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 September 30, 1994 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
---- ----
92,630,278
- ------------------------------------------------------------------------------
Number of shares of Registrant's common stock outstanding
as of September 30, 1994
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 Nine Months Ended
---------------------- ---------------------
Sept 30 Sept 30 Sept 30 Sept 30
Income 1994 1993 1994 1993
- ------ ------- ------- ------- -------
Net revenues............................................... $ 2,574 $ 2,161 $ 7,533 $ 6,149
Operating costs and expenses:
Cost of revenues......................................... 1,852 1,552 5,441 4,515
General, administrative and marketing.................... 333 316 1,029 906
Employees' retirement and profit sharing plans........... 98 75 271 198
------- ------- ------- -------
Total.................................................. 2,283 1,943 6,741 5,619
------- ------- ------- -------
Profit from operations..................................... 291 218 792 530
Interest income............................................ 12 8 35 22
Other income (expense) net................................. (11) (18) (31) (23)
Interest on loans.......................................... 11 12 33 35
------- ------- ------- -------
Income before provision for income taxes and
cumulative effect of accounting changes.................. 281 196 763 494
Provision for income taxes................................. 95 50 260 151
------- ------- ------- -------
Income before cumulative effect of accounting changes...... 186 146 503 343
Cumulative effect of accounting changes.................... -- -- -- (4)
------- ------- ------- -------
Net income................................................. $ 186 $ 146 $ 503 $ 339
======= ======= ======= =======
Earnings per common and common equivalent share:
Income before cumulative effect of accounting changes.... $ 1.94 $ 1.54 $ 5.29 $ 3.65
Cumulative effect of accounting changes.................. -- -- -- (0.05)
------- ------- ------- -------
Net income............................................. $ 1.94 $ 1.54 $ 5.29 $ 3.60
======= ======= ======= =======
Cash dividends declared per share of common stock.......... $ 0.25 $ 0.18 $ 0.68 $ 0.54
Cash Flows
- ----------
Net cash provided by operating activities.............................................. $ 1,101 $ 588
Cash flows from investing activities:
Additions to property, plant and equipment........................................... (756) (512)
Purchases of short-term investments.................................................. (602) (565)
Sales and maturities of short-term investments....................................... 562 583
------- -------
Net cash used in investing activities.................................................. (796) (494)
Cash flows from financing activities:
Payments on long-term debt........................................................... (82) (9)
Dividends paid on common and preferred stock......................................... (56) (69)
Sales and other common stock transactions............................................ 109 79
Other................................................................................ 22 (10)
------- -------
Net cash used in financing activities.................................................. (7) (9)
Effect of exchange rate changes on cash................................................ 11 (4)
------- -------
Net increase in cash and cash equivalents.............................................. 309 81
Cash and cash equivalents, January 1................................................... 404 356
------- -------
Cash and cash equivalents, September 30................................................ $ 713 $ 437
======= =======
2
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
(In millions of dollars, except per-share amounts.)
Sept. 30 Dec. 31
Balance Sheet 1994 1993
- ------------- ------- -------
Assets
Current assets:
Cash and cash equivalents.......................................... $ 713 $ 404
Short-term investments............................................. 528 484
Accounts receivable, less allowance for losses of
$50 million in 1994 and $42 million in 1993...................... 1,458 1,218
Inventories:
Raw materials.................................................... 237 244
Work in process.................................................. 597 557
Finished goods................................................... 274 250
Less progress billings........................................... (238) (229)
------- -------
Inventories (net of progress billings)......................... 870 822
------- -------
Prepaid expenses................................................... 66 55
Deferred income taxes.............................................. 334 331
------- -------
Total current assets............................................. 3,969 3,314
------- -------
Property, plant and equipment at cost................................ 4,818 4,620
Less accumulated depreciation...................................... (2,371) (2,417)
------- -------
Property, plant and equipment (net).............................. 2,447 2,203
------- -------
Deferred income taxes................................................ 254 237
Other assets......................................................... 173 239
------- -------
Total assets......................................................... $ 6,843 $ 5,993
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Loans payable and current portion long-term debt................... $ 42 $ 211
Accounts payable................................................... 628 543
Accrued and other current liabilities.............................. 1,514 1,247
------- -------
Total current liabilities........................................ 2,184 2,001
------- -------
Long-term debt....................................................... 813 694
Accrued retirement costs............................................. 792 739
Deferred credits and other liabilities............................... 191 244
Stockholders' equity:
Preferred stock, $25 par value. Authorized - 10,000,000 shares.
