SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996 Commission File Number 1-3761
TEXAS INSTRUMENTS INCORPORATED
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 75-0289970
- ------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
13500 North Central Expressway, P.O. Box 655474, Dallas, Texas 75265-5474
- ----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 214-995-3773
---------------------------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
---- ----
189,584,085
- -----------------------------------------------------------------------------
Number of shares of Registrant's common stock outstanding as of June 30, 1996
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
- -----------------------------
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Financial Statements
(In millions of dollars, except per-share amounts.)
For Three Months Ended For Six Months Ended
---------------------- ---------------------
June 30 June 30 June 30 June 30
Income 1996 1995 1996 1995
- ------ ------- ------- ------- -------
Net revenues............................................... $ 2,845 $ 3,238 $ 5,921 $ 6,099
Operating costs and expenses:
Cost of revenues......................................... 2,061 2,148 4,248 4,050
Research and development................................. 253 215 516 428
Marketing, general and administrative.................... 435 472 864 874
------- ------- ------- -------
Total.................................................. 2,749 2,835 5,628 5,352
------- ------- ------- -------
Profit from operations..................................... 96 403 293 747
Other income (expense) net................................. 8 20 64 37
Interest on loans.......................................... 12 13 25 26
------- ------- ------- -------
Income before provision for income taxes................... 92 410 332 758
Provision for income taxes................................. 16 132 93 250
------- ------- ------- -------
Net income................................................. $ 76 $ 278 $ 239 $ 508
======= ======= ======= =======
Earnings per common and common equivalent share............ $ 0.39 $ 1.44 $ 1.23 $ 2.65
Cash dividends declared per share of common stock.......... $ 0.17 $ 0.17 $ 0.34 $ 0.295
Cash Flows
- ----------
Net cash provided by operating activities.............................................. $ 93 $ 625
Cash flows from investing activities:
Additions to property, plant and equipment........................................... (1,162) (522)
Purchases of short-term investments.................................................. (10) (400)
Sales and maturities of short-term investments....................................... 160 445
Proceeds from sale of business....................................................... 132 --
------- -------
Net cash used in investing activities.................................................. (880) (477)
Cash flows from financing activities:
Additions to long-term debt.......................................................... 417 22
Dividends paid on common stock....................................................... (64) (46)
Sales and other common stock transactions............................................ 6 65
Other................................................................................ 55 (1)
------- -------
Net cash provided by financing activities.............................................. 414 40
Effect of exchange rate changes on cash................................................ (13) 19
------- -------
Net increase (decrease) in cash and cash equivalents................................... (386) 207
Cash and cash equivalents, January 1................................................... 1,364 760
------- -------
Cash and cash equivalents, June 30..................................................... $ 978 $ 967
======= =======
2
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Financial Statements
(In millions of dollars, except per-share amounts.)
June 30 Dec. 31
Balance Sheet 1996 1995
- ------------- ------- -------
Assets
Current assets:
Cash and cash equivalents.......................................... $ 978 $ 1,364
Short-term investments............................................. 39 189
Accounts receivable, less allowance for losses of
$58 million in 1996 and $45 million in 1995...................... 1,976 2,320
Inventories:
Raw materials.................................................... 246 299
Work in process.................................................. 716 607
Finished goods................................................... 397 434
Less progress billings........................................... (204) (205)
------- -------
Inventories (net of progress billings)......................... 1,155 1,135
------- -------
Prepaid expenses................................................... 59 57
Deferred income taxes.............................................. 492 453
------- -------
Total current assets............................................. 4,699 5,518
------- -------
Property, plant and equipment at cost................................ 6,534 5,631
Less accumulated depreciation...................................... (2,639) (2,444)
------- -------
Property, plant and equipment (net).............................. 3,895 3,187
------- -------
Deferred income taxes................................................ 237 229
Other assets......................................................... 410 281
------- -------
Total assets......................................................... $ 9,241 $ 9,215
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Loans payable and current portion long-term debt................... $ 83 $ 27
Accounts payable................................................... 931 1,110
Accrued and other current liabilities.............................. 1,516 2,051
------- -------
Total current liabilities........................................ 2,530 3,188
------- -------
Long-term debt....................................................... 1,223 804
Accrued retirement costs............................................. 849 801
Deferred credits and other liabilities............................... 360 327
Stockholders' equity:
Preferred stock, $25 par value. Authorized - 10,000,000 shares.
Participating cumulative preferred. None issued.................. -- --
Common stock, $1 par value. Authorized - 500,000,000 shares.
Shares issued: 1996 - 189,725,689; 1995 - 189,526,939............ 190 190
Paid-in capital.................................................... 1,088 1,081
Retained earnings.................................................. 3,055 2,881
Less treasury common stock at cost.
Shares: 1996 - 141,604; 1995 - 138,129........................... (12) (12)
Other.............................................................. (42) (45)
------- -------
Total stockholders' equity....................................... 4,279 4,095
------- -------
Total liabilities and stockholders' equity........................... $ 9,241 $ 9,215
======= =======
3
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Notes to Financial Statements
Earnings per common and common equivalent share are based on average common
and common equivalent shares outstanding (194.6 and 193.4 million shares for
the second quarters of 1996 and 1995, and 194.4 and 192.3 million shares for
the six months ended June 30, 1996 and 1995). Shares issuable upon exercise
of dilutive stock options and upon conversion of dilutive convertible
debentures are included in average common and common equivalent shares
outstanding.
In the first quarter of 1996, the company issued $300 million of 6.125
percent notes due 2006.
Beginning in 1996, the company has made reclassifications to its statement
of income to conform with current industry practices. Research and
development expense, which was previously included in cost of revenues, is
now presented separately. Also, employees' retirement and profit sharing
plans expense, previously separately reported, is now allocated throughout
operating costs and expenses, consistent with other employee benefit costs.
Prior year amounts have been reclassified to conform with the 1996
presentation.
Financial results for the third quarter of 1996 will reflect the purchase of
Silicon Systems Inc., which was acquired in July via a stock purchase
agreement for $340 million in cash plus the assumption of a $235 million
long term note to TDK Corp. of Japan. The cash payment was initially
financed by a draw down on TI's existing line of bank credit. The company
is considering various alternatives for permanent financing. TI expects to
take a one-time charge in the third quarter for the value of acquired in-
process R&D, estimated to be approximately $180 million, or $0.95 per share.
