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 March 31, 1997 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 972-995-3773
---------------------------------------------------------------
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
---- ----
191,132,969
- -----------------------------------------------------------------------------
Number of shares of Registrant's common stock outstanding
as of March 31, 1997
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
Mar.31 Mar.31
Income 1997 1996
- ------ -------- --------
Net revenues................................................................ $ 2,263 $ 2,675
Operating costs and expenses:
Cost of revenues.......................................................... 1,472 1,889
Research and development.................................................. 239 243
Marketing, general and administrative..................................... 381 397
-------- --------
Total................................................................... 2,092 2,529
-------- --------
Profit from operations...................................................... 171 146
Other income (expense) net.................................................. 10 56
Interest on loans........................................................... 24 12
-------- --------
Income before provision for income taxes.................................... 157 190
Provision for income taxes.................................................. 55 58
-------- --------
Income from continuing operations........................................... 102 132
Income from discontinued operations......................................... 27 31
-------- --------
Net income.................................................................. $ 129 $ 163
======== ========
Earnings per common and common equivalent share:
Continuing operations..................................................... $ 0.52 $ 0.68
Discontinued operations................................................... 0.14 0.16
-------- --------
Net income................................................................ $ 0.66 $ 0.84
======== ========
Cash dividends declared per share of common stock........................... $ 0.17 $ .17
Cash Flows
- ----------
Continuing Operations:
Net cash provided by (used in) operating activities....................... $ 278 $ (5)
Cash flows from investing activities:
Additions to property, plant and equipment.............................. (225) (523)
Purchases of short-term investments..................................... (60) (7)
Sales and maturities of short-term investments.......................... 11 144
Proceeds from sale of business.......................................... -- 120
-------- --------
Net cash used in investing activities..................................... (274) (266)
Cash flows from financing activities:
Addition to long-term debt.............................................. -- 300
Dividends paid on common stock.......................................... (32) (32)
Sales and other common stock transactions............................... 41 3
Other................................................................... 20 9
-------- --------
Net cash provided by financing activities................................. 29 280
Effect of exchange rate changes on cash................................... (11) (8)
-------- --------
Cash provided by continuing operations.................................... 22 1
-------- --------
2
Discontinued Operations:
Operating activities...................................................... 13 (67)
Investing activities...................................................... (10) (19)
-------- --------
Cash provided by (used in) discontinued operations........................ 3 (86)
-------- --------
Net increase (decrease) in cash and cash equivalents........................ 25 (85)
Cash and cash equivalents, January 1........................................ 964 1,364
-------- --------
Cash and cash equivalents, March 31......................................... $ 989 $ 1,279
======== ========
3
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Financial Statements
(In millions of dollars, except per-share amounts.)
Mar. 31 Dec. 31
Balance Sheet 1997 1996
- ------------- ------- -------
Assets
Current assets:
Cash and cash equivalents.......................................... $ 989 $ 964
Short-term investments............................................. 63 14
Accounts receivable, less allowance for losses of
$67 million in 1997 and $90 million in 1996...................... 1,699 1,799
Inventories:
Raw materials.................................................... 103 111
Work in process.................................................. 337 361
Finished goods................................................... 223 231
------- -------
Inventories.................................................... 663 703
------- -------
Prepaid expenses................................................... 54 50
Deferred income taxes.............................................. 402 395
Net assets of discontinued operations.............................. 553 529
------- -------
Total current assets............................................. 4,423 4,454
------- -------
Property, plant and equipment at cost................................ 6,816 6,712
Less accumulated depreciation...................................... (2,724) (2,550)
------- -------
Property, plant and equipment (net).............................. 4,092 4,162
------- -------
Deferred income taxes................................................ 188 192
Other assets......................................................... 560 552
------- -------
Total assets......................................................... $ 9,263 $ 9,360
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Loans payable and current portion long-term debt................... $ 368 $ 314
Accounts payable................................................... 652 775
Accrued and other current liabilities.............................. 1,290 1,397
------- -------
Total current liabilities........................................ 2,310 2,486
------- -------
Long-term debt....................................................... 1,643 1,697
Accrued retirement costs............................................. 712 719
Deferred credits and other liabilities............................... 364 361
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: 1997 - 191,289,194; 1996 - 190,396,797............ 191 190
Paid-in capital.................................................... 1,157 1,116
Retained earnings.................................................. 2,911 2,814
Less treasury common stock at cost.