Participating cumulative preferred. None issued.................. -- --
Common stock, $1 par value. Authorized - 300,000,000 shares.
Shares issued: 1994 - 92,737,732; 1993 - 90,919,314.............. 93 91
Paid-in capital.................................................... 1,040 932
Retained earnings.................................................. 1,748 1,307
Less treasury common stock at cost.
Shares: 1994 - 107,454; 1993 - 102,522........................... (6) (5)
Other.............................................................. (12) (10)
------- -------
Total stockholders' equity....................................... 2,863 2,315
------- -------
Total liabilities and stockholders' equity........................... $ 6,843 $ 5,993
======= =======
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 (96.0 and 94.4 million
shares for the third quarters of 1994 and 1993, and 95.5 and 93.5 million
shares for the nine months ended September 30, 1994 and 1993). Shares
issuable upon exercise of dilutive stock options and upon conversion of
dilutive convertible debentures and, for 1993, conversion preferred stock
are included in average common and common equivalent shares outstanding.
In computing per-share earnings for the periods, net income is reduced by
$5 million for the third quarter of 1993, and $20 million for the nine
months ended September 30, 1993, for dividends accrued on preferred stock,
and increased by $1 million and $4 million for the third quarters of 1994
and 1993, and $2 million and $18 million for the nine months ended Septem-
ber 30, 1994 and 1993, for interest (net of tax and profit sharing effect)
and dividends on the convertible debentures and conversion preferred stock
considered dilutive common stock equivalents.
Results for the first nine months of 1994 include the following
first-quarter items: special pretax charges of $132 million and one-time
royalty revenues of $69 million.
In April 1994, the company amended its asset securitization agree-
ment for accounts receivable and reduced the outstanding balance from $175
million to $125 million. Holders of TI's 2.75% convertible subordinated
debentures due 2002 had the option of notifying TI (during the 32-day peri-
od beginning July 29, 1994) of their intent to redeem these securities at
par during the 30-day period beginning September 29, 1994. All redeeming
holders chose September 29 as their redemption date; $76 million of the
debentures were redeemed by the company on that date. The $124 million
remaining balance has been classified as a long-term liability at the end
of the third quarter because the holders' redemption period has lapsed.
Effective January 1, 1993, the company adopted two new accounting
standards: SFAS No. 106, which requires accrual of expected retiree
health-care benefit costs during the employees working careers, and SFAS
No. 109, which requires increased recording of deferred income tax assets.
This resulted in a charge of $294 million ($3.15 per share) for SFAS No.
106 and a credit of $290 million ($3.10 per share) for SFAS No. 109, for
the cumulative effect of the accounting changes.
The statements of income, statements of cash flows and balance sheet
at September 30, 1994, 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.
Net revenues for the third quarter of 1994 were $2574 million, up 19
percent from $2161 million in the third quarter of 1993. The increase
resulted primarily from continued strong growth in semiconductor revenues.
TI's profit from operations for the quarter was $291 million, up 33 percent
from $218 million in the third quarter of 1993. Most of the profit
increase came from substantial improvement in semiconductor operating
profit. Net income for the quarter was $186 million, compared with $146
million in the third quarter of 1993. Earnings per share were $1.94, an
increase of 26 percent from $1.54 in the third quarter of 1993. Net income
for the third quarter of 1993 included a one-time favorable tax item of $17
million, or $0.18 per share.
Third-quarter 1994 results include an accrual of $50 million for employee
profit-sharing plans, compared with a $26 million accrual in the third
quarter of 1993.
There were no one-time royalty revenues in the third quarter of 1994. One-
time royalties from patent license agreements reached in the third quarter
of 1993 were $37 million. Ongoing royalties were up from the third quarter
of 1993.
