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TI reports 4Q15 and 2015 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 fourth-quarter revenue of $3.19 billion, net income of $836 million and earnings per share of 80 cents. Earnings per share included 9 cents for two items that were not in the company's prior guidance for the quarter.

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

TI also announced its intentions to phase out a small, older manufacturing facility in Greenock, Scotland, over the next three years. Plans are to move production from this facility to more cost-effective 200-millimeter TI fabs in Germany, Japan and Maine.

Free cash flow is a non-GAAP financial measure. Free cash flow is cash flow from operations less capital expenditures.

Earnings summary

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



4Q15


4Q14

Change

Revenue


$   3,189


$   3,269

-2%

Operating profit


$   1,142


$   1,100

4%

Net income


$      836


$      825

1%

Earnings per share


$     0.80


$     0.76

5%

 

Earnings per share for the fourth quarter of 2015 included a 9-cent benefit for two items not included in the company's prior outlook: 5 cents due to a net tax benefit as a result of the reinstatement of the R&D tax credit and 4 cents for Restructuring charges/other, which included gains on sales of assets and a charge for the planned site closure. 

Cash generation

Amounts are in millions of dollars.




Trailing 12 Months




4Q15


4Q15


4Q14

Change

Cash flow from operations


$   1,430


$   4,268


$  3,892

10%

Capital expenditures


$      164


$      551


$     385

43%

Free cash flow


$   1,266


$   3,717


$  3,507

6%

Free cash flow % of revenue




28.6%


26.9%


 

Capital expenditures for the past 12 months were 4 percent of revenue. The company's long-term expectation is about 4 percent.

Cash return

Amounts are in millions of dollars.




Trailing 12 Months




4Q15


4Q15


4Q14

Change

Dividends paid


$      386


$   1,444


$   1,323

9%

Stock repurchases


$      627


$   2,741


$   2,831

-3%

Total cash returned


$   1,013


$   4,185


$   4,154

1%

 

The company's targeted cash return is 100 percent of free cash flow plus proceeds from exercises of equity compensation minus net debt retirement.


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



December 31,


December 31,



2015


2014


2015


2014

Revenue


$

3,189


$

3,269


$

13,000


$

13,045

Cost of revenue (COR)



1,323



1,374



5,440



5,618

Gross profit



1,866



1,895



7,560



7,427

Research and development (R&D)



306



311



1,280



1,358

Selling, general and administrative (SG&A)



405



429



1,748



1,843

Acquisition charges



81



82



329



330

Restructuring charges/other



(68)



(27)



(71)



(51)

Operating profit



1,142



1,100



4,274



3,947

Other income (expense), net (OI&E)



19



9



32



21

Interest and debt expense



22



22



90



94

Income before income taxes



1,139



1,087



4,216



3,874

Provision for income taxes



303



262



1,230



1,053

Net income


$

836


$

825


$

2,986


$

2,821














Diluted earnings per common share


$

.80


$

.76


$

2.82


$

2.57














Average diluted shares outstanding (millions)



1,027



1,063



1,043



1,080














Cash dividends declared per common share


$

.38


$

.34


$

1.40


$

1.24














As a result of accounting rule ASC 260, which requires a portion of Net income to be allocated to unvested restricted stock units (RSUs) on which we pay dividend equivalents, diluted EPS is calculated using the following:














Net income


$

836


$

825


$

2,986


$

2,821

Income allocated to RSUs



(12)



(13)



(42)



(43)

Income allocated to common stock for diluted EPS


$

824


$

812


$

2,944


$

2,778

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheets

(Millions of dollars, except share amounts)




December 31,



2015


2014

Assets







Current assets:







Cash and cash equivalents


$

1,000


$

1,199

Short-term investments



2,218



2,342

Accounts receivable, net of allowances of ($7) and ($12)



1,165



1,246

Raw materials



109



101

Work in process



846



896

Finished goods



736



787

Inventories



1,691



1,784

Prepaid expenses and other current assets



1,000



850

Total current assets



7,074



7,421

Property, plant and equipment at cost



5,465



6,266

Accumulated depreciation



(2,869)



(3,426)

Property, plant and equipment, net



2,596



2,840

Long-term investments



221



224

Goodwill, net



4,362



4,362

Acquisition-related intangibles, net



1,583



1,902

Deferred income taxes



201



180

Capitalized software licenses, net



46



83

Overfunded retirement plans



85



127

Other assets



62



233

Total assets


$

16,230


$

17,372








Liabilities and stockholders' equity







Current liabilities:







Current portion of long-term debt


$

1,000


$

1,001

Accounts payable



386



437

Accrued compensation



664



651

Income taxes payable



95



71

Accrued expenses and other liabilities



410



498

Total current liabilities



2,555



2,658

Long-term debt



3,120



3,630

Underfunded retirement plans



196



225

Deferred income taxes



37



64

Deferred credits and other liabilities



376



405

Total liabilities



6,284



6,982

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

Paid-in capital



1,629



1,368

Retained earnings



31,176



29,653

Treasury common stock at cost







Shares: 2015 – 729,547,527; 2014 – 694,189,127



(24,068)



(21,840)

Accumulated other comprehensive income (loss), net of taxes (AOCI)



(532)



(532)

Total stockholders' equity



9,946



10,390

Total liabilities and stockholders' equity


$

16,230


$

17,372

 

As of December 31, 2015, we elected to early adopt and retrospectively apply two new accounting standards that require reclassification on our Consolidated Balance Sheets of: (1) deferred income taxes from current to noncurrent accounts, and (2) debt issuance costs from Other assets to Long-term debt. We have reclassified these amounts in the prior periods' financial statements to conform to the 2015 presentation.