There is no tax offset associated with this one-time charge.
The statements of income, statements of cash flows and balance sheet at
June 30, 1996, are not audited but reflect all adjustments which are of a
normal recurring nature and are, in the opinion of management, necessary to
a fair statement of the results of the periods shown.
4
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Continued sharp price declines for dynamic random access memory (DRAM) chips
and lower semiconductor royalty revenues adversely affected the financial
performance of the Registrant (the "company" or "TI") during the second
quarter of 1996.
In contrast to the difficult memory market environment, TI's mixed signal
and application specific products, which include digital signal processors
and application specific integrated circuits (ASICs), achieved record
revenues during the quarter.
FINANCIAL SUMMARY
Net revenues for the second quarter of 1996 were $2845 million, down 12
percent from the second quarter of 1995, and down sequentially from the
first quarter of 1996. The decrease resulted primarily from the continued
decline in DRAM prices and lower semiconductor royalty revenues.
Profit from operations for the second quarter was $96 million, compared with
$403 million in the second quarter of 1995. Net income for the quarter was
$76 million, compared with $278 million in the second quarter of 1995.
Earnings per share were $0.39, compared with $1.44 in the second quarter of
1995.
Revenues in the second quarter of 1996 versus the year-ago period were up in
all TI businesses except semiconductors. Revenues of differentiated
semiconductor products were ahead of the year-ago period and up slightly
from the first quarter of 1996, but not enough to offset the sharp decline
in DRAM prices. As a result, total semiconductor orders, revenues and
profits were down substantially from year-ago and first quarter 1996 levels,
which negatively impacted TI's second quarter results.
SEMICONDUCTORS
Average DRAM unit prices were down 65-75 percent in the second quarter of
1996, compared with the year-ago period, and 40-50 percent from the first
quarter of 1996. At the same time, R&D investments for next-generation
products and costs associated with ramping of 16-megabit production at TI's
Avezzano, Italy, facility have increased, resulting in a loss in TI's memory
operations.
TI's joint ventures, which share in the risks and rewards of DRAM
production, help reduce the effect of market volatility on TI. However, as
in the first quarter of 1996, these supply arrangements were not able to
fully comprehend the sharp decline in average unit prices in the second
quarter of 1996.
Demand for mature logic products remains soft, and pricing pressures have
increased.
The memory correction continues with signs of industry production in excess
of current demand. However, unit demand for memory has remained strong, and
lower DRAM prices should stimulate increased memory content per computer.
In this environment, with uncertain near-term visibility, TI is taking the
following actions:
5
- Trimming back selectively on semiconductor capital equipment
expenditures;
- Emphasizing development of 0.35-micron, 16-megabit DRAMs and next-
generation DRAMs; and
- Strengthening the long-term focus on digital signal processing
solutions (DSPS) with the recent acquisition of Silicon Systems Inc.
(SSi), a leading supplier of components to the mass storage industry;
and through the recent Tartan Inc. acquisition, doubling TI's software
support for DSP customers.
DEFENSE SYSTEMS & ELECTRONICS
Revenues in TI's defense systems and electronics business increased slightly
in the second quarter of 1996 versus the year-ago period. The business
continued to maintain stable margins. During the quarter, the first
deployment was made to U.S. operational forces of Javelin anti-tank missile
systems from the TI/Martin Marietta joint venture. This First Unit Equipped
(FUE) status is an important milestone for this breakthrough "fire-and-
forget" infantry anti-tank weapon system.
Demand for Paveway precision-guided weapons continued to expand during the
quarter with international customers now in 28 countries and additional
systems being purchased for the U.S. Navy. TI's move toward commercial
practices is resulting in lower costs to the customer, and helping to extend
and broaden the market for this product.
MATERIALS & CONTROLS
Revenues in TI's materials and controls business were up slightly from the
second quarter of 1995. Margins were stable with year-ago levels. TI's
electronics-based sensor activities continue to grow, and new TI
Registration and Identification (TIRIS)( applications are being developed in
radio frequency sports timing, security and automotive anti-theft systems.
PERSONAL PRODUCTIVITY PRODUCTS
Revenues in TI's personal productivity products business were up
substantially from the second quarter of 1995, reflecting revenues that more
than doubled for mobile computing products, and continued success in the
instructional calculator market.
EMERGING OPPORTUNITIES
TI is continuing to invest in emerging opportunities that provide higher
value added digital solutions, such as Digital Light Processing( (DLP)(.
Costs associated with production ramp-up of initial products for the
commercial projection market were higher than expected and will remain at a
high level in the second half of 1996.
TI software business revenues were up over the second quarter of 1995,
primarily due to higher software sales in the Americas. The joint
TI/Microsoft project to develop an industry standard repository
6
specification for software components has been completed and TI is moving
forward with the development of products incorporating this standard.
SUMMARY
Because of imbalances in the worldwide DRAM market and recent weakness in
end equipment demand reported by some major producers, TI expects
competitive pressures for semiconductors to continue in the near term.
Although bit growth remains strong, the memory market will be down sharply
in 1996 versus 1995, because of significantly lower DRAM prices. As a
result, the total semiconductor market is expected to decline in 1996.
In this environment, TI continues to emphasize system-level design activity
to support customers' electronic end equipment, particularly in mass
storage, networking and wireless communications. With the need to maintain
appropriate investments in next-generation products, the company expects
little or no improvement in the near-term financial performance of its
semiconductor business.
The recent acquisition of SSi provides the opportunity to couple TI's DSP
leadership, manufacturing capacity and process technology with SSi's design
capability and systems expertise in mixed signal/analog circuits. TI
believes this combination will strengthen its DSPS strategy and broaden the
number of functions that can be integrated onto single chips.
Financial results for the third quarter of 1996 will reflect the purchase of
SSi, which was acquired in July. TI expects to take a one-time charge for
the value of acquired in-process R&D, estimated to be approximately $180
million, or $0.95 per share. There is no tax offset associated with this
one-time charge.
The longer-term outlook for the world semiconductor market remains positive,
and consumption is expected to double over the next five years, exceeding
$300 billion. The Asia-Pacific region remains a major long-term
opportunity. TI is well-positioned there and plans to continue to
strengthen its base in this strategic area of the world, which could become
one of the largest consumers of semiconductors in the 21st century.