Profit after tax return on assets (PAT ROA) increased to an annualized rate
of 10.5 percent in the first nine months of 1994, and return on common
equity increased to an annualized rate of 25.9 percent.
SEMICONDUCTORS
TI s semiconductor orders were up from third-quarter 1993 levels, led by
substantial growth in memory and differentiated products, especially
digital signal processing products and microprocessors. Orders remain near
the record level of the second quarter of 1994, despite some seasonality.
TI s semiconductor revenues grew faster than the market and were up
strongly over the third quarter of 1993, primarily because of increased
shipments of memory and differentiated products. Revenues were up slightly
over the second quarter of 1994.
Profits were up substantially over the third quarter of 1993. Semicon-
ductor operating margins continue to improve, primarily because of higher
revenues and increased manufacturing productivity.
Construction of TI s advanced semiconductor manufacturing facility in
Dallas is progressing, and initial production is planned for the first half
of 1995. This facility is designed for rapid prototyping and 0.35-micron
production of differentiated semiconductor products, including digital
signal processors, microprocessors and other advanced logic products.
Demand for dynamic random-access memory (DRAM) remains strong, and memory
requirements for next-generation computer systems continue to escalate.
The majority of the DRAMs sold by TI are produced in joint-venture
manufacturing facilities. Because TI purchases products from the joint
ventures at a discount from the market price, this has substantially
reduced the volatility of TI s DRAM business and helped to stabilize TI s
semiconductor margins.
TI is continuing to execute strategies to position the company as a leader
of the digital revolution. A fundamental engine driving the digital
5
revolution is signal processing. TI is the clear market leader in digital
signal processors (DSPs), with revenues growing substantially faster than
the market. Mixed-signal devices that provide interfaces between digital
information and the analog world are key components in digital signal
processing solutions. TI s analog and mixed-signal revenues are growing
faster than the market and reached record levels in the third quarter.
DEFENSE ELECTRONICS
TI s defense electronics revenues were flat with the third quarter of 1993,
and margins remained stable. We continue to expect defense revenues in the
fourth quarter to be below year-ago levels.
TI s Paveway III was selected for the United Kingdom s interdiction weapons
program. Also during the quarter, TI received the fiscal-year 1994 order
for the High-Speed Antiradiation Missile (HARM). These contracts, which
will be delivered over the next few years, raised TI s defense electronics
orders substantially over the third quarter of last year.
SOFTWARE
TI s strategic software business, based on the Information Engineering
Facility (IEF)** model-based development tools, operated at a small profit
on higher revenues during the third quarter as a result of acceptance of
new client/server products. The company recently announced Composer by
IEF**, which will provide a more open and flexible tool for development of
future client/server applications.
SUMMARY
TI continues to focus on improved stability and sustained return on assets
across all operations. Improved semiconductor operations, resulting from
the higher differentiated product mix and increased manufacturing produc-
tivity, provide the foundation for profitable growth. In addition, strong
performance from the materials and controls business, and from
instructional calculators, is contributing to improved profitability and
ROA in 1994.
TI will continue to take ongoing actions to reduce costs and streamline
operations to remain competitive. For example, the company is proceeding
with a voluntary early retirement program in Japan for eligible employees
that will be implemented in the fourth quarter. The costs associated with
this program will be reflected in fourth-quarter results.
Trends in the worldwide semiconductor industry continue to point toward
growth with improved long-term stability. Capital spending as a percentage
of revenue remains in a range that is reasonable by historical standards,
and the semiconductor content of electronic end-equipment continues to
rise. TI is well positioned with a balance of TI-owned capacity and joint-
venture facilities to plan capacity additions in a flexible, cost-effective
manner to meet customer requirements.
** IEF, Information Engineering Facility and Composer by IEF are trademarks
of Texas Instruments.
