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): January 22,
2008
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))
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ITEM
2.02. Results of Operations and Financial Condition
The
Registrant's news release dated January 22, 2008, regarding its fourth quarter
and 2007 results of operations and financial condition is attached hereto as
Exhibit 99 and is incorporated by reference herein.
ITEM
9.01. Exhibits
|
Designation
of
Exhibit
in
this
Report
|
|
Description
of Exhibit
|
|
99
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|
Registrant’s
News Release
|
|
|
|
Dated
January 22, 2008 (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, 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;
|
|
·
|
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:
January 22, 2008
|
|
By:
|
|
/s/
Kevin P. March
|
|
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|
|
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Kevin
P. March
|
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|
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Senior
Vice President
|
|
|
|
|
|
and
Chief Financial Officer
|
Exhibit
99
TI
Reports Financial Results for 4Q07 and 2007
|
·
|
Revenue
is $3.56 Billion and EPS is $0.54 in
4Q07
|
|
·
|
For
Year, Cash Flow from Operations is $4.41 Billion and Return on Invested
Capital Exceeds 25 Percent
|
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
(Jan. 22, 2008) – Financial
results reported today by Texas Instruments Incorporated (TI) (NYSE:TXN) reflect
the company’s strong positions in analog and digital signal processing
semiconductors.
Growth
resumed in the fourth quarter with a revenue increase of 3 percent from the
same quarter a year ago. This growth was led by demand for
TI’s digital signal processors and high-performance analog products,
which were up 12 percent each. Gross profit increased 10 percent
and operating profit increased 30 percent, reflecting the quality of the
company's product portfolio,
the efficiency of its manufacturing strategies and effective expense
management. For the year, cash flow from operations was a
record $4.41 billion and return on invested capital was more than 25
percent.
“It
was a
good quarter and a good year for TI. We delivered more value to
shareholders and built momentum with customers. Perhaps most important to
our future performance, we sharpened our focus on analog
with increases in dedicated research and development, sales support and
manufacturing capacity. Evidence of our potential in this area was
notable in high-performance analog where we again made substantial market
share gains,” said Rich Templeton, TI president and chief
executive officer. “We move into the first quarter of
2008 expecting year-over-year growth to accelerate in
our semiconductor operations.”
Details
of financial performance for both the fourth quarter and the year are in the
following paragraphs.
Fourth
Quarter 2007
|
·
|
Revenue
was $3.56 billion, up 3 percent from the same quarter a year
ago. This was the first year-over-year gain in four quarters,
reflecting renewed growth in the company’s Semiconductor
segment. Compared with the third quarter of the
year, revenue decreased 3 percent due to the expected seasonal decline
in
graphing calculators, the core products in the company’s Education
Technology segment.
|
|
·
|
Gross
profit was $1.93 billion, or 54.2 percent of revenue. This was
down $58 million from the prior quarter primarily due to seasonally
lower
revenue from graphing calculators. In addition, the prior
quarter included a $39 million gain from the sale of TI’s product line for
digital subscriber line (DSL) customer premises
equipment. These more than offset higher gross profit in
the company’s Semiconductor segment. Compared with the year-ago
quarter, gross profit was up $178 million as a greater percentage
of
revenue came from more-profitable analog and digital signal processing
products, and as the company continued to reduce manufacturing
costs.
|
|
·
|
Operating
expenses were $508 million for research and development (R&D) and $422
million for selling, general and administrative
(SG&A). R&D expense decreased $34 million from the
prior quarter due to lower costs for severance and semiconductor
product development. From the year-ago quarter, R&D expense
decreased $48 million due to lower costs for semiconductor product
development. The company continues to benefit from more
efficient development of advanced digital manufacturing process
technologies through its collaborative work with
foundries. SG&A decreased $7 million from the prior
quarter due to seasonally lower compensation expense.
