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TI reports 1Q16 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 first-quarter revenue of $3.01 billion, net income of $668 million and earnings per share of 65 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 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. 



1Q16

1Q15

Change

Revenue


$   3,008

$   3,150

-5%

Operating profit


$      968

$      958

1%

Net income


$      668

$      656

2%

Earnings per share


$     0.65

$     0.61

7%

 

Cash generation

Amounts are in millions of dollars.




Trailing 12 Months



1Q16

1Q16

1Q15

Change

Cash flow from operations


$   547

$   4,206

$   4,039

4%

Capital expenditures


$   124

$      552

$      431

28%

Free cash flow


$   423

$   3,654

$   3,608

1%

Free cash flow % of revenue



28.4%

27.3%


 

Capital expenditures for the past 12 months were 4 percent of revenue, consistent with TI's long-term expectations.

Cash return

Amounts are in millions of dollars.




Trailing 12 Months



1Q16

1Q16

1Q15

Change

Dividends paid


$     383

$   1,471

$   1,354

9%

Stock repurchases


$     630

$   2,701

$   2,781

-3%

Total cash returned


$  1,013

$   4,172

$   4,135

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




March 31,




2016


2015


Revenue


$

3,008


$

3,150


Cost of revenue (COR)



1,184



1,334


Gross profit



1,824



1,816


Research and development (R&D)



326



338


Selling, general and administrative (SG&A)



448



439


Acquisition charges



80



83


Restructuring charges/other



2



(2)


Operating profit



968



958


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



4



4


Interest and debt expense



22



22


Income before income taxes



950



940


Provision for income taxes



282



284


Net income


$

668


$

656










Diluted earnings per common share


$

.65


$

.61










Average diluted shares outstanding (millions)



1,018



1,061










Cash dividends declared per common share


$

.38


$

.34










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


$

668


$

656


Income allocated to RSUs



(9)



(9)


Income allocated to common stock for diluted EPS


$

659


$

647


 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheets

(Millions of dollars, except share amounts)




March 31,



2016


2015

Assets







Current assets:







Cash and cash equivalents


$

1,281


$

1,242

Short-term investments



1,519



2,062

Accounts receivable, net of allowances of ($11) and ($12)



1,269



1,394

Raw materials



105



107

Work in process



888



906

Finished goods



812



831

Inventories



1,805



1,844

Prepaid expenses and other current assets



785



810

Total current assets



6,659



7,352

Property, plant and equipment at cost



5,290



6,177

Accumulated depreciation



(2,736)



(3,419)

Property, plant and equipment, net



2,554



2,758

Long-term investments



220



232

Goodwill, net



4,362



4,362

Acquisition-related intangibles, net



1,503



1,822

Deferred income taxes



175



170

Capitalized software licenses, net



53



73

Overfunded retirement plans



84



128

Other assets



76



95

Total assets


$

15,686


$

16,992








Liabilities and stockholders' equity







Current liabilities:







Current portion of long-term debt


$

1,249


$

1,000

Accounts payable



387



432

Accrued compensation



340



349

Income taxes payable



67



75

Accrued expenses and other liabilities



377



426

Total current liabilities



2,420



2,282

Long-term debt



2,869



3,628

Underfunded retirement plans



195



253

Deferred income taxes



38



63

Deferred credits and other liabilities



382



397

Total liabilities



5,904



6,623

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



1,558



1,410

Retained earnings



31,457



29,948

Treasury common stock at cost







Shares: March 31, 2016 – 734,244,179; March 31, 2015 – 696,401,920



(24,443)



(22,199)

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



(531)



(531)

Total stockholders' equity



9,782



10,369

Total liabilities and stockholders' equity


$

15,686


$

16,992

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Millions of dollars)




For Three Months Ended



March 31,



2016


2015

Cash flows from operating activities







Net income


$

668


$

656

Adjustments to Net income:







Depreciation



161



203

Amortization of acquisition-related intangibles



80



80

Amortization of capitalized software



8



13

Stock-based compensation



72



78

Gains on sales of assets





(1)

Deferred income taxes



24



1

Increase (decrease) from changes in:







Accounts receivable



(100)



(154)

Inventories



(114)



(60)

Prepaid expenses and other current assets



43



54

Accounts payable and accrued expenses



(104)



(108)

Accrued compensation



(322)



(294)

Income taxes payable



131



147

Changes in funded status of retirement plans



18



19

Other



(18)



(25)

Cash flows from operating activities



547



609








Cash flows from investing activities







Capital expenditures



(124)



(123)

Proceeds from asset sales





1

Purchases of short-term investments



(200)



(335)

Proceeds from short-term investments



900



615

Other



(3)



Cash flows from investing activities



573



158








Cash flows from financing activities







Dividends paid



(383)



(356)

Stock repurchases



(630)



(670)

Proceeds from common stock transactions



131



246

Excess tax benefit from share-based payments



43



56

Cash flows from financing activities



(839)



(724)








Net change in Cash and cash equivalents



281



43

Cash and cash equivalents at beginning of period



1,000



1,199

Cash and cash equivalents at end of period


$

1,281


$

1,242

 

1Q16 segment results

Amounts are in millions of dollars.



1Q16


1Q15


Change

Analog:







Revenue


$   1,879


$   2,035


-8%

Operating profit


$      679


$      721


-6%

Embedded Processing:







Revenue


$      729


$      672


8%

Operating profit


$      182


$      123


48%

Other:







Revenue


$      400


$      443


-10%

Operating profit*


$      107


$      114


-6%


* 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)

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 12 Months Ended





March 31,





2016


2015


Change

Cash flow from operations (GAAP)


$

4,206


$

4,039


4%

Capital expenditures



(552)



(431)



Free cash flow (non-GAAP)


$

3,654


$

3,608


1%










Revenue


$

12,858


$

13,212












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



32.7%



30.6%



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



28.4%



27.3%



 

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, 2015. The forward-looking statements included in this release are made only as of the date of this release, and we undertake 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-G

 

To view the original version on PR Newswire, visit: http://www.prnewswire.com/news-releases/ti-reports-1q16-financial-results-and-shareholder-returns-300258785.html

SOURCE Texas Instruments Incorporated

Contact:
Texas Instruments Incorporated
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