6
ADDITIONAL FINANCIAL INFORMATION
Change in orders, Change in net revenues,
Segment 3Q94 vs. 3Q93 3Q94 vs. 3Q93
------------------- ---------------- ----------------------
Components up 20% up 27%
Defense Electronics up 290% flat
Digital Products up 6% up 11%
Total up 43% up 19%
Change in orders, Change in net revenues,
Segment YTD94 vs. YTD93 YTD94 vs. YTD93
-------------------- ------------------ ----------------------
Components up 27% up 33%
Defense Electronics up 27% down 3%
Digital Products up 13% up 16%
Total up 24% up 23%
TI's orders for the third quarter of 1994 were $2926 million, compared with
$2050 million in the same period of 1993. Higher semiconductor orders ac-
counted for the increase in the components segment. The increase in
defense electronics orders reflects the Paveway and HARM contracts. The
increase in digital products was in personal productivity products, custom
manufacturing services and information technology.
TI's revenues in the third quarter of 1994 were $2574 million, compared
with $2161 million in the third quarter of 1993. The increase in
components segment revenues resulted primarily from higher semiconductor
revenues, attributable mainly to increased shipments and new products. The
increase in digital products segment revenues was primarily in custom
manufacturing services and information technology, offsetting lower total
royalty revenues in digital products. Last year s third quarter included
$37 million in one-time royalties in this segment.
Profit from operations for the third quarter was $291 million, compared
with $218 million in the third quarter of 1993. Components segment profit
was up strongly, primarily because of substantial improvement in
semiconductor operations and strength in electrical controls. Digital
segment profit was flat with the third quarter of 1993 despite the absence
of one-time royalties. Operating performance improved.
TI's current estimate of the income tax rate for 1994 is 34.0 percent.
For the first nine months of 1994, TI's orders were $7890 million, up 24
percent from the first nine months of 1993. The increase in components
segment orders resulted primarily from increased semiconductor orders. The
increase in defense segment orders was related primarily to the Paveway
contract entered in the third quarter and the Javelin contract entered in
the second quarter. The increase in digital segment orders was primarily
in custom manufacturing services and personal productivity products.
Net revenues for the first nine months of 1994 were $7533 million, up 23
percent from $6149 million in the first nine months of 1993. Most of the
increase was attributable to new products and increased shipments. The
7
increase in components segment revenues reflects higher semiconductor
revenues and higher royalties. Defense segment revenues were down,
reflecting the ramp-down of mature production programs. The increase in
digital segment revenues was primarily in personal productivity products
and custom manufacturing services.
TI's profit from operations for the first nine months of 1994 was $792 mil-
lion, compared with $530 million in the first nine months of 1993.
Essentially all the increase was in the components segment, resulting from
improved semiconductor operations and higher ongoing royalties.
In the first quarter of 1994, the company took a pretax charge of $83
million for restructuring of its European operations from the traditional
country-by-country approach to business centers with pan-European
responsibilities. The charge included cash-related accruals of $58 million
for severance as well as $17 million for other costs, plus non-cash asset
write-downs of $8 million. This action, primarily affecting semiconductor
activities, was expected to be essentially complete by the end of 1994;
however, there have been delays in implementation due to extended
negotiations with European works councils. The action is expected to
result in annual savings of approximately $54 million when fully
implemented. Also taken in the first quarter was a pretax charge of $49
million for costs related to the divestiture by early 1995 of nonstrategic
product lines, primarily in information technology. The charge included
cash-related accruals of $4 million for severance as well as $22 million
for other costs, plus non-cash asset write-downs of $23 million. These
restructuring and divestiture actions include severance actions affecting
approximately 1,000 employees, primarily in Europe.
Year-to-date 1994 results also include $69 million in one-time royalty
revenues in the first quarter, approximately offsetting the restructuring
charge in the components segment. One-time royalties in the first nine
months of 1993 were $90 million.
On August 31, 1994, the district court in Tokyo ruled that Fujitsu's
production of 1-megabit and 4-megabit DRAMs and 32K EPROMs does not
infringe the company's Kilby patent. The company is appealing the court's
decision to the Tokyo High Court. The decision should not have any
significant effect on existing licensing agreements. TI continues to
expect a significant ongoing stream of royalty revenue throughout the
remainder of the decade.
TI's financial condition remains strong as third quarter cash flow from
operating activities net of additions to property, plant and equipment
remains positive.