SG&A was about even with the same quarter a year
ago.
|
|
·
|
Operating
profit was $996 million, or 28.0 percent of revenue. This was a
decrease of $17 million from the prior quarter as less gross profit
more than offset the benefit of lower operating
expenses. Operating profit increased $229 million from the
year-ago quarter, primarily due to higher gross profit, as well as
lower
operating expenses.
|
|
·
|
Other
income was $46 million. This was down in both
comparisons, $7 million from the prior quarter and $23 million
from the year-ago quarter. The declines were primarily due to
the non-recurrence of favorable items, including a tax interest benefit
in
the prior quarter and a settlement with the Italian government in
the
year-ago quarter.
|
|
·
|
Income
from continuing operations was $753 million, including a discrete
tax
benefit of $11 million. Income was about even with the prior quarter
and up $82 million, or 12 percent, from the year-ago quarter.
Income in the year-ago quarter included a $72 million benefit from
the
reinstatement of the federal R&D tax
credit.
|
|
·
|
Earnings
per share (EPS) were $0.54 and included a discrete tax benefit of
$0.01. EPS increased in both comparisons, $0.02 from the prior
quarter and $0.09 from the year-ago quarter. EPS in the
year-ago quarter included a $0.05 tax benefit from the reinstatement
of
the federal R&D tax credit.
|
|
·
|
Orders
were $3.48 billion. This was a decrease of $75 million from the
prior quarter primarily due to the seasonal decline in graphing
calculators, and an increase of $402 million from the same quarter
a year
ago due to stronger demand for the company’s
semiconductors.
|
|
·
|
Cash
flow from operations was $1.42 billion, a decrease of $109 million
from
the prior quarter. The prior quarter included a tax
refund. At the end of the quarter, total cash (cash and cash
equivalents plus short-term investments) was $2.92
billion. This was $745 million lower than the end of the prior
quarter and $793 million lower than the same quarter a year ago as
the
company used $1.88 billion to repurchase 57 million shares of its
common
stock and paid dividends of $138
million.
|
|
·
|
Capital
spending totaled $181 million, primarily for equipment and facilities
used to assemble and test semiconductors. Depreciation was
$253 million.
|
|
·
|
Accounts
receivable were $1.74 billion at the end of the quarter. This
was a decrease of $281 million from the prior quarter, and reflected
normal seasonal patterns, for both lower revenue in the final
month of the quarter in the Semiconductor segment and lower revenue
in the
company's Education Technology segment. Accounts receivable
were down $32 million compared with the same quarter a year
ago. Days sales outstanding were 44 at the end of the quarter,
compared with 50 at the end of the prior quarter and 46 for the same
period in 2006.
|
|
·
|
Inventory
was $1.42 billion at the end of the fourth quarter. This was
$32 million lower than the prior quarter and $19 million lower than
the
same quarter a year ago. Days of inventory at the end of the
fourth quarter were 78, unchanged from the end of the prior quarter
and up
from 75 a year ago.
|
Year
2007
|
·
|
Revenue
was $13.83 billion, down 3 percent from 2006, due to lower revenue
for
RISC microprocessors, semiconductors used in cell phone applications
and
DLP®
products. The collective declines in these areas more than
offset strong growth from high-performance analog
products.
|
|
·
|
Gross
profit was $7.33 billion, or 53.0 percent of revenue. This was an
increase of $74 million as a greater percentage of revenue came from
more-profitable analog and digital signal processing products, and
as the
company reduced manufacturing
costs.
|
|
·
|
Operating
expenses were $2.15 billion for R&D and $1.68 billion for
SG&A. R&D expense decreased $40 million compared with
2006 as the company benefited from more efficient development of
advanced
digital manufacturing process technologies through its collaborative
work with foundries. SG&A expense decreased $16
million compared with 2006.
|
|
·
|
Operating
profit was $3.50 billion, or 25.3 percent of revenue. This was
an increase of $130 million, or 4 percent, primarily due to strong
gross
profit, as well as lower operating
expenses.
|
|
·
|
Other
income was $195 million, a decrease of $63 million primarily due
to lower
interest income. The year 2006 included a favorable settlement with
the Italian government that was not repeated in
2007.
|
|
·
|
Income
from continuing operations was $2.64 billion, about the same as
2006. Net income was $2.66 billion, down from $4.34 billion in
2006 when the company had $1.70 billion in income from discontinued
operations, almost all of which came from the gain on the sale of the
Sensors & Controls business.
