TI reports financial results for 4Q09 and 2009

Conference call on TI web site at 4:30 p.m. Central time today

www.ti.com/ir

Jan 25, 2010, 16:30 ET from Texas Instruments Incorporated

DALLAS, Jan. 25 /PRNewswire-FirstCall/ -- Texas Instruments Incorporated (TI) (NYSE: TXN) today announced fourth-quarter revenue of $3.00 billion, net income of $655 million and earnings per share (EPS) of $0.52.  

"TI's growth and improving performance reflect our focus on Analog and Embedded Processing.  These are large, diverse businesses that give us access to the world's fastest-growing electronics markets," said Rich Templeton, TI chairman, president and chief executive officer.  

"In the fourth quarter, demand was strong across end markets without the usual holiday slowdown.  Throughout, we believe customer and channel inventories have been lean.  With demand continuing to be solid and inventories well below historical levels, our outlook for the first quarter reflects the likelihood of sequential growth instead of the typical seasonal decline.  

"We continue to make investments to support customers and drive growth, including the ramp-up of the industry's first 300-millimeter analog factory in Richardson, Texas," Templeton concluded.  

4Q09 financial summary

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

4Q09

4Q08

vs. 4Q08

3Q09

vs. 3Q09

Revenue:

$

3,005

$

2,491

21%

$

2,880

4%

Operating profit:

$

875

$

51

1,616%

$

763

15%

Net income:

$

655

$

107

512%

$

538

22%

Earnings per share:

$

0.52

$

0.08

550%

$

0.42

24%

Cash flow from operations:

$

1,000

$

1,113

-10%

$

834

20%

TI's operating profit increased compared with the fourth quarter of 2008 and the prior quarter primarily due to higher gross profit, which included the impact of higher revenue and the benefit associated with higher utilization of manufacturing assets.  In addition, restructuring charges were lower compared with a year ago.  

4Q09 segment results

4Q09

4Q08

vs. 4Q08

3Q09

vs. 3Q09

Note

Analog:

  Revenue

$

1,289

$

1,015 

27%

$

1,184

9%

(1)

  Operating profit

$

386

$

78 

395%

$

306

26%

Embedded Processing:

  Revenue

$

412

$

340 

21%

$

393

5%

(2)

  Operating profit (loss)

$

89

$

(2)

n/a

$

75

19%

Wireless:

  Revenue

$

732

$

646 

13%

$

675

8%

(3)

  Operating profit (loss)

$

178

$

(87)

n/a

$

110

62%

Other:

  Revenue

$

572

$

490 

17%

$

628

-9%

(4)

  Operating profit

$

222

$

62 

258%

$

272

-18%

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 increase in Analog revenue from a year ago and from the prior quarter was primarily due to a combination of strength in power management and high-volume analog & logic.  High-performance analog revenue also increased, but to a lesser extent.  The gains in operating profit for this segment, both from a year ago and sequentially, were primarily due to higher gross profit.  

(2)

The increase in Embedded Processing revenue from a year ago and from the prior quarter was primarily due to a combination of higher catalog and automotive product revenue.  Revenue from communications infrastructure products also increased, but to a lesser extent.  The gains in operating profit for this segment, both from a year ago and sequentially, were primarily due to higher gross profit.  

(3)

The increase in Wireless revenue from a year ago and from the prior quarter was primarily due to strength in connectivity products and applications processors.  Baseband product revenue was about even with the year-ago quarter and increased sequentially.  Operating profit in this segment increased from a year ago primarily due to the combination of lower restructuring charges and higher gross profit, and increased from the prior quarter primarily due to higher gross profit.

(4)

Other revenue increased from a year ago due to gains in DLP products, royalties and calculators.  Revenue from RISC microprocessors declined from a year ago.  Revenue in this segment decreased from the prior quarter due to the seasonal decline in calculator revenue.  This was partially offset as revenue from DLP products and ASIC products increased.  Operating profit in this segment increased from a year ago primarily due to higher gross profit and declined from the prior quarter due to seasonally lower gross profit.

Restructuring charges were as follows:

4Q09

4Q08

3Q09

Analog:

$

6

$

60

$

4

Embedded Processing:

$

3

$

24

$

2

Wireless:

$

1

$

130

$

3

Other:

$

2

$

40

$

1

Total:

$

12

$

254

$

10

4Q09 additional financial information

  • Net income included $16 million in discrete tax benefits.
  • Orders were $3.26 billion, up 75 percent from a year ago and up 5 percent from the prior quarter.
  • Inventory was $1.20 billion at the end of the quarter, down $173 million from a year ago and up $86 million from the prior quarter.
  • Capital expenditures were $436 million in the quarter compared with $76 million a year ago and $226 million in the prior quarter.  Capital expenditures in the quarter included the purchase of 300-millimeter wafer manufacturing equipment as part of Qimonda AG's bankruptcy proceedings, as well as additional assembly/test manufacturing equipment.
  • The company used $351 million in the quarter to repurchase 14.8 million shares of its common stock and paid dividends of $149 million.