7
Additional Financial Information
Change in orders, Change in net revenues,
Segment 2Q96 vs. 2Q95 2Q96 vs. 2Q95
- ------- ----------------- -----------------------
Components down 46% down 17%
Defense Systems & down 5% up 4%
Electronics
Digital Products down 5% down 5%
Total down 36% down 12%
Change in orders, Change in net revenues,
Segment 1H96 vs. 1H95 1H96 vs. 1H95
- ------- ----------------- -----------------------
Components down 29% down 7%
Defense Systems & up 6% up 1%
Electronics
Digital Products up 6% up 13%
Total down 20% down 3%
TI's orders for the second quarter of 1996 were $2216 million, compared with
$3462 million in the same period of 1995. The decrease was due primarily to
the weak DRAM market, which resulted in repricing the DRAM backlog. The
decrease in defense systems and electronics resulted from lower HARM orders.
Excluding TI's Custom Manufacturing unit (CMS), which was sold in the first
quarter of 1996, digital products orders increased 34 percent in the second
quarter of 1996 over the second quarter of 1995, due primarily to increased
orders in mobile computing.
TI's revenues for the second quarter of 1996 were $2845 million, compared
with $3238 million in the same period of 1995. The decrease in components
segment revenues resulted primarily from lower DRAM revenues and lower
semiconductor royalties. The increase in defense systems and electronics
revenues was due to shipments of Paveway. Digital products revenues,
excluding CMS, were up 27 percent, primarily due to increased mobile
computing revenues.
Profit from operations for the second quarter decreased 76 percent to $96
million from the second quarter of 1995, primarily because of the abrupt
drop in DRAM prices and lower royalty revenues. Royalty revenues were $105
million lower primarily due to the previously reported expiration of patent
licenses, principally the license with Samsung Electronics Co., Ltd.
TI has reached an agreement in principle with Matsushita Electric Industrial
Co., Ltd. on the major terms and conditions of a 10-year worldwide
semiconductor cross-license. When executed, the new agreement will be
effective as of April 1, 1996, the first date after expiration of a similar
five-year agreement between the parties.
8
The agreement recognizes the patents of both parties and is consistent with
TI's objective of receiving fair value for its technology. Under the
agreement, Matsushita will pay ongoing royalties to TI based on Matsushita's
worldwide sales of integrated circuit products. The royalty rates under the
new agreement are lower than the rate under the prior agreement in
recognition of the longer license term.
Negotiations continue with other companies for renewal of expired licenses.
However, these negotiations by their nature are not predictable as to
outcome or timing.
Components segment profit was down considerably over the second quarter of
1995, primarily due to abrupt price declines in DRAMs and lower royalty
revenues. The digital segment operated at a loss during the quarter
primarily due to continued high marketing investments and new product
development in mobile computing, software, and communications and electronic
systems.
For the first six months of 1996, TI's orders were $5410 million, compared
with $6774 million for the first six months of 1995. The decrease in
component segment orders resulted from the weak DRAM market. The digital
segment orders, excluding CMS, were up 32 percent due to mobile computing.
Net revenues for the first half of 1996 were $5921 million, compared with
$6099 million in the first half of 1995. The decrease in component segment
revenue resulted from lower DRAM revenues and lower royalties. The increase
in digital products revenue, 31 percent excluding CMS, was due primarily to
increased revenue in mobile computing.
TI's profit from operations for the first six months of 1996 was $293
million, compared with $747 million in the first half of 1995. The decrease
was primarily from lower semiconductor profits due to the unprecedented drop
in DRAM prices and lower semiconductor royalty revenues. The moderate
digital segment loss was due primarily to operating losses in personal
productivity products and communication and electronic systems.
Net income for the first half of 1996 was $239 million, compared with $508
million in the first six months of 1995. Earnings per share were $1.23,
compared with $2.65.
The income tax rate for the first half of 1996 was 28 percent, which is the
current estimate of the rate for the full year, excluding the effect of the
SSi one-time R&D charge.
During the first half of 1996, cash and cash equivalents plus short-term
investments decreased by $536 million to $1017 million. Net cash provided
by operating activities was negatively impacted by the pay-out of 1995
profit sharing in the first quarter. Investments in property, plant and
equipment were $1162 million for the half. The sale of TI's Custom
Manufacturing business has generated $132 million of cash. In the first
quarter, TI issued $300 million of 6.125 percent notes due 2006. In the
second quarter the balance of Italian lira mortgage notes increased by $102
million.
In June TI announced the pending acquisition of Silicon Systems Inc. via a
stock purchase agreement for $340 million in cash plus the assumption of a
$235 million long-term note to TDK Corp. of Japan. The transaction closed
9
in July, and the cash payment was initially financed by a draw down on TI's
existing line of bank credit. The company is considering various
alternatives for permanent financing. The company is also considering the
redemption at par of $150 million of nine percent notes due 1999. At
June 30, 1996, the debt-to-total-capital ratio was .23, up from .21 at the
end of the first quarter and .17 at year-end 1995.
TI's backlog of unfilled orders as of June 30, 1996, was $3925 million, down
$646 million from the second quarter of 1995 and down $629 million from the
first quarter of 1996. Most of the decrease was in semiconductors,
reflecting lower DRAM prices and in defense systems and electronics.
TI's R&D was $253 million in the second quarter of 1996, compared with $215
million in the second quarter of 1995. R&D for the first six months of 1996
was $516 million, compared with $428 million in the first half of 1995. R&D
for the full year is expected to be $1.2 billion, including the estimated
R&D charge associated with the SSi acquisition.
Capital expenditures in the second quarter of this year were $620 million,
compared with $300 million in the second quarter of 1995 and $1162 million
for the first half of 1996, compared with $522 million for the first six
months of 1995. Capital expenditures for the full year 1996 are expected to
be $2.3 billion, compared with the $2.5 billion previously projected.
Depreciation in the second quarter of 1996 was $232 million, compared with
$182 million in the second quarter of 1995, and $422 million for the first
six months of 1996, compared with $359 million for the same period of 1995.
Depreciation for the total year is projected to be about $1 billion.