Shares: 1997 - 156,225; 1996 - 143,525........................... (13) (12)
Other.............................................................. (12) (11)
------- -------
Total stockholders' equity....................................... 4,234 4,097
------- -------
Total liabilities and stockholders' equity........................... $ 9,263 $ 9,360
======= =======
4
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 (197.2 and 194.2 million shares for
the first quarters of 1997 and 1996). 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 1997, the company sold its mobile computing business
and terminated its digital imaging printing development program. As a result,
the company took a pretax charge of $56 million in the first quarter, of which
$27 million was for severance for involuntary employment reductions worldwide.
These severance actions were essentially completed by the end of the quarter
and affected approximately 1,045 employees. The balance, $29 million, was for
other costs associated with the business sale and program termination,
including vendor cancellation and lease charges.
The statements of income, statements of cash flows and balance sheet at
March 31, 1997, 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.
5
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Higher operating margins in the Registrant's (the "company" or "TI")
differentiated semiconductor products led to improved profitability in the
first quarter of 1997. Major strategic actions continue to accelerate TI's
progress in providing value, growth and improved financial stability, and
further strengthen TI's position in digital signal processing solutions
(DSPS).
Note: Throughout this report, TI's defense operations are reported as a
discontinued business. As previously reported, TI expects the acquisition by
Raytheon of its defense business to close in the second quarter of 1997.
FINANCIAL SUMMARY
Revenues from continuing operations during the first quarter of 1997 were
$2263 million, down 15 percent from the year-ago period, reflecting lower
prices for dynamic random access memory (DRAM) chips, and the absence of
revenues due to the sale of TI's mobile computing, custom manufacturing
services and printer businesses.
Results for the current quarter include a special pretax charge of $56
million, primarily related to severance actions and other costs associated
with the sale of TI's mobile computing business.
Earnings per share (EPS) for the quarter from continuing operations, excluding
the charge, were $0.70, compared with $0.68 in the year-ago period. EPS from
discontinued operations were $0.14, compared with $0.16 in the first quarter
of 1996. Including the charge, EPS from continuing operations were $0.52.
Profit from operations (PFO) from continuing operations, excluding the charge,
was $227 million versus $146 million in the year-ago period. Net income from
continuing operations, excluding the charge, was $138 million versus $132
million in the first quarter of 1996. Including the charge, PFO from
continuing operations was $171 million and net income was $102 million. Net
income from discontinued operations was $27 million versus $31 million in the
year-ago period.
TI's operating profit margin, excluding the charge, improved sharply in the
first quarter to 10.0 percent, up from 5.5 percent in the year-ago period, due
to higher gross margins. Marketing, general and administrative expenses for
TI as a percentage of revenues were 15.6 percent, compared with 14.8 percent
in the year-ago period, excluding the portion of the charge related to this
expense category. Including the charge, operating profit margin in the first
quarter was 7.6 percent.
SEMICONDUCTOR
Semiconductor orders were higher than the year-ago period and grew at double-
digit rates over the fourth quarter of 1996, with strength across all products
and geographic regions. Orders for DSP Solutions (DSPs and mixed-
signal/analog products) reached record levels, with particular strength in
mass storage, networking and wireless communications end equipment markets.
6
TI's semiconductor revenues were below year-ago levels, primarily due to lower
DRAM prices. Excluding memory, semiconductor revenues were significantly
higher than year-ago levels. Revenues for digital signal processors and
mixed-signal/analog products continue strong, at more than 40 percent of total
semiconductor revenues.
