d8k.htm



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 



 


FORM 8-K
 
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): April 20, 2009

 


 
 

TEXAS INSTRUMENTS INCORPORATED
(Exact name of registrant as specified in charter)
 
         
DELAWARE
 
001-03761
 
75-0289970
(State or other jurisdiction of incorporation)
 
(Commission file number)
 
(I.R.S. employer identification no.)
 
12500 TI BOULEVARD
P.O. BOX 660199
DALLAS, TEXAS 75266-0199
(Address of principal executive offices)
 
Registrant’s telephone number, including area code: (972) 995-3773
 

 

 

 
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


 
 

 

ITEM 2.02.  Results of Operations and Financial Condition

The Registrant's news release dated April 20, 2009, regarding its first quarter 2009 results of operations and financial condition is attached hereto as Exhibit 99 and is incorporated by reference herein.
 
ITEM 9.01.  Exhibits
 
     
Designation
of Exhibit
in this
Report
  
Description of Exhibit
   
99
  
Registrant’s News Release
 
  
Dated April 20, 2009 (furnished pursuant to Item 2.02)
 
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This report includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as TI or its management “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import. Similarly, statements in this report that describe the Company’s business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements.  All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements.

We urge you to carefully consider the following important factors that could cause actual results to differ materially from the expectations of TI or its management:
 
 
Market demand for semiconductors, particularly in key markets such as communications, entertainment electronics and computing;
 
TI’s ability to maintain or improve profit margins, including its ability to utilize its manufacturing facilities at sufficient levels to cover its fixed operating costs, in an intensely competitive and cyclical industry;
 
TI’s ability to develop, manufacture and market innovative products in a rapidly changing technological environment;
 
TI’s ability to compete in products and prices in an intensely competitive industry;
 
TI’s ability to maintain and enforce a strong intellectual property portfolio and obtain needed licenses from third parties;
 
Expiration of license agreements between TI and its patent licensees, and market conditions reducing royalty payments to TI;
 
Economic, social and political conditions in the countries in which TI, its customers or its suppliers operate, including security risks, health conditions, possible disruptions in transportation networks and fluctuations in foreign currency exchange rates;
 
Natural events such as severe weather and earthquakes in the locations in which TI, its customers or its suppliers operate;
 
Availability and cost of raw materials, utilities, manufacturing equipment, third-party manufacturing services and manufacturing technology;
 
Changes in the tax rate applicable to TI as the result of changes in tax law, the jurisdictions in which profits are determined to be earned and taxed, the outcome of tax audits and the ability to realize deferred tax assets;
 
Losses or curtailments of purchases from key customers and the timing and amount of distributor and other customer inventory adjustments;
 
Customer demand that differs from our forecasts;
 
The financial impact of inadequate or excess TI inventory that results from demand that differs from projections;
 
The ability of TI and its customers and suppliers to access their bank accounts and lines of credit or otherwise access the capital markets;
 
Product liability or warranty claims, claims based on epidemic or delivery failure or recalls by TI customers for a product containing a TI part;
 
TI’s ability to recruit and retain skilled personnel; and
 
Timely implementation of new manufacturing technologies, installation of manufacturing equipment and the ability to obtain needed third-party foundry and assembly/test subcontract services.

For a more detailed discussion of these factors, see Item 1A, “Risk Factors” in the Company’s most recently filed Form 10-K.  The forward-looking statements included in this report on Form 8-K are made only as of the date of this report, and the Company undertakes no obligation to update the forward-looking statements to reflect subsequent events or circumstances.

SIGNATURES
 
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 hereunto duly authorized.
 
         
 
  
TEXAS INSTRUMENTS INCORPORATED
     
Date: April 20, 2009
  
By:
  
/s/ Kevin P. March
 
  
 
  
Kevin P. March
 
  
 
  
Senior Vice President
 
  
 
  
and Chief Financial Officer


exhibit.htm
Exhibit 99

TI reports financial results for 1Q09


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

DALLAS (April 20, 2009) – Texas Instruments Incorporated (TI) (NYSE: TXN) today announced first-quarter revenue of $2.09 billion, net income of $17 million and earnings per share (EPS) of $0.01.

