Press release

TI reports financial results for 2Q09

--Conference call on TI web site at 4:30 p.m. Central time today --www.ti.com/ir

Non-GAAP Reconciliation Charts

DALLAS, July 20, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Texas Instruments Incorporated (TI) (NYSE: TXN) today announced second-quarter revenue of $2.46 billion, net income of $260 million and earnings per share (EPS) of $0.20.

"After sharp inventory corrections in our markets during the prior two quarters, our revenue levels are beginning to more closely reflect end demand," said TI Chairman, President and CEO Rich Templeton. "As it will likely take some time before the economy strengthens, we have aligned our operations and expenses to be consistent with the weak environment. As a result, we are seeing healthy trends in our profitability.

"Analog was the biggest driver of sequential growth this quarter with all three major businesses contributing. Of particular note, our High-Volume Analog & Logic business is now showing early signs of progress from our efforts over the past couple of years to reinvigorate growth.

"Operationally, TI performed well. Despite low visibility at the start of the quarter, our factories were able to respond to a surge in demand resulting in 18 percent sequential growth in revenue. At the same time, TI inventory again declined, and by working with our distributors we were able to further reduce channel inventory by about 10 percent.

"Looking ahead, we expect solid sequential growth in the third quarter. As end demand trends remain uncertain, we will keep our operations flexible so we can quickly respond to our customers' needs.

"In the meantime, we continue to focus on strengthening our core businesses of Analog and Embedded Processing. In the quarter, we acquired Luminary Micro, which expanded TI's Embedded Processing portfolio by more than 140 advanced, 32-bit microcontroller products. Many of our 2,000 field sales representatives and applications engineers already are working with these products to help customers solve a wide variety of system needs."

2Q09 financial summary

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

                                  2Q09     2Q08  vs. 2Q08      1Q09  vs. 1Q09
                                  ----     ----  --------      ----  --------
                      Revenue:   $2457    $3351      -27%     $2086       18%
             Operating profit:   $ 343    $ 833      -59%     $  10     3330%
                   Net income:   $ 260    $ 588      -56%     $  17     1429%
           Earnings per share:   $0.20    $0.44      -55%     $0.01     1900%
    Cash flow from operations:   $ 557    $ 522        7%     $ 251      122%

TI's revenue declined 27 percent compared with the second quarter of 2008 and increased 18 percent compared with the first quarter of 2009. The decline from a year ago was the result of broad-based declines across all segments. The increase from the prior quarter was primarily due to strength in TI's Analog segment as well as a seasonal increase in calculators. Revenue was up sequentially in all segments.

TI's operating profit declined $490 million compared with the year-ago quarter and grew $333 million compared with the first quarter. The decline from a year ago was due to lower revenue and the associated lower gross profit, as well as the negative impact of underutilized manufacturing assets and restructuring charges. Collectively, these more than offset lower operating expenses and manufacturing cost reductions. The increase from the prior quarter was due to higher revenue in all segments and the associated higher gross profit, combined with the positive effect of higher utilization of the company's manufacturing assets.

Excluding restructuring charges of $85 million, TI's operating profit was $428 million in the second quarter, or 17.4 percent of revenue, and EPS was $0.25. (See reconciliation table at the end of this release.)

2Q09 segment results

                          2Q09      2Q08 vs. 2Q08     1Q09 vs. 1Q09     Note
                          ----      ---- --------     ---- --------     ----
    Analog:
      Revenue             $983     $1287     -24%     $814      21%      (1)
      Operating profit
       (loss)             $ 96     $ 326     -71%     $(35)    374%

    Embedded Processing:
      Revenue             $350     $ 439     -20%     $316      11%      (2)
      Operating profit    $ 28     $ 101     -72%     $  2    1300%

    Wireless:
      Revenue             $601     $ 902     -33%     $551       9%      (3)
      Operating profit
       (loss)             $ 58     $ 126     -54%     $(13)    546%

    Other:
      Revenue             $523     $ 723     -28%     $405      29%      (4)
      Operating profit    $161     $ 280     -43%     $ 56     188%

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(R) products, calculators, ASIC products, RISC
        microprocessors and royalties

    (1) The decline in Analog revenue from a year ago was primarily due to
        lower high-volume analog & logic revenue.  High-performance analog
        and power management revenue also declined, although by a lesser
        amount.  The increase in Analog revenue from the prior quarter was
        primarily due to stronger high-volume analog & logic revenue.  Power
        management and high-performance analog revenue also increased,
        although by a lesser amount.

