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): July 23, 2007
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)
|
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¨
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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 July 23, 2007, regarding its second quarter
2007
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
July 23, 2007 (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.
|
|
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TEXAS
INSTRUMENTS INCORPORATED
|
||
|
Date:
July 23, 2007
|
|
By:
|
|
/s/
Kevin P. March
|
|
|
|
|
|
Kevin
P. March
|
|
|
|
|
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Senior
Vice President
|
|
|
|
|
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and
Chief Financial Officer
|
Exhibit
99
TI
Reports 2Q07 Financial Results
| · |
TI
Revenue Up 7% Sequentially
|
| · |
EPS
of $0.42, Up 20% Sequentially
|
| · |
Record
Gross Margin as Company Progresses Toward Higher Profitability Goals
|
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
(July 23, 2007) - Texas Instruments Incorporated (TI) (NYSE: TXN) today reported
revenue of $3.42 billion for the second quarter of 2007. Revenue increased
7
percent compared with the prior quarter as demand for the company’s
semiconductor products began to rebound following an inventory correction in
the
semiconductor market. Growth also benefited from a seasonal increase in demand
for the company’s graphing calculator products. Revenue decreased 7 percent
compared with the year-ago quarter due to lower demand across a broad base
of
products.
Earnings
per share (EPS) were $0.42. This was a $0.07, or 20 percent, increase from
the
prior quarter and a $0.05 decrease from the year-ago quarter. In the year-ago
quarter, financial results included EPS benefits of $0.03 from a sales tax
refund and $0.02 associated with a favorable royalty settlement. The royalty
settlement also contributed $70 million to revenue in the year-ago
quarter.
“Our
attention to customers and growing focus on analog continue to help us deliver
stronger financial results,” said Rich Templeton, president and chief executive
officer. “Moreover, we see even greater opportunities ahead as the
market regains momentum. With TI’s broad product portfolio, spanning
both analog and digital signal processing technologies, we are in a unique
position to support customers working on hundreds of electronics
applications across the globe. We also see potential to expand our
margins, and we recently raised our profitability goals to 55 percent gross
margin and 30 percent operating margin. We expect to meet these goals
within the next few years.”
Gross
Profit
Gross
profit was $1.78 billion, a record 52.1 percent of revenue. This was up $147
million from the prior quarter due to higher revenue. It was down $123 million
from the year-ago quarter primarily due to the combination of the royalty
settlement and sales tax refund in the year-ago quarter, as well as lower
revenue.
Operating
Expenses
Research
and development (R&D) expense was $551 million. This was about even with the
prior quarter. R&D
expense increased $15 million from the year-ago quarter due to the favorable
impact of the sales tax refund a year ago.
Selling,
general and administrative (SG&A) expense was $424 million. This was an
increase of $19 million from the prior quarter primarily due to higher
compensation-related expenses, as well as seasonally higher marketing expenses
for graphing calculators. SG&A expense was about even with the year-ago
quarter.
Operating
Profit
Operating
profit was $809 million, or 23.6 percent of revenue. This was an increase of
$129 million from the prior quarter due to higher gross profit. It was a
decrease of $144 million from the year-ago quarter primarily due to the
combination of the royalty settlement and sales tax refund in the year-ago
quarter.
Other
Income (Expense) Net (OI&E)
OI&E
was $56 million. This was an increase of $16 million from the prior quarter
primarily due to the impairment of an investment in the prior quarter. OI&E
declined $32 million from a year ago primarily due to a benefit associated
with
the sales tax refund in the year-ago quarter, as well as lower interest income.
Income
Income
from continuing operations was $614 million, or $0.42 per share.
Orders
TI
orders
were $3.45 billion. This was an increase of $247 million, or 8 percent, from
the
prior quarter due to higher demand for semiconductor products and seasonally
stronger demand for calculators. Orders declined $455 million from the year-ago
quarter due to lower demand for semiconductor products that more than offset
a
$50 million increase in demand for calculators.