Return on net assets (RONA) and return on common equity (ROCE) are measures
TI uses to monitor progress in building shareholder value. For the four
quarters ending June 30, 1996, RONA was 16.4 percent, and ROCE was 20.9
percent. In the four quarters ending June 30, 1995, RONA was 22.1 percent
and ROCE was 28.3 percent.
Trademarks: Digital Light Processing, DLP and TIRIS are trademarks of Texas
Instruments Incorporated.
10
PART II - OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of Stockholders held on April 18, 1996, in addition
to the election of directors, the stockholders voted upon the two board
proposals contained in the Registrant's Proxy Statement dated February 28,
1996.
The board nominees were elected as directors with the following vote:
Nominee For Withheld
------- --- ---------
James R. Adams 161,414,538 582,587
David L. Boren 161,389,871 607,254
James B. Busey IV 161,399,679 597,446
Gerald W. Fronterhouse 161,300,830 696,295
David R. Goode 161,400,357 596,768
Jerry R. Junkins 161,389,340 607,785
William S. Lee 161,406,735 590,390
William B. Mitchell 161,402,057 595,068
Gloria M. Shatto 161,398,317 598,808
William P. Weber 161,404,370 592,755
Clayton K. Yeutter 161,405,046 592,079
The two board proposals were approved with the following vote:
Abstentions
(Other Than
Broker Broker
Proposal For Against Non-Votes) Non-Votes
- -------- ----------- ---------- ----------- ---------
Board proposal with 149,397,199 12,040,411 559,515 --
respect to amendment
to the Company's
Restated Certificate
of Incorporation
Board proposal with 104,597,060 28,735,135 867,633 27,797,297
respect to adoption
of the Texas
Instruments 1996
Long-Term Incentive
Plan
The deadline for receipt of stockholder proposals for inclusion in the
company's 1997 proxy material is October 31, 1996.
11
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Designation of
Exhibits in
this Report Description of Exhibit
-------------- -----------------------------
3 Certificate of Amendment to
Restated Certificate of
Incorporation of the Registrant.
10 Texas Instruments 1996 Long-Term
Incentive Plan.*
11 Computation of primary and fully
diluted earnings per common and
common equivalent share.
12 Computation of Ratio of Earnings
to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges
and Preferred Stock Dividends.
27 Financial Data Schedule.
(b) Report on Form 8-K
The Registrant filed the following reports on Form 8-K with the Securities
and Exchange Commission during the quarter ended June 30, 1996: Form 8-K
dated May 30, 1996, which included news releases regarding the death of
Jerry R. Junkins, the Registrant's Chairman, President and Chief Executive
Officer, and the election of an acting President and Chief Executive
Officer; and Form 8-K dated June 30, 1996 regarding the election of
James R. Adams as Chairman of the Board, and Thomas J. Engibous as
President and Chief Executive Officer.
[FN]* Executive Compensation Plans and Arrangements: Texas Instruments
1996 Long-Term Incentive Plan - Exhibit 10 to this Report.
12
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995:
With the exception of historical information, the matters discussed or
incorporated by reference in this Report on Form 10-Q are forward-looking
statements that involve risks and uncertainties including, but not limited
to, economic conditions, product demand and industry capacity, competitive
products and pricing, manufacturing efficiencies, new product development,
ability to enforce patents, availability of raw materials and critical
manufacturing equipment, new plant startups, the regulatory and trade
environment, and other risks indicated in filings with the Securities and
Exchange Commission.
SIGNATURE
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, thereunto duly authorized.
TEXAS INSTRUMENTS INCORPORATED
BY: /s/ WILLIAM A. AYLESWORTH
--------------------------------
William A. Aylesworth
Senior Vice President, Treasurer
and Chief Financial Officer
Date: July 18, 1996
13
Exhibit Index
Designation of Paper (P)
Exhibits in or
this Report Description of Exhibit Electronic (E)
- ---------------- ----------------------- --------------
3 Certificate of Amendment to E
Restated Certificate of
Incorporation of the Registrant.
10 Texas Instruments 1996 Long- E
Term Incentive Plan.
*
11 Computation of primary and E
fully diluted earnings per
common and common equiv-
alent share.
12 Computation of Ratio of E
Earnings to Fixed Charges and
Ratio of Earnings to Combined
Fixed Charges and Preferred
Stock Dividends.
27 Financial Data Schedule E
[FN]* Executive Compensation Plans and Arrangements: Texas Instruments
1996 Long-Term Incentive Plan - Exhibit 10 to this Report.
EXHIBIT 3
----------
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
TEXAS INSTRUMENTS INCORPORATED
TEXAS INSTRUMENTS INCORPORATED, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the first sentence of Article Fourth of the Restated
Certificate of Incorporation as heretofore amended is hereby amended to read
as follows:
"The total number of shares of all classes of stock which the
Company shall have authority to issue is Five Hundred Ten Million
(510,000,000) shares, of which Ten Million (10,000,000) shall be
Preferred Stock with a par value of $25.00 per share, and Five
Hundred Million (500,000,000) shall be Common Stock with a par
value of $1.00 per share."
SECOND: That said amendment has been duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, TEXAS INSTRUMENTS INCORPORATED has caused this
Certificate to be signed by Jerry R. Junkins, Chairman of the Board, President
and Chief Executive Officer, this 18th day of April, 1996.
TEXAS INSTRUMENTS INCORPORATED
By: /s/ JERRY R. JUNKINS
Chairman of the Board, President
and Chief Executive Officer
EXHIBIT 10
----------
TEXAS INSTRUMENTS 1996 LONG-TERM INCENTIVE PLAN
As Adopted April 18, 1996
The Texas Instruments 1996 Long-Term Incentive Plan is designed to enhance the
ability of the Company to attract and retain exceptionally qualified
individuals and to encourage them to acquire a proprietary interest in the
growth and performance of the Company.
For purposes of the Plan, unless otherwise indicated, the term "Company" shall
mean Texas Instruments Incorporated and its subsidiaries of which
substantially all of the voting stock is owned directly or indirectly by Texas
Instruments.
Eligibility
Any employee of the Company, including any officer or employee-director, shall
be eligible to be designated a Participant (defined below). Directors who are
not full-time or part-time officers or employees are not eligible to be
designated Participants.
