TI Home > News Releases

News Releases

Conference call on TI website at 4:30 p.m. Central time today

www.ti.com/ir

PRNewswire-FirstCall
Apr 26, 2010

Non-GAAP Reconciliation Charts

DALLAS, April 26 /PRNewswire-FirstCall/ -- Texas Instruments Incorporated (TI) (NYSE: TXN) today announced first-quarter revenue of $3.21 billion, net income of $658 million and earnings per share of 52 cents.  

"TI invested in new manufacturing capacity for both wafer fabs and assembly/test facilities during the downturn in 2009.  The strategic investments we've made over the years are delivering strong growth and market share gains.  This was the fourth quarter of excellent sequential increases, with the combined revenue of our Analog and Embedded Processing businesses setting a new record level," said Rich Templeton, TI chairman, president and chief executive officer. 

"Momentum continues into the second quarter as demand for our products remains strong, and we add more manufacturing capacity to support our customers.  Production output is at an all-time high, and capacity is increasing each quarter in 2010 as we add 200-millimeter equipment purchased last year and as we ramp the industry's first 300-millimeter Analog facility, from which we will start shipments in the fourth quarter."

1Q10 financial summary

Amounts are in millions of dollars, except per-share amounts.

1Q10

1Q09

vs. 1Q09

4Q09

vs. 4Q09

Revenue

$ 3,205

$ 2,086

54%

$ 3,005

7%

Operating profit

$    950

$      10

9,400%

$    875

9%

Net income

$    658

$      17

3,771%

$    655

0%

Earnings per share

$   0.52

$   0.01

5,100%

$   0.52

0%

Cash flow from operations

$    710

$    251

183%

$ 1,000

-29%


TI's operating profit increased compared with the first quarter of 2009 and the prior quarter primarily due to higher gross profit.  Higher gross profit compared with the year-ago quarter included the impact of higher revenue and the benefit associated with higher utilization of manufacturing assets.  In addition, restructuring charges were lower compared with a year ago.  

1Q10 segment results

1Q10

1Q09

vs. 1Q09

4Q09

vs. 4Q09

Analog*:

Revenue

$ 1,367

$  802

70%

$1,263

8%

Operating profit (loss)

$    398

$  (26)

n/a

$   383

4%

Embedded Processing:

Revenue

$    440

$  316

39%

$   412

7%

Operating profit

$      73

$      2

3,550%

$     89

-18%

Wireless*:

Revenue

$    717

$  563

27%

$   758

-5%

Operating profit (loss)

$    158

$  (22)

n/a

$   181

-13%

Other:

Revenue

$    681

$  405

68%

$   572

19%

Operating profit

$    321

$    56

473%

$   222

45%

* All periods have been restated to reflect the transfer of a low-power wireless product line from the Analog segment to the Wireless segment.  During 2009, revenue from this product line was $68 million, and it operated at a loss of $17 million.


Analog:  (includes high-volume analog & logic, high-performance analog and power management products)  

  • Compared with a year ago, the increase in revenue was due to growth in all major product areas, especially high-volume analog & logic and power management products.    
  • Compared with the prior quarter, the increase in revenue was due to approximately equal gains in all three major product areas.
  • The gains in operating profit compared with both a year ago and the prior quarter were primarily due to higher gross profit.

 

Embedded Processing:  (includes digital signal processor and microcontroller catalog products that are sold across a wide variety of markets, as well as application-specific products that are used in communications infrastructure and automotive electronics)

  • In both comparisons, revenue growth was primarily due to an increase in revenue from catalog products.  Revenue from automotive products also increased from a year ago, although to a lesser extent.  
  • Compared with a year ago, the gain in operating profit was due to higher gross profit.  
  • Compared with the prior quarter, operating profit declined due to higher operating expenses.

 

Wireless:  (includes connectivity products, OMAP™ applications processors and baseband products)

  • Compared with a year ago, revenue grew primarily due to strength in connectivity products and applications processors.  Revenue from baseband products also grew from a year ago, although to a lesser extent.  
  • Compared with the prior quarter, revenue declined due to seasonally lower baseband revenue.  
  • Operating profit increased from a year ago primarily due to higher gross profit and declined from the prior quarter primarily due to lower gross profit.

 

Other:  (includes DLP® products, custom ASIC products, calculators and royalties)

  • Compared with a year ago and the prior quarter, revenue grew due to gains in DLP products, royalties, custom ASIC products and calculators.
  • Operating profit increased from a year ago and from the prior quarter due to higher gross profit.

