UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE
OF REPORT (DATE OF EARLIEST EVENT REPORTED): October 23, 2006
TEXAS
INSTRUMENTS INCORPORATED
(Exact
name of registrant as specified in charter)
|
DELAWARE
|
|
001-03761
|
|
75-0289970
|
|
(State
or other jurisdiction of incorporation)
|
|
(Commission
file number)
|
|
(I.R.S.
employer identification
no.)
|
12500
TI BOULEVARD
P.O.
BOX 660199
DALLAS,
TEXAS 75266-0199
(Address
of principal executive offices)
Registrant’s
telephone number, including area code: (972) 995-3773
Check
the
appropriate box below if the Form 8-K is intended to simultaneously satisfy
the
filing obligation of the registrant under any of the following provisions:
|
¨
|
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
|
¨
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
¨
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
|
|
¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
|
ITEM
2.02. Results of Operations and Financial Condition
The
Registrant's news release dated October 23, 2006, regarding its third quarter
2006 results of operations and financial condition attached hereto as Exhibit
99
is incorporated by reference herein.
ITEM
9.01. Exhibits
|
Designation
of
Exhibit
in
this
Report
|
|
Description
of Exhibit
|
|
99
|
|
Registrant’s
News Release
|
|
|
|
Dated
October 23, 2006 (furnished pursuant to Item
2.02)
|
“Safe
Harbor” Statement under the Private Securities Litigation Reform Act of 1995:
This report 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 in this report that describe the Company’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 the Company or
its
management:
| · |
Market
demand for semiconductors, particularly for analog chips and digital
signal processors 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 and critical manufacturing equipment;
|
| · |
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;
|
| · |
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 company forecasts;
|
| · |
The
financial impact of inadequate or excess TI inventories to meet demand
that differs from projections;
|
| · |
Product
liability or warranty claims, 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 text under the heading “Risk
Factors” in Item 1A of the Company’s most recent Form 10-K. The forward-looking
statements included in this report on Form 8-K are made only as of the date
of
this report, and the Company undertakes no obligation to update the
forward-looking statements to reflect subsequent events or
circumstances.
SIGNATURES
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 hereunto
duly authorized.
|
|
|
TEXAS
INSTRUMENTS INCORPORATED
|
||
|
Date:
October 23, 2006
|
|
By:
|
|
/s/
Kevin P. March
|
|
|
|
|
|
Kevin
P. March
|
|
|
|
|
|
Senior
Vice President
|
|
|
|
|
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and
Chief Financial Officer
|
Exhibit
99
TI
Reports 3Q06 Financial Results
| · |
TI
Revenue Grows to $3.76 Billion
|
| · |
$0.45
EPS from Continuing Operations
|
| · |
High-Performance
Analog Revenue Up 37% from a Year
Ago
|
| · |
Strong
Profitability at 51.4% Gross Margin, 24.7% Operating Margin
|
Conference
Call on TI Web Site at 4:30 p.m. Central Time Today
www.ti.com
Except
as noted, financial results are for continuing operations. The sale of TI’s
former Sensors & Controls business was completed on April 27, 2006, and that
business is reported as a discontinued operation.
DALLAS
(October 23, 2006) - Texas Instruments Incorporated (TI) (NYSE: TXN) today
reported third-quarter 2006 revenue of $3.76 billion. Revenue grew 2 percent
compared with the second quarter, which included a $70 million royalty
settlement, and increased 13 percent from the same quarter a year ago. The
increases were primarily due to continued strong demand for the company’s
high-performance analog and DSP products.
Earnings
per share (EPS) from continuing operations were $0.45. Second-quarter EPS of
$0.47 included a benefit of $0.03 from a sales tax refund and a benefit of
$0.02
from a royalty settlement. EPS grew 25 percent from $0.36 in the year-ago
quarter. EPS in each of these periods included an expense of $0.03 for
stock-based compensation.
“The
third quarter was one of the best in TI’s history,” said Rich Templeton, TI
president and chief executive officer. “Our revenue once again set an all-time
record as our share continued to climb in our core markets. Our strong gross
and
operating margins reflected the value of our product portfolio, rich in analog
and DSP products.
