TI reports financial results for 3Q12

*  Includes Acquisition charges and Restructuring charges/other.

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 a full quarter of Silicon Valley Analog revenue.  Revenue from Power Management and High Volume Analog & Logic increased while revenue from High Performance Analog declined.
  • Compared with the prior quarter, revenue increased primarily due to growth in High Volume Analog & Logic, as well as Power Management.  Revenue from Silicon Valley Analog and High Performance Analog declined.    
  • Operating profit increased from the year-ago quarter as higher gross profit more than offset higher operating expenses.  Operating profit increased from the prior quarter primarily due to operating expense reductions, as well as higher 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 applications.  Revenue from products sold into automotive applications and catalog products increased.
  • Compared with the prior quarter, the increase in revenue was due to catalog products.  Revenue from products sold into communications infrastructure applications declined, and revenue from products sold into automotive applications was even.      
  • Operating profit decreased from a year ago primarily due to lower gross profit.  Operating profit increased from the prior quarter primarily due to operating expense reductions. 

Wireless:  (includes OMAPapplications processors, connectivity products and baseband products) 

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

Other:  (includes DLP® products, custom ASIC products, calculators and royalties)

  • Compared with the year-ago quarter, revenue was down due to lower DLP revenue, the expiration of transitional supply agreements associated with previously acquired factories, and lower calculator revenue.  These more than offset higher revenue from the business interruption insurance proceeds.
  • Compared with the prior quarter, revenue was up primarily due to the business interruption insurance proceeds, and to a lesser extent higher royalties and increased calculator revenue.  Revenue from DLP products and custom ASIC products declined. 
  • Operating profit increased from a year ago primarily due to the Japan pension program change, although lower acquisition charges and lower operating expenses also contributed.  Operating profit increased from the prior quarter primarily due to the pension program change, although business interruption insurance proceeds also contributed to a lesser extent.

3Q12 additional financial information

  • Orders were $3.24 billion, up 6 percent from the year-ago quarter and down 5 percent from the prior quarter.
  • Inventory was $1.85 billion at the end of the quarter, down $117 million from a year ago primarily due to the fair value write-up of inventory that was acquired from National Semiconductor.  Inventory was down $37 million from the prior quarter. 
  • Capital expenditures were $149 million in the quarter compared with $193 million a year ago and $146 million in the prior quarter.  Capital expenditures in the quarter were primarily for semiconductor manufacturing equipment.
  • In August 2012, the company issued $1.5 billion of new long-term debt at an average coupon rate of 1.05%.  The company repaid $500 million of commercial paper borrowings in the quarter and has no remaining commercial paper obligations at the end of the quarter.
  • The company used $600 million in the quarter to repurchase 20.6 million shares of its common stock and paid dividends of $194 million.

Outlook

For the fourth quarter of 2012, TI expects:

  • Revenue:  $2.83 – 3.07 billion
  • Earnings per share:  $0.23 – 0.31

The fourth quarter's EPS will be negatively affected by about 6 cents from acquisition and restructuring charges.    

TI will update its fourth-quarter outlook on December 10, 2012.

For the full year of 2012, TI expects approximately the following:

  • R&D expense:  $1.9 billion
  • Capital expenditures:  $0.5 billion, down from the prior expectation of $0.7 billion
  • Depreciation:  $1.0 billion
  • Annual effective tax rate:  22%, down from the prior expectation of 26%

The tax rate estimate is based on current 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



Sept. 30,

2012


Sept. 30,

2011


June 30,

2012








Revenue


$      3,390


$       3,466


$       3,335

Cost of revenue


1,650


1,722


1,684

Gross profit


1,740


1,744


1,651

Research and development (R&D)


463


395


480

Selling, general and administrative (SG&A)


453


388


456

Restructuring charges/other


(122)


--


13

Acquisition charges


106


147


104

Operating profit


840


814


598

Other income (expense), net


24


(19)


(2)

Interest and debt expense


21


15


20

Income before income taxes


843


780


576

Provision for income taxes


59


179


130

Net income


$         784


$          601


$          446








Earnings per common share:







  Basic


$          .68


$           .52


$           .38

  Diluted


$          .67


$           .51


$           .38








Average shares outstanding (millions):







  Basic


1,130


1,144


1,140

  Diluted


1,141


1,157


1,154








Cash dividends declared per share of common stock


$          .17


$           .13


$           .17








Percentage of revenue:







Gross profit


51.3%


50.3%


49.5%

R&D


13.6%


11.4%


14.4%

SG&A


13.4%


11.2%


13.7%

Operating profit


24.8%


23.5%


17.9%










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