Cash
Cash
flow
from operations was $898 million. This was an increase of $344 million from
the
prior quarter primarily due to a reduced need for cash to meet working capital
requirements, such as the payment of annual profit sharing and bonus that was
made in the prior quarter. Higher net income also contributed to the increase
in
cash flow from operations. Total cash (cash and cash equivalents plus short-term
investments) was $3.58 billion at the end of the second quarter. This was an
increase of $245 million from the end of the prior quarter and a decrease of
$2.09 billion from the year-ago quarter, which included $2.98 billion from
the
sale of the company’s former Sensors & Controls business in that quarter. In
the second quarter of 2007, the company used $742 million to repurchase 21
million shares of common stock, paid $115 million in dividends to shareholders
and retired $43 million of debt on its maturity date. Since the end of the
year-ago quarter, the company has used $4.42 billion to repurchase 143 million
shares of common stock and paid $278 million in dividends.
Capital
Spending and Depreciation
Capital
expenditures were $174 million. This was a decrease of $5 million from the
prior
quarter and a decrease of $200 million from the year-ago
quarter
due to lower expenditures for semiconductor manufacturing equipment.
TI’s
capital expenditures in the quarter were primarily for equipment used in the
manufacture of semiconductors, especially assembly and test equipment.
Depreciation
was $256 million. This was an increase of $4 million from the prior quarter
and
a decrease of $11 million from the year-ago quarter.
Accounts
Receivable and Inventories
Accounts
receivable were $1.90 billion at the end of the second quarter. This was an
increase of $141 million from the prior quarter due to higher revenue and a
decrease of $32
million from the year-ago quarter due to lower revenue. Days
sales outstanding were 50 at the end of the second quarter compared with 50
at
the end of the prior quarter and 47 at the end of the year-ago
quarter.
Inventory
was $1.42 billion at the end of the second quarter. This was an increase of
$15
million from the prior quarter as the company built inventory of graphing
calculators in preparation for the back-to-school sales season. Compared with
a
year ago, inventory increased $89 million primarily due to replenishment of
high-performance analog product inventory from less-than-desirable levels a
year
ago. Days of inventory at the end of the second quarter were 78 compared with
82
at the end of the prior quarter and 67 a year ago.
Outlook
TI
intends to provide a mid-quarter update to its financial outlook on
September
11, 2007, by issuing a press release and holding a conference call. Both will
be
available on the company’s web site.
For
the
third quarter of 2007, TI expects revenue to be in the following
ranges:
| · |
Total
TI, $3.49 billion to $3.79 billion;
|
| · |
Semiconductor,
$3.29 billion to $3.57 billion; and
|
| · |
Education
Technology, $200 million to $220 million.
|
TI
expects earnings per share to be in the range of $0.46 to $0.52.
This
estimate assumes that the sale of the company’s broadband DSL customer-premises
equipment semiconductor product line will close at the end of July. The EPS
estimate does not include the expected gain on the sale.
In
2007,
TI still expects:
an
annual effective tax rate of about 28 percent, R&D expense of about $2.2
billion, capital expenditures of about $0.9 billion and depreciation of about
$1.0
billion.
TEXAS
INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated
Statements of Income
(Millions
of dollars, except share and per-share amounts)
|
For
Three Months Ended
|
||||||||||
|
June
30,
2007
|
Mar.