    (2) The decline in Embedded Processing revenue from a year ago was
        primarily due to lower catalog product revenue.  Revenue from
        automotive products also declined, although by a lesser amount, while
        revenue from communications infrastructure products was up.  The
        increase in Embedded Processing revenue from the prior quarter was
        primarily due to higher catalog product revenue.  Revenue from
        automotive products also increased, although by a lesser amount,
        while revenue from communications infrastructure products was about
        even.

    (3) Wireless revenue declined from a year ago due to lower baseband
        revenue.  Revenue from OMAP applications processors also declined,
        although by a lesser amount, while revenue from connectivity
        products increased.  Wireless revenue increased from the prior
        quarter primarily due to higher connectivity products revenue.
        Revenue from OMAP applications processors and baseband products
        also increased, although by a lesser amount.

    (4) Other revenue decreased from a year ago due to declines in royalties,
        DLP products, calculators, RISC microprocessors and ASIC products.
        Other revenue increased from the prior quarter due to a seasonal
        increase in calculators, as well as higher revenue from DLP products
        and RISC microprocessors.  Revenue from ASIC products and royalties
        declined from the prior quarter.

Operating profit declined in all segments from a year ago primarily because of lower revenue. Compared with the prior quarter, operating profit increased in the Analog, Embedded Processing and Other segments primarily due to higher revenue. Operating profit increased in the Wireless segment primarily due to the combination of higher revenue and cost reductions.

Restructuring charges were as follows:

                                   2Q09      2Q08      1Q09
                                   ----      ----      ----
                 Analog:            $35       $--      $ 42
    Embedded Processing:            $18       $--      $ 19
               Wireless:            $23       $--      $ 32
                  Other:            $ 9       $--      $ 12
                  Total:            $85       $--      $105

2Q09 additional financial information

    --  Orders were $2.80 billion, down 19 percent from a year ago but up 27
        percent from the prior quarter.
    --  Inventory was $1.06 billion, down $588 million from a year ago and down
        $35 million from the prior quarter.
    --  Capital expenditures were $47 million in the quarter, a decline from
        $271 million in the year-ago quarter and an increase from $43 million in
        the prior quarter.
    --  TI used $251 million in the quarter to repurchase 13.4 million shares of
        its common stock and paid dividends of $139 million.

    --  Cash and cash equivalents plus short-term investments increased to $2.56
        billion at the end of the quarter.

Outlook

For the third quarter of 2009, TI expects:

    --  Revenue:  $2.50 - 2.80 billion

    --  Earnings per share:  $0.29 - 0.39

The EPS estimate includes a negative impact of $0.01 per share resulting from restructuring charges.

TI will update its third-quarter outlook on September 9, 2009.

For the full year of 2009, TI expects approximately the following:

    --  R&D expense:  $1.5 billion
    --  Capital expenditures:  $300 million
    --  Depreciation:  $900 million

    --  Annual effective tax rate:  27%, up from the prior expectation of 24%

                  TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
                        Consolidated Statements of Income
             (Millions of dollars, except share and per-share amounts)

