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TI reports 3Q13 financial results and shareholder returns

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

(PRNewswire) —  Texas Instruments Incorporated (TI) (NASDAQ: TXN) today reported third-quarter revenue of $3.24 billion, net income of $629 million and earnings per share of 56 cents

Regarding the company's performance and returns to shareholders, Rich Templeton, TI's chairman, president and CEO, made the following comments:

Free cash flow and revenue excluding legacy wireless are non-GAAP financial measures.  Free cash flow is Cash flow from operations less Capital expenditures.

Earnings summary

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






3Q13

3Q12

Change

Revenue

$ 3,244

$ 3,390

-4%

Operating profit

$    844

$    840

0%

Net income

$    629

$    784

-20%

Earnings per share

$     .56

$     .67

-16%

 

Cash generation

Amounts are in millions of dollars.




Trailing 12 Months



3Q13


3Q13

3Q12

Change

Cash flow from operations

$ 1,151


$ 3,270

$ 3,298

-1%

Capital expenditures

$    124


$    402

$    551

-27%

Free cash flow

$ 1,027


$ 2,868

$ 2,747

4%

Free cash flow % of revenue

32%


24%

21%


 

Capital expenditures for the last 12 months were 3 percent of revenue.

 

Cash return

Amounts are in millions of dollars.




Trailing 12 Months


3Q13


3Q13

Percentage of

Free Cash Flow

Dividends paid

$     308


$   1,084

38%

Stock repurchases

$     734


$   2,734

95%

 Total cash returned

$  1,042


$   3,818

133%

 

Outlook

For the fourth quarter of 2013, TI expects:

TI will update its fourth-quarter outlook on December 9, 2013.

For the full year of 2013, TI continues to expect approximately the following:

 

Consolidated Statements of Income

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






For Three Months Ended



Sept. 30,

2013


Sept. 30,

2012


Jun. 30,

2013








Revenue


$       3,244


$       3,390


$       3,047

Cost of revenue


1,465


1,650


1,477

Gross profit


1,779


1,740


1,570

Research and development (R&D)


368


463


389

Selling, general and administrative (SG&A)


465


453


471

Acquisition charges


86


106


86

Restructuring charges/other


16


(122)


(282)

Operating profit


844


840


906

Other income (expense), net


(4)


24


--

Interest and debt expense


24


21


24

Income before income taxes


816


843


882

Provision for income taxes


187


59


222

Net income


$          629


$          784


$          660








Earnings per common share:







   Basic


$           .56


$           .68


$           .59

   Diluted


$           .56


$           .67


$           .58








Average shares outstanding (millions):







   Basic


1,096


1,130


1,103

   Diluted


1,111


1,141


1,117








Cash dividends declared per share of common stock


$           .28


$           .17


$           .28








Percentage of revenue:







Gross profit


54.8%


51.3%


51.5%

R&D


11.3%


13.6%


12.8%

SG&A


14.4%


13.4%


15.5%

Operating profit


26.0%


24.8%


29.7%


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 $11 million, $14 million and $11 million for the quarters ending September 30, 2013, September 30, 2012, and June 30, 2013, respectively.

 

Consolidated Balance Sheets

(Millions of dollars, except share amounts)










Sept. 30,

2013


Sept. 30,

2012


Jun. 30,

2013

Assets







Current assets:







   Cash and cash equivalents


$   1,435


$    1,210


$    1,180

   Short-term investments


2,158


2,451


2,064

   Accounts receivable, net of allowances of ($29), ($23) and ($31)


1,524


1,623


1,491

   Raw materials


107


124


101

   Work in process


954


988


926

   Finished goods


665


736


693

   Inventories


1,726


1,848


1,720

   Deferred income taxes


1,039


1,043


1,070

   Prepaid expenses and other current assets


219


409


513

   Total current assets


8,101


8,584


8,038

Property, plant and equipment at cost


6,539


6,806


6,679

   Less accumulated depreciation


(3,030)


(2,751)


(3,068)