31,
2007
|
June
30,
2006
|
||||||||
|
Net
revenue
|
$
|
3,424
|
$
|
3,191
|
$
|
3,697
|
||||
|
Cost
of revenue (COR)
|
1,640
|
1,554
|
1,790
|
|||||||
|
Gross
profit
|
1,784
|
1,637
|
1,907
|
|||||||
|
Research
and development (R&D)
|
551
|
552
|
536
|
|||||||
|
Selling,
general and administrative (SG&A)
|
424
|
405
|
418
|
|||||||
|
Total
operating costs and expenses
|
2,615
|
2,511
|
2,744
|
|||||||
|
Profit
from operations
|
809
|
680
|
953
|
|||||||
|
Other
income (expense) net
|
56
|
39
|
86
|
|||||||
|
Income
from continuing operations before income taxes
|
865
|
719
|
1,039
|
|||||||
|
Provision
for income taxes
|
251
|
203
|
300
|
|||||||
|
Income
from continuing operations
|
614
|
516
|
739
|
|||||||
|
Income
(loss) from discontinued operations, net of income taxes
|
(4
|
)
|
--
|
1,648
|
||||||
|
Net
income
|
$
|
610
|
$
|
516
|
$
|
2,387
|
||||
|
Basic
earnings per common share:
|
||||||||||
|
Income
from continuing operations
|
$
|
.43
|
$
|
.36
|
$
|
.48
|
||||
|
Net
income
|
$
|
.42
|
$
|
.36
|
$
|
1.54
|
||||
|
Diluted
earnings per common share:
|
||||||||||
|
Income
from continuing operations
|
$
|
.42
|
$
|
.35
|
$
|
.47
|
||||
|
Net
income
|
$
|
.42
|
$
|
.35
|
$
|
1.50
|
||||
|
Average
shares outstanding (millions):
|
||||||||||
|
Basic
|
1,437
|
1,442
|
1,553
|
|||||||
|
Diluted
|
1,469
|
1,470
|
1,586
|
|||||||
|
Cash
dividends declared per share of common stock
|
$
|
.08
|
$
|
.04
|
$
|
.03
|
||||
|
Percentage
of revenue:
|
||||||||||
|
Gross
profit
|
52.1
|
%
|
51.3
|
%
|
51.6
|
%
|
||||
|
R&D
|
16.1
|
%
|
17.3
|
%
|
14.5
|
%
|
||||
|
SG&A
|
12.4
|
%
|
12.7
|
%
|
11.3
|
%
|
||||
|
Operating
profit
|
23.6
|
%
|
21.3
|
%
|
25.8
|
%
|
||||
TEXAS
INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated
Balance Sheets
(Millions
of dollars, except share amounts)
|
June
30,
2007
|
Mar.
31,
2007
|
June
30,
2006
|
||||||||
|
Assets
|
||||||||||
|
Current
assets:
|
||||||||||
|
Cash
and cash equivalents
|
$
|
1,266
|
$
|
965
|
$
|
1,678
|
||||
|
Short-term
investments
|
2,315
|
2,371
|
3,992
|
|||||||
|
Accounts
receivable, net of allowances of ($27), ($25) and ($28)
|
1,897
|
1,756
|
1,929
|
|||||||
|
Raw
materials
|
106
|
114
|
108
|
|||||||
|
Work
in process
|
876
|
879
|
818
|
|||||||
|
Finished
goods
|
442
|
416
|
409
|
|||||||
|
Inventories
|
1,424
|
1,409
|
1,335
|
|||||||
|
Deferred
income taxes
|
1,072
|
1,071
|
632
|
|||||||
|
Prepaid
expenses and other current assets
|
246
|
257
|
215
|
|||||||
|
Assets
of discontinued operations
|
--
|
4
|
11
|
|||||||
|
Total
current assets
|
8,220
|
7,833
|
9,792
|
|||||||
|
Property,
plant and equipment at cost
|
7,657
|
7,715
|
8,406
|
|||||||
|
Less
accumulated depreciation
|
(3,859
|
)
|
(3,835
|
)
|
(4,422
|
)
|
||||
|
Property,
plant and equipment, net
|
3,798
|
3,880
|
3,984
|
|||||||
|
Equity
and other long-term investments
|
254
|
250
|
253
|
|||||||
|
Goodwill
|
792
|
792
|
792
|
|||||||
|
Acquisition-related
intangibles
|
117
|
131
|
117
|
|||||||
|
Deferred
income taxes
|
405
|
436
|
428
|
|||||||
|
Capitalized
software licenses, net
|
259
|
280
|
197
|
|||||||
|
Overfunded