                                                     For Three Months Ended
                                                  ----------------------------
                                                  June 30,  June 30,  Mar. 31,
                                                    2009      2008      2009
                                                  --------  --------  --------
    Revenue                                        $2,457    $3,351    $2,086
    Cost of revenue                                 1,333     1,602     1,280
                                                  --------  --------  --------
    Gross profit                                    1,124     1,749       806
    Research and development (R&D)                    369       488       386
    Selling, general and administrative (SG&A)        327       428       305
    Restructuring expense                              85        --       105
                                                  --------  --------  --------
    Operating profit                                  343       833        10
    Other income (expense) net                         13        17         5
                                                  --------  --------  --------
    Income before income taxes                        356       850        15
    Provision (benefit) for income taxes               96       262        (2)
                                                  --------  --------  --------
    Net income                                     $  260    $  588    $   17
                                                  ========  ========  ========

    Earnings per common share:
      Basic                                        $  .20    $  .44    $  .01
                                                  ========  ========  ========
      Diluted                                      $  .20    $  .44    $  .01
                                                  ========  ========  ========

    Average shares outstanding (millions):
      Basic                                         1,267     1,320     1,275
                                                  ========  ========  ========
      Diluted                                       1,272     1,338     1,277
                                                  ========  ========  ========

    Cash dividends declared per share of common
     stock                                         $  .11    $  .10    $  .11
                                                  ========  ========  ========

    Percentage of revenue:
    Gross profit                                     45.7%     52.2%     38.6%
    R&D                                              15.0%     14.6%     18.5%
    SG&A                                             13.3%     12.8%     14.6%
    Operating profit                                 14.0%     24.9%      0.5%



                 TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
                           Consolidated Balance Sheets
                    (Millions of dollars, except share amounts)

                                                  June 30,  June 30,  Mar. 31,
                                                    2009      2008      2009
                                                  --------  --------  --------
    Assets
    Current assets:
      Cash and cash equivalents                   $ 1,765   $ 1,317   $ 1,436
      Short-term investments                          792       331       990
      Accounts receivable, net of allowances of
       ($23), ($24) and ($20)                       1,244     1,811     1,125
      Raw materials                                    81       111        77
      Work in process                                 699       997       712
      Finished goods                                  283       543       309
                                                  --------  --------  --------
      Inventories                                   1,063     1,651     1,098
                                                  --------  --------  --------
      Deferred income taxes                           668       641       676
      Prepaid expenses and other current assets       208       259       207
                                                  --------  --------  --------
      Total current assets                          5,740     6,010     5,532
                                                  --------  --------  --------
    Property, plant and equipment at cost           6,739     7,603     7,030
      Less accumulated depreciation                (3,799)   (3,999)   (3,915)
                                                  --------  --------  --------
      Property, plant and equipment, net            2,940     3,604     3,115
                                                  --------  --------  --------
    Long-term investments                             632       766       645
    Goodwill                                          926       840       912
    Acquisition-related intangibles                   150       108       120
    Deferred income taxes                             909       626       967
    Capitalized software licenses, net                140       220       160
    Overfunded retirement plans                        20       128        17
    Other assets                                       53        80        52
                                                  --------  --------  --------
    Total assets                                  $11,510   $12,382   $11,520
                                                  ========  ========  ========

    Liabilities and Stockholders' Equity
    Current liabilities:
      Accounts payable                            $   421   $   677   $   326
      Accrued expenses and other liabilities          931       955       907
      Income taxes payable                             56        26        21
      Accrued profit sharing and retirement            60       102        33
                                                  --------  --------  --------
      Total current liabilities                     1,468     1,760     1,287
                                                  --------  --------  --------
    Underfunded retirement plans                      502       187       608
    Deferred income taxes                              54        57        61
    Deferred credits and other liabilities            273       394       354
                                                  --------  --------  --------
    Total liabilities                               2,297     2,398     2,310
                                                  --------  --------  --------
    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, 2009 --
         1,739,734,081; June 30, 2008 --
         1,739,712,567; Mar. 31, 2009 --
         1,739,723,261                              1,740     1,740     1,740
      Paid-in capital                               1,045       940     1,020
      Retained earnings                            21,163    20,773    21,043
      Less treasury common stock at cost:
        Shares:  June 30, 2009 -- 478,309,646;
         June 30, 2008 -- 428,835,142; Mar. 31,
         2009 -- 466,270,151                      (14,061)  (13,138)  (13,852)
      Accumulated other comprehensive income
       (loss), net of taxes                          (674)     (331)     (741)
                                                  --------  --------  --------
      Total stockholders' equity                    9,213     9,984     9,210
                                                  --------  --------  --------
    Total liabilities and stockholders' equity    $11,510   $12,382   $11,520
                                                  ========  ========  ========