   Property, plant and equipment, net


3,509


4,055


3,611

Long-term investments


210


225


203

Goodwill, net


4,362


4,452


4,362

Acquisition-related intangibles, net


2,305


2,643


2,388

Deferred income taxes


227


199


253

Capitalized software licenses, net


139


166


159

Overfunded retirement plans


119


29


106

Other assets


272


161


278

Total assets


$ 19,244


$  20,514


$  19,398








Liabilities and Stockholders' Equity







Current liabilities:







   Current portion of long-term debt


$   1,000


$    1,500


$    1,000

   Accounts payable


426


501


437

   Accrued compensation


567


552


463

   Income taxes payable


37


106


218

   Deferred income taxes


2


3


2

   Accrued expenses and other liabilities


691


766


682

   Total current liabilities


2,723


3,428


2,802

Long-term debt


4,161


4,190


4,165

Underfunded retirement plans


253


350


240

Deferred income taxes


564


593


584

Deferred credits and other liabilities


492


550


539

Total liabilities


8,193


9,111


8,330

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 – 1,740,815,939


1,741


1,741


1,741

   Paid-in capital


1,125


1,193


1,117

   Retained earnings


27,993


27,179


27,677

   Less treasury common stock at cost:







      Shares:  Sept. 30, 2013 – 646,252,825; Sept. 30, 2012 –

      620,012,959; Jun. 30, 2013 – 639,643,135


(19,236)


(18,093)


(18,877)

    Accumulated other comprehensive income (loss), net of taxes


(572)


(617)


(590)

    Total stockholders' equity


11,051


11,403


11,068

Total liabilities and stockholders' equity


$  19,244


$    20,514


$   19,398

 

Consolidated Statements of Cash Flows

(Millions of dollars)











For Three Months Ended




Sept. 30,

2013


Sept. 30,

2012


Jun. 30,

2013


Cash flows from operating activities:








    Net income


$       629


$        784


$        660


    Adjustments to net income:








       Depreciation


217


241


221


       Amortization of acquisition-related intangibles


83


86


85


       Stock-based compensation


71


66


75


       Gains on sales of assets


(3)


--


--


       Deferred income taxes


30


119


(54)


       Gain on transfer of Japan substitutional pension


--


(144)


--


   Increase (decrease) from changes in:








       Accounts receivable


(30)


18


(160)


       Inventories


(6)


37


(20)


       Prepaid expenses and other current assets


229


25


(304)


       Accounts payable and accrued expenses


(17)


(9)


(36)


       Accrued compensation


96


95


95


       Income taxes payable


(173)


(141)


115


    Changes in funded status of retirement plans


30


6


23


    Other


(5)


21


(26)


Cash flows from operating activities


1,151


1,204


674










Cash flows from investing activities:








    Capital expenditures


(124)


(149)


(97)


    Proceeds from asset sales


3


--


--


    Purchases of short-term investments


(775)


(1,484)


(1,866)


    Proceeds from short-term investments


681


173


2,268


    Purchases of long-term investments


--


--


(1)


    Proceeds from long-term investments


3


20


6


Cash flows from investing activities


(212)


(1,440)


310










Cash flows from financing activities:








    Proceeds from issuance of long-term debt


--


1,492


986


    Repayment of debt and commercial paper borrowings


--


(500)


(1,500)


    Dividends paid


(308)


(194)


(309)


    Stock repurchases


(734)


(600)


(721)


    Proceeds from common stock transactions


349


63


343


    Excess tax benefit from share-based payments


9


3


11


    Other


--


(10)


(7)


Cash flows from financing activities


(684)


254


(1,197)










Net change in cash and cash equivalents


255


18


(213)

Cash and cash equivalents, beginning of period


1,180


1,192


1,393

Cash and cash equivalents, end of period


$   1,435


$     1,210


$     1,180


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

 

3Q13 segment results










   3Q13


3Q12

Change


  2Q13

Change

Analog:








       Revenue

$ 1,931


$ 1,843

5%


$ 1,745

11%

       Operating profit

$    583


$    460

27%


$    416

40%

Embedded Processing:








      Revenue

$    668


$    591

13%


$    618

8%

      Operating profit

$      83


$      60

38%


$      54

54%

Other:








      Revenue

$    645


$    956

-33%


$    684

-6%

      Operating profit*

$    178


$    320

-44%


$    436

-59%


* Includes Acquisition charges and Restructuring charges/other.

