TEXAS INSTRUMENTS INCORPORATED 
By DALLAS, Jan. 25 /PRNewswire-FirstCall/ -- Texas Instruments Incorporated (TI) (NYSE: TXN) today announced fourth-quarter revenue of $3.00 billion, net income of $655 million and earnings per share (EPS) of $0.52.
"TI's growth and improving performance reflect our focus on Analog and Embedded Processing. These are large, diverse businesses that give us access to the world's fastest-growing electronics markets," said Rich Templeton, TI chairman, president and chief executive officer.
"In the fourth quarter, demand was strong across end markets without the usual holiday slowdown. Throughout, we believe customer and channel inventories have been lean. With demand continuing to be solid and inventories well below historical levels, our outlook for the first quarter reflects the likelihood of sequential growth instead of the typical seasonal decline.
"We continue to make investments to support customers and drive growth, including the ramp-up of the industry's first 300-millimeter analog factory in Richardson, Texas," Templeton concluded.
4Q09 financial summary
Amounts are in millions of dollars, except per-share amounts.
4Q09 4Q08 vs. 4Q08 3Q09 vs. 3Q09
------ ------ -------- ----- --------
Revenue: $ 3,005 $ 2,491 21% $ 2,880 4%
Operating profit: $ 875 $ 51 1,616% $ 763 15%
Net income: $ 655 $ 107 512% $ 538 22%
Earnings per share: $ 0.52 $ 0.08 550% $ 0.42 24%
Cash flow from operations: $ 1,000 $ 1,113 -10% $ 834 20%
TI's operating profit increased compared with the fourth quarter of 2008 and the prior quarter primarily due to higher gross profit, which included the impact of higher revenue and the benefit associated with higher utilization of manufacturing assets. In addition, restructuring charges were lower compared with a year ago.
4Q09 segment results
4Q09 4Q08 vs. 4Q08 3Q09 vs. 3Q09 Note
---- ---- -------- ---- -------- ----
Analog:
Revenue $1,289 $1,015 27% $1,184 9% (1)
Operating profit $ 386 $ 78 395% $ 306 26%
Embedded Processing:
Revenue $ 412 $ 340 21% $ 393 5% (2)
Operating profit
(loss) $ 89 $ (2) n/a $ 75 19%
Wireless:
Revenue $ 732 $ 646 13% $ 675 8% (3)
Operating profit
(loss) $ 178 $ (87) n/a $ 110 62%
Other:
Revenue $ 572 $ 490 17% $ 628 -9% (4)
Operating profit $ 222 $ 62 258% $ 272 -18%
The product categories in each segment are as follows:
-- Analog: high-volume analog & logic, high-performance analog (includes
data converters, amplifiers and interface products) and power management
-- Embedded Processing: DSPs and microcontrollers used in catalog,
communications infrastructure and automotive applications
-- Wireless: DSPs and analog used in basebands for handsets, OMAP(TM)
applications processors and connectivity products for wireless
applications
-- Other: includes DLP® products, calculators, ASIC products, RISC
microprocessors and royalties
(1) The increase in Analog revenue from a year ago and from the prior
quarter was primarily due to a combination of strength in power
management and high-volume analog & logic. High-performance analog
revenue also increased, but to a lesser extent. The gains in
operating profit for this segment, both from a year ago and
sequentially, were primarily due to higher gross profit.
(2) The increase in Embedded Processing revenue from a year ago and from
the prior quarter was primarily due to a combination of higher
catalog and automotive product revenue. Revenue from communications
infrastructure products also increased, but to a lesser extent.
The gains in operating profit for this segment, both from a year ago
and sequentially, were primarily due to higher gross profit.
(3) The increase in Wireless revenue from a year ago and from the prior
quarter was primarily due to strength in connectivity products and
applications processors. Baseband product revenue was about even
with the year-ago quarter and increased sequentially. Operating
profit in this segment increased from a year ago primarily due to
the combination of lower restructuring charges and higher gross
profit, and increased from the prior quarter primarily due to higher
gross profit.
(4) Other revenue increased from a year ago due to gains in DLP
products, royalties and calculators. Revenue from RISC
microprocessors declined from a year ago. Revenue in this segment
decreased from the prior quarter due to the seasonal decline in
calculator revenue. This was partially offset as revenue from DLP
products and ASIC products increased. Operating profit in this
segment increased from a year ago primarily due to higher gross
profit and declined from the prior quarter due to seasonally lower
gross profit.