Year 2009 financial summary

2009

2008

vs. 2008

Revenue:

$

10,427

$

12,501

-17%

Operating profit:

$

1,991

$

2,437

-18%

Net income:

$

1,470

$

1,920

-23%

Earnings per share:

$

1.15

$

1.44

-20%

Cash flow from operations:

$

2,643

$

3,330

-21%

TI's operating profit decreased 18 percent in 2009 due to lower revenue.  The impact of lower revenue was partially offset by reductions in operating expenses.  Operating profit included the negative impact of $212 million in restructuring charges, which were down $42 million from 2008.

Year 2009 segment results

2009

2008

vs. 2008

Note

Analog:

  Revenue

$

4,270

$

4,857

-12%

(1)

  Operating profit

$

753

$

1,050

-28%

Embedded Processing:

  Revenue

$

1,471

$

1,631

-10%

(2)

  Operating profit

$

194

$

268

-28%

Wireless:

  Revenue

$

2,558

$

3,383

-24%

(3)

  Operating profit

$

332

$

347

-4%

Other:

  Revenue

$

2,128

$

2,630

-19%

(4)

  Operating profit

$

712

$

772

-8%

(1)

Analog revenue declined primarily due to lower high-volume analog & logic revenue.  

(2)

Embedded Processing revenue declined primarily due to lower catalog product revenue.  

(3)

Wireless revenue declined due to lower baseband revenue.  

(4)

Other revenue declined across a broad range of products, especially RISC microprocessors.

Restructuring charges negatively impacted each segment's operating profit as follows:

2009

2008

Analog:

$

87

$

60

Embedded Processing:

$

43

$

24

Wireless:

$

59

$

130

Other:

$

23

$

40

Total:

$

212

$

254

2009 additional financial information

  • Capital expenditures were $753 million in 2009, down $10 million from 2008.      
  • The company used $954 million to repurchase 45.3 million shares of its common stock and paid dividends of $567 million.

Outlook

For the first quarter of 2010, TI expects:

  • Revenue:  $2.95 - 3.19 billion
  • Earnings per share:  $0.44 - 0.52

TI will update its first-quarter outlook on March 8, 2010.

For the full year of 2010, TI expects approximately the following:

  • R&D expense:  $1.5 billion
  • Capital expenditures:  $0.9 billion
  • Depreciation:  $0.9 billion
  • Annual effective tax rate:  31%

The tax rate estimate is based on current tax law and does not assume reinstatement of the federal R&D tax credit, which expired at the end of 2009.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Income

(Millions of dollars, except share and per-share amounts)

For Three Months Ended

For Years Ended

Dec. 31,

Dec. 31,

Sept. 30,

Dec. 31,

Dec. 31,

2009

2008

2009

2009

2008

Revenue

$

3,005   

$

2,491   

$

2,880   

$

10,427   

$

12,501   

Cost of revenue

1,416   

1,394   

1,399   

5,428   

6,256   

Gross profit

1,589   

1,097   

1,481   

4,999   

6,245   

Research and development (R&D)

355   

431   

368   

1,476   

1,940   

Selling, general and administrative (SG&A)

347   

361   

340   

1,320   

1,614   

Restructuring expense

12   

254   

10   

212   

254   

Operating profit

875   

51   

763   

1,991   

2,437   

Other income (expense) net

6   

(15)  

2   

26   

44   

Income before income taxes

881   

36   

765   

2,017   

2,481   

Provision (benefit) for income taxes

226   

(71)  

227   

547   

561   

Net income

$

655   

$

107   

$

538   

$

1,470   

$

1,920   

Earnings per common share:

 Basic

$

.52   

$

.08   

$

.42   

$

1.16   

$

1.46   

 Diluted

$

.52   

$

.08   

$

.42   

$

1.15   

$

1.44   

Average shares outstanding (millions):

 Basic

1,243   

1,283   

1,255   

1,260   

1,308   

 Diluted

1,257   

1,287   

1,268   

1,269   

1,321   

Cash dividends declared per share of common stock

$

.12   

$

.11   

$

.11   

$

.45   

$

.41   

Percentage of revenue:

Gross profit

52.9%

44.0%

51.4%

47.9%

50.0%

R&D

11.8%

17.3%

12.7%

14.2%

15.5%

SG&A

11.5%

14.5%

11.8%

12.6%

12.9%

Operating profit

29.1%

2.0%

26.5%

19.1%

19.5%

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheets

(Millions of dollars, except share amounts)

Dec. 31,

2009

Dec. 31,

2008

Sept. 30,

2009

Assets

Current assets:

Cash and cash equivalents

$

1,182 

$

1,046 

$

1,294 

Short-term investments

1,743 

1,494 

1,533 

Accounts receivable, net of allowances of ($23), ($30) and

 ($22)

