Press release

TI reports financial results for 4Q09 and 2009

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

DALLAS, Jan 25, 2010 /PRNewswire via COMTEX News Network/ -- 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 andconnectivity products for wireless applications
  • Other: includes DLP(R) 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.



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