TI’s revenue and earnings exceeded expectations for the quarter, but the company emphasized caution about the business climate.  Chairman, President and CEO Rich Templeton explained, "Demand for our products has begun to stabilize after sharp drops in the past two quarters.  Many customers have increased orders for TI products as they have begun to slow down their inventory reductions.  However, we remain sensitive to continuing weakness in the global economy, and we have yet to see signs of a broad-based recovery in our business.  In this environment, we will keep our operations flexible so that we can respond quickly to any shifts in demand, whether up or down."

Operational performance in the quarter was good, especially reduction of the company’s inventory.  "We reduced our own inventory by $277 million, and at the same time worked with distributors to reduce channel inventory by $132 million.  Our inventory reductions are essentially complete, and we expect to moderately increase production levels in our factories during the second quarter," Templeton said.

"Our people are focusing on opportunities for growth in Analog and Embedded Processing.  Among highlights in the quarter were the acquisition of CICLON Semiconductor, a specialized supplier of analog chips for power management, and qualification of a new assembly/test factory.  Both improve our ability to serve customers."

1Q09 financial summary

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

      1Q09       1Q08    
vs. 1Q08
      4Q08    
vs. 4Q08
 
Revenue:
  $ 2086     $ 3272       -36%     $ 2491       -16%  
Operating profit:
  $ 10     $ 807       -99%     $ 51       -80%  
Net income:
  $ 17     $ 662       -97%     $ 107       -84%  
Earnings per share:
  $ 0.01     $ 0.49       -98%     $ 0.08       -88%  
Cash flow from operations:
  $ 251     $ 649       -61%     $ 1113       -77%  

TI’s revenue declined 36 percent compared with the first quarter of 2008 and declined 16 percent compared with the fourth quarter of 2008.  Revenue in all segments declined in both comparisons.

TI’s operating profit declined 99 percent compared with the year-ago quarter and 80 percent compared with the fourth quarter.  The decline from a year ago was due to lower revenue in all segments and the associated lower gross profit, as well as the impact of underutilized manufacturing assets and restructuring charges.  Collectively, these more than offset lower operating expenses and manufacturing cost reductions.  The decline from the prior quarter was due to lower revenue in all segments and the associated lower gross profit, as well as the impact of underutilized manufacturing assets.  These more than offset lower restructuring charges, lower operating expenses and manufacturing cost reductions.

Excluding restructuring charges of $105 million, TI’s operating profit was $115 million in the first quarter, or 5.5 percent of revenue, and EPS was $0.07.  (See reconciliation table at the end of this release.)

1Q09 segment results
      1Q09       1Q08    
vs. 1Q08
      4Q08    
vs. 4Q08
   
Note
 
Analog:
Revenue
Operating profit (loss)
 
$
$
814
(35)
   
$
$
1265
372
     
-36%
-109%
   
$
$
1015
78
     
-20%
-145%
     
(1)    
    
 
Embedded Processing:
Revenue
Operating profit (loss)
 
$
$
316
2
   
$
$
425
96
     
-26%
-98%
   
$
$
340
(2)
     
-7%
200%
     
(2)
 
 
Wireless:
Revenue
Operating profit (loss)
 
$
$
551
(13)
   
$
$
921
153
     
-40%
-108%
   
$
$
646
(87)
     
-15%
85%
     
(3)
 
 
Other:
Revenue
Operating profit
 
$
$
405
56
   
$
$
661
186
     
-39%
-70%
   
$
$
490
62
     
-17%
-10%
     
(4)
 
 
                                                 
                                                 
 
 The product categories in each segment are as follows:
·  
Analog:  high-volume analog & logic, high-performance analog (includes data converters, amplifiers and interface products) and power management
·  
Embedded Processing:  DSPs and microcontrollers used in catalog, communications infrastructure and automotive applications
·  
Wireless: DSPs and analog used in basebands for handsets, OMAP™ applications processors and connectivity products for wireless applications
·  
Other:  includes DLP® products, calculators, ASIC products, RISC microprocessors and royalties
 
(1)  
The decline in Analog revenue from a year ago and from the prior quarter was primarily due to lower high-volume analog & logic revenue.  High-performance analog and power management revenue also declined in both comparisons, although by a lesser amount.