 

Restructuring charges were as follows:

1Q10

1Q09

4Q09

Analog

$    4

$   40

$   6

Embedded Processing

$    2

$   19

$   3

Wireless

$    3

$   34

$   1

Other

$    1

$   12

$   2

Total

$  10

$ 105

$ 12


1Q10 additional financial information

  • Orders were $3.64 billion, up 66 percent from a year ago and up 12 percent from the prior quarter.
  • Inventory was $1.28 billion at the end of the quarter, up $178 million from a year ago and up $74 million from the prior quarter.
  • Capital expenditures were $219 million in the quarter compared with $43 million a year ago and $436 million in the prior quarter.  Capital expenditures in the quarter were primarily for assembly/test manufacturing equipment, as well as for analog wafer manufacturing equipment.
  • The company used $504 million in the quarter to repurchase 20.6 million shares of its common stock and paid dividends of $149 million.

 

Outlook

For the second quarter of 2010, TI expects:

  • Revenue:  $3.31 – 3.59 billion
  • Earnings per share:  $0.56 – 0.64

 

TI will update its second-quarter outlook on June 8, 2010.

For the full year of 2010, TI continues to expect approximately the following:

  • R&D expense:  $1.5 billion
  • Capital expenditures:  $0.9 billion
  • Depreciation:  $0.9 billion
  • Annual effective tax rate:  31%

 

The tax rate estimate is based on current tax law and does not assume reinstatement of the federal R&D tax credit, which expired at the end of 2009.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Income

(Millions of dollars, except share and per-share amounts)

For Three Months Ended

Mar. 31, 2010

Mar. 31, 2009

Dec. 31, 2009

Revenue

$  3,205

$  2,086

$  3,005

Cost of revenue

1,516

1,280

1,416

Gross profit

1,689

806

1,589

Research and development (R&D)

370

386

355

Selling, general and administrative (SG&A)

359

305

347

Restructuring expense

10

105

12

Operating profit

950

10

875

Other income (expense) net

7

5

6

Income before income taxes

957

15

881

Provision (benefit) for income taxes

299

(2)

226

Net income

$    658

$      17

$    655

Earnings per common share:

   Basic

$     .53

$     .01

$     .52

   Diluted

$     .52

$     .01

$     .52

Average shares outstanding (millions):

   Basic

1,233

1,275

1,243

   Diluted

1,246

1,277

1,257

Cash dividends declared per share of common stock

$    .12

$     .11

$     .12

Percentage of revenue:

Gross profit

52.7%

38.6%

52.9%

R&D

11.5%

18.5%

11.8%

SG&A

11.2%

14.6%

11.5%

Operating profit

29.7%

0.5%

29.1%


TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheets

(Millions of dollars, except share amounts)

Mar. 31,

2010

Mar. 31,

2009

Dec. 31,

2009

Assets

Current assets:

Cash and cash equivalents

$   1,217

$    1,436

$   1,182

Short-term investments

1,574

990

1,743

Accounts receivable, net of allowances of ($20), ($20) and ($23)

1,526

1,125

1,277

Raw materials

95

77

93

Work in process

812

712

758

Finished goods

369

309

351

Inventories

1,276

1,098

1,202

Deferred income taxes

556

676

546

Prepaid expenses and other current assets

174

207

164

Total current assets

6,323

5,532

6,114

Property, plant and equipment at cost

6,763

7,030

6,705

Less accumulated depreciation

(3,601)

(3,915)

(3,547)

Property, plant and equipment, net

3,162

3,115

3,158

Long-term investments

641

645

637

Goodwill

926

912

926

Acquisition-related intangibles

111

120

124

Deferred income taxes

893

967

926

Capitalized software licenses, net

219

160

119

Overfunded retirement plans

54

17

64

Other assets

41

52

51

Total assets

$  12,370

$  11,520

 $ 12,119

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$       556

$       326

$       503

Accrued expenses and other liabilities

756

907

841

Income taxes payable

317

21

128

Accrued profit sharing and retirement

90

33

115

Total current liabilities

1,719

1,287

1,587

Underfunded retirement plans

425

608

425

Deferred income taxes

68

61

67

Deferred credits and other liabilities

353

354

318

Total liabilities

2,565

2,310

2,397

Stockholders' equity:

Preferred stock, $25 par value.  Authorized -- 10,000,000 shares.

Participating cumulative preferred.  None issued.

--

--

--

Common stock, $1 par value.  Authorized -- 2,400,000,000 shares.  

Shares issued:  Mar. 31, 2010 -- 1,739,818,725; Mar. 31, 2009 -- 1,739,723,261; Dec. 31, 2009 -- 1,739,811,721

1,740

1,740

1,740

Paid-in capital

1,095

1,020

1,086

Retained earnings

22,573

21,043

22,066

Less treasury common stock at cost:

Shares:  Mar. 31, 2010 -- 517,592,342; Mar. 31, 2009 -- 466,270,151; Dec. 31,  2009 -- 499,693,704

(14,976)

(13,852)

(14,549)

Accumulated other comprehensive income (loss), net of taxes

(627)

(741)

(621)

Total stockholders' equity

9,805

9,210

9,722

Total liabilities and stockholders' equity

$  12,370

 $   11,520

$   12,119


TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Millions of dollars)