|
|
·
|
EPS
from continuing operations was $1.83, up 8 percent from 2006, even
though
income from continuing operations was about even. The increase
in EPS reflects fewer shares outstanding. TI's portfolio now
requires less capital spending and is comprised of higher-margin
products. As a result, the company has generated greater levels of
cash that it has returned to shareholders through stock
repurchases. EPS from discontinued operations were $0.01,
compared with $1.09 last year when a gain on the sale of the Sensors
& Controls business was
included.
|
|
·
|
Orders
were $13.69 billion, down $327 million from 2006, due to lower demand
for
semiconductor products.
|
|
·
|
Cash
flow from operations was $4.41 billion, an increase of $1.95 billion
from
the prior year. Cash flow in 2006 included income tax payments
associated with the gain on the sale of the Sensors & Controls
business and investments made by the company to carry a higher level
of inventory in order to improve its responsiveness to
customers. Cash flow in 2007 included a tax refund. For
the year, the company used $4.89 billion to repurchase 147 million
shares
of common stock, reducing shares outstanding by 7 percent. The
company paid $425 million in dividends, more than double the $199
million
paid in 2006.
|
|
·
|
Capital
spending totaled $686 million, primarily for equipment and facilities
used to assemble and test semiconductors. This was a
decrease of $586 million from the prior year. Depreciation was
$1.02 billion.
|
Outlook
TI
intends to provide a mid-quarter update to its financial outlook on March
10,
2008, by issuing a press release and holding a conference call. Both
will be available on the company’s web site.
For
the first quarter of 2008, TI
expects revenue to be in the following ranges:
|
·
|
Total
TI, $3.27 billion to $3.55 billion;
|
|
·
|
Semiconductor,
$3.20 billion to $3.46 billion; and
|
|
·
|
Education
Technology, $70 million to $90
million.
|
TI
expects EPS to be in the range of
$0.43 to $0.49.
In
2008,
TI expects R&D expense of about $2.0 billion, capital expenditures of about
$0.9 billion and depreciation of about $1.0 billion. The annual
effective tax rate is estimated to be about 31 percent, up from 29 percent
in 2007. The tax rate is based on current tax law and does not assume
reinstatement of the federal R&D tax credit, which expired at the end of
2007.
TEXAS
INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated
Statements of Income
(Millions
of dollars, except share and per-share amounts)
|
For
Three Months Ended
|
For
Years Ended
|
|||||||||||||||||||
|
Dec.
31, 2007
|
Sept.
30, 2007
|
Dec.
31, 2006
|
Dec.
31, 2007
|
Dec.
31, 2006
|
||||||||||||||||
|
Net
revenue
|
$ |
3,556
|
$ |
3,663
|
$ |
3,463
|
$ |
13,835
|
$ |
14,255
|
||||||||||
|
Cost
of revenue (COR)
|
1,630
|
1,679
|
1,715
|
6,502
|
6,996
|
|||||||||||||||
|
Gross
profit
|
1,926
|
1,984
|
1,748
|
7,333
|
7,259
|
|||||||||||||||
|
Research
and development (R&D)
|
508
|
542
|
556
|
2,155
|
2,195
|
|||||||||||||||
|
Selling,
general and administrative (SG&A)
|
422
|
429
|
425
|
1,681
|
1,697
|
|||||||||||||||