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

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

(4)  
Other revenue decreased from a year ago primarily due to declines in RISC microprocessors, DLP products, calculators and royalties, while revenue from ASIC products increased.  Other revenue decreased from the prior quarter due to declines in DLP products, RISC microprocessors, ASIC products and royalties, while calculator revenue increased.

Operating profit declined in all segments from a year ago primarily because of lower revenue, as well as restructuring charges.  Compared with the prior quarter, operating profit declined in the Analog and Other segments due to lower revenue, although increased in Wireless due to lower restructuring charges.  
 
Restructuring charges were as follows:

      1Q09       1Q08       4Q08  
Analog:
  $ 42     $ -     $ 60  
Embedded Processing:
  $ 19     $ -     $ 24  
Wireless:
  $ 32     $ -     $ 130  
Other:
  $ 12     $ -     $ 40  
Total:
  $ 105     $ -     $ 254  

1Q09 additional financial information

Ÿ  
Orders were $2.19 billion, down 34 percent from a year ago although up 18 percent from the prior quarter.
Ÿ  
Capital expenditures were $43 million in the quarter, a decline from $219 million in the year-ago quarter and $76 million in the prior quarter.
Ÿ  
TI used $101 million in the quarter to repurchase 6.6 million shares of its common stock and paid dividends of $141 million.
Ÿ  
Cash and cash equivalents plus short-term investments totaled $2.43 billion at the end of the quarter.

Outlook

For the second quarter of 2009, TI expects:

Ÿ  
Revenue:  $1.95 – 2.40 billion
Ÿ  
Earnings per share:  $0.01 - 0.15

The EPS estimate includes a negative impact of $0.05 per share resulting from about $100 million of restructuring charges.

TI will update its second-quarter outlook on June 8, 2009.

For the full year of 2009, TI continues to expect approximately the following:

Ÿ  
R&D expense:  $1.5 billion
Ÿ  
Capital expenditures:  $300 million
Ÿ  
Depreciation:  $900 million
Ÿ  
Annual effective tax rate:  24%

 
 

 


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

   
For Three Months Ended
 
   
Mar. 31,
 2009
   
Mar. 31,
 2008
   
Dec. 31,
 2008
 
                   
Revenue
  $ 2,086     $ 3,272     $ 2,491  
Cost of revenue
    1,280       1,516       1,394  
Gross profit
    806       1,756       1,097  
Research and development (R&D)
    386       514       431  
Selling, general and administrative (SG&A)
    305       435       361  
Restructuring expense
    105       --       254  
Operating profit
    10       807       51  
Other income (expense) net
    5       33       (15 )
Income before income taxes
    15       840       36  
Provision (benefit) for income taxes
    (2 )     178       (71 )
Net income
  $ 17     $ 662     $ 107  
                         
Earnings per common share:
                       
  Basic
  $ .01     $ .50     $ .08  
  Diluted
  $ .01     $ .49     $ .08  
                         
Average shares outstanding (millions):
                       
  Basic
    1,275       1,327       1,283  
  Diluted
    1,277       1,345       1,287  
                         
Cash dividends declared per share of common stock
  $ .11     $ .10     $ .11  
                         
Percentage of revenue:
                       
Gross profit
    38.6 %     53.7 %     44.0 %
R&D
    18.5 %     15.7 %     17.3 %
SG&A
    14.6 %     13.3 %     14.5 %
Operating profit
    0.5 %     24.7 %     2.0 %

 
 

 

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


   
Mar. 31,
2009
   
Mar. 31,
 2008
   
Dec. 31,
2008
 
Assets
                 
Current assets:
                 
Cash and cash equivalents                                                                                   
  $ 1,436     $ 1,450     $ 1,046  
Short-term investments                                                                                   
    990       426       1,494  
Accounts receivable, net of allowances of ($20), ($25) and ($30)
    1,125       1,669       913  
Raw materials                                                                                   
    77       111       99  
Work in process                                                                                   
    712       943       837  
Finished goods                                                                                   
    309       524       439  
Inventories                                                                                   
    1,098       1,578       1,375  
Deferred income taxes                                                                                   
    676       659       695  
Prepaid expenses and other current assets                                                                                   
    207       193       267  
Total current assets                                                                                   
    5,532       5,975       5,790  
Property, plant and equipment at cost                                                                                     
    7,030       7,493       7,321  
Less accumulated depreciation                                                                                   
    (3,915 )     (3,908 )     (4,017 )
Property, plant and equipment, net                                                                                   
    3,115       3,585       3,304  
Long-term investments                                                                                     
    645       791       653  
Goodwill                                                                                     
    912       838       840  
Acquisition-related intangibles                                                                                     
    120       105       91  
Deferred income taxes                                                                                     
    967       618       990  
Capitalized software licenses, net                                                                                     
    160       225       182  
Overfunded retirement plans                                                                                     
    17       122       17  
Other assets                                                                                     
    52       79       56  
Total assets                                                                                     
  $ 11,520     $ 12,338     $ 11,923  
                         