Semiconductor profit from operations was up substantially from the first
quarter of 1996, reflecting strength in differentiated products. Compared
with the fourth quarter of 1996 (excluding special charges), PFO was up more
than 50 percent because of differentiated semiconductors and narrowing losses
in DRAMs.
During the quarter, TI strengthened its leadership position in digital signal
processors with the introduction of the TMS320C6x, which has the speed and
power to support the explosive growth of data communications, especially the
Internet.
U.S. Robotics, the leading supplier of computer modems to the retail channel,
began shipments during the quarter of the x2 modem, based on a DSP solution
from TI. It provides data transmission at speeds up to twice that of existing
modems. Packard Bell NEC, Inc., a leading manufacturer of personal computers,
also announced the adoption of the x2 modem.
MATERIALS & CONTROLS
Revenues in TI's materials and controls business were up slightly from the
first quarter of 1996. Operating profit margins increased from the first
quarter of 1996 and are at double-digit levels. The materials and controls
business continues to develop electronic sensors, and recently won a multi-
million dollar order for TIRIS radio frequency identification systems that
will provide gas pump point-of-sale capability to Mobil Corp.
PERSONAL PRODUCTIVITY PRODUCTS
As previously announced, TI sold its mobile computing business to The Acer
Group during the quarter. Revenues during the quarter in the calculator
business reflected seasonal patterns. The business continues to invest in new
product development, and plans to expand in the educational market in Europe
and Asia during 1997.
EMERGING OPPORTUNITIES
TI continues to focus on achieving cost reductions in its digital imaging
operation as it transitions from a research and development phase into volume
production. During the quarter, TI began shipping digital light processing
(DLP) products for high brightness, professional projection systems
manufactured by Digital Projection Limited, Electrohome, and Sony.
TI's software business released Composer 4(R) during the quarter, which
provides the baseline toolset that enables customers to develop systems by
assembling a collection of software components.
7
SUMMARY
TI's plans for 1997 are based on a moderate recovery in the world
semiconductor market of about 10 percent growth, following a decline of nine
percent in 1996. The non-DRAM portion of the market will likely grow more
than 10 percent, with differentiated semiconductors such as DSPs and mixed-
signal analog products growing two to three times faster than the overall
market.
Based on TI's latest customer survey, semiconductor inventories remain at
record low levels. The company is seeing signs of improved stability in DRAM
pricing, and the combination of cost controls and momentum in TI's
differentiated semiconductors are having a positive impact on the company's
performance.
ADDITIONAL FINANCIAL INFORMATION
Change in orders, Change in net revenues,
Segment 1Q97 vs. 1Q96 1Q97 vs. 1Q96
- ------- ----------------- -----------------------
Components up 7% down 4%
Digital Products down 68% down 72%
Total down 5% down 15%
TI's orders for the first quarter of 1997 were $2500 million, compared with
$2635 million in the same period of 1996. The decrease was due primarily to
lower DRAM prices and the sale of TI's mobile computing, custom manufacturing
services and printer businesses.
TI's revenues for the first quarter of 1997 were $2263 million, compared with
$2675 million in the same period of 1996. The decrease in the components
segment was due to DRAM pricing. Digital products revenues were down due to
the sale of TI's mobile computing, custom manufacturing services and printer
businesses.
Royalty revenues in first-quarter 1997 were up moderately from the same period
of 1996, primarily due to the previously announced cross-licensing agreement
with Samsung Electronics Company, Ltd.
In the first quarter of 1997, the company sold its mobile computing business
and terminated its digital printing development program. As a result, the
company took a special pretax charge of $56 million in the first quarter, of
which $27 million was for severance for involuntary employment reductions
worldwide.
Excluding the charge, profit from operations for the first quarter of 1997 was
up substantially from the year-ago period to $227 million, primarily because
of strength in differentiated semiconductors and the absence of losses in
mobile computing.
8
Components segment profit was up from the first quarter of 1996, primarily the
result of increased volume and higher margins in differentiated
semiconductors, despite the loss in memory.