“At
the
same time, orders declined, leading us to expect that fourth-quarter
Semiconductor growth will be below the seasonal average. A couple of factors
are
influencing this. First, we believe customers have broadly replenished their
own
inventory and are confident in operating with lower backlog now that chip supply
has improved. The second factor is wireless, where we expect that unit mix
will
be more weighted toward low-priced cell phones and inventory correction will
continue in Japan. Even with a less-than-seasonal fourth quarter, we expect
the
growth rate of our Semiconductor business to be in the upper teens for the
year,” Templeton said.
“In
the
near term, we are managing inventory and tightening expenses. We have a
responsive manufacturing model and we believe distributor inventory levels
remain lean, both of which should serve us well. We are competing from a
position of strength with leading products and with customers who are gaining
share.”
Gross
Profit
TI’s
gross profit was $1.93 billion, or 51.4 percent of revenue. This was an increase
of $25 million from the prior quarter and an increase of $242 million from
the
year-ago quarter. The increases were due to higher revenue in the company’s
Semiconductor segment.
Operating
Expenses
Research
and development (R&D) expense was $570 million, or 15.2 percent of revenue.
R&D expense was $34 million higher than the prior quarter primarily because
the second quarter included a sales tax refund. R&D expense increased $49
million from the year-ago quarter due to higher investment in new semiconductor
technology, particularly for wireless applications.
Selling,
general and administrative (SG&A) expense was $432 million, or 11.5 percent
of revenue. SG&A expense increased $14 million from the prior quarter. This
expense was $24 million higher than a year ago primarily because of increased
consumer advertising of DLP®
technology for high-definition televisions.
Operating
Profit
Operating
profit was $930 million, or 24.7 percent of revenue. This was a decrease of
$23
million from the prior quarter, which included a $117 million operating profit
benefit associated with a royalty settlement and a sales tax refund. Operating
profit increased $169 million from the year-ago quarter due to higher gross
profit in the Semiconductor segment.
Total
stock-based compensation expense of $79 million, or 2.1 percent of revenue,
was
included in Corporate in the third quarter. This was about the same as in the
comparison periods.
Other
Income (Expense) Net (OI&E)
OI&E
of $55 million decreased $33 million from the prior quarter, which included
a
$20 million benefit from a sales tax refund. OI&E increased $6 million from
the year-ago quarter.
Net
Income
Income
from continuing operations was $686 million, or $0.45 per share.
Net
income of $702 million includes income from continuing and discontinued
operations. In the prior quarter, net income included $1.65 billion from
discontinued operations, almost all of which was a gain on the sale of the
company’s former Sensors & Controls business.
Orders
TI
orders
were $3.43 billion. This was a decrease of $478 million from the prior quarter
and a decrease of $41 million from the year-ago quarter. The decreases were
due
to lower orders in the company’s Semiconductor segment.
Cash
Cash
flow
from operations was $419 million. This was a decline of $248 million from the
prior quarter.
At
the
end of the third quarter, total cash (cash and cash equivalents plus short-term
investments) was $4.18 billion, down $1.49 billion from the end of the prior
quarter. During the third quarter, the company used $1.69 billion to repurchase
56 million shares and paid $46 million in dividends. During the past four
quarters, the company used $5.04 billion to repurchase 163 million shares,
reducing shares outstanding by more than 8 percent.
Capital
Spending and Depreciation
Capital
expenditures were $276 million. This was a decrease of $98 million from the
prior quarter and a decrease of $164 million from the year-ago
quarter.
TI’s
capital expenditures in the third quarter were primarily for equipment used
in
the assembly and test of semiconductors.
Depreciation
was $266 million, about the same as the prior quarter. Depreciation decreased
$66 million from the year-ago quarter.
Accounts
Receivable and Inventories
Accounts
receivable were $2.09 billion. This was an increase of $160 million from the
prior quarter primarily due to higher revenue in the month of September versus
the month of June. Accounts receivable increased $333 million from the year-ago
quarter primarily due to higher revenue. Days
sales outstanding were 50 at the end of the third quarter compared with 47
at
the end of the prior and the year-ago quarters.