Liabilities and Stockholders’ Equity
                       
Current liabilities:
                       
Accounts payable                                                                                   
  $ 326     $ 680     $ 324  
Accrued expenses and other liabilities                                                                                   
    907       871       1,034  
Income taxes payable                                                                                   
    21       218       40  
Accrued profit sharing and retirement                                                                                   
    33       79       134  
Total current liabilities                                                                                   
    1,287       1,848       1,532  
Underfunded retirement plans                                                                                     
    608       191       640  
Deferred income taxes                                                                                     
    61       60       59  
Deferred credits and other liabilities                                                                                     
    354       382       366  
Total liabilities                                                                                     
    2,310       2,481       2,597  


 
 

 


Stockholders’ equity:
                 
Preferred stock, $25 par value.  Authorized -- 10,000,000 shares. Participating cumulative preferred.  None issued.
    --       --       --  
Common stock, $1 par value.  Authorized -- 2,400,000,000 shares.  Shares issued:  March 31, 2009 -- 1,739,723,261;  March 31, 2008 -- 1,739,660,927; Dec. 31, 2008 -- 1,739,718,073
    1,740       1,740       1,740  
Paid-in capital
    1,020       926       1,022  
Retained earnings
    21,043       20,318       21,168  
Less treasury common stock at cost:
Shares:  March 31, 2009 -- 466,270,151; March 31, 2008 -- 416,925,336; Dec. 31, 2008 -- 461,822,215
    (13,852 )     (12,776 )     (13,814 )
Accumulated other comprehensive income (loss), net of taxes
    (741 )     (351 )     (790 )
Total stockholders’ equity
    9,210       9,857       9,326  
Total liabilities and stockholders’ equity                                                                                     
  $ 11,520     $ 12,338     $ 11,923  
                         





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

   
For Three Months Ended
 
   
Mar. 31,
 2009
   
Mar. 31,
 2008
   
Dec. 31,
 2008
 
Cash flows from operating activities:
                 
Net income                                                                                   
  $ 17     $ 662     $ 107  
Adjustments to net income:
                       
  Depreciation                                                                                   
    230       241       283  
  Stock-based compensation                                                                                   
    50       54       51  
  Amortization of acquisition-related intangibles                                                                                   
    10       10       8  
  Losses on sale of assets                                                                                   
    --       6       --  
  Deferred income taxes                                                                                   
    3       (74 )     (23 )
Increase (decrease) from changes in:
                       
  Accounts receivable                                                                                   
    (218 )     89       889  
  Inventories                                                                                   
    279       (160 )     200  
  Prepaid expenses and other current assets                                                                                   
    8       (46 )     (100 )
  Accounts payable and accrued expenses                                                                                   
    (119 )     (179 )     (211 )
  Income taxes payable                                                                                   
    49       165       13  
  Accrued profit sharing and retirement                                                                                   
    (97 )     (122 )     (10 )
Other                                                                                   
    39       3       (94 )
Net cash provided by operating activities                                                                                     
    251       649       1,113  
                         
Cash flows from investing activities:
                       
Additions to property, plant and equipment                                                                                   
    (43 )     (219 )     (76 )
Purchases of short-term investments                                                                                   
    (220 )     (362 )     (1,384 )
Sales and maturities of short-term investments                                                                                   
    729       958       182  
Purchases of long-term investments                                                                                   
    (2 )     (2 )     (1 )
Sales of long-term investments                                                                                   
    3       16       7  
Acquisitions, net of cash acquired                                                                                   
    (104 )     --       --  
Net cash provided by (used in) investing activities                                                                                     
    363       391       (1,272 )
                         