Restructuring charges were as follows:
4Q09 4Q08 3Q09
---- ---- ----
Analog: $ 6 $ 60 $ 4
Embedded Processing: $ 3 $ 24 $ 2
Wireless: $ 1 $ 130 $ 3
Other: $ 2 $ 40 $ 1
Total: $ 12 $ 254 $ 10
4Q09 additional financial information
-- Net income included $16 million in discrete tax benefits.
-- Orders were $3.26 billion, up 75 percent from a year ago and up 5
percent from the prior quarter.
-- Inventory was $1.20 billion at the end of the quarter, down $173 million
from a year ago and up $86 million from the prior quarter.
-- Capital expenditures were $436 million in the quarter compared with $76
million a year ago and $226 million in the prior quarter. Capital
expenditures in the quarter included the purchase of 300-millimeter
wafer manufacturing equipment as part of Qimonda AG's bankruptcy
proceedings, as well as additional assembly/test manufacturing
equipment.
-- The company used $351 million in the quarter to repurchase 14.8 million
shares of its common stock and paid dividends of $149 million.
Year 2009 financial summary
2009 2008 vs. 2008
---- ---- --------
Revenue: $ 10,427 $ 12,501 -17%
Operating profit: $ 1,991 $ 2,437 -18%
Net income: $ 1,470 $ 1,920 -23%
Earnings per share: $ 1.15 $ 1.44 -20%
Cash flow from operations: $ 2,643 $ 3,330 -21%
TI's operating profit decreased 18 percent in 2009 due to lower revenue. The impact of lower revenue was partially offset by reductions in operating expenses. Operating profit included the negative impact of $212 million in restructuring charges, which were down $42 million from 2008.
Year 2009 segment results
2009 2008 vs. 2008 Note
---- ---- -------- ----
Analog:
Revenue $ 4,270 $ 4,857 -12% (1)
Operating profit $ 753 $ 1,050 -28%
Embedded Processing:
Revenue $ 1,471 $ 1,631 -10% (2)
Operating profit $ 194 $ 268 -28%
Wireless:
Revenue $ 2,558 $ 3,383 -24% (3)
Operating profit $ 332 $ 347 -4%
Other:
Revenue $ 2,128 $ 2,630 -19% (4)
Operating profit $ 712 $ 772 -8%
(1) Analog revenue declined primarily due to lower high-volume analog
& logic revenue.
(2) Embedded Processing revenue declined primarily due to lower
catalog product revenue.
(3) Wireless revenue declined due to lower baseband revenue.
(4) Other revenue declined across a broad range of products,
especially RISC microprocessors.
Restructuring charges negatively impacted each segment's operating profit as follows:
2009 2008
---- ----
Analog: $ 87 $ 60
Embedded Processing: $ 43 $ 24
Wireless: $ 59 $ 130
Other: $ 23 $ 40
Total: $ 212 $ 254
2009 additional financial information
-- Capital expenditures were $753 million in 2009, down $10 million from
2008.
-- The company used $954 million to repurchase 45.3 million shares of its
common stock and paid dividends of $567 million.
Outlook
For the first quarter of 2010, TI expects:
-- Revenue: $2.95 - 3.19 billion
-- Earnings per share: $0.44 - 0.52
TI will update its first-quarter outlook on March 8, 2010.
For the full year of 2010, TI expects approximately the following:
-- R&D expense: $1.5 billion
-- Capital expenditures: $0.9 billion
-- Depreciation: $0.9 billion
-- Annual effective tax rate: 31%
The tax rate estimate is based on current tax law and does not assume reinstatement of the federal R&D tax credit, which expired at the end of 2009.
