TI reports financial results for 1Q12

Analog:  (includes High Volume Analog & Logic, Power Management, High Performance Analog and Silicon Valley Analog) 

  • Compared with the year-ago quarter, revenue increased due to the inclusion of Silicon Valley Analog revenue.  Revenue from High Performance Analog, High Volume Analog & Logic and Power Management declined.
  • Compared with the prior quarter, revenue was about even as growth in Silicon Valley Analog revenue was offset by a decline in High Volume Analog & Logic revenue.  Power Management and High Performance Analog were about even. 
  • Operating profit decreased from the year-ago quarter due to higher operating expenses that resulted from the inclusion of Silicon Valley Analog.  Operating profit decreased from the prior quarter primarily due to lower gross profit. 

Embedded Processing:  (includes digital signal processor and microcontroller catalog products that are sold across a wide variety of markets as well as application-specific products that are used in communications infrastructure and automotive electronics)

  • Compared with the year-ago quarter, the decline in revenue was due to lower revenue from products sold into communications infrastructure and from catalog products.  Revenue from products sold into automotive applications increased.
  • Compared with the prior quarter, the increase in revenue was due to higher revenue from products sold into automotive applications and communications infrastructure.  Revenue from catalog products was about even.    
  • Operating profit decreased from a year ago primarily due to lower gross profit.  Operating profit increased from the prior quarter due to higher gross profit. 

Wireless:  (includes OMAP™  applications processors, connectivity products and baseband products) 

  • Compared with the year-ago quarter, revenue declined primarily due to baseband products.  Revenue from connectivity products also declined while revenue from OMAP applications processors increased. 
  • Compared with the prior quarter, revenue decreased primarily due to baseband products.  Revenue from OMAP applications processors and connectivity products also declined. 
  • Operating profit decreased from the year-ago and prior quarters due to lower gross profit. 

Other:  (includes DLP® products, custom ASIC products, calculators and royalties as well as products sold under transitional supply agreements associated with recently acquired factories)

  • Compared with the year-ago quarter, revenue was down due to lower demand for DLP products and expiration of transitional supply agreements.  The first quarter's results also included proceeds of about $65 million from business interruption insurance related to the 2011 Japan earthquake.
  • Compared with the prior quarter, revenue was up primarily due to the insurance proceeds.
  • Operating profit decreased from a year ago primarily due to total acquisition-related charges.  Operating profit increased from the prior quarter primarily due to lower restructuring charges and lower total acquisition-related charges.

1Q12 additional financial information

  • Orders were $3.24 billion, down 9 percent from the year-ago quarter and up 13 percent from the prior quarter.
  • Inventory was $1.85 billion at the end of the quarter, up $175 million from a year ago and $65 million from the prior quarter.  The increase was due to the company building inventory to support higher anticipated demand in future quarters. 
  • Capital expenditures were $103 million in the quarter compared with $194 million a year ago and $152 million in the prior quarter.  Capital expenditures in the quarter were primarily for assembly/test and wafer manufacturing equipment.
  • The company used $300 million to repay its commercial paper borrowings, reducing the outstanding commercial paper obligation to $700 million.
  • The company used $300 million in the quarter to repurchase 9.1 million shares of its common stock and paid dividends of $195 million.

Outlook

For the second quarter of 2012, TI expects:

  • Revenue:  $3.22 – 3.48 billion
  • Earnings per share:  $0.30 – 0.38

The second quarter's results will be negatively affected by about $100 million of acquisition charges and about $10 million of restructuring charges.  Combined, these items will impact EPS by about 6 cents

TI will update its second-quarter outlook on June 11, 2012.

For the full year of 2012, TI continues to expect approximately the following:

  • R&D expense:  $2.0 billion
  • Capital expenditures:  $0.7 billion
  • Depreciation:  $1.0 billion
  • Annual effective tax rate:  28%

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 2011.

 

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Income

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





For Three Months Ended










Mar. 31,

2012


Mar. 31,

2011


Dec. 31, 

2011








Revenue


$     3,121


$     3,392


$     3,420

Cost of revenue


1,590


1,664


1,872

Gross profit


1,531


1,728


1,548

Research and development (R&D)


509


422


475

Selling, general and administrative (SG&A)


462


396


443

Restructuring charges


10


--


112

Acquisition charges


153


2


153

Operating profit


397


908


365

Other income (expense) net


(14)


10


5

Interest and debt expense


21


--


21

Income before income taxes


362


918


349

Provision for income taxes


97


252


51

Net income


$        265


$        666


$        298








Earnings per common share:







   Basic


$         .23


$         .56


$         .26

    Diluted


$         .22


$         .55


$         .25








Average shares outstanding (millions):







   Basic


1,143


1,167


1,138

   Diluted


1,165


1,194


1,155








Cash dividends declared per share of common stock


$         .17


$         .13


$         .17








Percentage of revenue:







Gross profit


49.0%


50.9%


45.3%

R&D


16.3%


12.4%


13.9%

SG&A


14.8%


11.7%


13.0%

Operating profit


12.7%


26.8%


10.7%


As required by accounting rule ASC 260, net income allocated to unvested restricted stock units (RSUs), on which we pay dividend equivalents, is excluded from the calculation of EPS.  The amount excluded is $4 million, $10 million and $5 million for the quarters ending March 31, 2012, March 31, 2011 and December 31, 2011.



TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheets

(Millions of dollars, except share amounts)

 



Mar. 31,

2012


Mar. 31,

2011


Dec. 31,

2011

Assets







Current assets:







   Cash and cash equivalents


$   1,193


$   1,343


$       992

   Short-term investments


1,572


1,514


1,943

   Accounts receivable, net of allowances of ($32), ($20) and ($19)


1,478


1,568


1,545

   Raw materials


114


132


115

   Work in process


996


934


1,004

   Finished goods


743


612


669

   Inventories


1,853


1,678


1,788

   Deferred income taxes


1,192


771


1,174

   Prepaid expenses and other current assets


303


170


386

   Total current assets


7,591


7,044


7,828

Property, plant and equipment at cost


6,840


6,712


7,133

   Less accumulated depreciation


(2,562)


(3,055)


(2,705)

   Property, plant and equipment, net


4,278


3,657


4,428

Long-term investments


239


449


265

Goodwill


4,452


924


4,452

Acquisition-related intangibles, net


2,815


69


2,900

Deferred income taxes


302


899


321

Capitalized software licenses, net


201


193


206

Overfunded retirement plans


37


28


40

Other assets


94


47


57

Total assets


$ 20,009


$ 13,310


$ 20,497








Liabilities and Stockholders' Equity







Current liabilities:







   Commercial paper borrowings


$      700


$          --


$      999

   Current portion of long-term debt


378


--


382

   Accounts payable


589


605


625

   Accrued compensation


382


348


597

   Income taxes payable


106


247


101

   Accrued expenses and other liabilities


754


593


795

   Total current liabilities


2,909


1,793


3,499

Long-term debt


4,207


--


4,211

Underfunded retirement plans


684


527


701

Deferred income taxes


622


82


607

Deferred credits and other liabilities


516


334


527

Total liabilities


8,938


2,736


9,545

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:  Mar. 31, 2012 – 1,740,814,489; Mar. 31, 2011 –

      1,740,394,740; Dec. 31, 2011 – 1,740,630,391


1,741


1,740


1,741

   Paid-in capital


1,112


1,068


1,194

   Retained earnings


26,345


25,206


26,278

   Less treasury common stock at cost:                                        

      Shares:  Mar. 31, 2012 – 596,461,198; Mar. 31, 2011 –

      579,225,953; Dec. 31, 2011 – 601,131,631


(17,385)


(16,738)


(17,485)

   Accumulated other comprehensive income (loss), net of taxes


(742)


(702)


(776)

   Total stockholders' equity


11,071


10,574


10,952

Total liabilities and stockholders' equity


$ 20,009


$ 13,310


$ 20,497



TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Millions of dollars)





For Three Months Ended



Mar. 31,

2012


Mar. 31,

2011


Dec. 31,

2011

Cash flows from operating activities:







   Net income


$       265


$       666


$       298

   Adjustments to net income:







     Depreciation


243


224


247

     Stock-based compensation


69


57


66

     Amortization of acquisition-related intangibles


86


7


86

     Deferred income taxes


(4)


31


(110)

   Increase (decrease) from changes in:







     Accounts receivable


63


(44)


236

     Inventories


(91)


(158)


203

     Prepaid expenses and other current assets


5


(9)


(18)

     Accounts payable and accrued expenses


(37)


(83)


(68)

     Accrued compensation


(211)


(281)


65

     Income taxes payable


67


137


4

   Other


(6)


(31)


(39)

Cash flows from operating activities


449


516


970








Cash flows from investing activities:







   Additions to property, plant and equipment


(103)


(194)


(152)

   Purchases of short-term investments


(242)


(872)


(1,190)

   Proceeds from short-term investments


613


1,111


301

   Purchases of long-term investments


(1)


(1)


(2)

   Proceeds from long-term investments


3


19


82

   Business acquisitions, net of cash acquired


--


--


(35)

Cash flows from investing activities


270


63


(996)








Cash flows from financing activities:







   Repayment of commercial paper borrowings


(300)


--


(200)

   Dividends paid


(195)


(153)


(193)

   Proceeds from common stock transactions


259


350


127

   Excess tax benefit from share-based payments


18


19


3

   Stock repurchases


(300)


(771)


(300)

Cash flows from financing activities


(518)


(555)


(563)








Net change in cash and cash equivalents


201


24


(589)

Cash and cash equivalents, beginning of period


992


1,319


1,581

Cash and cash equivalents, end of period


$   1,193


$   1,343


$       992


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


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