Inventory
of $1.49 billion at the end of the third quarter was above desired levels.
This
was an increase of $156 million from the prior quarter as the company built
inventory to support expected product shipments, especially for cell phones.
To
a lesser degree, the company also began to rebuild needed work-in-process
inventory that previously had been depleted for catalog product lines such
as
high-performance analog. Compared with the year-ago quarter, when inventory
was
below desired levels, inventory increased $417 million. Days of inventory at
the
end of the third quarter were 73 compared with 67 at the end of the prior
quarter and 59 at the end of the year-ago quarter.
Outlook
TI
intends to provide a mid-quarter update to its financial outlook on
December
11, 2006, by issuing a press release and holding a conference call. Both will
be
available on the company’s web site.
For
the
fourth quarter of 2006, TI expects revenue from continuing operations to be
in
the following ranges:
| · |
Total
TI, $3.46 billion to $3.75 billion;
|
| · |
Semiconductor,
$3.39 billion to $3.66 billion; and
|
| · |
Educational
& Productivity Solutions, $70 million to $90
million.
|
TI
expects earnings per share from continuing operations to be in the range of
$0.40 to $0.46.
In
2006
for continuing operations, TI expects: the annual effective tax rate to be
about
29 percent compared with its prior expectation of about 30 percent; expense
for R&D to be about $2.2 billion; capital expenditures to be about $1.3
billion; and depreciation to be about $1.05 billion.
TEXAS
INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated
Statements of Income
(Millions
of dollars, except per-share amounts)
|
For
Three Months Ended
|
||||||||||
|
Sept.
30,
2006
|
June
30,
2006
|
Sept.
30,
2005
|
||||||||
|
Net
revenue
|
$
|
3,761
|
$
|
3,697
|
$
|
3,339
|
||||
|
Cost
of revenue (COR)
|
1,829
|
1,790
|
1,649
|
|||||||
|
Gross
profit
|
1,932
|
1,907
|
1,690
|
|||||||
|
Gross
profit % of revenue
|
51.4
|
%
|
51.6
|
%
|
50.6
|
%
|
||||
|
Research
and development (R&D)
|
570
|
536
|
521
|
|||||||
|
R&D
% of revenue
|
15.2
|
%
|
14.5
|
%
|
15.6
|
%
|
||||
|
Selling,
general and administrative (SG&A)
|
432
|
418
|
408
|
|||||||
|
SG&A
% of revenue
|
11.5
|
%
|
11.3
|
%
|
12.2
|
%
|
||||
|
Total operating costs and expenses
|
2,831
|
2,744
|
2,578
|
|||||||
|
Profit
from operations
|
930
|
953
|
761
|
|||||||
|
Operating
profit % of revenue
|
24.7
|
%
|
25.8
|
%
|
22.8
|
%
|
||||
|
Other
income (expense) net
|
55
|
88
|
49
|
|||||||
|
Interest
expense on loans
|
1
|
2
|
2
|
|||||||
|
Income
from
continuing operations before income taxes
|
984
|
1,039
|
808
|
|||||||
|
Provision
for income taxes
|
298
|
300
|
212
|
|||||||
|
Income
from
continuing operations
|
686
|
739
|
596
|
|||||||
|
Income
from
discontinued operations, net
of income taxes
|
16
|
1,648
|
35
|
|||||||
|
Net
income
|
$
|
702
|
$
|
2,387
|
$
|
631
|
||||
|
Basic
earnings
per common share:
|
||||||||||
|
Income
from continuing operations
|
$
|
.46
|
$
|
.48
|
$
|
.37
|
||||
|
Net
income
|
$
|
.47
|
$
|
1.54
|
$
|
.39
|
||||
|
Diluted
earnings per common share:
|
||||||||||
|
Income
from continuing operations
|
$
|
.45
|
$
|
.47
|
$
|
.36
|
||||
|
Net
income
|
$
|
.46
|
$
|
1.50
|
$
|
.38
|
||||
|
Average
shares outstanding (millions):
|
||||||||||
|
Basic
|
1,506
|
1,553
|
1,624
|
|||||||
|
Diluted
|
1,537
|
1,586
|
1,663
|
|||||||
|
Cash
dividends declared per share of common stock
|
$
|
.030
|
$
|
.030
|
$
|
.025
|
||||
|
Stock-based
compensation expense included in continuing operations:
|
||||||||||
|
COR
|
$
|
15
|
$
|
16
|
$
|
15
|
||||
|
R&D
|
24
|
25
|
26
|
|||||||
|
SG&A
|
40
|
43
|
39
|
|||||||
|
Profit
from operations
|
$
|
79
|
$
|
84
|
$
|
80
|
||||
|
%
of revenue
|
2.1
|
%
|
2.3
|
%
|
2.4
|
%
|
||||
TEXAS
INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated
Balance Sheets
(Millions
of dollars, except share amounts)
|
Sept.