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Income
(Millions of dollars, except share and per-share amounts)
For Three Months Ended For Years Ended
---------------------------- -----------------
Dec. 31, Dec. 31, Sept. 30, Dec. 31, Dec. 31,
2009 2008 2009 2009 2008
------- ------- -------- ------- --------
Revenue $ 3,005 $ 2,491 $ 2,880 $10,427 $ 12,501
Cost of revenue 1,416 1,394 1,399 5,428 6,256
------- ------- -------- ------- --------
Gross profit 1,589 1,097 1,481 4,999 6,245
Research and
development (R&D) 355 431 368 1,476 1,940
Selling, general and
administrative (SG&A) 347 361 340 1,320 1,614
Restructuring expense 12 254 10 212 254
------- ------- -------- ------- --------
Operating profit 875 51 763 1,991 2,437
Other income (expense)
net 6 (15) 2 26 44
------- ------- -------- ------- --------
Income before income
taxes 881 36 765 2,017 2,481
Provision (benefit) for
income taxes 226 (71) 227 547 561
------- ------- -------- ------- --------
Net income $ 655 $107 $ 538 $ 1,470 $ 1,920
======= ======= ======== ======= ========
Earnings per common
share:
Basic $ .52 $ .08 $ .42 $ 1.16 $ 1.46
======= ======= ======== ======= ========
Diluted $ .52 $ .08 $ .42 $ 1.15 $ 1.44
======= ======= ======== ======= ========
Average shares
outstanding (millions):
Basic 1,243 1,283 1,255 1,260 1,308
======= ======= ======== ======= ========
Diluted 1,257 1,287 1,268 1,269 1,321
======= ======= ======== ======= ========
Cash dividends declared
per share of common
stock $ .12 $ .11 $ .11 $ .45 $ .41
======= ======= ======== ======= ========
Percentage of revenue:
Gross profit 52.9% 44.0% 51.4% 47.9% 50.0%
R&D 11.8% 17.3% 12.7% 14.2% 15.5%
SG&A 11.5% 14.5% 11.8% 12.6% 12.9%
Operating profit 29.1% 2.0% 26.5% 19.1% 19.5%
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
(Millions of dollars, except share amounts)
Dec. 31, Dec. 31, Sept. 30,
2009 2008 2009
-------- -------- --------
Assets
Current assets:
Cash and cash equivalents $ 1,182 $ 1,046 $ 1,294
Short-term investments 1,743 1,494 1,533
Accounts receivable, net of
allowances of ($23), ($30) and ($22) 1,277 913 1,435
Raw materials 93 99 89
Work in process 758 837 767
Finished goods 351 439 260
-------- -------- --------
Inventories 1,202 1,375 1,116
-------- -------- --------
Deferred income taxes 546 695 592
Prepaid expenses and other current
assets 164 267 168
-------- -------- --------
Total current assets 6,114 5,790 6,138
-------- -------- --------
Property, plant and equipment at cost 6,705 7,321 6,599
Less accumulated depreciation (3,547) (4,017) (3,654)
-------- -------- --------
Property, plant and equipment, net 3,158 3,304 2,945
-------- -------- --------
Long-term investments 637 653 627
Goodwill 926 840 926
Acquisition-related intangibles 124 91 138
Deferred income taxes 926 990 928
Capitalized software licenses, net 119 182 124
Overfunded retirement plans 64 17 20
Other assets 51 56 57
-------- -------- --------
Total assets $ 12,119 $ 11,923 $ 11,903
======== ======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 503 $ 324 $ 467
Accrued expenses and other liabilities 841 1,034 959
Income taxes payable 128 40 148
Accrued profit sharing and retirement 115 134 88
-------- -------- --------
Total current liabilities 1,587 1,532 1,662
-------- -------- --------
Underfunded retirement plans 425 640 464
Deferred income taxes 67 59 60
Deferred credits and other liabilities 318 366 279
-------- -------- --------
Total liabilities 2,397 2,597 2,465
-------- -------- --------
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, 2009 --
1,739,811,721; Dec. 31, 2008 --
1,739,718,073; Sept. 30, 2009 --
1,739,770,537 1,740 1,740 1,740
Paid-in capital 1,086 1,022 1,071
Retained earnings 22,066 21,168 21,562
Less treasury common stock at cost:
Shares: Dec. 31, 2009 --
499,693,704; Dec. 31, 2008 --
461,822,215; Sept. 30, 2009 --
486,897,139 (14,549) (13,814) (14,257)
Accumulated other comprehensive
income (loss), net of taxes (621) (790) (678)
-------- -------- --------
Total stockholders' equity 9,722 9,326 9,438
-------- -------- --------
Total liabilities and stockholders'
equity $ 12,119 $ 11,923 $ 11,903
======== ======== ========
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Millions of dollars)
For Three Months Ended For Years Ended
---------------------------- -----------------
Dec. 31, Dec. 31, Sept. 30, Dec. 31, Dec. 31,
2009 2008 2009 2009 2008
------- ------- -------- ------- --------
Cash flows from
operating activities:
Net income $ 655 $ 107 $ 538 $ 1,470 $ 1,920
Adjustments to net
income:
Depreciation 210 283 217 877 1,022
Stock-based
compensation 44 51 46 186 213
Amortization of
acquisition-related
intangibles 14 8 12 48 37
Deferred income taxes 66 (23) 71 146 (182)
Increase (decrease)
from changes in:
Accounts receivable 156 889 (186) (364) 865
Inventories (86) 200 (53) 177 43
Prepaid expenses and
other current assets 11 (100) 31 35 (125)
Accounts payable and
accrued expenses (53) (211) 54 (17) (382)
Income taxes payable (18) 13 94 73 38
Accrued profit sharing
and retirement 27 (10) 28 (16) (84)
Other (26) (94) (18) 28 (35)
------- ------- -------- ------- --------
Net cash provided by
operating activities 1,000 1,113 834 2,643 3,330
------- ------- -------- ------- --------
Cash flows from
investing activities:
