TI reports financial results for 1Q08 |
| Texas Instruments Logo. (PRNewsFoto/Texas Instruments Incorporated)
DALLAS, TX UNITED STATES | |||
- Revenue is $3.27 billion
- EPS is $0.49, including discrete tax items of $0.06
- High-performance analog revenue up 20 percent from year ago
Conference call on TI web site at 4:30 p.m. Central time today http://www.ti.com
Except as noted, financial results are for continuing operations. The sale
of TI's former Sensors & Controls business was completed on April 27, 2006,
and that business is reported as a discontinued operation.
DALLAS, April 21 /PRNewswire-FirstCall/ -- Financial results from Texas
Instruments Incorporated (TI) (NYSE: TXN) for the first quarter reflect the
company's strengthening position in the market for analog semiconductors.
TI revenue was up 3 percent from the year-ago quarter, led by 20
percent growth in high-performance analog semiconductors. TI's operating
profit grew 19 percent. "Analog is making us stronger and will be a great
growth opportunity for a very long time. Analog goes into almost every
piece of electronic equipment that is made, and at TI we have the
technology and the manufacturing power to serve much more of this market
than we are addressing today. There also are clear benefits to our
operating profit, which has grown faster than revenue, and to our cash
flow, which we can return to shareholders or reinvest in growth," said Rich
Templeton, TI's chairman, president and CEO.
Compared with the fourth quarter, TI revenue declined 8 percent
primarily due to weaker sales into cell phones, especially high-end cell
phones. "Given uncertainty in the near-term economy, we have become more
conservative with our outlook for the second quarter. More strategically,
we believe our long- term opportunity is excellent. We're continuing to do
the things needed to be the better choice for our customers, such as adding
sales and applications engineers, investing in new products, and increasing
assembly/test capability," Templeton said.
"In addition to traditional markets in communications and
entertainment, analog semiconductors and digital signal processors are at
the heart of solving some of the world's most challenging problems in
healthcare, energy and security. We've achieved early positions in each of
these, all of which are just beginning to leverage semiconductor
technology," Templeton said.
TI financial results
-- Revenue was $3.27 billion, up $81 million, or 3 percent, from a year
ago. Compared with the prior quarter, revenue decreased $284 million,
or 8 percent.
-- Gross profit was $1.76 billion, or 53.7 percent of revenue. This was
up $119 million from a year ago. Gross profit declined $170 million
from the prior quarter.
-- Operating expenses were $514 million for research and development (R&D)
and $435 million for selling, general and administrative (SG&A). R&D
expense decreased $38 million from a year ago as the company continues
to benefit from its collaborative work with foundries on advanced
digital process technologies. R&D expense was about the same as the
prior quarter. SG&A expense increased $30 million from the year-ago
quarter primarily due to higher investments in field sales and customer
support, especially for emerging regions. SG&A expense increased
$13 million from the prior quarter.
-- Operating profit was $807 million, or 24.7 percent of revenue. This
was an increase of $127 million from the year-ago quarter. Operating
profit decreased $189 million from the prior quarter.
-- Other income was $33 million. This was down $6 million from the
year-ago quarter and down $13 million from the prior quarter due to
lower interest income.
-- Income from continuing operations was $662 million, including a
discrete tax benefit of $81 million associated with the company's
decision to indefinitely reinvest the accumulated earnings of a
non-U.S. subsidiary. Income from continuing operations increased
$146 million from the year-ago quarter and declined $91 million from
the prior quarter.
-- Earnings per share (EPS) were $0.49 and included a discrete tax benefit
of $0.06. EPS increased $0.14 from the year-ago quarter and decreased
$0.05 from the prior quarter.
-- Orders were $3.32 billion. This was an increase of $111 million from
the year-ago quarter and a decline of $164 million from the prior
quarter.
-- Cash flow from operations was $641 million, an increase of $87 million
from a year ago and a decrease of $781 million from the prior quarter.
-- Accounts receivable were $1.67 billion at the end of the quarter. This
was a decrease of $87 million from the year-ago quarter and a decrease
of $73 million from the prior quarter. Days sales outstanding were 46
at the end of the quarter compared with 50 a year ago and 44 at the end
of the prior quarter.
-- Inventory was $1.58 billion at the end of the quarter. This was
$169 million higher than the year-ago quarter and $160 million higher
than the prior quarter. Days of inventory at the end of the first
quarter were 94, up 12 days from a year ago and up 16 days from the
prior quarter.