For Three Months Ended

Mar. 31, 2010

Mar. 31, 2009

Dec. 31, 2009

Cash flows from operating activities:

Net income

$   658

 $      17

$     655

Adjustments to net income:

   Depreciation

211

230

210

   Stock-based compensation

47

50

44

   Amortization of acquisition-related intangibles

13

10

14

   Deferred income taxes

(11)

3

66

Increase (decrease) from changes in:

   Accounts receivable

(251)

(218)

156

   Inventories

(74)

279

(86)

   Prepaid expenses and other current assets

(10)

8

11

   Accounts payable and accrued expenses

(66)

(119)

(53)

   Income taxes payable

203

49

(18)

   Accrued profit sharing and retirement

(23)

(97)

27

Other

13

39

(26)

Net cash provided by operating activities

710

251

1,000

Cash flows from investing activities:

Additions to property, plant and equipment

(219)

(43)

(436)

Purchases of short-term investments

(599)

(220)

(831)

Sales and maturities of short-term investments

768

729

618

Purchases of long-term investments

(2)

(2)

(4)

Redemptions and sales of long-term investments

1

3

2

Acquisitions, net of cash acquired

--

(104)

--

Net cash (used in) provided by investing activities

(51)

363

(651)

Cash flows from financing activities:

Dividends paid

(149)

(141)

(149)

Sales and other common stock transactions

29

18

38

Excess tax benefit from share-based payments

--

--

1

Stock repurchases

(504)

(101)

(351)

Net cash used in financing activities

(624)

(224)

(461)

Net increase (decrease) in cash and cash equivalents

35

390

(112)

Cash and cash equivalents, beginning of period

1,182

1,046

1,294

Cash and cash equivalents, end of period

$  1,217

$  1,436

$   1,182


Safe Harbor Statement

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

This release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995.  These forward-looking statements generally can be identified by phrases such as TI or its management "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import.  Similarly, statements herein that describe TI's business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements.  All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements.  

We urge you to carefully consider the following important factors that could cause actual results to differ materially from the expectations of TI or its management:

  • Market demand for semiconductors, particularly in key markets such as communications, entertainment electronics and computing;
  • TI's ability to maintain or improve profit margins, including its ability to utilize its manufacturing facilities at sufficient levels to cover its fixed operating costs, in an intensely competitive and cyclical industry;
  • TI's ability to develop, manufacture and market innovative products in a rapidly changing technological environment;
  • TI's ability to compete in products and prices in an intensely competitive industry;
  • TI's ability to maintain and enforce a strong intellectual property portfolio and obtain needed licenses from third parties;
  • Expiration of license agreements between TI and its patent licensees, and market conditions reducing royalty payments to TI;
  • Economic, social and political conditions in the countries in which TI, its customers or its suppliers operate, including security risks, health conditions, possible disruptions in transportation networks and fluctuations in foreign currency exchange rates;
  • Natural events such as severe weather and earthquakes in the locations in which TI, its customers or its suppliers operate;
  • Availability and cost of raw materials, utilities, manufacturing equipment, third-party manufacturing services and manufacturing technology;
  • Changes in the tax rate applicable to TI as the result of changes in tax law, the jurisdictions in which profits are determined to be earned and taxed, the outcome of tax audits and the ability to realize deferred tax assets;
  • Changes in laws and regulations to which TI or its suppliers are or may become subject, such as those imposing fees or reporting or substitution costs relating to the discharge of emissions into the environment or the use of certain raw materials in our manufacturing processes;
  • Losses or curtailments of purchases from key customers and the timing and amount of distributor and other customer inventory adjustments;
  • Customer demand that differs from our forecasts;
  • The financial impact of inadequate or excess TI inventory that results from demand that differs from projections;
  • The ability of TI and its customers and suppliers to access their bank accounts and lines of credit or otherwise access the capital markets;
  • Impairments of our non-financial assets;
  • Product liability or warranty claims, claims based on epidemic or delivery failure or recalls by TI customers for a product containing a TI part;
  • TI's ability to recruit and retain skilled personnel; and
  • Timely implementation of new manufacturing technologies, installation of manufacturing equipment and the ability to obtain needed third-party foundry and assembly/test subcontract services.

 

For a more detailed discussion of these factors, see the Risk Factors discussion in Item 1A of the Company's most recent Form 10-K.  The forward-looking statements included in this release are made only as of the date of this release, and the Company undertakes no obligation to update the forward-looking statements to reflect subsequent events or circumstances.

About Texas Instruments

Texas Instruments (NYSE: TXN) helps customers solve problems and develop new electronics that make the world smarter, healthier, safer, greener and more fun.  A global semiconductor company, TI innovates through design, sales and manufacturing operations in more than 30 countries.  For more information, go to www.ti.com.

TI trademarks:

OMAP

DLP

Other trademarks are the property of their respective owners.

TXN-F

SOURCE Texas Instruments Incorporated