Excluding the charge of $38 million, the digital products segment essentially
broke even during the first quarter of 1997. The improvement from the first
quarter of 1996 was due to the absence of mobile computing losses.
The income tax rate for the first quarter of 1997 was 35 percent, which is the
estimated rate for the full year.
TI's financial condition remains sound. During the quarter, cash and cash
equivalents plus short-term investments increased by $74 million to $1052
million. Cash flow from operating activities net of additions to property,
plant and equipment was a positive $53 million. On January 6, 1997, TI and
Raytheon Company announced that their boards of directors had approved a
definitive agreement for Raytheon to purchase the assets of TI's defense
operations for $2.95 billion in cash. The transaction is subject to Hart-
Scott-Rodino antitrust review and is expected to close in the second quarter
of 1997. TI plans to use the net proceeds from the sale to strengthen its
focus on digital solutions for the networked society.
The outstanding balance of commercial paper was $300 million at the end of the
quarter, essentially unchanged from year-end 1996. The debt-to-total-capital
ratio was .32, down from the year-end 1996 value of .33.
TI's backlog of unfilled orders as of March 31, 1997, was $1860 million, up
$237 million from the end of 1996, due to strong semiconductor orders.
Backlog was down $303 million from the year-ago period due to lower DRAM
prices. Excluding memory, total backlog was up from the first quarter of
1996.
R&D was $239 million in the first quarter of 1997, compared with $243 million
in the first quarter of 1996. R&D is expected to be $1.1 billion in 1997, up
from $1.0 billion in 1996 (excluding the one-time charge associated with the
SSi acquisition), primarily to support semiconductors.
Capital expenditures in the first quarter of this year were $225 million,
compared to $523 million in the first quarter of 1996. For the full year
1997, TI expects capital expenditures to be $1.1 billion.
Depreciation for the first quarter of 1997 was $246 million, compared to $173
million in the year-ago period. Depreciation for 1997 is projected at $1.1
billion, up from $904 million in 1996.
9
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Designation of
Exhibits in
this Report Description of Exhibit
-------------- -----------------------------
10(a) Texas Instruments Executive Officer
Performance 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) Reports on Form 8-K
The Registrant filed the following reports on Form 8-K with the Securities
and Exchange Commission during the quarter ended March 31, 1997: Form 8-K
dated January 4, 1997, which included a news release regarding the sale of
Registrant's defense business; Form 8-K dated January 17, 1997, relating to
Registrant's 1997 Annual Meeting of Stockholders; Form 8-K dated
February 28, 1997, which included a news release regarding the sale of
Registrant's mobile computing business; and Form 8-K dated March 7, 1997,
which included a news release regarding Registrant's annual meeting for
financial analysts and media.
10
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995:
With the exception of historical information, the matters discussed in this
news release 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, timely completion of announced asset
sales, 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: April 17, 1997
11
Exhibit Index
Designation of Paper (P)
Exhibits in or
this Report Description of Exhibit Electronic (E)
- ---------------- ----------------------- --------------
10(a) Texas Instruments Executive E
Officer Performance Plan
11 Computation of Primary and E
Fully Diluted Earnings Per
Common and Common Equivalent
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
12
EXHIBIT 10(a)
TEXAS INSTRUMENTS EXECUTIVE OFFICER PERFORMANCE PLAN
Dated February 20, 1997
The purpose of the Plan is to promote the success of the Company by providing
performance-based compensation for executive officers.
For purposes of the Plan unless otherwise indicated, the term "Company" shall
mean Texas Instruments Incorporated and its subsidiaries.
The Plan is intended to provide qualified performance-based compensation in
accordance with Section 162(m) of the Internal Revenue Code of 1986, as
amended, and regulations thereunder ("Code") and will be so interpreted.