30,
2006
|
June
30,
2006
|
Sept.
30,
2005
|
||||||||
|
Assets
|
||||||||||
|
Current
assets:
|
||||||||||
|
Cash
and cash equivalents
|
$
|
1,430
|
$
|
1,678
|
$
|
1,941
|
||||
|
Short-term
investments
|
2,754
|
3,992
|
3,305
|
|||||||
|
Accounts
receivable, net of allowances of ($29), ($28) and ($42)
|
2,089
|
1,929
|
1,756
|
|||||||
|
Raw
materials
|
117
|
108
|
74
|
|||||||
|
Work
in process
|
946
|
818
|
705
|
|||||||
|
Finished
goods
|
428
|
409
|
295
|
|||||||
|
Inventories
|
1,491
|
1,335
|
1,074
|
|||||||
|
Deferred
income taxes
|
666
|
632
|
581
|
|||||||
|
Prepaid
expenses and other current assets
|
190
|
215
|
166
|
|||||||
|
Assets
of discontinued operations
|
1
|
11
|
449
|
|||||||
|
Total
current assets
|
8,621
|
9,792
|
9,272
|
|||||||
|
Property,
plant and equipment at cost
|
7,890
|
8,406
|
8,661
|
|||||||
|
Less
accumulated depreciation
|
(3,901
|
)
|
(4,422
|
)
|
(4,929
|
)
|
||||
|
Property,
plant and equipment, net
|
3,989
|
3,984
|
3,732
|
|||||||
|
Equity
and debt investments
|
270
|
253
|
234
|
|||||||
|
Goodwill
|
792
|
792
|
677
|
|||||||
|
Acquisition-related
intangibles
|
131
|
117
|
72
|
|||||||
|
Deferred
income taxes
|
411
|
428
|
413
|
|||||||
|
Capitalized
software licenses, net
|
175
|
197
|
259
|
|||||||
|
Prepaid
retirement costs
|
308
|
219
|
210
|
|||||||
|
Other
assets
|
88
|
146
|
115
|
|||||||
|
Total
assets
|
$
|
14,785
|
$
|
15,928
|
$
|
14,984
|
||||
|
Liabilities
and Stockholders’ Equity
|
||||||||||
|
Current
liabilities:
|
||||||||||
|
Loans
payable and current portion of long-term debt
|
$
|
43
|
$
|
43
|
$
|
303
|
||||
|
Accounts
payable
|
744
|
788
|
755
|
|||||||
|
Accrued
expenses and other liabilities
|
1,066
|
994
|
906
|
|||||||
|
Income
taxes payable
|
458
|
870
|
81
|
|||||||
|
Accrued
profit sharing and retirement
|
118
|
77
|
92
|
|||||||
|
Liabilities
of discontinued operations
|
--
|
11
|
116
|
|||||||
|
Total
current liabilities
|
2,429
|
2,783
|
2,253
|
|||||||
|
Long-term
debt
|
--
|
--
|
55
|
|||||||
|
Accrued
retirement costs
|
67
|
103
|
503
|
|||||||
|
Deferred
income taxes
|
14
|
15
|
33
|
|||||||
|
Deferred
credits and other liabilities
|
248
|
239
|
267
|
|||||||
|
Total
liabilities
|
2,758
|
3,140
|
3,111
|
|||||||
|
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:
September 30, 2006 -- 1,739,102,544; June 30, 2006 -- 1,739,086,194;
September
30, 2005 -- 1,738,650,318
|
1,739
|
1,739
|
1,739
|
|||||||
|
Paid-in
capital
|
820
|
779
|
674
|
|||||||
|
Retained
earnings
|
16,927
|
16,271
|
12,787
|
|||||||
|
Less
treasury common stock at cost: Shares: September 30, 2006 -- 255,218,212;
June 30, 2006 -- 206,501,103; September 30, 2005 --
120,597,527
|
(7,413
|
)
|
(5,911