-- Capital spending totaled $219 million. Depreciation was $241 million.
-- Total cash (cash and cash equivalents plus short-term investments) was
$1.88 billion at the end of the quarter. This was $1.46 billion lower
than a year ago and $1.05 billion lower than the prior quarter. The
company reduced its holdings of auction-rate securities, which are
based on pools of student loans that are guaranteed by the U.S.
Department of Education, by $473 million from the end of the prior
quarter. As of the end of the first quarter, TI reclassified its
remaining auction-rate securities, which have a fair value of
$551 million, from short-term investments to long-term investments due
to reduced liquidity for these securities. The company used
$874 million in the quarter to repurchase 28.6 million shares of its
common stock and paid dividends of $133 million.
Outlook
For the second quarter of 2008, TI currently expects its financial
results to fall within the following ranges:
Total TI revenue: $3.24 - 3.50 billion
Semiconductor revenue: $3.08 - 3.32 billion
Education Technology revenue: $160 - 180 million
EPS: $0.42 - 0.48
The company will update its second-quarter outlook on June 9, 2008.
For the full year 2008, TI continues to expect the following:
R&D expense: $2.0 billion
Capital expenditures: $0.9 billion
Depreciation: $1.0 billion
Annual effective tax rate: 31%
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Income
(Millions of dollars, except share and per-share amounts)
For Three Months Ended
Mar. 31, Dec. 31, Mar. 31,
2008 2007 2007
Net revenue $3,272 $3,556 $3,191
Cost of revenue 1,516 1,630 1,554
Gross profit 1,756 1,926 1,637
Research and development (R&D) 514 508 552
Selling, general and administrative (SG&A) 435 422 405
Total operating costs and expenses 2,465 2,560 2,511
Profit from operations 807 996 680
Other income (expense) net 33 46 39
Income from continuing operations before
income taxes 840 1,042 719
Provision for income taxes 178 289 203
Income from continuing operations 662 753 516
Income from discontinued operations, net
of taxes -- 3 --
Net income $ 662 $ 756 $ 516
Basic earnings per common share:
Income from continuing operations $ .50 $ .55 $ .36
Net income $ .50 $ .55 $ .36
Diluted earnings per common share:
Income from continuing operations $ .49 $ .54 $ .35
Net income $ .49 $ .54 $ .35
Average shares outstanding (millions):
Basic 1,327 1,372 1,442
Diluted 1,347 1,399 1,470
Cash dividends declared per share of common
stock $ .10 $ .10 $ .04
Percentage of revenue:
Gross profit 53.7% 54.2% 51.3%
R&D 15.7% 14.3% 17.3%
SG&A 13.3% 11.9% 12.7%
Operating profit 24.7% 28.0% 21.3%
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
(Millions of dollars, except share amounts)
Mar. 31, Dec. 31, Mar. 31,
2008 2007 2007
Assets
Current assets:
Cash and cash equivalents $ 1,450 $ 1,328 $ 965
Short-term investments 426 1,596 2,371
Accounts receivable, net of allowances
of ($25), ($26) and ($25) 1,669 1,742 1,756
Raw materials 111 105 114
Work in process 943 876 879
Finished goods 524 437 416
Inventories 1,578 1,418 1,409
Deferred income taxes 659 654 1,071
Prepaid expenses and other current assets 193 180 261
Total current assets 5,975 6,918 7,833
Property, plant and equipment at cost 7,493 7,568 7,715
Less accumulated depreciation (3,908) (3,959) (3,835)
Property, plant and equipment, net 3,585 3,609 3,880
Long-term investments 791 267 250
Goodwill 838 838 792
Acquisition-related intangibles 105 115 131
Deferred income taxes 618 510 436
Capitalized software licenses, net 225 227 280
Overfunded retirement plans 122 105 54
Other assets 79 78 94
Total assets $ 12,338 $ 12,667 $ 13,750
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ -- $ -- $ 43
Accounts payable 680 657 550
Accrued expenses and other liabilities 871 1,117 877
Income taxes payable 218 53 286
Accrued profit sharing and retirement 79 198 51
Total current liabilities 1,848 2,025 1,807
Underfunded retirement plans 191 184 197
Deferred income taxes 60 49 10
Deferred credits and other liabilities 382 434 453
Total liabilities 2,481 2,692 2,467
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:
March 31, 2008 -- 1,739,660,927; Dec.