 

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

Embedded Processing:  (includes Processors, Microcontrollers and Connectivity)

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

 

Non-GAAP financial information

Revenue excluding legacy wireless

This release includes references to TI's revenue and revenue outlook excluding legacy wireless products.  These measures, which were not prepared in accordance with generally accepted accounting principles (GAAP) in the United States, provide investors with insight into TI's underlying business results and are supplemental to the comparable GAAP measure.

 


TEXAS INSTRUMENTS INCORPORATED

(Millions of dollars)




For Three Months Ended












Sept. 30, 2013


Jun. 30, 2013


Change








Revenue (GAAP)


$                3,244


$                3,047


6%

Less legacy wireless revenue


57


148



TI Revenue less legacy wireless revenue (non-GAAP)


$                3,187


$                2,899


10%









For Three Months Ended












Dec. 31, 2013

(Expected)


Dec. 31, 2012


Change








Revenue (GAAP)


$                2,980

(a)    

$               2,979


0%

Less legacy wireless revenue


50


270



TI Revenue less legacy wireless revenue (non-GAAP)


$                2,930


$               2,709


8%












(a)

Represents the mid-point of the revenue guidance of $2.86 – 3.10 billion provided in the Outlook section of this release. The amount was determined by calculating the average of the low point and high point of that range.

 

Free cash flow

This release also includes references to free cash flow and various ratios based on that measure.  These are financial measures that were not prepared in accordance with GAAP.  Free cash flow was calculated by subtracting Capital expenditures from the most directly comparable GAAP measure of Cash flow from operating activities (also referred to as Cash flow from operations). 

The free cash flow measures were compared to the following GAAP items to determine the various non-GAAP ratios presented below and referred to in the release:  Revenue, Dividends paid and Stock repurchases.  Reconciliation to the most directly comparable GAAP-based ratios is provided in the table below.

The company believes these non-GAAP measures provide insight into its liquidity, its cash-generating capability and the amount of cash available to return to investors as well as insight into its financial performance.  These non-GAAP measures are supplemental to the comparable GAAP measures.

 

TEXAS INSTRUMENTS INCORPORATED

(Millions of dollars)




For the Twelve

Months Ended

Sept. 30, 2013


Percentage of

Revenue


For the Twelve

Months Ended

Sept. 30, 2012


Percentage of

Revenue










Revenue


$             12,155




$            13,266












Cash flow from operations (GAAP)


$               3,270


27%


$              3,298


25%

Less Capital expenditures


402


3%


551


4%

Free cash flow (non-GAAP)


$               2,868


24%


$              2,747


21%






























For the Twelve

Months Ended

Sept. 30, 2013


Percentage of

Cash Flow from

Operations

(GAAP)


Percentage of

Free

Cash Flow

(Non-GAAP)












Dividends paid


$               1,084


33%


38%



Stock repurchases


2,734


84%


95%



Total cash returned to shareholders


$               3,818


117%


133%





















 

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 TI'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:

For a more detailed discussion of these factors, see the Risk Factors discussion in Item 1A of TI's Form 10-K for the year ended December 31, 2012.  The forward-looking statements included in this release are made only as of the date of this release, and TI undertakes no obligation to update the forward-looking statements to reflect subsequent events or circumstances.

About Texas Instruments

Texas Instruments Incorporated (TI) is a global semiconductor design and manufacturing company that develops analog ICs and embedded processors.  By employing the world's brightest minds, TI creates innovations that shape the future of technology.  TI is helping more than 100,000 customers transform the future, today.  Learn more at www.ti.com.

TI trademarks:
            DLP
Other trademarks are the property of their respective owners.

TXN-F

SOURCE Texas Instruments Incorporated

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