Compensation Committee
The Plan shall be administered by a Committee of the Board of Directors which
shall be known as the Compensation Committee (the "Committee"). The Committee
shall be appointed by a majority of the whole Board and shall consist of not
less than three directors. The Board may designate one or more directors as
alternate members of the Committee who may replace any absent or disqualified
member at any meeting of the Committee. A director may serve as a member or
alternate member of the Committee only during periods in which he is a
"disinterested person" as described in Rule 16b-3 under the Securities
Exchange Act of 1934, as in effect from time to time ("Rule 16b-3"). No
member or alternate member of the Committee shall be eligible, while a member
or alternate member, for participation in the Plan. In addition, a director
may serve as a member or alternate member of the Committee only during periods
in which he is an "outside" director as described in Section 162(m) of the
Internal Revenue Code of 1986 and regulations promulgated thereunder. The
Committee shall have full power and authority to construe, interpret and
administer the Plan. It may issue rules and regulations for administration of
the Plan. It shall meet at such times and places as it may determine. A
majority of the members of the Committee shall constitute a quorum and all
decisions of the Committee shall be final, conclusive and binding upon all
parties, including the Company, the stockholders and the employees.
Definitions
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Award" shall mean any Option, Restricted Stock, Restricted Stock Unit,
Performance Unit or Other Stock-Based Award granted under the Plan.
(b) "Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
(d) "Cycle Time Improvement" shall mean a reduction of the actual time a
specific process relating to a product or service of the Company takes to
accomplish.
(e) "Earnings Per Share" shall mean earnings per share calculated in
accordance with Generally Accepted Accounting Principles.
(f) "Fair Market Value" shall mean, with respect to any property (including,
without limitation, any Shares or other securities) the fair market value
of such property determined by such methods or procedures as shall be
established from time to time by the Committee.
(g) "Incentive Stock Option" shall mean an option granted under paragraph (a)
under the heading "Awards" set forth below that is intended to meet the
requirements of Section 422 of the Code, or any successor provision
thereto.
(h) "Manufacturing Process Yield" shall mean the good units produced as a
percent of the total units processed.
(i) "Market Share" shall mean the percent of sales of the total available
market in an industry, product line or product attained by the Company or
one of its business units during a time period.
(j) "Net Revenue Per Employee" in a period shall mean net revenue divided by
the average number of employees of the Company, with average defined as
the sum of the number of employees at the beginning and ending of the
period divided by two.
(k) "Non-Qualified Stock Option" shall mean an option granted under said
paragraph (a) that is not intended to be an Incentive Stock Option.
(l) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
(m) "Other Stock-Based Award" shall mean any right granted under paragraph
(d) under the heading "Awards" set forth below.
(n) "Participant" shall mean an employee designated to be granted an Award
under the Plan.
(o) "Performance Unit" shall mean any right granted under paragraph (c) under
the heading "Awards" set forth below.
(p) "Released Securities" shall mean securities that were Restricted
Securities with respect to which all applicable restrictions have
expired, lapsed, or been waived.
2
(q) "Restricted Securities" shall mean Awards of Restricted Stock or other
Awards under which issued and outstanding Shares are held subject to
certain restrictions.
(r) "Restricted Stock" shall mean any Share granted under paragraph (b) under
the heading "Awards" set forth below.
(s) "Restricted Stock Unit" shall mean any right granted under said paragraph
(b) that is denominated in Shares.
(t) "Return On Common Equity" for a period shall mean net income less
preferred stock dividends divided by total shareholders equity, less
amounts, if any, attributable to preferred stock.
(u) "Return On Net Assets" for a period shall mean net income less preferred
stock dividends divided by the difference of average total assets less
average non-debt liabilities, with average defined as the sum of assets
or liabilities at the beginning and ending of the period divided by two.
(v) "Revenue Growth" shall mean the percentage change in revenue (as defined
in Statement of Financial Accounting Concepts No. 6, published by the
Financial Accounting Standards Board) from one period to another.
(w) "Shares" shall mean shares of the common stock of the Company, $1.00 par
value.
(x) "Total Shareholder Return" shall mean the sum of the appreciation in the
Company's stock price and dividends paid on the common stock of the
Company over a given period of time.
Administration of Plan
The Plan shall be administered by the Committee. Subject to the terms of the
Plan and applicable law, the Committee shall have full power and authority to:
(i) designate Participants; (ii) determine the type or types of Awards to be
granted to each Participant under the Plan; (iii) determine the number of
Shares to be covered by (or with respect to which payments, rights, or other
matters are to be calculated in connection with) Awards; (iv) determine the
terms and conditions of any Award; (v) determine whether, to what extent, and
under what circumstances Awards may be settled or exercised in cash, Shares,
other securities, other Awards, or other property, or canceled, forfeited or
suspended, and the method or methods by which Awards may be settled,
exercised, canceled, forfeited or suspended; (vi) determine whether, to what
extent, and under what circumstances cash, Shares, other securities, other
Awards, other property, and other amounts payable with respect to an Award
under the Plan shall be deferred either automatically or at the election of
the holder thereof or of the Committee; (vii) interpret and administer the
Plan and any instrument or agreement relating to, or Award made under, the
Plan; (viii) establish, amend, suspend or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (ix) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of the
Plan.
Unless otherwise determined by the Committee, the amounts of any dividend
equivalents or interest determined by the Committee to be payable with respect
to any Awards shall not be counted against the aggregate number of shares
3
available for granting Awards under the Plan. Unless otherwise expressly
provided in the Plan, all designations, determinations, interpretations and
other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time, and shall be
final, conclusive and binding upon all persons, including the Company, any
Participant, any holder or beneficiary of any Award, any stockholder and any
employee of the Company.
Shares Available for Awards
Subject to adjustment as provided below:
(a) Number of Shares Available
(i) Overall. The number of Shares available for granting Awards
(including Awards of Restricted Stock and Restricted Stock Units
and Other Stock-Based Awards) under the Plan during the term of
the Plan shall be 18,500,000 shares. If, after the effective
date of the Plan, any Shares covered by an award granted under
the Plan, or by an option granted under the Company's 1984 or
1988 Stock Option Plans, or an award granted under the Company's
Long-Term Incentive Plan adopted April 15, 1993, or to which such
an award relates, are forfeited, or if such an Award or such an
option otherwise terminates without the delivery of Shares or of
other consideration, then the Shares covered by such award or
option, or to which such award relates, or the number of Shares
otherwise counted against the aggregate number of Shares
available under the Plan with respect to such award, to the
extent of any such forfeiture or termination, shall again be, or
shall become, available for granting awards under the Plan to
the extent permitted by Rule 16b-3.
