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 18, 2006
TEXAS
INSTRUMENTS INCORPORATED
(Exact
name of registrant as specified in charter)
|
DELAWARE
|
|
001-03761
|
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75-0289970
|
|
(State
or other jurisdiction of incorporation)
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|
(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 18, 2006, regarding its first quarter
2006
results of operations and financial condition attached hereto as Exhibit 99
is
incorporated by reference herein.
ITEM 9.01.
Exhibits
|
Designation
of
Exhibit
in
this
Report
|
|
Description
of Exhibit
|
|
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||
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“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 the Company or
its
management:
-
Market demand for semiconductors, particularly for analog chips and digital signal processors 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;
-
Consolidation of TI’s 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 suppliers operate;
-
Availability and cost of raw materials, utilities and critical manufacturing equipment;
-
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 company forecasts;
-
The financial impact of inadequate or excess TI inventories to meet demand that differs from projections;
-
Product liability or warranty claims, 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 text under the heading “Risk
Factors” in Item 1A of the Company’s most recent 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.
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TEXAS
INSTRUMENTS INCORPORATED
|
||
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Date:
April 18, 2006
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|
By:
|
|
/s/
Kevin P. March
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Kevin
P. March
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Senior
Vice President
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and
Chief Financial Officer
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Exhibit
99
TI
Reports 1Q06 Financial Results
· Revenue
Grows 23% from Year Ago
· Gross
Profit Margin Increases to 50.1 Percent of Revenue
· Company
Earns $0.33 Per Share from Continuing Operations, Up 57% from Year Ago
Conference
Call on TI Web Site at 4:30 p.m. Central Time Today
www.ti.com
Except
as noted, financial results are for continuing operations. TI’s Sensors &
Controls business is reported as a discontinued operation. The previously
announced divestiture of this business is expected to close in the second
quarter of 2006.
DALLAS
(April 18, 2006) - Texas Instruments Incorporated (TI) (NYSE: TXN) today
reported first-quarter 2006 revenue of $3.33 billion, up 23 percent from
the
same quarter in 2005 as growth in the company’s Semiconductor segment
accelerated for the third consecutive quarter. Revenue in the first quarter,
usually the company’s seasonally weakest quarter, was about even with the fourth
quarter of 2005.
Earnings
per share from continuing operations were $0.33, up 57 percent from a year
ago,
and included stock-based compensation expense of $0.04. The company began
expensing stock options in the third quarter of 2005 and, therefore, equivalent
stock-based compensation expense was not reflected in the year-ago period
when
the company earned $0.21 per share from continuing operations.
“This
is
a good start to the year. Demand was strong, and we expect it to continue,” said
Rich Templeton, TI president and chief executive officer. “Especially
encouraging was our growth in digital signal processors and analog
semiconductors, increasing 32 percent and 24 percent respectively from a
year
ago. These are the core semiconductors of today’s electronics, including 3G cell
phones where our revenue doubled from a year ago; low-end cell phones that
are
beginning to gain traction in large, emerging markets; and wireless basestations
where our revenue grew by more than half. We also built momentum in consumer
awareness for high-definition televisions that use TI’s DLP®
picture
technology.”
Gross
Profit
TI’s
gross profit was $1.67 billion, or 50.1 percent of revenue, an increase
of $15
million from the fourth quarter. Gross profit increased $428 million from
the
year-ago quarter due to higher revenue. Stock-based compensation expense
of $18
million was included in cost of revenue in the first quarter of
2006.
Operating
Expenses
Research
and development (R&D) expense of $533 million, or 16.0 percent of revenue,
increased $40 million sequentially due to a combination of increased
semiconductor product development, especially for wireless and high-performance
analog products, and seasonally higher pay and benefits. R&D expense
increased $46 million from the year-ago quarter primarily due to stock-based
compensation expense of $28 million, which was included in the first quarter
of
2006, as well as higher semiconductor product development. R&D in the first
quarter included expenses associated with TI’s acquisition of Chipcon Group ASA,
a leader in the design of short-range, low-power wireless RF (radio frequency)
transceiver semiconductors. The acquisition will help expand TI’s
high-performance analog product portfolio.