During the first three quarters of 1994, cash and cash equivalents plus
short-term investments increased by $353 million to $1241 million,
primarily because of the cash flow mentioned above. Holders of TI s 2.75%
convertible subordinated debentures due 2002 had the option of notifying TI
(during the 32-day period beginning July 29, 1994) of their intent to
redeem these securities at par during the 30-day period beginning September
29, 1994. All redeeming holders chose September 29 as their redemption
date; $76 million of the debentures were redeemed by the company on that
date. The $124 million remaining balance has been classified as a long-
term liability at the end of the third quarter because the holders'
redemption period has lapsed. In early April, the company amended its
asset securitization agreement for accounts receivable and reduced the
outstanding balance from $175 million to $125 million. On June 17, the
company announced an increase in the annual common dividend rate per share
8
from $.72 to $1.00, resulting in approximately $7 million of increased
dividend payments per quarter (at current common share balances). TI's
debt-to-total-capital ratio was .23 at the end of the third quarter, down
from .25 at second quarter's end and .28 at year-end 1993.
TI's backlog of unfilled orders as of September 30, 1994, was $4162
million, up $231 million from the end of last year's third quarter.
Backlog increased in all businesses except defense electronics and
information technology, which were unchanged. Backlog is up $357 million
from year-end 1993 because of increases in semiconductors and defense
electronics, and up $352 million from the end of the second quarter of
1994, primarily because of higher backlog in defense electronics.
TI-funded research and development (R&D) expense was $168 million in the
third quarter of 1994, compared with $150 million in the same period of
1993. For the first nine months of 1994, TI-funded R&D was $499 million,
compared with $421 million for the first nine months of 1993. The
increases were driven primarily by investments in semiconductors and
digital imaging.
Capital expenditures in the third quarter of this year were $297 million,
compared with $186 million in the third quarter of 1993, and $756 million
for the first nine months of 1994, compared with $512 million in the first
nine months of 1993. Capital expenditures for 1994 are now projected to be
more than $1 billion.
Depreciation in the third quarter of 1994 was $170 million, compared with
$157 million in the third quarter of 1993, and $486 million for the first
nine months of 1994, compared with $450 million in the same period of 1993.
9
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
In connection with the Registrant's lawsuit against Fujitsu
Limited ("Fijitsu") discussed in Items 3 and 7 of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993, the Tokyo
District Court on August 31, 1994 ruled that Fujitsu's production of 1-
megabit and 4-megabit DRAM and 32K EPROMs does not infringe the
Registrant's Japanese patent on the invention of the integrated circuit
(the "Kilby" patent). The Registrant is appealing the court's decision to
the Tokyo High Court.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Designation of
Exhibits in
this Report Description of Exhibit
-------------- -----------------------------
11 Computation of primary and
fully diluted earnings per
common and common equiv-
alent 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 with the Securities and Exchange
Commission during the quarter ended September 30, 1994, a Form 8-K dated
August 31, 1994, which included a news release regarding the Registrant's
patent litigation.
10
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
WILLIAM A. AYLESWORTH
Senior Vice President,
Treasurer and
Chief Financial Officer
Date: October 17, 1994
11
Exhibit Index
Designation of Paper (P)
Exhibits in or
this Report Description of Exhibit Electronic (E)
---------------- ----------------------- --------------
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
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 Nine Months Ended
---------------------- ---------------------
Sept 30 Sept 30 Sept 30 Sept 30
1994 1993 1994 1993
-------- -------- -------- --------
Income before cumulative effect of accounting changes...... $185,652 $146,224 $503,292 $342,644
Less preferred dividends accrued:
Market auction preferred............................... -- (593) -- (1,839)
Money market preferred................................. -- (588) -- (1,909)