31, 2007 -- 1,739,632,601; March 31,
2007 -- 1,739,211,844 1,740 1,740 1,739
Paid-in capital 926 931 822
Retained earnings 20,318 19,788 18,017
Less treasury common stock at cost:
Shares: March 31, 2008 -- 416,925,336;
Dec. 31, 2007 -- 396,421,798; March 31,
2007 -- 305,502,566 (12,776) (12,160) (8,940)
Accumulated other comprehensive loss,
net of taxes (351) (324) (355)
Total stockholders' equity 9,857 9,975 11,283
Total liabilities and stockholders'
equity $ 12,338 $ 12,667 $ 13,750
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Millions of dollars)
For Three Months Ended
Mar. 31, Dec. 31, Mar. 31,
2008 2007 2007
Cash flows from operating activities:
Net income $ 662 $ 756 $ 516
Adjustments to reconcile net income to
cash provided by operating activities of
continuing operations:
(Income) from discontinued operations -- (3) --
Depreciation 241 253 252
Stock-based compensation 54 67 78
Amortization of acquisition-related
intangibles 10 10 14
Losses on sales of assets 6 -- --
Deferred income taxes (74) 4 (3)
Increase (decrease) from changes in:
Accounts receivable 89 284 17
Inventories (160) 32 28
Prepaid expenses and other current assets (46) 26 (79)
Accounts payable and accrued expenses (179) (20) (167)
Income taxes payable 165 (47) 33
Accrued profit sharing and retirement (122) 52 (111)
Excess tax benefit from share-based payments (13) (10) (34)
Change in funded status of retirement plans
and accrued retirement (4) (3) 1
Other 12 21 9
Net cash provided by operating activities of
continuing operations 641 1,422 554
Cash flows from investing activities:
Additions to property, plant and equipment (219) (181) (179)
Purchases of cash investments (362) (794) (846)
Sales and maturities of cash investments 958 2,067 1,011
Purchases of long-term investments (2) (4) (5)
Sales of long-term investments 16 2 2
Acquisitions, net of cash acquired -- (56) (27)
Net cash provided by (used in) investing
activities of continuing operations 391 1,034 (44)
Cash flows from financing activities:
Dividends paid (133) (138) (58)
Sales and other common stock transactions 76 67 154
Excess tax benefit from share-based payments 13 10 34
Stock repurchases (874) (1,877) (857)
Net cash used in financing activities of
continuing operations (918) (1,938) (727)
Effect of exchange rate changes on cash 8 3 (1)
Net increase (decrease) in cash and cash
equivalents 122 521 (218)
Cash and cash equivalents, beginning of period 1,328 807 1,183
Cash and cash equivalents, end of period $ 1,450 $ 1,328 $ 965
Certain amounts in prior periods' financial statements have been
reclassified to conform to the current presentation.
Segment Net Revenue
(Millions of dollars)
For Three Months Ended
Mar. 31, Dec. 31, Mar. 31,
2008 2007 2007
Semiconductor $3,191 $3,475 $3,115
Education Technology 81 81 76
Total net revenue $3,272 $3,556 $3,191
Segment Profit (Loss)
(Millions of dollars)
For Three Months Ended
Mar. 31, Dec. 31, Mar. 31,
2008 2007 2007
Semiconductor $ 927 $1,117 $ 831
Education Technology 18 19 16
Corporate* (138) (140) (167)
Profit from operations $ 807 $ 996 $ 680
*Corporate includes stock-based compensation expense.
Semiconductor segment
-- Revenue was $3.19 billion. This was 2 percent higher than a year ago
primarily due to higher sales of analog products, especially
high-performance analog products. Revenue declined 8 percent from the
prior quarter primarily due to lower demand for digital signal
processing products sold into cell phone applications.
o Analog product revenue was $1.32 billion. This was up 6 percent
compared with a year ago due to stronger demand for high-performance
analog products. Revenue was down 4 percent from the prior quarter
primarily due to weaker demand for application-specific analog
products sold into hard-disk drive and cell phone applications.
Revenue from high-performance analog products increased 20 percent
from a year ago and was about even with the prior quarter.
o Digital signal processing product revenue was $1.12 billion. This
was a decrease of 3 percent from a year ago and a decrease of 18
percent from the prior quarter. Both declines were due to lower
sales into cell phone applications.
o TI's remaining semiconductor revenue was $754 million. This was up
6 percent from a year ago and was up 2 percent from the prior
quarter.