Selling,
general and administrative (SG&A) expense of $421 million, or 12.6 percent
of revenue, increased $17 million sequentially primarily due to seasonally
higher pay and benefits. SG&A increased $100 million from a year ago
primarily due to the combination of stock-based compensation expense of
$45
million included in the first quarter of 2006 and higher Semiconductor
marketing
expense, which included consumer advertising for DLP products.
Operating
Profit
Operating
profit of $718 million, or 21.5 percent of revenue, declined $42 million
sequentially primarily due to higher operating expenses in the Semiconductor
segment. Operating profit increased $282 million from the year-ago quarter
due
to higher gross profit in the Semiconductor segment. Total stock-based
compensation expense of $91 million, or 2.7 percent of revenue, was included
in
corporate activities in the first quarter.
Net
Income
Income
from continuing operations was $542 million or $0.33 per share, which
includes $0.04 of stock-based compensation expense. Income from
discontinued operations was $43 million. Net income was $585 million or
$0.36
per share.
Orders
TI
orders
of $3.60 billion increased $116 million sequentially due to seasonally
higher
orders in the Educational & Productivity Solutions business in preparation
for the back-to-school retail season. TI orders increased $859 million
from the
year-ago quarter due to higher demand for Semiconductor products.
Cash
Cash
flow
from operations of $522 million decreased $358 million sequentially and
increased $24 million from the year-ago quarter.
At
the
end of the first quarter, total cash (cash and cash equivalents plus short-term
investments) was $3.66 billion, down $1.67 billion from the end of the
previous
quarter and $1.47 billion from the end of the year-ago period. During the
quarter, the company repurchased 47 million shares of TI common stock for
$1.44
billion, paid $48 million in dividends and retired $311 million of long-term
debt. The company also acquired Chipcon in the first quarter for $177 million
in
cash, net of cash acquired.
Capital
Spending and Depreciation
Capital
expenditures of $408 million increased $74 million sequentially and increased
$141 million from the year-ago
quarter.
TI’s
capital expenditures in the first quarter were primarily for assembly,
test and
advanced 65- and 45-nanometer wafer fabrication equipment used to manufacture
semiconductors.
Depreciation
of $270 million decreased $66 million sequentially and $71 million from
a year
ago. The company’s change from an accelerated to a straight-line method of
depreciation beginning in the first quarter of 2006 lowered first-quarter
depreciation by $29 million.
Accounts
Receivable and Inventories
Accounts
receivable of $1.80 billion increased $150 million sequentially due to
higher
Semiconductor shipments in the last month of the quarter versus the comparable
period in the prior quarter. Accounts receivable increased $274 million
from the
year-ago quarter due to higher revenue. Days sales outstanding were 49
at the
end of the first quarter compared with 45 at the end of the previous quarter
and
51 at the end of the year-ago quarter.
Inventory
of $1.25 billion at the end of the first quarter increased $61 million
sequentially as the company built inventory from the lower-than-desired
levels
of the fourth quarter in order to better support customer demand. Inventory
increased $90 million compared with the year-ago level. Days of inventory
at the
end of the first quarter were 67 compared with 64 at the end of the previous
quarter and 71 at the end of the year-ago quarter.
Outlook
TI
intends to provide a mid-quarter update to its financial outlook on
June
8, 2006, by issuing a press release and holding a conference call. Both
will be
available on the company’s web site.
For
the
second quarter of 2006, TI expects revenue from continuing operations to
be in
the following ranges:
| · |
Total
TI, $3.46 billion to $3.75 billion;
|
| · |
Semiconductor,
$3.29 billion to $3.56 billion; and
|
| · |
Educational
& Productivity Solutions, $170 million to $190
million.
|
TI
expects earnings per share from continuing operations to be in the range
of
$0.38 to $0.43. This estimate includes about $0.04, or about $90 million,
for
stock-based compensation expense.