Series A conversion preferred.......................... -- (3,654) -- (16,097)
Add:
Dividends on series A conversion preferred
shares assumed converted............................. -- 3,654 -- 16,097
Interest, net of tax and profit sharing effect, on
convertible debentures assumed converted............. 666 676 1,995 2,005
-------- -------- -------- --------
Adjusted income before cumulative effect
of accounting changes.................................... 186,318 145,719 505,287 340,901
Cumulative effect of accounting changes.................... -- -- -- (4,173)
-------- -------- -------- --------
Adjusted net income........................................ $186,318 $145,719 $505,287 $336,728
======== ======== ======== ========
Earnings per Common and Common Equivalent Share:
- ------------------------------------------------
Weighted average common shares outstanding................. 92,430 86,886 91,862 84,367
Weighted average common equivalent shares:
Stock option and compensation plans.................... 1,166 1,740 1,250 1,469
Convertible debentures................................. 2,393 2,413 2,407 2,413
Series A conversion preferred.......................... -- 3,354 -- 5,241
-------- -------- -------- --------
Weighted average common and common equivalent shares..... 95,989 94,393 95,519 93,490
======== ======== ======== ========
Earnings per Common and Common Equivalent Share:
Income before cumulative effect of accounting changes.... $ 1.94 $ 1.54 $ 5.29 $ 3.65
Cumulative effect of accounting changes.................. -- -- -- (0.05)
-------- -------- -------- --------
Net income............................................... $ 1.94 $ 1.54 $ 5.29 $ 3.60
======== ======== ======== ========
Earnings per Common Share Assuming Full Dilution:
- -------------------------------------------------
Weighted average common shares outstanding................. 92,430 86,886 91,862 84,367
Weighted average common equivalent shares:
Stock option and compensation plans.................... 1,166 1,756 1,262 1,852
Convertible debentures................................. 2,393 2,413 2,407 2,413
Series A conversion preferred.......................... -- 3,354 -- 5,241
-------- -------- -------- --------
Weighted average common and common equivalent shares..... 95,989 94,409 95,531 93,873
======== ======== ======== ========
Earnings per Common Share Assuming Full Dilution:
Income before cumulative effect of accounting changes.... $ 1.94 $ 1.54 $ 5.29 $ 3.63
Cumulative effect of accounting changes.................. -- -- -- (0.04)
-------- -------- -------- --------
Net income............................................... $ 1.94 $ 1.54 $ 5.29 $ 3.59
======== ======== ======== ========
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 Nine Months
Ended Sept 30
--------------
1989 1990 1991 1992 1993 1993 1994
----- ----- ----- ----- ----- ----- -----
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....... $ 387 $ 14 $(250) $ 433 $ 755 $ 538 $ 804
Add interest attributable to
rental and lease expense............. 47 50 43 42 38 28 31
----- ----- ----- ----- ----- ----- -----
$ 434 $ 64 $(207) $ 475 $ 793 $ 566 $ 835
===== ===== ===== ===== ===== ===== =====
Fixed charges:
Total interest on loans (expensed
and capitalized)..................... $ 38 $ 47 $ 59 $ 57 $ 55 $ 41 $ 42
Interest attributable to rental
and lease expense.................... 47 50 43 42 38 28 31
----- ----- ----- ----- ----- ----- -----
Fixed charges.............................. $ 85 $ 97 $ 102 $ 99 $ 93 $ 69 $ 73
===== ===== ===== ===== ===== ===== =====
Combined fixed charges and
preferred stock dividends:
Fixed charges.......................... $ 85 $ 97 $ 102 $ 99 $ 93 $ 69 $ 73
Preferred stock dividends
(adjusted as appropriate to a
pretax equivalent basis)............. 47 36 34 55 29 29 --
----- ----- ----- ----- ----- ----- -----
Combined fixed charges and
preferred stock dividends............ $ 132 $ 133 $ 136 $ 154 $ 122 $ 98 $ 73
===== ===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges......... 5.1 * * 4.8 8.5 8.2 11.4
===== ===== ===== ===== ===== ===== =====
Ratio of earnings to combined
fixed charges and preferred
stock dividends.......................... 3.3 ** ** 3.1 6.5 5.8 11.4
===== ===== ===== ===== ===== ===== =====
* Not meaningful. The coverage deficiency was $33 million in 1990 and $309 million in 1991.
** Not meaningful. The coverage deficiency was $69 million in 1990 and $343 million in 1991.
5
1,000,000
9-MOS
DEC-31-1994
SEP-30-1994
713
528
1,458
50
870
3,969
4,818
2,371
6,843
2,184
813
93
0
0
2,770
6,843
7,533
7,533
5,441
5,441
271
0
33
763
260
503
0
0
0
503
5.29
0