Covered Employees
The executive officers of the Company (within the meaning of Rule 3b-7 of the
Securities Exchange Act of 1934 as amended from time to time) as of March 30 of
each calendar year ("performance year") shall receive awards under the Plan for
such performance year. An individual who becomes an executive officer after
March 30 and on or before October 1 of a performance year shall receive an
award as provided below.
Administration of Plan
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 the director is
a "non-employee director" as described in Rule 16b-3 under the Securities
Exchange Act of 1934, as in effect from time to time. In addition, a director
may serve as a member or alternate member of the Committee only during periods
in which the director is an "outside director" as described in Section 162(m)
of the Code. 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.
The Committee shall have the full and exclusive right to make reductions in
awards under the Plan. In determining whether to reduce any award and the
amount of any reduction, the Committee shall take into consideration such
factors as the Committee shall determine.
Expenses of Administration
The expenses of the administration of this Plan, including the interest
provided in the Plan, shall be borne by the Company.
Amendments
The Board of Directors of the Company may, at any time and from time to time,
alter, amend, suspend or terminate the Plan or any part thereof as it may deem
proper and in the best interests of the Company, provided, however, that no
such action shall affect or impair the rights under any award theretofore
granted under the Plan, except that in the case of a covered employee employed
outside the United States the Board may vary the provisions of the Plan as it
may deem appropriate to conform with local laws, practices and procedures.
Further, unless the stockholders of the Company shall have first approved
thereof, no amendment shall be made which shall increase the maximum amount of
any award above the amount determined by the formula described below in any
year.
Awards
Subject to the Committee's discretion to reduce such awards, each covered
employee shall be entitled to an award for each performance year equal to 0.5%
of the Company's consolidated income from continuing operations before
(i) provision for income taxes, (ii) awards under the Plan, (iii) any pretax
gain or loss exceeding $25 million recognized for the year related to
divestiture of a business and (iv) any write-off of in process research and
development expenses exceeding $25 million associated with an acquisition,
("Consolidated Income"), as determined and reported to the Committee by the
Company's independent auditors.
An individual who becomes an executive officer after March 30 and on or before
October 1 of a performance year shall receive an award for that performance
year based on the Consolidated Income of the Company for each calendar quarter
following the quarter in which the individual becomes an executive officer.
Scope of the Plan
Nothing in this Plan shall be construed as precluding or prohibiting the
Company from establishing or maintaining other bonus or compensation
arrangements, which may be generally applicable or applicable only to selected
employees or officers.
2
Report of Awards; Committee Discretion to Reduce
As soon as practicable after the end of each performance year, the Company's
independent auditors shall determine and report to the Committee and the
Committee shall certify the amount of each award for that year under the
provisions of this Plan.
The Committee, in its sole discretion, based on any factors the Committee deems
appropriate, may reduce the award to any covered employee in any year
(including reduction to zero if the Committee so determines). The Committee
shall make a determination of whether and to what extent to reduce awards under
the Plan for each year at such time or times following the close of the
performance year as the Committee shall deem appropriate. The reduction in the
amount of an award to any covered employee for a performance year shall have no
effect on the amount of the award to any other covered employee for such year.
Payment of Awards
Awards and any installments thereof shall be paid in cash as of a date or dates
determined by the Committee or, if the Committee makes no determination, then
as soon as practicable after the amount of the awards has been determined.
The Committee may direct the awards to the covered employees or any of them for
any year to be paid in a single amount or in installments of equal or varying
amounts or may defer payment of any awards and may prescribe such terms and
conditions concerning payment of awards as it deems appropriate, including
completion of specific periods of employment with the Company, provided that
such terms and conditions are not more favorable to a covered employee than
those expressly set forth in this Plan. The Committee may determine that
interest will be payable with respect to any payment of any award. The
Committee may at any time amend any such direction and may amend or delete any
such terms and conditions if the Committee deems it appropriate. The
Committee's actions under this paragraph shall be subject to and in accordance
with the rules governing qualified performance based compensation in Section
162(m) of the Code.
Payments of awards to covered employees who are employees of subsidiaries of
the Company shall be paid directly by such subsidiaries.