                   TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
                       Consolidated Statements of Cash Flows
                                 (Millions of dollars)

                                                     For Three Months Ended
                                                  ----------------------------
                                                  June 30,  June 30,  Mar. 31,
                                                    2009      2008      2009
                                                  --------  --------  --------
    Cash flows from operating activities:
      Net income                                   $  260    $  588    $   17
      Adjustments to net income:
        Depreciation                                  221       245       230
        Stock-based compensation                       47        54        50
        Amortization of acquisition-related
         intangibles                                   12        10        10
        Deferred income taxes                           6        (7)        3
      Increase (decrease) from changes in:
        Accounts receivable                          (116)     (149)     (218)
        Inventories                                    37       (73)      279
        Prepaid expenses and other current assets     (15)      (29)        8
        Accounts payable and accrued expenses         101        32      (119)
        Income taxes payable                          (52)     (181)       49
        Accrued profit sharing and retirement          26        23       (97)
      Other                                            30         9        39
                                                  --------  --------  --------
    Net cash provided by operating activities         557       522       251
                                                  --------  --------  --------

    Cash flows from investing activities:
      Additions to property, plant and equipment      (47)     (271)      (43)
      Purchases of short-term investments            (343)       --      (220)
      Sales and maturities of short-term
       investments                                    544       111       729
      Purchases of long-term investments               (3)       (3)       (2)
      Redemptions and sales of long-term
       investments                                     43        --         3
      Acquisitions, net of cash acquired              (51)      (19)     (104)
                                                  --------  --------  --------
    Net cash provided by (used in) investing
     activities                                       143      (182)      363
                                                  --------  --------  --------

    Cash flows from financing activities:
      Dividends paid                                 (139)     (132)     (141)
      Sales and other common stock transactions        19        89        18
      Excess tax benefit from share-based
       payments                                        --         3        --
      Stock repurchases                              (251)     (433)     (101)
                                                  --------  --------  --------
      Net cash used in financing activities          (371)     (473)     (224)
                                                  --------  --------  --------
    Net increase (decrease) in cash and cash
     equivalents                                      329      (133)      390
    Cash and cash equivalents, beginning of
     period                                         1,436     1,450     1,046
                                                  --------  --------  --------
    Cash and cash equivalents, end of period       $1,765    $1,317    $1,436
                                                  ========  ========  ========

    Certain amounts in prior periods' financial statements have been
    reclassified to conform to the current presentation.

The following describes TI's results excluding the impact of restructuring charges. Management believes this presentation provides investors additional insight into the underlying business conditions and results.

                  TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
                             Non-GAAP Reconciliation
              (Millions of dollars, except share and per-share amounts)

                                                For the three
                                                months ended
                                                June 30, 2009
                                                -------------
    Operating profit as reported                 $  343
    Pre-tax restructuring charges                    85
                                                -------------
    Operating profit excluding restructuring
     charges                                     $  428
                                                =============

    Revenue                                      $2,457

    Operating profit percentage of
     revenue excluding restructuring
     charges                                       17.4%


                                                For the three
                                                months ended
                                                June 30, 2009
                                                -------------

    Net income as reported                       $  260
    Pre-tax restructuring charges                    85
    Tax impact of restructuring charges             (30)
                                                -------------
    Net income excluding restructuring charges   $  315
                                                =============

    Average diluted shares outstanding            1,272
                                                =============

    Diluted earnings per share excluding the
     impact of restructuring charges             $  .25
                                                =============

"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;
    --  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.

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