retirement plans
|
79
|
54
|
--
|
|||||||
|
Prepaid
retirement costs
|
--
|
--
|
219
|
|||||||
|
Other
assets
|
96
|
94
|
146
|
|||||||
|
Total
assets
|
$
|
14,020
|
$
|
13,750
|
$
|
15,928
|
||||
|
Liabilities
and Stockholders’ Equity
|
||||||||||
|
Current
liabilities:
|
||||||||||
|
Loans
payable and current portion of long-term debt
|
$
|
--
|
$
|
43
|
$
|
43
|
||||
|
Accounts
payable
|
622
|
550
|
788
|
|||||||
|
Accrued
expenses and other liabilities
|
1,048
|
877
|
994
|
|||||||
|
Income
taxes payable
|
187
|
286
|
870
|
|||||||
|
Accrued
profit sharing and retirement
|
98
|
51
|
77
|
|||||||
|
Liabilities
of discontinued operations
|
--
|
--
|
11
|
|||||||
|
Total
current liabilities
|
1,955
|
1,807
|
2,783
|
|||||||
|
Underfunded
retirement plans
|
115
|
197
|
--
|
|||||||
|
Accrued
retirement costs
|
--
|
--
|
103
|
|||||||
|
Deferred
income taxes
|
20
|
10
|
15
|
|||||||
|
Deferred
credits and other liabilities
|
436
|
453
|
239
|
|||||||
|
Total
liabilities
|
2,526
|
2,467
|
3,140
|
|||||||
|
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:
June 30, 2007 -- 1,739,467,307; March 31, 2007 -- 1,739,211,844;
June 30,
2006 -- 1,739,086,194
|
1,739
|
1,739
|
1,739
|
|||||||
|
Paid-in
capital
|
761
|
822
|
779
|
|||||||
|
Retained
earnings
|
18,511
|
18,017
|
16,271
|
|||||||
|
Less
treasury common stock at cost: Shares: June 30, 2007 -- 310,382,046;
March
31, 2007 -- 305,502,566; June 30, 2006 -- 206,501,103
|
(9,233
|
)
|
(8,940
|
)
|
(5,911
|
)
|
||||
|
Accumulated
other comprehensive income (loss), net of tax
|
(284
|
)
|
(355
|
)
|
(90
|
)
|
||||
|
Total
stockholders’ equity
|
11,494
|
11,283
|
12,788
|
|||||||
|
Total
liabilities and stockholders’ equity
|
$
|
14,020
|
$
|
13,750
|
$
|
15,928
|
||||
TEXAS
INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated
Statements of Cash Flows
(Millions
of dollars)
|
For
Three Months Ended
|
||||||||||
|
June
30,
2007
|
Mar.
31,
2007
|
June
30,
2006
|
||||||||
|
Cash
flows from operating activities:
|
||||||||||
|
Net
income
|
$
|
610
|
$
|
516
|
$
|
2,387
|
||||
|
Adjustments
to reconcile net income to cash provided by
operating
activities of continuing operations:
|
||||||||||
|
(Income)
loss from discontinued operations
|
4
|
--
|
(1,648
|
)
|
||||||
|
Depreciation
|
256
|
252
|
267
|
|||||||
|
Stock-based
compensation
|
69
|
78
|
84
|
|||||||
|
Amortization
of capitalized software
|
24
|
25
|
29
|
|||||||
|
Amortization
of acquisition-related intangibles
|
14
|
14
|
15
|
|||||||
|
Deferred
income taxes
|
(3
|
)
|
(3
|
)
|
(41
|
)
|
||||
|
Increase
(decrease) from changes in:
|
||||||||||
|
Accounts
receivable
|
(144
|
)
|
17
|
(138
|
)
|
|||||
|
Inventories
|
(15
|
)
|
28
|
(89
|
)
|
|||||
|
Prepaid
expenses and other current assets
|
42
|
(79
|
)
|
9
|
||||||
|
Accounts
payable and accrued expenses
|
110
|
(167
|
)
|
133
|
||||||
|
Income
taxes payable
|
(132
|
)
|
(1
|
)
|
(334
|
)
|
||||
|
Accrued
profit sharing and retirement
|
47
|
(111
|
)
|
56
|
||||||
|
Change
in funded status of retirement plans and accrued retirement costs
|
--
|
1
|
(68
|
)
|
||||||
|
Other
|
16
|
(16
|
)
|
(8
|