Cash flows from financing activities:
                       
Dividends paid                                                                                   
    (141 )     (133 )     (141 )
Sales and other common stock transactions                                                                                   
    18       76       15  
Excess tax benefit from share-based payments                                                                                   
    --       13       2  
Stock repurchases                                                                                   
    (101 )     (874 )     (386 )
Net cash used in financing activities                                                                                     
    (224 )     (918 )     (510 )
Net increase (decrease) in cash and cash equivalents
    390       122       (669 )
Cash and cash equivalents, beginning of period                                                                                     
    1,046       1,328       1,715  
Cash and cash equivalents, end of period                                                                                     
  $ 1,436     $ 1,450     $ 1,046  

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



 
 

 

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

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


   
For the three months ended March 31, 2009
 
       
Operating profit as reported
  $ 10  
Pre-tax restructuring charges
    105  
Operating profit excluding restructuring charges
  $ 115  
         
Revenue
  $ 2,086  
         
Operating profit percentage of revenue excluding restructuring charges
    5.5 %


   
For the three months ended March 31, 2009
 
       
Net income as reported
  $ 17  
Pre-tax restructuring charges
    105  
Tax impact of restructuring charges
    (37 )
Net income excluding restructuring charges
  $ 85  
         
Average diluted shares outstanding
    1,277  
         
Diluted earnings per share excluding the impact of restructuring charges
  $ .07  


#   #   #

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:
 
 
This release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as TI or its management "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import. Similarly, statements herein that describe the Company's business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements.
 
 
We urge you to carefully consider the following important factors that could cause actual results to differ materially from the expectations of TI or its management:
 
·  
Market demand for semiconductors, particularly in key markets such as communications, entertainment electronics and computing;
·  
TI's ability to maintain or improve profit margins, including its ability to utilize its manufacturing facilities at sufficient levels to cover its fixed operating costs, in an intensely competitive and cyclical industry;
·  
TI's ability to develop, manufacture and market innovative products in a rapidly changing technological environment;
·  
TI's ability to compete in products and prices in an intensely competitive industry;
·  
TI's ability to maintain and enforce a strong intellectual property portfolio and obtain needed licenses from third parties;
·  
Expiration of license agreements between TI and its patent licensees, and market conditions reducing royalty payments to TI;
·  
Economic, social and political conditions in the countries in which TI, its customers or its suppliers operate, including security risks, health conditions, possible disruptions in transportation networks and fluctuations in foreign currency exchange rates;
·  
Natural events such as severe weather and earthquakes in the locations in which TI, its customers or its suppliers operate;
·  
Availability and cost of raw materials, utilities, manufacturing equipment, third-party manufacturing services and manufacturing technology;
·  
Changes in the tax rate applicable to TI as the result of changes in tax law, the jurisdictions in which profits are determined to be earned and taxed, the outcome of tax audits and the ability to realize deferred tax assets;
·  
Losses or curtailments of purchases from key customers and the timing and amount of distributor and other customer inventory adjustments;
·  
Customer demand that differs from our forecasts;
·  
The financial impact of inadequate or excess TI inventory that results from demand that differs from projections;
·  
The ability of TI and its customers and suppliers to access their bank accounts and lines of credit or otherwise access the capital markets;
·  
Product liability or warranty claims, claims based on epidemic or delivery failure or recalls by TI customers for a product containing a TI part;
·  
TI's ability to recruit and retain skilled personnel; and
·  
Timely implementation of new manufacturing technologies, installation of manufacturing equipment and the ability to obtain needed third-party foundry and assembly/test subcontract services.
 
For a more detailed discussion of these factors, see the "Risk Factors" discussion in Item 1A of the Company's most recent Form 10-K.  The forward-looking statements included in this release are made only as of the date of this release, and the Company undertakes no obligation to update the forward-looking statements to reflect subsequent events or circumstances.

About Texas Instruments
Texas Instruments (NYSE: TXN) helps customers solve problems and develop new electronics that make the world smarter, healthier, safer, greener and more fun.  A global semiconductor company, TI innovates through design, sales and manufacturing operations in more than 30 countries.  For more information, go to www.ti.com.

TI trademarks:
   OMAP
   DLP

Other trademarks are the property of their respective owners.