|
Total
operating costs and expenses
|
2,560
|
2,650
|
2,696
|
10,338
|
10,888
|
|||||||||||||||
|
Profit
from operations
|
996
|
1,013
|
767
|
3,497
|
3,367
|
|||||||||||||||
|
Other
income (expense) net
|
46
|
53
|
69
|
195
|
258
|
|||||||||||||||
|
Income
from continuing operations before income taxes
|
1,042
|
1,066
|
836
|
3,692
|
3,625
|
|||||||||||||||
|
Provision
for income taxes
|
289
|
308
|
165
|
1,051
|
987
|
|||||||||||||||
|
Income
from continuing operations
|
753
|
758
|
671
|
2,641
|
2,638
|
|||||||||||||||
|
Income
(loss) from discontinued operations,
net
of income taxes
|
3
|
18
|
(3 | ) |
16
|
1,703
|
||||||||||||||
|
Net
income
|
$ |
756
|
$ |
776
|
$ |
668
|
$ |
2,657
|
$ |
4,341
|
||||||||||
|
Basic
earnings per common share:
|
||||||||||||||||||||
|
Income
from continuing operations
|
$ |
.55
|
$ |
.54
|
$ |
.46
|
$ |
1.86
|
$ |
1.73
|
||||||||||
|
Net
income
|
$ |
.55
|
$ |
.55
|
$ |
.45
|
$ |
1.88
|
$ |
2.84
|
||||||||||
|
Diluted
earnings per common share:
|
||||||||||||||||||||
|
Income
from continuing operations
|
$ |
.54
|
$ |
.52
|
$ |
.45
|
$ |
1.83
|
$ |
1.69
|
||||||||||
|
Net
income
|
$ |
.54
|
$ |
.54
|
$ |
.45
|
$ |
1.84
|
$ |
2.78
|
||||||||||
|
Average
shares outstanding (millions):
|
||||||||||||||||||||
|
Basic
|
1,372
|
1,417
|
1,469
|
1,417
|
1,528
|
|||||||||||||||
|
Diluted
|
1,399
|
1,448
|
1,499
|
1,446
|
1,560
|
|||||||||||||||
|
Cash
dividends declared per share of common stock
|
$ |
.10
|
$ |
.08
|
$ |
.04
|
$ |
.30
|
$ |
.13
|
||||||||||
|
Percentage
of revenue:
|
||||||||||||||||||||
|
Gross
profit
|
54.2 | % | 54.2 | % | 50.5 | % | 53.0 | % | 50.9 | % | ||||||||||
|
R&D
|
14.3 | % | 14.8 | % | 16.0 | % | 15.6 | % | 15.4 | % | ||||||||||
|
SG&A
|
11.9 | % | 11.7 | % | 12.3 | % | 12.1 | % | 11.9 | % | ||||||||||
|
Operating
profit
|
28.0 | % | 27.6 | % | 22.1 | % | 25.3 | % | 23.6 | % | ||||||||||
TEXAS
INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated
Balance Sheets
(Millions
of dollars, except share amounts)
|
Dec.
31,
2007
|
Sept.
30,
2007
|
Dec.
31,
2006
|
||||||||||
|
Assets
|
||||||||||||
|
Current
assets:
|
||||||||||||
|
Cash
and cash equivalents
|
$ |
1,328
|
$ |
807
|
$ |
1,183
|
||||||
|
Short-term
investments
|
1,596
|
2,862
|
2,534
|
|||||||||
|
Accounts
receivable, net of allowances of ($26), ($30) and ($26)
|
1,742
|
2,023
|
1,774
|
|||||||||
|
Raw
materials
|
105
|
102
|
105
|
|||||||||
|
Work
in process
|
876
|
934
|
930
|
|||||||||
|
Finished
goods
|
437
|
414
|
402
|
|||||||||
|
Inventories
|
1,418
|
1,450
|
1,437
|
|||||||||
|
Deferred
income taxes
|
654
|
702
|
741
|
|||||||||
|
Prepaid
expenses and other current assets
|
180
|
209
|
185
|
|||||||||
|
Total
current assets
|
6,918
|
8,053
|
7,854
|
|||||||||
|
Property,
plant and equipment at cost
|
7,568
|
7,597
|
7,751
|
|||||||||
|
Less
accumulated depreciation
|
(3,959 | ) | (3,916 | ) | (3,801 | ) | ||||||
|
Property,
plant and equipment, net
|
3,609
|
3,681
|
3,950
|
|||||||||
|
Equity
and other long-term investments
|
267
|
265
|
287
|
|||||||||
|
Goodwill
|
838
|
796
|
792
|
|||||||||
|
Acquisition-related
intangibles
|
115
|