In
2006
for continuing operations, the estimated annual effective tax rate remains
about
30 percent. This rate is based on current tax law and does not assume
reinstatement of the federal research tax credit, which expired at the
end of
2005. Also
in
2006 for continuing operations, TI still expects R&D expense of about $2.2
billion and capital expenditures of about $1.3 billion. Depreciation is
still
expected to be about $1.03 billion.
TEXAS
INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated
Statements of Income
(Millions
of dollars, except per-share amounts)
|
For
Three Months Ended
|
||||||||||
|
Mar.
31,
2006
|
Dec.
31,
2005
|
Mar.
31,
2005
|
||||||||
|
Net
revenue
|
$
|
3,334
|
$
|
3,324
|
$
|
2,702
|
||||
|
Cost
of revenue (COR)
|
1,662
|
1,667
|
1,458
|
|||||||
|
Gross
profit
|
1,672
|
1,657
|
1,244
|
|||||||
|
Gross
profit % of revenue
|
50.1
|
%
|
49.8
|
%
|
46.0
|
%
|
||||
|
Research
and development (R&D)
|
533
|
493
|
487
|
|||||||
|
R&D
% of revenue
|
16.0
|
%
|
14.8
|
%
|
18.0
|
%
|
||||
|
Selling,
general and administrative (SG&A)
|
421
|
404
|
321
|
|||||||
|
SG&A
% of revenue
|
12.6
|
%
|
12.1
|
%
|
11.9
|
%
|
||||
|
Total
operating expenses
|
2,616
|
2,564
|
2,266
|
|||||||
|
Profit
from operations
|
718
|
760
|
436
|
|||||||
|
Operating
profit % of revenue
|
21.5
|
%
|
22.9
|
%
|
16.1
|
%
|
||||
|
Other
income (expense) net
|
52
|
51
|
48
|
|||||||
|
Interest
expense on loans
|
3
|
2
|
2
|
|||||||
|
Income
from
continuing operations before income taxes
|
767
|
809
|
482
|
|||||||
|
Provision
for income taxes
|
225
|
187
|
111
|
|||||||
|
Income
from
continuing operations
|
542
|
622
|
371
|
|||||||
|
Income
from
discontinued operations, net of income taxes
|
43
|
33
|
40
|
|||||||
|
Net
income
|
$
|
585
|
$
|
655
|
$
|
411
|
||||
|
Basic
earnings
per common share:
|
||||||||||
|
Income
from continuing operations
|
$
|
.34
|
$
|
.39
|
$
|
.22
|
||||
|
Net
income
|
$
|
.37
|
$
|
.41
|
$
|
.24
|
||||
|
Diluted
earnings per common share:
|
||||||||||
|
Income
from continuing operations
|
$
|
.33
|
$
|
.38
|
$
|
.21
|
||||
|
Net
income
|
$
|
.36
|
$
|
.40
|
$
|
.24
|
||||
|
Average
shares outstanding (millions):
|
||||||||||
|
Basic
|
1,585
|
1,606
|
1,701
|
|||||||
|
Diluted
|
1,618
|
1,643
|
1,735
|
|||||||
|
Cash
dividends declared per share of common stock
|
$
|
.030
|
$
|
.030
|
$
|
.025
|
||||
|
Stock-based
compensation expense included in continuing
operations:
|
||||||||||
|
COR
|
18
|
17
|
--
|
|||||||
|
R&D
|
28
|
27
|
--
|
|||||||
|
SG&A
|
45
|
41
|
5
|
|||||||
|
Profit
from operations
|
91
|
85
|
5
|
|||||||
|
%
of revenue
|
2.7
|
%
|
2.6
|
%
|
0.2
|
%
|
||||
TEXAS
INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated
Balance Sheets
(Millions
of dollars, except share amounts)
|
Mar.
31,
2006
|
Dec.