1,277 

913 

1,435 

Raw materials

93 

99 

89 

Work in process

758 

837 

767 

Finished goods

351 

439 

260 

Inventories

1,202 

1,375 

1,116 

Deferred income taxes

546 

695 

592 

Prepaid expenses and other current assets

164 

267 

168 

Total current assets

6,114 

5,790 

6,138 

Property, plant and equipment at cost

6,705 

7,321 

6,599 

Less accumulated depreciation

(3,547)

(4,017)

(3,654)

Property, plant and equipment, net

3,158 

3,304 

2,945 

Long-term investments

637 

653 

627 

Goodwill

926 

840 

926 

Acquisition-related intangibles

124 

91 

138 

Deferred income taxes

926 

990 

928 

Capitalized software licenses, net

119 

182 

124 

Overfunded retirement plans

64 

17 

20 

Other assets

51 

56 

57 

Total assets

$

12,119 

$

11,923 

$

11,903 

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

503 

$

324 

$

467 

Accrued expenses and other liabilities

841 

1,034 

959 

Income taxes payable

128 

40 

148 

Accrued profit sharing and retirement

115 

134 

88 

Total current liabilities

1,587 

1,532 

1,662 

Underfunded retirement plans

425 

640 

464 

Deferred income taxes

67 

59 

60 

Deferred credits and other liabilities

318 

366 

279 

Total liabilities

2,397 

2,597 

2,465 

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:  Dec. 31, 2009 -- 1,739,811,721; Dec. 31, 2008 -- 1,739,718,073; Sept. 30, 2009 -- 1,739,770,537

1,740 

1,740 

1,740 

Paid-in capital

1,086 

1,022 

1,071 

Retained earnings

22,066 

21,168 

21,562 

Less treasury common stock at cost:

Shares:  Dec. 31, 2009 -- 499,693,704; Dec. 31, 2008 -- 461,822,215; Sept. 30, 2009 -- 486,897,139

(14,549)

(13,814)

(14,257)

Accumulated other comprehensive income (loss), net of taxes

(621)

(790)

(678)

Total stockholders' equity

9,722 

9,326 

9,438 

Total liabilities and stockholders' equity

$

12,119 

$

11,923 

$

11,903 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Millions of dollars)

For Three Months Ended

For Years Ended

Dec. 31,

Dec. 31,

Sept. 30,

Dec. 31,

Dec. 31,

2009

2008

2009

2009

2008

Cash flows from operating activities:

Net income

$

655 

$

107 

$

538 

$

1,470 

$

1,920 

Adjustments to net income:

  Depreciation

210 

283 

217 

877 

1,022 

  Stock-based compensation

44 

51 

46 

186 

213 

  Amortization of acquisition-related intangibles

14 

12 

48 

37 

  Deferred income taxes

66 

(23)

71 

146 

(182)

Increase (decrease) from changes in:

  Accounts receivable

156 

889 

(186)

(364)

865 

  Inventories

(86)

200 

(53)

177 

43 

  Prepaid expenses and other current assets

11 

(100)

31 

35 

(125)

  Accounts payable and accrued expenses

(53)

(211)

54 

(17)

(382)

  Income taxes payable

(18)

13 

94 

73 

38 

  Accrued profit sharing and retirement

27 

(10)

28 

(16)

(84)

Other

(26)

(94)

(18)

28 

(35)

Net cash provided by operating activities

1,000 

1,113 

834 

2,643 

3,330 

Cash flows from investing activities:

Additions to property, plant and equipment

(436)

(76)

(226)

(753)

(763)

Purchases of short-term investments

(831)

(1,384)

(879)

(2,273)

(1,746)

Sales and maturities of short-term investments

618 

182 

139 

2,030 

1,300 

Purchases of long-term investments

(4)

(1)

-- 

(9)

(9)

Redemptions and sales of long-term investments

16 

64 

55 

Acquisitions, net of cash acquired

-- 

-- 

-- 

(155)

(19)

Net cash used in investing activities

(651)

(1,272)

(950)

(1,096)

(1,182)

Cash flows from financing activities:

Dividends paid

(149)

(141)

(138)

(567)

(537)

Sales and other common stock transactions

38 

15 

34 

109 

210 

Excess tax benefit from share-based payments

-- 

19 

Stock repurchases

(351)

(386)

(251)

(954)

(2,122)

Net cash used in financing activities

(461)

(510)

(355)

(1,411)

(2,430)

Net (decrease) increase in cash and cash equivalents

(112)

(669)

(471)

136 

(282)

Cash and cash equivalents, beginning of period

1,294 

1,715 

1,765 

1,046 

1,328 

Cash and cash equivalents, end of period

$

1,182 

$

1,046 

$

1,294 

$

1,182 

$

1,046 

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

Safe Harbor Statement

"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;
  • Changes in laws and regulations to which TI or its suppliers are or may become subject, such as those imposing fees or reporting or substitution costs relating to the discharge of emissions into the environment or the use of certain raw materials in our manufacturing processes;
  • 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.

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Other trademarks are the property of their respective owners.

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SOURCE Texas Instruments Incorporated



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