|
)
|
(3,152
|
)
|
||||
|
Accumulated
other comprehensive income (loss):
|
||||||||||
|
Minimum
pension liability
|
(33
|
)
|
(66
|
)
|
(158
|
)
|
||||
|
Unrealized
gains (losses) on available-for-sale investments
|
(12
|
)
|
(23
|
)
|
(15
|
)
|
||||
|
Unearned
compensation
|
(1
|
)
|
(1
|
)
|
(2
|
)
|
||||
|
Total
stockholders’ equity
|
12,027
|
12,788
|
11,873
|
|||||||
|
Total
liabilities and stockholders’ equity
|
$
|
14,785
|
$
|
15,928
|
$
|
14,984
|
TEXAS
INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated
Statements of Cash Flows
(Millions
of dollars)
|
For
Three Months Ended
|
||||||||||
|
Sept.
30,
2006
|
June
30,
2006
|
Sept.
30,
2005
|
||||||||
|
Cash
flows from operating activities:
|
||||||||||
|
Net
income
|
$
|
702
|
$
|
2,387
|
$
|
631
|
||||
|
Adjustments
to reconcile net income to cash provided by operating
activities of continuing operations:
|
||||||||||
|
Less
income from discontinued operations
|
(16
|
)
|
(1,648
|
)
|
(35
|
)
|
||||
|
Depreciation
|
266
|
267
|
332
|
|||||||
|
Stock-based
compensation
|
79
|
84
|
80
|
|||||||
|
Amortization
of capitalized software
|
26
|
29
|
33
|
|||||||
|
Amortization
of acquisition-related intangibles
|
15
|
15
|
12
|
|||||||
|
Deferred
income taxes
|
(46
|
)
|
(41
|
)
|
110
|
|||||
|
Increase/(decrease)
from changes in:
|
||||||||||
|
Accounts
receivable
|
(149
|
)
|
(138
|
)
|
(19
|
)
|
||||
|
Inventories
|
(156
|
)
|
(89
|
)
|
42
|
|||||
|
Prepaid
expenses and other current assets
|
(4
|
)
|
26
|
57
|
||||||
|
Accounts
payable and accrued expenses
|
82
|
129
|
247
|
|||||||
|
Income
taxes payable
|
(377
|
)
|
(334
|
)
|
(148
|
)
|
||||
|
Accrued
profit sharing and retirement
|
41
|
56
|
29
|
|||||||
|
Noncurrent
accrued retirement costs
|
(65
|
)
|
(68
|
)
|
12
|
|||||
|
Other
|
21
|
(8
|
)
|
81
|
||||||
|
Net
cash provided by operating activities of continuing
operations
|
419
|
667
|
1,464
|
|||||||
|
Cash
flows from investing activities:
|
||||||||||
|
Additions
to property, plant and equipment
|
(276
|
)
|
(374
|
)
|
(440
|
)
|
||||
|
Proceeds
from sales of assets
|
--
|
2,982
|
--
|
|||||||
|
Purchases
of cash investments
|
(1,330
|
)
|
(3,063
|
)
|
(2,095
|
)
|
||||
|
Sales
and maturities of cash investments
|
2,585
|
1,983
|
1,147
|
|||||||
|
Purchases
of equity investments
|
(11
|
)
|
(17
|
)
|
(5
|
)
|
||||
|
Sales
of equity and debt investments
|
--
|
2
|
39
|
|||||||
|
Acquisition
of businesses, net of cash acquired
|
--
|
(28
|
)
|
--
|
||||||
|
Net
cash provided by (used in) investing activities of continuing operations
|
968
|
1,485
|
(1,354
|
)
|
||||||
|
Cash
flows from financing activities:
|
||||||||||
|
Payments
on loans and long-term debt
|
--
|