)
|
|||||
|
Net
cash provided by operating activities of continuing
operations
|
898
|
554
|
654
|
|||||||
|
Cash
flows from investing activities:
|
||||||||||
|
Additions
to property, plant and equipment
|
(174
|
)
|
(179
|
)
|
(374
|
)
|
||||
|
Proceeds
from sales of assets
|
--
|
--
|
2,982
|
|||||||
|
Purchases
of cash investments
|
(1,479
|
)
|
(846
|
)
|
(3,063
|
)
|
||||
|
Sales
and maturities of cash investments
|
1,529
|
1,011
|
1,983
|
|||||||
|
Purchases
of equity investments
|
(6
|
)
|
(5
|
)
|
(17
|
)
|
||||
|
Sales
of equity and other long-term investments
|
3
|
2
|
2
|
|||||||
|
Acquisitions,
net of cash acquired
|
--
|
(27
|
)
|
(28
|
)
|
|||||
|
Net
cash provided by (used in) investing activities of continuing
operations
|
(127
|
)
|
(44
|
)
|
1,485
|
|||||
|
Cash
flows from financing activities:
|
||||||||||
|
Payments
on loans and long-term debt
|
(43
|
)
|
--
|
(275
|
)
|
|||||
|
Dividends
paid
|
(115
|
)
|
(58
|
)
|
(47
|
)
|
||||
|
Sales
and other common stock transactions
|
374
|
154
|
150
|
|||||||
|
Excess
tax benefit from stock option exercises
|
56
|
34
|
57
|
|||||||
|
Stock
repurchases
|
(742
|
)
|
(857
|
)
|
(1,037
|
)
|
||||
|
Net
cash used in financing activities of continuing operations
|
(470
|
)
|
(727
|
)
|
(1,152
|
)
|
||||
|
Net
cash used in discontinued operations
|
--
|
--
|
(34
|
)
|
||||||
|
Effect
of exchange rate changes on cash
|
--
|
(1
|
)
|
3
|
||||||
|
Net
increase (decrease) in cash and cash equivalents
|
301
|
(218
|
)
|
956
|
||||||
|
Cash
and cash equivalents, beginning of period
|
965
|
1,183
|
722
|
|||||||
|
Cash
and cash equivalents, end of period
|
$
|
1,266
|
$
|
965
|
$
|
1,678
|
||||
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
|
||||||||||
|
June
30,
2007
|
Mar.
31,
2007
|
June
30,
2006
|
||||||||
|
Semiconductor
|
$
|
3,257
|
$
|
3,115
|
$
|
3,505
|
||||
|
Education
Technology
|
167
|
76
|
192
|
|||||||
|
Total
net revenue
|
$
|
3,424
|
$
|
3,191
|
$
|
3,697
|
||||
Segment
Profit (Loss)
(Millions
of dollars)
|
For
Three Months Ended
|
||||||||||
|
June
30,
2007
|
Mar.
31,
2007
|
June
30,
2006
|
||||||||
|
Semiconductor*
|
$
|
905
|
$
|
831
|
$
|
1,032
|
||||
|
Education
Technology
|
74
|
16
|
84
|
|||||||
|
Corporate**
|
(170
|
)
|
(167
|
)
|
(163
|
)
|
||||
|
Profit
from operations
|
$
|
809
|
$
|
680
|
$
|
953
|
||||
|
*
Semiconductor
profit from operations includes a benefit of $57 for a sales tax
refund
and $60 from the royalty settlement in the second quarter of
2006.
|
||||||||||
|
**
Corporate includes the following stock-based compensation
expense:
|
||||||||||
|
COR
|
$
|
13
|
$
|
15
|
$
|
16
|
||||
|
R&D
|
21
|
23
|
25
|
|||||||
|
SG&A
|
35
|
40
|
43
|
|||||||
|
Profit
from operations
|
$
|
69
|
$
|
78
|
$
|
84
|
||||
Semiconductor
| · |
Revenue
in the second quarter was $3.26 billion. This was an increase of
5 percent
from the prior quarter due to higher demand for DSP, DLP®
and analog products. Compared with a year ago, revenue decreased
7 percent
as higher demand for high-performance analog products was more than
offset
by declines across a broad base of other products.