108
|
118
|
|||||||||
|
Deferred
income taxes
|
510
|
425
|
601
|
|||||||||
|
Capitalized
software licenses, net
|
227
|
242
|
188
|
|||||||||
|
Overfunded
retirement plans
|
105
|
77
|
58
|
|||||||||
|
Other
assets
|
78
|
77
|
82
|
|||||||||
|
Total
assets
|
$ |
12,667
|
$ |
13,724
|
$ |
13,930
|
||||||
|
Liabilities
and Stockholders’ Equity
|
||||||||||||
|
Current
liabilities:
|
||||||||||||
|
Loans
payable and current portion of long-term debt
|
$ |
--
|
$ |
--
|
$ |
43
|
||||||
|
Accounts
payable
|
657
|
644
|
560
|
|||||||||
|
Accrued
expenses and other liabilities
|
1,117
|
1,092
|
1,029
|
|||||||||
|
Income
taxes payable
|
53
|
152
|
284
|
|||||||||
|
Accrued
profit sharing and retirement
|
198
|
143
|
162
|
|||||||||
|
Total
current liabilities
|
2,025
|
2,031
|
2,078
|
|||||||||
|
Underfunded
retirement plans
|
184
|
95
|
208
|
|||||||||
|
Deferred
income taxes
|
49
|
27
|
23
|
|||||||||
|
Deferred
credits and other liabilities
|
434
|
434
|
261
|
|||||||||
|
Total
liabilities
|
2,692
|
2,587
|
2,570
|
|||||||||
|
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: Dec. 31, 2007 --
1,739,632,601; Sept. 30, 2007 -- 1,739,579,782; Dec. 31, 2006 --
1,739,108,694
|
1,740
|
1,740
|
1,739
|
|||||||||
|
Paid-in
capital
|
931
|
853
|
885
|
|||||||||
|
Retained
earnings
|
19,788
|
19,172
|
17,529
|
|||||||||
|
Less
treasury common stock at cost:
Shares: Dec.
31, 2007 -- 396,421,798; Sept. 30, 2007 -- 341,373,012; Dec. 31,
2006 --
289,078,450
|
(12,160 | ) | (10,344 | ) | (8,430 | ) | ||||||
|
Accumulated
other comprehensive (loss), net of taxes
|
(324 | ) | (284 | ) | (363 | ) | ||||||
|
Total
stockholders’ equity
|
9,975
|
11,137
|
11,360
|
|||||||||
|
Total
liabilities and stockholders’ equity
|
$ |
12,667
|
$ |
13,724
|
$ |
13,930
|
||||||
TEXAS
INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated
Statements of Cash Flows
(Millions
of dollars)
|
For
Three Months Ended
|
For
Years Ended
|
|||||||||||||||||||
|
Dec.
31, 2007
|
Sept.
30, 2007
|
Dec.
31, 2006
|
Dec.
31, 2007
|
Dec.
31, 2006
|
||||||||||||||||
|
Cash
flows from operating activities:
|
||||||||||||||||||||
|
Net
income
|
$ |
756
|
$ |
776
|
$ |
668
|
$ |
2,657
|
$ |
4,341
|
||||||||||
|
Adjustments
to reconcile net income to cash provided by operating
activities of continuing operations:
|
||||||||||||||||||||
|
(Income)
loss from discontinued operations
|
(3 | ) | (18 | ) |
3
|
(16 | ) | (1,703 | ) | |||||||||||
|
Depreciation
|
253
|
262
|
249
|
1,022
|
1,052
|
|||||||||||||||
|
Stock-based
compensation
|
67
|
66
|
78
|
280
|
332
|
|||||||||||||||
|
Amortization
of acquisition-related intangibles
|
10
|
10
|
13
|
48
|
59
|
|||||||||||||||
|
(Gains)
losses on sales of assets
|
--
|
(39 | ) |
--
|
(39 | ) |
--
|
|||||||||||||
|
Deferred
income taxes
|
4
|
36
|
(77 | ) |
34
|
(200 | ) | |||||||||||||
|
Increase
(decrease) from changes in:
|
||||||||||||||||||||
|
Accounts
receivable
|
284
|
(117 | ) |
315
|
40
|
(116 | ) | |||||||||||||
|
Inventories
|
32
|
(34 | ) |
54
|
11
|
(248 | ) | |||||||||||||
|
Prepaid
expenses and other current assets
|
26
|
24
|
(14 | ) |
13
|
(95 | ) | |||||||||||||