Additions to property,
plant and equipment (436) (76) (226) (753) (763)
Purchases of
short-term
investments (831) (1,384) (879) (2,273) (1,746)
Sales and maturities
of short-term
investments 618 182 139 2,030 1,300
Purchases of
long-term
investments (4) (1) -- (9) (9)
Redemptions and
sales of
long-term
investments 2 7 16 64 55
Acquisitions, net
of cash acquired -- -- -- (155) (19)
------- ------- -------- ------- --------
Net cash used in
investing activities (651) (1,272) (950) (1,096) (1,182)
------- ------- -------- ------- --------
Cash flows from
financing activities:
Dividends paid (149) (141) (138) (567) (537)
Sales and other
common stock
transactions 38 15 34 109 210
Excess tax benefit
from share-based
payments 1 2 -- 1 19
Stock repurchases (351) (386) (251) (954) (2,122)
------- ------- -------- ------- --------
Net cash used in
financing activities (461) (510) (355) (1,411) (2,430)
------- ------- -------- ------- --------
Net (decrease) increase
in cash and cash
equivalents (112) (669) (471) 136 (282)
Cash and cash
equivalents, beginning
of period 1,294 1,715 1,765 1,046 1,328
------- ------- -------- ------- --------
Cash and cash
equivalents, end
of period $ 1,182 $ 1,046 $ 1,294 $ 1,182 $ 1,046
======= ======== ========= ======== ========
Certain amounts in prior periods' financial statements have been
reclassified to conform to the current presentation.
Safe Harbor Statement
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:
This release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as TI or its management "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import. Similarly, statements herein that describe 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 TI or its management:
-- Market demand for semiconductors, particularly in key markets such as
communications, entertainment electronics and computing;
-- TI's ability to maintain or improve profit margins, including its
ability to utilize its manufacturing facilities at sufficient levels to
cover its fixed operating costs, in an intensely competitive and
cyclical industry;
-- TI's ability to develop, manufacture and market innovative products in a
rapidly changing technological environment;
-- TI's ability to compete in products and prices in an intensely
competitive industry;
-- TI's ability to maintain and enforce a strong intellectual property
portfolio and obtain needed licenses from third parties;
-- Expiration of license agreements between TI and its patent licensees,
and market conditions reducing royalty payments to TI;
-- Economic, social and political conditions in the countries in which TI,
its customers or its suppliers operate, including security risks, health
conditions, possible disruptions in transportation networks and
fluctuations in foreign currency exchange rates;
-- Natural events such as severe weather and earthquakes in the locations
in which TI, its customers or its suppliers operate;
-- Availability and cost of raw materials, utilities, manufacturing
equipment, third-party manufacturing services and manufacturing
technology;
-- Changes in the tax rate applicable to TI as the result of changes in tax
law, the jurisdictions in which profits are determined to be earned and
taxed, the outcome of tax audits and the ability to realize deferred tax
assets;
-- Changes in laws and regulations to which TI or its suppliers are or may
become subject, such as those imposing fees or reporting or substitution
costs relating to the discharge of emissions into the environment or the
use of certain raw materials in our manufacturing processes;
-- Losses or curtailments of purchases from key customers and the timing
and amount of distributor and other customer inventory adjustments;
-- Customer demand that differs from our forecasts;
-- The financial impact of inadequate or excess TI inventory that results
from demand that differs from projections;
-- The ability of TI and its customers and suppliers to access their bank
accounts and lines of credit or otherwise access the capital markets;
-- Product liability or warranty claims, claims based on epidemic or
delivery failure or recalls by TI customers for a product containing a
TI part;
-- TI's ability to recruit and retain skilled personnel; and
-- Timely implementation of new manufacturing technologies, installation of
manufacturing equipment and the ability to obtain needed third-party
foundry and assembly/test subcontract services.
For a more detailed discussion of these factors, see the Risk Factors discussion in Item 1A of the Company's most recent Form 10-K. The forward-looking statements included in this release are made only as of the date of this release, and the Company undertakes no obligation to update the forward-looking statements to reflect subsequent events or circumstances.
About Texas Instruments
Texas Instruments (NYSE: TXN) helps customers solve problems and develop new electronics that make the world smarter, healthier, safer, greener and more fun. A global semiconductor company, TI innovates through design, sales and manufacturing operations in more than 30 countries. For more information, go to www.ti.com.
TI trademarks:
OMAP
DLP
Other trademarks are the property of their respective owners.
TXN-F
SOURCE Texas Instruments Incorporated