(275
|
)
|
--
|
||||||
|
Dividends
paid on common stock
|
(46
|
)
|
(47
|
)
|
(41
|
)
|
||||
|
Sales
and other common stock transactions
|
89
|
137
|
160
|
|||||||
|
Excess
tax benefit from stock option exercises
|
21
|
57
|
42
|
|||||||
|
Stock
repurchases
|
(1,695
|
)
|
(1,037
|
)
|
(496
|
)
|
||||
|
Net
cash used in financing activities of continuing operations
|
(1,631
|
)
|
(1,165
|
)
|
(335
|
)
|
||||
|
Cash
flows from discontinued operations:
|
||||||||||
|
Operating
activities
|
--
|
(28
|
)
|
63
|
||||||
|
Investing
activities
|
--
|
(6
|
)
|
(23
|
)
|
|||||
|
Net
cash provided by (used
in) discontinued operations
|
--
|
(34
|
)
|
40
|
||||||
|
Effect
of exchange rate changes on cash
|
(4
|
)
|
3
|
(2
|
)
|
|||||
|
Net
increase/(decrease) in cash and cash equivalents
|
(248
|
)
|
956
|
(187
|
)
|
|||||
|
Cash
and cash equivalents, beginning of period
|
1,678
|
722
|
2,128
|
|||||||
|
Cash
and cash equivalents, end of period
|
$
|
1,430
|
$
|
1,678
|
$
|
1,941
|
||||
Business
Segment Net Revenue
(Millions
of dollars)
|
For
Three Months Ended
|
||||||||||
|
Sept.
30,
2006
|
June
30,
2006
|
Sept.
30,
2005
|
||||||||
|
Semiconductor
|
$
|
3,579
|
$
|
3,505
|
$
|
3,162
|
||||
|
Educational
& Productivity Solutions
|
182
|
192
|
177
|
|||||||
|
Total
net revenue
|
$
|
3,761
|
$
|
3,697
|
$
|
3,339
|
||||
Business
Segment Profit (Loss)
(Millions
of dollars)
|
For
Three Months Ended
|
||||||||||
|
Sept.
30,
2006
|
June
30,
2006
|
Sept.
30,
2005
|
||||||||
|
Semiconductor*
|
$
|
1,008
|
$
|
1,032
|
$
|
837
|
||||
|
Educational
& Productivity Solutions
|
83
|
84
|
79
|
|||||||
|
Corporate
|
(161
|
)
|
(163
|
)
|
(155
|
)
|
||||
|
Profit
from operations
|
$
|
930
|
$
|
953
|
$
|
761
|
||||
*
Semiconductor includes a benefit of $57 for a state sales tax refund and $60
from the royalty settlement in the second quarter of 2006.
The
royalty settlement and sales tax refund benefit included in TI's second-quarter
2006 results are detailed as follows. All items are in the Semiconductor segment
results except the $20 million in Other income (expense) net, which is in
Corporate.
|
|
Royalty
Settlement
|
Sales
Tax Refund
|
|||||
|
Orders
|
$
|
70
|
$
|
--
|
|||
|
Net
revenue
|
70
|
--
|
|||||
|
Cost
of revenue
|
10
|
(31
|
)
|
||||
|
Gross
profit
|
60
|
31
|
|||||
|
R&D
|
--
|
(21
|
)
|
||||
|
SG&A
|
--
|
(5
|
)
|
||||
|
Profit
from operations
|
60
|
57
|
|||||
|
Other
income (expense) net
|
--
|
20
|
|||||
|
Income
from continuing operations
before income taxes
|
60
|
77
|
|||||
Semiconductor
| · |
Revenue
in the third quarter was $3.58 billion. This was an increase of 2
percent
from the prior quarter, which included a $70 million royalty settlement.