|
Accounts
payable and accrued expenses
|
(20 | ) |
154
|
(208 | ) |
77
|
(104 | ) | ||||||||||||
|
Income
taxes payable
|
(57 | ) |
378
|
(156 | ) |
188
|
(716 | ) | ||||||||||||
|
Accrued
profit sharing and retirement
|
52
|
45
|
30
|
33
|
28
|
|||||||||||||||
|
Change
in funded status of retirement plans and accrued retirement costs
|
(3 | ) | (14 | ) | (94 | ) | (16 | ) | (210 | ) | ||||||||||
|
Other
|
21
|
2
|
(21 | ) |
74
|
34
|
||||||||||||||
|
Net
cash provided by operating activities of continuing
operations
|
1,422
|
1,531
|
840
|
4,406
|
2,454
|
|||||||||||||||
|
Cash
flows from investing activities:
|
||||||||||||||||||||
|
Additions
to property, plant and equipment
|
(181 | ) | (152 | ) | (214 | ) | (686 | ) | (1,272 | ) | ||||||||||
|
Proceeds
from sales of assets
|
--
|
61
|
14
|
61
|
3,000
|
|||||||||||||||
|
Purchases
of cash investments
|
(794 | ) | (1,916 | ) | (1,275 | ) | (5,035 | ) | (6,821 | ) | ||||||||||
|
Sales
and maturities of cash investments
|
2,067
|
1,374
|
1,509
|
5,981
|
8,418
|
|||||||||||||||
|
Purchases
of equity investments
|
(4 | ) | (15 | ) | (7 | ) | (30 | ) | (40 | ) | ||||||||||
|
Sales
of equity and debt investments
|
2
|
4
|
2
|
11
|
11
|
|||||||||||||||
|
Acquisitions,
net of cash acquired
|
(56 | ) | (4 | ) |
--
|
(87 | ) | (205 | ) | |||||||||||
|
Net
cash provided by (used in) investing activities of continuing operations
|
1,034
|
(648 | ) |
29
|
215
|
3,091
|
||||||||||||||
|
Cash
flows from financing activities:
|
||||||||||||||||||||
|
Payments
on loans and long-term debt
|
--
|
--
|
--
|
(43 | ) | (586 | ) | |||||||||||||
|
Dividends
paid
|
(138 | ) | (114 | ) | (59 | ) | (425 | ) | (199 | ) | ||||||||||
|
Sales
and other common stock transactions
|
67
|
166
|
57
|
761
|
418
|
|||||||||||||||
|
Excess
tax benefit from stock option exercises
|
10
|
16
|
15
|
116
|
100
|
|||||||||||||||
|
Stock
repurchases
|
(1,877 | ) | (1,409 | ) | (1,130 | ) | (4,886 | ) | (5,302 | ) | ||||||||||
|
Net
cash used in financing activities of continuing operations
|
(1,938 | ) | (1,341 | ) | (1,117 | ) | (4,477 | ) | (5,569 | ) | ||||||||||
|
Cash
flows from discontinued operations:
|
||||||||||||||||||||
|
Operating
activities
|
--
|
--
|
--
|
--
|
7
|
|||||||||||||||
|
Investing
activities
|
--
|
--
|
--
|
--
|
(16 | ) | ||||||||||||||
|
Net
cash used in discontinued operations
|
--
|
--
|
--
|
--
|
(9 | ) | ||||||||||||||
|
Effect
of exchange rate changes on cash
|
3
|
(1 | ) |
1
|
1
|
2
|
||||||||||||||
|
Net
increase (decrease) in cash and cash equivalents
|
521
|
(459 | ) | (247 | ) |
145
|
(31 | ) | ||||||||||||
|
Cash
and cash equivalents, beginning of period
|
807
|
1,266
|
1,430
|
1,183
|
1,214
|
|||||||||||||||
|
Cash
and cash equivalents, end of period
|
$ |
1,328
|
$ |
807
|
$ |
1,183
|
$ |
1,328
|
$ |
1,183
|
||||||||||
Certain
amounts in the prior periods’ financial statements have been reclassified to
conform to the current presentation.
Segment
Net Revenue
(Millions
of dollars)
|
For
Three Months Ended
|
For
Years Ended
|
|||||||||||||||||||
|
Dec.
31,
2007
|
Sept.
30,
2007
|
Dec.
31,
2006
|
Dec.
31,
2007
|
Dec.