(ii) Additional Restriction. The maximum number of Shares that may be
awarded under paragraph (b), "Restricted Stock and Restricted
Stock Units", and paragraph (d), "Other Stock-Based Awards",
under the heading "Awards" below during the term of the Plan
shall be 2,000,000 shares.
(b) Accounting for Awards
For purposes of this section:
(i) If an Award is denominated in Shares, the number of Shares
covered by such Award, or to which such Award relates, shall be
counted on the date of grant of such Award against the aggregate
number of Shares available for granting Awards under the Plan;
and
(ii) Awards not denominated in Shares shall be counted against the
aggregate number of Shares available for granting Awards under
the Plan in such amount and at such time as the Committee shall
determine under procedures adopted by the Committee consistent
with the purposes of the Plan;
provided, however, that Awards that operate in tandem with (whether granted
simultaneously with or at a different time from) other Awards may be counted
4
or not counted under procedures adopted by the Committee in order to avoid
double counting. Any Shares that are delivered by the Company, and any Awards
that are granted by, or become obligations of, the Company, through the
assumption by the Company of, or in substitution for, outstanding awards
previously granted by an acquired company shall not, except in the case of
Awards granted to employees who are officers or directors of the Company for
purposes of Section 16 of the Securities Exchange Act of 1934, as amended, be
counted against the Shares available for granting Awards under the Plan.
(c) Sources of Shares Deliverable Under Awards
Any Shares delivered pursuant to an Award may consist, in whole or in part, of
authorized and unissued Shares or of treasury Shares.
(d) Adjustments
In the event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange
of Shares or other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that an adjustment is
determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall, in such manner as it may
deem equitable, adjust any or all of (i) the number and type of Shares (or
other securities or property) which thereafter may be made the subject of
Awards, (ii) the number and type of Shares (or other securities or property)
subject to outstanding Awards, and (iii) the grant, purchase, or exercise
price with respect to any Award or, if deemed appropriate, make provision for
a cash payment to the holder of an outstanding Award; provided, however, in
each case, that with respect to Awards of Incentive Stock Options no such
adjustment shall be authorized to the extent that such authority would cause
the Plan to violate Section 422(b)(1) of the Code or any successor provision
thereof; and provided further, that the number of Shares subject to any Award
denominated in Shares shall always be a whole number.
Awards
(a) Options. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such additional
terms and conditions, in either case not inconsistent with the provisions of
the Plan, as the Committee shall determine:
(i) Exercise Price. The purchase price per Share purchasable under
an Option shall be determined by the Committee; provided,
however, that, except in the case of Options granted through
assumption of, or in substitution for, outstanding awards
previously granted by an acquired company, such purchase price
shall not be less than the Fair Market Value of a Share on the
date of grant of such Option.
(ii) Option Term. The term of each Option shall be fixed by the
Committee.
5
(iii) Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in
part, and the method or methods by which, and the form or forms,
including, without limitation, cash, Shares, other Awards, or
other property, or any combination thereof, having a Fair Market
Value on the exercise date equal to the relevant exercise price,
in which, payment of the exercise price with respect thereto may
be made or deemed to have been made.
(iv) Incentive Stock Options. The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code, or any successor
provision thereto, and any regulations promulgated thereunder.
(b) Restricted Stock and Restricted Stock Units
(i) Issuance. The Committee is hereby authorized to grant Awards of
Restricted Stock and Restricted Stock Units to Participants.
(ii) Restrictions. Shares of Restricted Stock and Restricted Stock
Units shall be subject to such restrictions as the Committee may
impose (including, without limitation, any limitation on the
right to vote a Share of Restricted Stock or the right to
receive any dividend or other right or property), which
restrictions may lapse separately or in combination at such time
or times, in such installments or otherwise, as the Committee may
deem appropriate. However, the minimum vesting period for
Restricted Stock Units granted under this Plan shall be three
years.
(iii) Registration. Any Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee may deem appropriate
including, without limitation, book-entry registration or
issuance of a stock certificate or certificates. In the event
any stock certificate is issued in respect of Shares of
Restricted Stock granted under the Plan, such certificate shall
be registered in the name of the Participant and shall bear an
appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock.
(iv) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment (as determined under criteria
established by the Committee) for any reason during the
applicable restriction period, all Shares of Restricted Stock and
all Restricted Stock Units still, in either case, subject to
restriction shall be forfeited and reacquired by the Company;
provided, however, that the Committee may, when it finds that a
waiver would be in the best interests of the Company, waive in
whole or in part any or all remaining restrictions with respect
to Shares of Restricted Stock or Restricted Stock Units.
Unrestricted Shares, evidenced in such manner as the Committee
shall deem appropriate, shall be delivered to the holder of
Restricted Stock promptly after such Restricted Stock shall
become Released Securities.
(c) Performance Units. The Committee is hereby authorized to grant
Performance Units to Participants. Subject to the terms of the Plan, a
6
Performance Unit granted under the Plan (i) may be denominated or payable in
cash, Shares (including, without limitation, Restricted Stock), other
securities, other Awards, or other property and (ii) shall confer on the
holder thereof rights valued as determined by the Committee and payable to, or
exercisable by, the holder of the Performance Unit, in whole or in part, upon
the achievement of such performance goals during such performance periods as
the Committee shall establish. Subject to the terms of the Plan, the
performance goals to be achieved during any performance period, the length of
any performance period, the amount of any Performance Unit granted and the
amount of any payment or transfer to be made pursuant to any Performance Unit
shall be determined by the Committee.