Compared with a year ago, revenue increased 13 percent primarily
due to
higher demand for the company’s high-performance analog and DSP products.
|
| o |
Analog
revenue was up 5 percent from the prior quarter and increased 15
percent
from the year-ago quarter primarily due to demand for the company’s
high-performance analog products. Revenue from high-performance analog
products grew 14 percent from the prior quarter and 37 percent from
a year
ago.
|
| o |
DSP
revenue was up 5 percent from the prior quarter and increased 12
percent
from the year-ago quarter primarily due to higher demand from the
wireless
market.
|
| o |
TI’s
remaining Semiconductor revenue was 6 percent lower than the prior
quarter
due to the royalty settlement that was included in the second quarter.
Additionally, demand was lower for RISC microprocessors in the third
quarter. TI’s remaining Semiconductor revenue increased 12 percent from a
year ago due to stronger demand for standard logic products,
microcontrollers, DLP products and RISC microprocessors that more
than
offset lower royalties.
|
| · |
Gross
profit was $1.84 billion, or 51.5 percent of revenue. This was an
increase
of $29 million from the prior quarter and $240 million from the year-ago
quarter. The increases over both periods were due to higher
revenue.
|
| · |
Operating
profit was $1.01 billion, or 28.2 percent of revenue. This was a
decline
of $24 million from the prior quarter, which included a $117 million
operating profit benefit associated with a royalty settlement and
a sales
tax refund. Operating profit increased $171 million from the year-ago
quarter due to higher gross profit.
|
| · |
Semiconductor
orders were $3.31 billion. This was a decrease of 12 percent from
the
prior quarter due to lower demand across a broad range of products,
and
was about even with the year-ago quarter.
|
Semiconductor
Highlights
| · |
LG
Electronics selected TI’s OMAP-Vox™ platform for a new series of EDGE cell
phones.
|
| · |
ARCHOS
selected a new TI DaVinci™ technology dual-core processor for its latest
generation of portable multimedia players.
|
| · |
TI
introduced a high-performance analog power management chip with stackable
features that enable designers to develop a high-density power supply
that
easily scales up to 320 amps of output yet maintains maximum power
efficiency.
|
| · |
TI
customers demonstrated upcoming models of slim DLP high-definition
televisions, which reduce the television cabinet depth to about 10
inches
and offer a very light weight, enabling flexible installation options.
Samsung has announced availability of the first slim DLP high-definition
televisions for later this year.
|
Educational
& Productivity Solutions
| · |
Revenue
in the third quarter was $182 million. This was a decrease of $10
million
from the prior quarter reflecting the end of the back-to-school season.
It
was an increase of $5 million from the year-ago quarter due to stronger
demand for graphing calculators.
|
| · |
Gross
profit was $116 million, or a record 63.8 percent of revenue. Gross
profit
decreased $3 million from the prior quarter, and increased $6 million
from
the year-ago quarter primarily due to lower manufacturing costs and
higher
revenue.
|
| · |
Operating
profit was $83 million, or a record 45.9 percent of revenue. This
was
about even with the prior quarter and an increase of $4 million from
the
year-ago quarter.
|
#
#
#
“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 in this release that describe the Company’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 the Company or
its
management:
| · |
Market
demand for semiconductors, particularly for analog chips and digital
signal processors 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 and critical manufacturing equipment;
|
| · |
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;
|
| · |
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 company forecasts;
|
| · |
The
financial impact of inadequate or excess TI inventories to meet demand
that differs from projections;
|
| · |
Product
liability or warranty claims, 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 text under the heading “Risk
Factors” 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 publication,
and the Company undertakes no obligation to update the forward-looking
statements to reflect subsequent events or circumstances.
Texas
Instruments Incorporated provides innovative DSP and analog technologies to
meet
our customers’ real world signal processing requirements. In addition to
Semiconductor, the company includes the Educational & Productivity Solutions
business. TI is headquartered in Dallas, Texas, and has manufacturing, design
or
sales operations in more than 25 countries.
Texas
Instruments is traded on the New York Stock Exchange under the symbol TXN.
More
information is located on the World Wide Web at www.ti.com.
TI
Trademarks:
DLP
OMAP-Vox
DaVinci
Other
trademarks are the property of their respective owners.