conviction of a crime under state or federal
law;
loss of professional license, occupational
license or certification;
pre-existing conditions (see definition).
Benefits will not be paid for any period of
disability during which you are incarcerated.
Pre-existing Condition A pre-existing condition is a sickness or injury
Exclusion for First for which you received medical treatment,
$15,000 of consultation, care or services including
Monthly diagnostic measures, or took prescribed drugs or
Benefit medicines, or if you had symptoms for which an
ordinary prudent person would have consulted a
health care provider in the 3 months prior to
your effective date of coverage.
If you suffer a disability caused by,
contributed to by or resulting from a pre-
existing condition and it begins in the first 12
months after your effective date, that
disability will be limited to a monthly benefit
of $7,500.
Pre-existing Condition A pre-existing condition is a sickness or injury
Exclusion for Monthly for which you received medical treatment,
benefit amounts over consultation, care or services including
$15,000 diagnostic measures, or took prescribed drugs or
medicines, or if you had symptoms for which an
ordinary prudent person would have consulted a
health care provider in the 24 months prior to
your effective date of coverage.
Any disability caused or contributed to by a
pre-existing condition will be limited to a
$15,000 monthly benefit unless the employee
remains treatment free for 12 consecutive months
beginning or after the effective date of
coverage.
Mental and Nervous Disabilities due to a sickness or injury which
are primarily based on self-reported symptoms
and disabilities due to mental illness have a
limited payment period of 24 months per
lifetime. Mental and nervous benefits will
continue beyond 24 months only if you are
institutionalized or hospitalized as a result of
the disability.
Survivor Benefit When the insurer receives proof that you have
died, it will pay your eligible survivor a lump
sum benefit equal to 3 months of your gross
disability payment if, on the date of your
death, you disability had continued for 180 or
more consecutive days and you were receiving or
were entitled to receive benefit payments under
the plan.
Work Incentive Benefit The Plan provides a financial incentive to help
you return to work. The Plan will not deduct
your return-to-work earnings from your
disability benefit. Instead, for the first 12
months after you return to work, there will be
no deductions from your disability benefit until
your earnings plus your benefit exceed your pre-
disability earnings. After 12 months, your
benefit will be reduced in proportion to your
loss in earnings.
Cost of Coverage You pay for the cost of coverage through payroll
deductions.
This plan highlight summary is provided to help you understand your
insurance coverage. If the terms of this plan highlight summary and the
policy differ, the policy will govern.
Exhibit 11.0
NATIONAL SEMICONDUCTOR CORPORATION
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
(in millions, except per share amounts)
Three Months Ended
-------------------
Aug 24, Aug 25,
1997 1996
------ -------
Net income, as reported and used
for primary earnings per share $ 70.1 $(207.6)
Adjustment for interest on
convertible notes - 2.4
------ -------
Net income used for fully diluted
earnings per share $ 70.1 $(205.2) (2)
====== =======
Number of shares:
Weighted average common shares
outstanding 146.0 137.7
Weighted average common equivalent
shares, net of tax benefit 3.9 1.6 (3)
------ -------
Weighted average common and common
equivalent shares for primary
earnings per share 149.9 139.3 (4)
Additional weighted average common
equivalent shares assuming
full dilution 0.8 0.1 (3)
Shares issuable from assumed
conversion of convertible notes 6.0 6.0
------ -------
Weighted average common and common
equivalent shares for fully diluted
earnings per share 156.7 145.4 (1)(4)
====== =======
Earnings per share:
Net income $0.45 $(1.41) (1)
====== =======
Earnings per common share, as reported:
Primary $0.45 $(1.41)
====== =======
Fully diluted $0.45 $(1.41)
====== =======
(1) For the three months ended August 25, 1996, this calculation is
submitted in accordance with Regulation S-K Item 601(b)(11) although it is
contrary to paragraph 40 of the APB Opinion No. 15 because it produces an
antidilutive result.
(2) For the three months ended August 25, 1996, since the effect of using
net loss for fully diluted earnings per share is antidilutive, primary and
fully diluted earnings per share is calculated using net loss, as reported.
(3) For purposes of this computation, all outstanding options and warrants
on common stock are assumed to have been exercised, even though for the three
months ended August 25, 1996, the related effect are antidilutive.
(4) For the three months ended August 25, 1996, the effect of shares from
the assumed exercise of all outstanding options and warrants and from the
assume conversion of convertible debt related to fully diluted earnings per
share is antidilutive. As a result, primary and fully diluted earnings per
share is calculated using weighted average common shares outstanding.
30 of 16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-24-1997
<PERIOD-END> AUG-24-1997
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<PP&E> 2455
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0
0
<COMMON> 73
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<CGS> 351
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<EPS-PRIMARY> 0.47
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</TABLE>