31,
2005
|
Mar.
31,
2005
|
||||||||
|
Assets
|
||||||||||
|
Current
assets:
|
||||||||||
|
Cash
and cash equivalents
|
$
|
722
|
$
|
1,214
|
$
|
1,851
|
||||
|
Short-term
investments
|
2,942
|
4,116
|
3,284
|
|||||||
|
Accounts
receivable, net of allowances of ($32), ($34) and ($37)
|
1,798
|
1,648
|
1,524
|
|||||||
|
Raw
materials
|
91
|
83
|
72
|
|||||||
|
Work
in process
|
819
|
813
|
739
|
|||||||
|
Finished
goods
|
336
|
289
|
345
|
|||||||
|
Inventories
|
1,246
|
1,185
|
1,156
|
|||||||
|
Deferred
income taxes
|
626
|
619
|
577
|
|||||||
|
Prepaid
expenses and other current assets
|
248
|
135
|
341
|
|||||||
|
Assets
of discontinued operations held for sale
|
495
|
472
|
425
|
|||||||
|
Total
current assets
|
8,077
|
9,389
|
9,158
|
|||||||
|
Property,
plant and equipment at cost
|
8,442
|
8,374
|
8,880
|
|||||||
|
Less
accumulated depreciation
|
(4,574
|
)
|
(4,644
|
)
|
(5,163
|
)
|
||||
|
Property,
plant and equipment, net
|
3,868
|
3,730
|
3,717
|
|||||||
|
Equity
and debt investments
|
240
|
236
|
260
|
|||||||
|
Goodwill
|
793
|
677
|
677
|
|||||||
|
Acquisition-related
intangibles
|
131
|
60
|
97
|
|||||||
|
Deferred
income taxes
|
390
|
393
|
457
|
|||||||
|
Capitalized
software licenses, net
|
222
|
243
|
288
|
|||||||
|
Prepaid
retirement costs
|
205
|
222
|
273
|
|||||||
|
Other
assets
|
112
|
113
|
118
|
|||||||
|
Total
assets
|
$
|
14,038
|
$
|
15,063
|
$
|
15,045
|
||||
|
Liabilities
and Stockholders’ Equity
|
||||||||||
|
Current
liabilities:
|
||||||||||
|
Loans
payable and current portion of long-term debt
|
$
|
--
|
$
|
301
|
$
|
318
|
||||
|
Accounts
payable
|
720
|
702
|
648
|
|||||||
|
Accrued
expenses and other liabilities
|
895
|
948
|
826
|
|||||||
|
Income
taxes payable
|
280
|
154
|
253
|
|||||||
|
Accrued
profit sharing and retirement
|
43
|
121
|
34
|
|||||||
|
Liabilities
of discontinued operations held for sale
|
157
|
151
|
122
|
|||||||
|
Total
current liabilities
|
2,095
|
2,377
|
2,201
|
|||||||
|
Long-term
debt
|
318
|
329
|
55
|
|||||||
|
Accrued
retirement costs
|
116
|
136
|
556
|
|||||||
|
Deferred
income taxes
|
17
|
23
|
40
|
|||||||
|
Deferred
credits and other liabilities
|
254
|
261
|
289
|
|||||||
|
Total
liabilities
|
2,800
|
3,126
|
3,141
|
|||||||
|
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, 2006 -- 1,739,070,044; December 31, 2005 -- 1,738,780,512;
March
31, 2005 -- 1,738,491,029
|
1,739
|
1,739
|
1,738
|
|||||||
|
Paid-in
capital
|
744
|
742
|
679
|
|||||||
|
Retained
earnings
|
13,930
|
13,394
|
11,610
|
|||||||
|
Less
treasury common stock at cost: Shares: March 31, 2006 -- 181,032,577;
December 31, 2005 -- 142,190,707; March 31, 2005 --
76,326,181
|
(5,092
|
)
|
(3,856
|
)
|
(1,929
|
)
|
||||
|
Accumulated
other comprehensive income (loss):
|
||||||||||
|
Minimum
pension liability
|
(65
|
)
|
(65
|
)
|
(167
|
)
|
||||
|
Unrealized
gains (losses) on available-for-sale investments
|
(17
|
)
|
(16
|
)
|
(24
|
)
|
||||
|
Unearned
compensation
|
(1
|
)
|
(1
|
)
|
(3
|
)
|
||||
|
Total
stockholders’ equity
|
11,238
|
11,937
|
11,904
|
|||||||
|
Total
liabilities and stockholders’ equity
|
$
|
14,038
|
$
|
15,063
|
$
|
15,045
|
||||
TEXAS
INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated
Statements of Cash Flows
(Millions
of dollars)
|
For
Three Months Ended
|
||||||||||
|
Mar.