-- Gross profit was $1.73 billion, or 54.3 percent of revenue. This was
up $102 million, or 6 percent, from the year-ago quarter primarily due
to higher revenue from more-profitable analog products, and to a
lesser extent, from microcontrollers. Gross profit was down $165
million, or 9 percent, from the prior quarter due to lower revenue.
-- Operating profit for the first quarter was $927 million, or 29.0
percent of revenue. This was an increase of $96 million from the
year-ago quarter and a decrease of $190 million from the prior quarter.
-- Orders in the first quarter were $3.17 billion. This was up 3 percent
from the year-ago quarter and down 7 percent from the prior quarter.
Semiconductor highlights
-- TI introduced a family of analog front-end chips that enable superior
image quality and reduced power consumption in medical ultrasound
diagnostic equipment.
-- TI delivered the industry's first closed-loop, digital-input Class-D
audio amplifier that improves sound quality and lowers audio
subsystem costs in high-definition TVs and media docking stations.
-- TI demonstrated a prototype cell phone based on the Android open source
platform and built using TI's OMAP(TM) applications processor and
connectivity solutions.
Education Technology segment
-- Revenue was $81 million. This was an increase of $5 million, or
7 percent, from the year-ago quarter due to higher sales of graphing
calculators. Revenue was even with the prior quarter.
-- Gross profit was $49 million, or 60.5 percent of revenue. This was an
increase of $4 million from the year-ago quarter and was a decrease of
$1 million from the prior quarter.
-- Operating profit was $18 million, or 21.9 percent of revenue. This was
an increase of $2 million from the year-ago quarter and a decrease of
$1 million from the prior quarter.
"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:
-- Market demand for semiconductors, particularly for analog chips and
digital signal processors in key markets such as communications,
entertainment electronics and computing;
-- TI's ability to maintain or improve profit margins, including its
ability to utilize its manufacturing facilities at sufficient levels to
cover its fixed operating costs, in an intensely competitive and
cyclical industry;
-- TI's ability to develop, manufacture and market innovative products in
a rapidly changing technological environment;
-- TI's ability to compete in products and prices in an intensely
competitive industry;
-- TI's ability to maintain and enforce a strong intellectual property
portfolio and obtain needed licenses from third parties;
-- Expiration of license agreements between TI and its patent licensees,
and market conditions reducing royalty payments to TI;
-- Economic, social and political conditions in the countries in which TI,
its customers or its suppliers operate, including security risks,
health conditions, possible disruptions in transportation networks and
fluctuations in foreign currency exchange rates;
-- Natural events such as severe weather and earthquakes in the locations
in which TI, its customers or its suppliers operate;
-- Availability and cost of raw materials, utilities, manufacturing
equipment, third-party manufacturing services and manufacturing
technology;
-- Changes in the tax rate applicable to TI as the result of changes in
tax law, the jurisdictions in which profits are determined to be earned
and taxed, the outcome of tax audits and the ability to realize
deferred tax assets;
-- Losses or curtailments of purchases from key customers and the timing
and amount of distributor and other customer inventory adjustments;
-- Customer demand that differs from our forecasts;
-- The financial impact of inadequate or excess TI inventory that results
from demand that differs from projections;
-- TI's ability to access its bank accounts and lines of credit or
otherwise access the capital markets;
-- Product liability or warranty claims, claims based on epidemic or
delivery failure or recalls by TI customers for a product containing a
TI part;
-- TI's ability to recruit and retain skilled personnel; and
-- Timely implementation of new manufacturing technologies, installation
of manufacturing equipment and the ability to obtain needed third-party
foundry and assembly/test subcontract services.
For a more detailed discussion of these factors see the Risk Factors
discussion in Item 1A of our most recent Form 10-K. 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 (NYSE: TXN) helps customers solve problems and
develop new electronics that make the world smarter, healthier, safer,
greener and more fun. A global semiconductor company, TI innovates through
manufacturing, design and sales operations in more than 25 countries. For
more information, go to http://www.ti.com.
TI Trademark:
OMAP
Other trademarks are the property of their respective owners.
SOURCE Texas Instruments Incorporated
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CONTACT:
Media, Chris Rongone, +1-214-480-6868,
c-rongone@ti.com, or Renee Fancher, +1-214-567-7447,
rfancher@ti.com, or Investor Relations, Ron Slaymaker,
+1-214-480-6388, rslaymaker@ti.com, or Dave Pahl,
+1-214-480-4629, dpahl@ti.com, Scott Roller, +1-214-567-0288,
sroller@ti.com, all of Texas Instruments Incorporated