31,
2006
|
||||||||||||||||
|
Semiconductor*
|
$ |
3,475
|
$ |
3,461
|
$ |
3,385
|
$ |
13,309
|
$ |
13,730
|
||||||||||
|
Education
Technology
|
81
|
202
|
78
|
526
|
525
|
|||||||||||||||
|
Total
net revenue
|
$ |
3,556
|
$ |
3,663
|
$ |
3,463
|
$ |
13,835
|
$ |
14,255
|
||||||||||
Segment
Profit (Loss)
(Millions
of dollars)
|
For
Three Months Ended
|
For
Years Ended
|
|||||||||||||||||||
|
Dec.
31,
2007
|
Sept.
30,
2007
|
Dec.
31,
2006
|
Dec.
31,
2007
|
Dec.
31,
2006
|
||||||||||||||||
|
Semiconductor*
|
$ |
1,117
|
$ |
1,031
|
$ |
908
|
$ |
3,883
|
$ |
3,831
|
||||||||||
|
Education
Technology
|
19
|
99
|
19
|
208
|
200
|
|||||||||||||||
|
Corporate**
|
(140 | ) | (117 | ) | (160 | ) | (594 | ) | (664 | ) | ||||||||||
|
Profit
from operations
|
$ |
996
|
$ |
1,013
|
$ |
767
|
$ |
3,497
|
$ |
3,367
|
||||||||||
|
*
Semiconductor revenue for the year ended December 31, 2006 includes
a $70
million benefit from a royalty settlement in the second
quarter. Semiconductor profit from operations includes a benefit of
$60 million from the royalty settlement. Semiconductor profit from
operations also includes a benefit in the second quarter of 2006
of $57
million from a $77 million net sales tax refund that was due to the
settlement of an audit of Texas sales taxes paid on various purchases
over
a nine-year period. The $57 million effect on profit from operations
is reflected as $31 million in cost of revenue, $21 million in R&D and
$5 million in SG&A. The remaining $20 million of the net sales
tax refund is reflected in Other income (expense) net.
|
||||||||||||||||||||
|
**
Corporate includes a gain on the sale of an asset of $39 million in
the third quarter of 2007 in cost of revenue. Corporate also
includes the following stock-based compensation expense:
|
||||||||||||||||||||
|
COR
|
$ |
13
|
$ |
12
|
$ |
15
|
$ |
53
|
$ |
64
|
||||||||||
|
R&D
|
20
|
20
|
24
|
83
|
101
|
|||||||||||||||
|
SG&A
|
34
|
34
|
39
|
144
|
167
|
|||||||||||||||
|
Profit
from operations
|
$ |
67
|
$ |
66
|
$ |
78
|
$ |
280
|
$ |
332
|
||||||||||
Semiconductor
Segment
|
·
|
For
the fourth quarter, revenue was $3.48 billion, about even with the
prior
quarter. Compared with the same quarter a year ago, revenue
increased 3 percent because demand was higher for TI’s digital signal
processing and analog products.
|
|
·
|
For
the year, revenue was $13.31 billion, a decrease of $421 million,
or 3
percent, because revenue was lower for RISC microprocessors,
semiconductors used in cell phone applications and DLP
products. Combined, the declines in these areas more than
offset strong growth from high-performance analog
products.
|
|
·
|
For
analog products:
|
|
·
|
Fourth
quarter revenue was $1.37 billion. This was down 2 percent from
the prior quarter primarily due to the divestiture of a DSL product
line. Revenue was up 4 percent compared with the same quarter a
year ago due to stronger demand for high-performance analog
products. Revenue from high-performance analog products
increased 1 percent from the prior quarter and 12 percent from the
same
quarter a year ago.
|
|
·
|
Annual
revenue was $5.29 billion. This was an increase of 1 percent
due to strong demand for high-performance analog products that was
mostly
offset by lower revenue from custom products sold into cell phone
applications. Revenue from high-performance analog products
grew 9 percent.
|
|
·
|
For
digital signal processing products:
|
|
·
|
Fourth
quarter revenue was $1.36 billion. This was an increase of 4
percent from the prior quarter due to demand for products used in
cell
phone applications and an increase of 12 percent from the same quarter
a
year ago primarily due to products used in cell phone
applications.
|
|
·
|
Annual
revenue was $5.07 billion, a decrease of 2 percent due to the divestiture
of a DSL product line and declines across a broad range of markets,
including cell phone applications.