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Millions of dollars)




For Three Months Ended


For Years Ended



December 31,


December 31,



2015


2014


2015


2014

Cash flows from operating activities













Net income


$

836


$

825


$

2,986


$

2,821

Adjustments to Net income:













Depreciation



172



211



766



850

Amortization of acquisition-related intangibles



79



80



319



321

Amortization of capitalized software



10



14



48



59

Stock-based compensation



58



60



286



277

Gains on sales of assets



(82)



(29)



(85)



(73)

Deferred income taxes



51



23



(55)



(61)

Increase (decrease) from changes in:













Accounts receivable



318



223



77



(49)

Inventories



80



(33)



93



(53)

Prepaid expenses and other current assets



5



(16)



94



65

Accounts payable and accrued expenses



2



30



(188)



(194)

Accrued compensation



44



38



7



89

Income taxes payable



(10)



9



11



(81)

Changes in funded status of retirement plans



(88)



(131)



(23)



(58)

Other



(45)



(32)



(68)



(21)

Cash flows from operating activities



1,430



1,272



4,268



3,892














Cash flows from investing activities













Capital expenditures



(164)



(125)



(551)



(385)

Proceeds from asset sales



100



96



110



142

Purchases of short-term investments



(1,054)



(937)



(2,767)



(3,107)

Proceeds from short-term investments



437



475



2,892



2,966

Other



6





14



7

Cash flows from investing activities



(675)



(491)



(302)



(377)














Cash flows from financing activities













Proceeds from issuance of debt







498



498

Repayment of debt







(1,000)



(1,000)

Dividends paid



(386)



(356)



(1,444)



(1,323)

Stock repurchases



(627)



(698)



(2,741)



(2,831)

Proceeds from common stock transactions



110



140



442



616

Excess tax benefit from share-based payments



15



25



83



100

Other





1



(3)



(3)

Cash flows from financing activities



(888)



(888)



(4,165)



(3,943)














Net change in Cash and cash equivalents



(133)



(107)



(199)



(428)

Cash and cash equivalents at beginning of period



1,133



1,306



1,199



1,627

Cash and cash equivalents at end of period


$

1,000


$

1,199


$

1,000


$

1,199

 

4Q15 segment results

Amounts are in millions of dollars.



4Q15


4Q14

Change

Analog:






Revenue


$   2,073


$   2,123

-2%

Operating profit


$      787


$      822

-4%

Embedded Processing:






Revenue


$      700


$      670

4%

Operating profit


$      164


$      114

44%

Other:






Revenue


$      416


$      476

-13%

Operating profit*


$      191


$      164

16%

 

* Includes Acquisition charges and Restructuring charges/other.

 

Compared with the year-ago quarter:

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

Embedded Processing:  (includes Microcontrollers, Processors and Connectivity)

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

Year 2015 segment results

Amounts are in millions of dollars.



2015


2014

Change

Analog:






Revenue


$   8,339


$   8,104

3%

Operating profit


$   3,048


$   2,786

9%

Embedded Processing:






Revenue


$   2,787


$   2,740

2%

Operating profit


$      596


$      384

55%

Other:






Revenue


$   1,874


$   2,201

-15%

Operating profit*


$      630


$      777

-19%

 

* Includes Acquisition charges and Restructuring charges/other.

 

Compared with the prior year:

Non-GAAP financial information 

This release includes references to free cash flow and 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, Cash flows from operating activities (also referred to as cash flow from operations).

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

Reconciliation to the most directly comparable GAAP-based measures is provided in the table below.

Amounts are in millions of dollars.




For Years Ended





December 31,





2015


2014


Change

Cash flow from operations (GAAP)


$

4,268


$

3,892


10%

Capital expenditures



(551)



(385)



Free cash flow (non-GAAP)


$

3,717


$

3,507


6%










Revenue


$

13,000


$

13,045












Cash flow from operations as a percent of revenue (GAAP)



32.8%



29.8%



Free cash flow as a percent of revenue (non-GAAP)



28.6%



26.9%



 

Notice regarding forward-looking statements

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, 2014. The forward-looking statements included in this release are made only as of the date of this release. TI undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or risks. If we do update any forward-looking statement, you should not infer that we will make additional updates with respect to that statement or any other forward-looking statement.

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-G

 

To view the original version on PR Newswire, visit: http://www.prnewswire.com/news-releases/ti-reports-4q15-and-2015-financial-results-and-shareholder-returns-300210918.html

SOURCE Texas Instruments Incorporated

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Texas Instruments Incorporated
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