3
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
----------------------
Mar 31 Mar 31
1997 1996
-------- --------
Income from continuing operations............................ $102,030 $132,000
Add:
Interest, net of tax and profit sharing effect, on
convertible debentures assumed converted............... 454 345
-------- --------
Adjusted income from continuing operations................... 102,484 132,345
Income from discontinued operations.......................... 27,315 31,236
-------- --------
Adjusted net income.......................................... $129,799 $163,581
======== ========
Earnings per Common and Common Equivalent Share:
Weighted average common shares outstanding................... 190,698 189,441
Weighted average common equivalent shares:
Stock option and compensation plans...................... 3,995 2,225
Convertible debentures................................... 2,492 2,493
-------- --------
Weighted average common and common equivalent shares......... 197,185 194,159
======== ========
Earnings per Common and Common Equivalent Share:
Income from continuing operations.......................... $ 0.52 $ 0.68
Income from discontinued operations........................ 0.14 0.16
-------- --------
Net income................................................. $ 0.66 $ 0.84
======== ========
Earnings per Common Share Assuming Full Dilution:
Weighted average common shares outstanding................... 190,698 189,441
Weighted average common equivalent shares:
Stock option and compensation plans...................... 4,068 2,377
Convertible debentures................................... 2,492 2,493
-------- --------
Weighted average common and common equivalent shares......... 197,258 194,311
======== ========
Earnings per Common Share Assuming Full Dilution:
Income from continuing operations.......................... $ 0.52 $ 0.68
Income from discontinued operations........................ 0.14 0.16
-------- --------
Net income................................................. $ 0.66 $ 0.84
======== ========
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 Three Months
Ended Mar 31
----------------
1992 1993 1994 1995 1996 1996 1997
----- ----- ----- ----- ----- ----- -----
Income before income taxes
and fixed charges:
Income before cumulative
effect of accounting changes,
interest expense on loans,
capitalized interest amortized,
and provision for income taxes..... $ 242 $ 561 $ 943 $1,530 $ 65 $ 205 $ 185
Add interest attributable to
rental and lease expense........... 42 38 40 41 44 9 11
----- ----- ----- ----- ----- ----- -----
$ 284 $ 599 $ 983 $1,571 $ 109 $ 214 $ 196
===== ===== ===== ===== ===== ===== =====
Fixed charges:
Total interest on loans (expensed
and capitalized)..................... $ 57 $ 55 $ 58 $ 69 $ 108 $ 20 $ 33
Interest attributable to rental
and lease expense.................... 42 38 40 41 44 9 11
----- ----- ----- ----- ----- ----- -----
Fixed charges............................ $ 99 $ 93 $ 98 $ 110 $ 152 $ 29 $ 44
===== ===== ===== ===== ===== ===== =====
Combined fixed charges and
preferred stock dividends:
Fixed charges........................ $ 99 $ 93 $ 98 $ 110 $ 152 $ 29 $ 44
Preferred stock dividends
(adjusted as appropriate to a
pretax equivalent basis)........... 55 29 -- -- -- -- --
----- ----- ----- ----- ----- ----- -----
Combined fixed charges and
preferred stock dividends.......... $ 154 $ 122 $ 98 $ 110 $ 152 $ 29 $ 44
===== ===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges....... 2.9 6.4 10.0 14.3 * 7.4 4.5
===== ===== ===== ===== ===== ===== =====
Ratio of earnings to combined
fixed charges and preferred
stock dividends........................ 1.8 4.9 10.0 14.3 * 7.4 4.5
===== ===== ===== ===== ===== ===== =====
* Not meaningful. The coverage deficiency was $43 million in 1996.
5
1,000,000
3-MOS
DEC-31-1997
MAR-31-1997
989
63
1,699
67
663
4,423
6,816
2,724
9,263
2,310
1,643
0
0
191
4,043
9,263
2,263
2,263
1,472
1,472
239
0
24
157
55
102
27
0
0
129
0.66
0