31,
2006
|
Dec.
31,
2005
|
Mar.
31,
2005
|
||||||||
|
Cash
flows from operating activities:
|
||||||||||
|
Net
income
|
$
|
585
|
$
|
655
|
$
|
411
|
||||
|
Adjustments
to reconcile net income to cash provided by
operating
activities of continuing operations:
|
||||||||||
|
Less
income from discontinued operations
|
(43
|
)
|
(33
|
)
|
(40
|
)
|
||||
|
Depreciation
|
270
|
336
|
341
|
|||||||
|
Stock-based
compensation
|
91
|
85
|
5
|
|||||||
|
Amortization
of capitalized software
|
30
|
33
|
29
|
|||||||
|
Amortization
of acquisition-related costs
|
16
|
13
|
15
|
|||||||
|
Purchased
in-process research and development
|
5
|
--
|
--
|
|||||||
|
(Gains)/losses
on investments and sales of assets
|
(5
|
)
|
(7
|
)
|
(22
|
)
|
||||
|
Deferred
income taxes
|
(36
|
)
|
(93
|
)
|
(37
|
)
|
||||
|
(Increase)/decrease
from changes in:
|
||||||||||
|
Accounts
receivable
|
(144
|
)
|
105
|
7
|
||||||
|
Inventories
|
(57
|
)
|
(111
|
)
|
6
|
|||||
|
Prepaid
expenses and other current assets
|
(111
|
)
|
30
|
(88
|
)
|
|||||
|
Accounts
payable and accrued expenses
|
(106
|
)
|
(24
|
)
|
20
|
|||||
|
Income
taxes payable
|
151
|
99
|
72
|
|||||||
|
Accrued
profit sharing and retirement
|
(99
|
)
|
15
|
(213
|
)
|
|||||
|
Decrease/(increase)
in noncurrent accrued retirement costs
|
17
|
(180
|
)
|
7
|
||||||
|
Other
|
(42
|
)
|
(43
|
)
|
(15
|
)
|
||||
|
Net
cash provided by operating activities of continuing
operations
|
522
|
880
|
498
|
|||||||
|
Cash
flows from investing activities:
|
||||||||||
|
Additions
to property, plant and equipment
|
(408
|
)
|
(334
|
)
|
(267
|
)
|
||||
|
Sales
of assets
|
4
|
--
|
42
|
|||||||
|
Purchases
of cash investments
|
(1,153
|
)
|
(2,690
|
)
|
(818
|
)
|
||||
|
Sales
and maturities of cash investments
|
2,341
|
1,887
|
1,204
|
|||||||
|
Purchases
of equity investments
|
(5
|
)
|
(4
|
)
|
(2
|
)
|
||||
|
Sales
of equity and debt investments
|
7
|
14
|
--
|
|||||||
|
Acquisition
of businesses, net of cash acquired
|
(177
|
)
|
--
|
--
|
||||||
|
Net
cash provided by (used in) investing activities of continuing
operations
|
609
|
(1,127
|
)
|
159
|
||||||
|
Cash
flows from financing activities:
|
||||||||||
|
Proceeds
from loans and long-term debt
|
--
|
275
|
--
|
|||||||
|
Payments
on loans and long-term debt
|
(311
|
)
|
(1
|
)
|
--
|
|||||
|
Dividends
paid on common stock
|
(48
|
)
|
(48
|
)
|
(43
|
)
|
||||
|
Sales
and other common stock transactions
|
142
|
128
|
57
|
|||||||
|
Excess
tax benefit from stock option exercises
|
7
|
17
|
--
|
|||||||
|
Stock
repurchases
|
(1,440
|
)
|
(870
|
)
|
(1,493
|
)
|
||||
|
Net
cash used in financing activities of continuing operations
|
(1,650
|
)
|
(499
|
)
|
(1,479
|
)
|
||||
|
Cash