(d) Other Stock-Based Awards. The Committee is hereby authorized to grant
to Participants such other Awards (including, without limitation, stock
appreciation rights) that are denominated or payable in, valued in whole or in
part by reference to, or otherwise based on or related to, Shares (including,
without limitation, securities convertible into Shares) as are deemed by the
Committee to be consistent with the purposes of the Plan. Subject to the
terms of the Plan, the Committee shall determine the terms and conditions of
such Awards. Shares or other securities delivered pursuant to a purchase
right granted under this paragraph (d) shall be purchased for such
consideration, which may be paid by such method or methods and in such form or
forms, including, without limitation, cash, Shares, other securities, other
Awards, or other property, or any combination thereof, as the Committee shall
determine, the value of which consideration, as established by the Committee,
shall, except in the case of Awards granted through assumption of, or in
substitution for, outstanding awards previously granted by an acquired
company, not be less than the Fair Market Value of such Shares or other
securities as of the date such purchase right is granted.
(e) General.
(i) No Cash Consideration for Awards. Awards shall be granted for no
cash consideration or for such minimal cash consideration as may
be required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in
addition to or in tandem with any other Award or any award
granted under any other plan of the Company. Awards granted in
addition to or in tandem with other Awards, or in addition to or
in tandem with awards granted under any other plan of the
Company, may be granted either at the same time as or at a
different time from the grant of such other Awards or awards.
(iii) Forms of Payment Under Awards. Subject to the terms of the Plan,
payments or transfers to be made by the Company upon the grant,
exercise or payment of an Award may be made in such form or forms
as the Committee shall determine including, without limitation,
cash, Shares, other securities, other Awards, or other property,
or any combination thereof, and may be made in a single payment
or transfer, in installments, or on a deferred basis, in each
case in accordance with rules and procedures established by the
Committee. Such rules and procedures may include, without
limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or
crediting of dividend equivalents in respect of installment or
deferred payments.
7
(iv) Limits on Transfer of Awards. No Award (other than Released
Securities), and no right under any such Award, shall be
assignable, alienable, saleable or transferable by a Participant
otherwise than by will or by the laws of descent and distribution
(or, in the case of an Award of Restricted Securities, to the
Company); provided, however, that, if so determined by the
Committee, a Participant may, in the manner established by the
Committee, designate a beneficiary or beneficiaries to exercise
the rights of the Participant, and to receive any property
distributable, with respect to any Award upon the death of the
Participant. Each Award, and each right under any Award, shall
be exercisable during the Participant's lifetime only by the
Participant or, if permissible under applicable law, by the
Participant's guardian or legal representative. No Award (other
than Released Securities), and no right under any such Award, may
be pledged, alienated, attached, or otherwise encumbered, and any
purported pledge, alienation, attachment or encumbrance thereof
shall be void and unenforceable against the Company.
(v) Term of Awards. The term of each Award shall be for such period
as may be determined by the Committee; provided, however, that in
no event shall the term of any Incentive Stock Option exceed a
period of ten years from the date of its grant.
(vi) Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under
the Plan or the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which
such Shares or other securities are then listed, and any
applicable Federal or state securities laws, and the Committee
may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions.
(vii) Performance Measures for Selected Awards. Every award other than
an option or stock appreciation right to a member of the
Executive Group (defined below) shall include a pre-established
formula, such that payment, retention or vesting of the award is
subject to the achievement during a performance period or
periods, as determined by the Committee, of a level or levels, as
determined by the Committee, of one or more of the following
performance measures, as determined by the Committee: (i) return
on net assets, (ii) revenue growth, (iii) return on common
equity, (iv) total shareholder return, (v) earnings per share,
(vi) cycle time improvement, (vii) manufacturing process yield,
(viii) net revenue per employee or (ix) market share. The
"Executive Group" shall include every person who, at the time
such pre-established formula is determined, is expected by the
Committee to be both (a) a "covered employee" as defined in
Section 162(m) of the Code as of the end of the taxable year in
which payment of the award may be deducted by the Company, and
(b) the recipient of compensation of more than $1,000,000 for
that taxable year. For awards in the form of options or stock
appreciation rights, no more than 500,000 shares can be granted
under this Plan to any participant in any one year. For other
awards denominated in stock, no more than 50,000 shares can be
8
granted under this Plan to any participant in any one year. For
all other awards, no more than $5,000,000 can be paid under this
Plan to any participant in any one year.
Amendment and Termination
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company may
amend, alter, suspend, discontinue or terminate the Plan, without the consent
of any share owner, Participant, other holder or beneficiary of an Award, or
other person; provided, however, that, no such action shall impair the rights
under any Award theretofore granted under the Plan and that, notwithstanding
any other provision of the Plan or any Award Agreement, without the approval
of the stockholders of the Company no such amendment, alteration, suspension,
discontinuation or termination shall be made that would:
(i) Increase the total number of Shares available for Awards under
the Plan, except as provided under the heading "Shares Available
for Awards" above; or
(ii) permit Options or other Stock-Based Awards encompassing rights to
purchase Shares to be granted with per Share grant, purchase, or
exercise prices of less than the Fair Market Value of a Share on
the date of grant thereof, except to the extent permitted in
paragraphs (a) or (d) under the heading "Awards" above.
(b) Amendments to Awards. The Committee may waive any conditions or
rights under, amend any terms of, or amend, alter, suspend, discontinue or
terminate, any Award theretofore granted, prospectively or retroactively,
without the consent of any relevant Participant or holder or beneficiary of an
Award, provided that no such action shall impair the rights of any relevant
Participant or holder or beneficiary under any Award theretofore granted under
the Plan; and provided further that, except as provided for in paragraph (d)
under the heading "Shares Available for Awards" above and in paragraph (c)
below, no such action shall reduce the exercise price of any Option.
(c) Adjustments of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee shall be authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in paragraph (d) under the heading "Shares Available for
Awards" above) affecting the Company, or the financial statements of the
Company, or of changes in applicable laws, regulations or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
(d) Correction of Defects, Omissions and Inconsistencies. The Committee
may correct any defect, supply any omission, or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent it shall deem desirable
to carry the Plan into effect.
9
General Provisions
(a) No Rights to Awards. No employee, Participant or other person shall
have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of employees, Participants, or holders
or beneficiaries of Awards under the Plan. The terms and conditions of Awards
need not be the same with respect to each recipient.
(b) Delegation. The Committee may delegate to one or more officers or
managers of the Company, or a committee of such officers or managers, the
authority, subject to such terms and limitations as the Committee shall
determine, to grant Awards to, or to cancel, modify, waive rights with respect
to, alter, discontinue, suspend or terminate Awards held by, employees who are
not officers or directors of the Company for purposes of Section 16 of the
Securities Exchange Act of 1934, as amended; provided, that any delegation to
management shall conform with the requirements of the General Corporation Law
of Delaware, as in effect from time to time.