|
|
·
|
For
remaining product lines:
|
|
·
|
Fourth
quarter revenue was $739 million. This was down 2 percent
compared with the prior quarter as a decline in DLP revenue more
than
offset gains in microcontroller revenue and royalties. Revenue
from standard logic products and RISC microprocessors was about
even. Compared with the same quarter a year ago, revenue
decreased 14 percent due to declines in DLP revenue, royalties and
RISC
microprocessor revenue. Revenue from microcontrollers and
standard logic products grew from a year
ago.
|
|
·
|
Annual
revenue was $2.95 billion, down 12 percent from the prior year due
to
lower demand for RISC microprocessors and DLP products. Revenue
from microcontrollers and royalties increased, while standard logic
revenue was about even.
|
|
·
|
Gross
profit for the fourth quarter was $1.90 billion, or 54.6 percent
of
revenue. This was up in both comparisons, $55 million from the
prior quarter and $165 million from the year-ago quarter. The higher
gross profit was a result of a greater percentage of revenue from
more-profitable analog and digital signal processing products, and
lower
manufacturing costs.
|
|
·
|
Gross
profit for the year was $7.08 billion, or 53.2 percent of
revenue. This was an increase of $30 million from the prior
year because a greater percentage of revenue came from
more-profitable analog and digital signal processing products, and
manufacturing costs were lower.
|
|
·
|
Operating
profit for the fourth quarter was $1.12 billion, or 32.1 percent
of
revenue. This was an increase of $86 million from the prior
quarter and $209 million from the same quarter a year ago due to
higher gross profit and lower R&D
expense.
|
|
·
|
Annual
operating profit was $3.88 billion, or 29.2 percent of
revenue. This was an increase of $52 million due to higher
gross profit and lower R&D
expense.
|
|
·
|
Orders
in the fourth quarter were $3.40 billion. This was about even
with the prior quarter and up 13 percent from the year-ago quarter
primarily due to higher demand for digital signal processing products,
as
well as for analog products.
|
|
·
|
Orders
for the year were $13.16 billion. This was a decrease of $329
million from the prior year due to lower demand across a broad range
of
semiconductor products.
|
Semiconductor
Highlights
|
·
|
TI
introduced a next-generation power management chip to maximize energy
efficiency in multi-kilowatt
systems.
|
|
·
|
TI
delivered the industry’s first sub-1 GHz radio frequency (RF)
system-on-chip solution with an integrated USB controller, enabling
a
fast, easy bridge between PCs and RF
networks.
|
|
·
|
TI
announced that Samsung Electronics Co., Ltd. would use TI’s OMAPTM
applications
processor and Bluetooth®
products in
its next-generation smartphones.
|
Education
Technology Segment
|
·
|
Revenue
in the fourth quarter was $81 million. This was a decrease of
$121 million from the prior quarter as graphing calculator sales
declined
with the end of the back-to-school season. It was an increase
of $3 million from the year-ago quarter due to higher demand for
graphing
calculators.
|
|
·
|
Annual
revenue was $526 million. This was about even with the prior
year.
|
|
·
|
Gross
profit in the fourth quarter was $50 million, or 62.1 percent of
revenue. This was a decrease of $85 million from the prior
quarter due to seasonally lower revenue and an increase of $5 million
from
the year-ago quarter primarily due to lower product costs, as well
as
higher revenue.
|
|
·
|
Gross
profit for the year was $340 million, or 64.6 percent of
revenue. This was an increase of $19 million, or 3.5 percentage
points of gross margin, due to lower product
costs.
|
|
·
|
Operating
profit in the fourth quarter was $19 million, or 23.6 percent of
revenue. This was a decrease of $80 million compared with the
prior quarter due to less gross profit. Operating profit was
even compared with the year-ago quarter as greater gross profit was
offset
by higher operating expenses.
|
|
·
|
Annual
operating profit was $208 million, or 39.4 percent of
revenue. This was an increase of $8 million from the prior year
due to greater gross profit.
|
# # #
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 in this release that
describe our 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 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, 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;
|
|
·
|
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 our most recent Form 10-K. The forward-looking
statements included in this release are made only as of the date of publication,
and we undertake 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
manufacturing, design and sales operations in more than 25 countries. For
more information, go to www.ti.com.
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