flows from discontinued operations:
|
||||||||||
|
Operating
activities
|
35
|
28
|
26
|
|||||||
|
Investing
activities
|
(10
|
)
|
(13
|
)
|
(11
|
)
|
||||
|
Net
cash provided by discontinued operations
|
25
|
15
|
15
|
|||||||
|
Effect
of exchange rate changes on cash
|
2
|
4
|
(5
|
)
|
||||||
|
Net
decrease in cash and cash equivalents
|
(492
|
)
|
(727
|
)
|
(812
|
)
|
||||
|
Cash
and cash equivalents, beginning of period
|
1,214
|
1,941
|
2,663
|
|||||||
|
Cash
and cash equivalents, end of period
|
$
|
722
|
$
|
1,214
|
$
|
1,851
|
||||
Business
Segment Net Revenue
(In
millions of dollars)
|
For
Three Months Ended
|
||||||||||
|
Mar.
31,
2006
|
Dec.
31,
2005
|
Mar.
31,
2005
|
||||||||
|
Semiconductor
|
$
|
3,262
|
$
|
3,258
|
$
|
2,621
|
||||
|
Educational
& Productivity Solutions
|
74
|
67
|
82
|
|||||||
|
Intersegment
eliminations
|
(2
|
)
|
(1
|
)
|
(1
|
)
|
||||
|
Total
net revenue
|
$
|
3,334
|
$
|
3,324
|
$
|
2,702
|
||||
Business
Segment Profit (Loss)
(In
millions of dollars)
|
For
Three Months Ended
|
||||||||||
|
Mar.
31,
2006
|
Dec.
31,
2005
|
Mar.
31,
2005
|
||||||||
|
Semiconductor
|
$
|
883
|
$
|
912
|
$
|
462
|
||||
|
Educational
& Productivity Solutions
|
13
|
10
|
20
|
|||||||
|
Corporate
activities*
|
(178
|
)
|
(162
|
)
|
(46
|
)
|
||||
|
Profit
from operations
|
$
|
718
|
$
|
760
|
$
|
436
|
||||
* Corporate activities include stock-based compensation expense of $91 million, $85 million and $5 million for the first quarter of 2006, the fourth quarter of 2005 and the first quarter of 2005. Also included in the first quarter of 2005 are gains of $23 million on sales of assets related primarily to the disposition of a sales facility and the sale of the commodity liquid crystal display driver product line.
Semiconductor
| · |
Revenue
of $3.26 billion in the first quarter was about even sequentially,
and
increased 24 percent from the year-ago quarter primarily due to
demand for
the company’s DSP and analog products. Revenue from semiconductors used in
wireless applications was even sequentially and was up 32 percent
from a year ago.
|
| · |
Gross
profit in the first quarter was $1.66 billion, or 50.8 percent
of revenue.
Gross profit increased $12 million sequentially, and increased
$460
million from the year-ago quarter due to higher revenue. Operating
profit
in the first quarter was $883 million, or 27.1 percent of revenue,
down
$29 million sequentially due to higher operating expenses. Compared
with
the year-ago quarter, operating profit increased $421 million due
to
higher gross profit.
|
| · |
Analog
revenue was even sequentially, and increased 24 percent from the
year-ago
quarter primarily due to demand for high-performance analog products.