(c) Withholding. The Company shall be authorized to withhold from any
Award granted or any payment due or transfer made under any Award or under the
Plan the amount (in cash, Shares, other securities, other Awards, or other
property) of withholding taxes due in respect of an Award, its exercise, or
any payment or transfer under such Award or under the Plan and to take such
other action (including, without limitation, providing for elective payment of
such amounts in cash, Shares, other securities, other Awards or other property
by the Participant) as may be necessary in the opinion of the Company to
satisfy all obligations for the payment of such taxes.
(d) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company from adopting or continuing in effect other or
additional compensation arrangements, and such arrangements may be either
generally applicable or applicable only in specific cases.
(e) No Right to Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the Company.
Further, the Company may at any time dismiss a Participant from employment,
free from any liability, or any claim under the Plan, unless otherwise
expressly provided in the Plan or in any Award Agreement.
(f) Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Delaware and applicable Federal law.
(g) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or
as to any person or Award, or would disqualify the Plan or any Award under any
law deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be so construed
or deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, person or Award, and the remainder of the Plan and
any such Award shall remain in full force and effect.
(h) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company and a Participant or any other person. To
the extent that any person acquires a right to receive payments from the
10
Company pursuant to an Award, such right shall be no greater than the right of
any unsecured general creditor of the Company.
(i) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities or other property shall be paid or transferred
in lieu of any fractional Shares, or whether such fractional Shares or any
rights thereto shall be canceled, terminated or otherwise eliminated.
Effective Date of the Plan
The Plan shall be effective as of the date of its approval by the stockholders
of the Company.
Term of the Plan
No Award shall be granted under the Plan after April 18, 2006. However,
unless otherwise expressly provided in the Plan or in an applicable Award
Agreement, any Award theretofore granted may extend beyond such date, and the
authority of the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award, or to waive any conditions or rights under any such
Award, and the authority of the Board of Directors of the Company to amend the
Plan, shall extend beyond such date.
11
EXHIBIT 11
----------
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
PRIMARY AND FULLY DILUTED EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
(In thousands, except per-share amounts.)
For Three Months Ended For Six Months Ended
---------------------- ---------------------
June 30 June 30 June 30 June 30
1996 1995 1996 1995
------- ------- ------- -------
Net income................................................... $ 75,596 $278,233 $238,832 $508,223
Add:
Interest, net of tax and profit sharing effect, on
convertible debentures assumed converted............... 460 410 921 817
------ ------- ------- -------
Adjusted net income.......................................... $ 76,056 $278,643 $239,753 $509,040
======= ======= ======= =======
Earnings per Common and Common Equivalent Share:
Weighted average common shares outstanding................... 189,530 187,205 189,486 186,445
Weighted average common equivalent shares:
Stock option and compensation plans...................... 2,583 3,261 2,407 2,876
Convertible debentures................................... 2,493 2,982 2,493 2,983
------- ------- ------- -------
Weighted average common and common equivalent shares......... 194,606 193,448 194,386 192,304
======= ======= ======= =======
Earnings per Common and Common Equivalent Share.............. $ 0.39 $ 1.44 $ 1.23 $ 2.65
Earnings per Common Share Assuming Full Dilution:
Weighted average common shares outstanding................... 189,530 187,205 189,486 186,445
Weighted average common equivalent shares:
Stock option and compensation plans...................... 2,583 3,797 2,409 3,997
Convertible debentures................................... 2,493 2,982 2,493 2,983
------- ------- ------- -------
Weighted average common and common equivalent shares......... 194,606 193,984 194,388 193,425
======= ======= ======= =======
Earnings per Common Share Assuming Full Dilution............. $ 0.39 $ 1.44 $ 1.23 $ 2.63
EXHIBIT 12
----------
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(Dollars in millions)
For Six Months
Ended June 30
--------------
1991 1992 1993 1994 1995 1995 1996
----- ----- ----- ----- ----- ----- -----
Income (loss) before income taxes
and fixed charges:
Income (loss) before cumulative
effect of accounting changes,
interest expense on loans,
capitalized interest amortized,
and provision for income taxes.......$ (250) $ 433 $ 755 $1,098 $1,679 $ 790 $ 364
Add interest attributable to
rental and lease expense............. 43 42 38 40 41 20 22
----- ----- ----- ----- ----- ----- -----
$ (207) $ 475 $ 793 $1,138 $1,720 $ 810 $ 386
===== ===== ===== ===== ===== ===== =====
Fixed charges:
Total interest on loans (expensed
and capitalized).......................$ 59 $ 57 $ 55 $ 58 $ 69 $ 35 $ 41
Interest attributable to rental
and lease expense...................... 43 42 38 40 41 20 22
----- ----- ----- ----- ----- ----- -----
Fixed charges..............................$ 102 $ 99 $ 93 $ 98 $ 110 $ 55 $ 63
===== ===== ===== ===== ===== ===== =====
Combined fixed charges and
preferred stock dividends:
Fixed charges..........................$ 102 $ 99 $ 93 $ 98 $ 110 $ 55 $ 63
Preferred stock dividends
(adjusted as appropriate to a
pretax equivalent basis)............. 34 55 29 -- -- -- --
----- ----- ----- ----- ----- ----- -----
Combined fixed charges and
preferred stock dividends............$ 136 $ 154 $ 122 $ 98 $ 110 $ 55 $ 63
===== ===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges......... * 4.8 8.5 11.6 15.6 14.7 6.1
===== ===== ===== ===== ===== ===== =====
Ratio of earnings to combined
fixed charges and preferred
stock dividends.......................... ** 3.1 6.5 11.6 15.6 14.7 6.1
===== ===== ===== ===== ===== ===== =====
* Not meaningful. The coverage deficiency was $309 million in 1991.
** Not meaningful. The coverage deficiency was $343 million in 1991.
5
1,000,000
6-MOS
DEC-31-1996
JUN-30-1996
978
39
1,976
58
1,155
4,699
6,534
2,639
9,241
2,530
1,223
0
0
190
4,089
9,241
5,921
5,921
4,248
4,248
516
0
25
332
93
239
0
0
0
239
1.23
0