|
| o |
Analog
product revenue of $1.27 billion was up 2 percent from the prior
quarter
due to increased demand for high-performance analog products. Compared
with the year-ago quarter, analog revenue decreased 3 percent as
a decline
in analog revenue for cell phone applications more than offset
gains in
high-performance analog revenue. Revenue from high-performance
analog
products increased 6 percent from the prior quarter and increased
11
percent from a year ago.
|
| o |
DSP
product revenue of $1.24 billion was up 7 percent from the prior
quarter
due to higher demand for products used in cell phone applications.
DSP
product revenue declined 5 percent from a year ago due to lower
demand for
a broad range of products.
|
| o |
TI’s
remaining Semiconductor revenue of $746 million was 5 percent
higher than
the prior quarter primarily due to growth in DLP products and,
to a lesser
extent, standard logic products. Microcontrollers and RISC microprocessors
were about even with the prior quarter while royalties declined.
TI’s
remaining Semiconductor revenue decreased 17 percent from the
year-ago
quarter primarily due to a decline in RISC microprocessor revenue
and the
royalty settlement in the year-ago quarter. To a lesser extent,
DLP
products and standard logic products revenue also declined while
microcontrollers were about even with the year-ago quarter.
|
| · |
Gross
profit was $1.71 billion, or 52.5 percent of revenue. This was an
increase
of $82 million from the prior quarter due to higher revenue. Gross
profit
declined $105 million from the year-ago quarter due to the combination
of
the royalty settlement and sales tax refund in the year-ago quarter,
as
well as lower revenue.
|
| · |
Operating
profit was $905 million, or 27.8 percent of revenue. This was an
increase
of $74
million from the prior quarter due to higher gross profit. It was
a
decline of $127 million from the year-ago quarter primarily due to
the
combination of the royalty settlement and the sales tax refund in
the
year-ago quarter.
|
| · |
Semiconductor
orders were $3.25 billion. This was an increase of 6 percent from
the
prior quarter due to higher demand across a broad range of analog
and DSP
products. Orders declined 13 percent from the year-ago quarter due
to
broadly lower demand.
|
Semiconductor Highlights
| · |
TI
delivered the industry’s highest performance family of two- and
four-channel analog-to-digital data converters. The chips combine
low
power, high performance and speed in a space-saving package and are
tailored for advanced communications, medical, video, imaging and
instrumentation applications.
|
| · |
TI
introduced the industry’s first location-detection system-on-chip solution
for low-power ZigBee®
wireless sensor networking applications such as asset and equipment
tracking, inventory control, patient monitoring, and security and
commissioning networks.
|
| · |
Lenovo
Mobile, China’s leading handset manufacturer, selected TI’s “LoCosto”
single-chip platform for a new family of low-cost, multimedia-rich
cell
phones.
|
Education
Technology
| · |
Revenue
in the second quarter was $167 million. This was an increase of $91
million from the prior quarter as retailers purchased calculators
in
preparation for the back-to-school season. This was a decrease of
$25
million from the year-ago quarter, as some major retailers delayed
stocking calculator inventory until the third quarter, closer to
the start
of the school year.
|
| · |
Gross
profit was $109 million, or a record 65.1 percent of revenue. This
was up
$64 million from the prior quarter due to higher revenue. Gross profit
decreased $10 million from the year-ago quarter due to lower revenue.
|
| · |
Operating
profit was $74 million, or 44.1 percent of revenue. This was an increase
of $58 million compared with the prior quarter due to higher gross
profit.
It was a decrease of $10 million from the year-ago quarter due to
lower
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 Incorporated provides innovative DSP and analog technologies to
meet
our customers’ real world signal processing requirements. In addition to
Semiconductor, the company includes the Education Technology 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
Other
trademarks are the property of their respective
owners.