Revenue from high-performance analog products grew 6 percent sequentially
and 43 percent from a year ago.
|
| · |
DSP
revenue in the first quarter increased 4 percent sequentially due
to
demand for communications infrastructure products, including high-density
Voice over Internet Protocol (VoIP) and wireless basestation products.
DSP
revenue increased 32 percent from the year-ago quarter due to higher
demand from the wireless market.
|
| · |
TI’s
remaining Semiconductor revenue in the first quarter decreased
6 percent
sequentially primarily due to the expected seasonal decline in
DLP
semiconductors used in high-definition televisions and projectors,
as well
as lower royalties. This more than offset higher revenue in
microcontrollers, RISC microprocessors and standard logic products.
From a
year ago, remaining Semiconductor revenue increased 14 percent
primarily
due to growth in standard logic, DLP, microcontroller and RISC
microprocessor revenue more than offsetting a decline in royalties.
|
| · |
Semiconductor
orders of $3.43 billion in the first quarter were about even sequentially,
and increased 32 percent from a year ago due to broad-based demand,
especially for the company’s wireless and high-performance analog
products.
|
1Q
Semiconductor Highlights
| · |
TI
announced its OMAP™ 3 product, believed to be the industry’s first
applications processor in 65-nanometer process technology, that
will power
a new class of advanced cell phones by enabling improvements in
entertainment and productivity features.
|
| · |
TI
joined other wireless and gaming industry leaders to define and
support an
open gaming architecture to accelerate the adoption of premium
mobile
games.
|
| · |
TI
introduced a new family of high-performance analog amplifiers featuring
precision performance at one-tenth the power consumption of the
nearest
competitive device, making them ideal for medical instrumentation,
temperature measurement, test equipment, security and consumer
systems.
|
| · |
TI
unveiled PIQUA™,
a
new IP network quality management system based on TI's DSP technology
and
embedded software solutions. Using sophisticated real-time calculations
to
instantly assess quality parameters, PIQUA allows network operators
to
proactively manage quality-of-service characteristics such as echo,
dropped packets and line delay.
|
Educational
& Productivity Solutions
| · |
Revenue
in the first quarter was $74 million, up $7 million sequentially
due to
higher demand for scientific calculators.
Revenue was down $8 million from the year-ago quarter due to an
expected
shift of instructional dealers’ purchases closer to second- and
third-quarter school demand.
|
| · |
Gross
profit in the first quarter was $41 million, or 55.7 percent of
revenue,
up $6 million sequentially primarily due to higher revenue and
down $3
million from the year-ago quarter primarily due to lower revenue.
|
| · |
Operating
profit in the quarter was $13 million, or 18.3 percent of revenue,
an
increase of $3 million sequentially, and a decrease of $7 million
from the
year-ago quarter primarily due to lower revenue.
|
#
#
#
“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 in this release 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 the Company
or its
management:
| · |
Market
demand for semiconductors, particularly for analog chips and digital
signal processors 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;
|
| · |
Consolidation
of TI’s 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 and critical manufacturing equipment;
|
| · |
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 company forecasts;
|
| · |
The
financial impact of inadequate or excess TI inventories to meet demand
that differs from projections;
|
| · |
Product
liability or warranty claims, 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 text under the heading
“Risk
Factors” 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 publication,
and the Company undertakes no obligation to update the forward-looking
statements to reflect subsequent events or circumstances.
Texas
Instruments Incorporated provides innovative DSP and analog technologies
to meet
our customers’ real world signal processing requirements. In addition to
Semiconductor, the company’s businesses include Sensors & Controls and
Educational & Productivity Solutions. TI is headquartered in Dallas, Texas,
and has manufacturing, design or sales operations in more than 25
countries.
Texas
Instruments is traded on the New York Stock Exchange under the symbol TXN.
More
information is located on the World Wide Web at www.ti.com.
TI
Trademarks:
DLP
OMAP
PIQUA
Other
trademarks are the property of their respective
owners.