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Texas Instruments 10-Q 2015

Documents found in this filing:

  1. 10-Q
  2. Ex-31.A
  3. Ex-31.B
  4. Ex-32.A
  5. Ex-32.B
  6. Ex-32.B
txn-10q_20150630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number 001-03761

 

TEXAS INSTRUMENTS INCORPORATED

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

 

 

Delaware

75-0289970

(State of Incorporation)

(I.R.S. Employer Identification No.)

 

 

 

 

12500 TI Boulevard, Dallas, Texas

75243

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code 214-479-3773

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

Large accelerated filer

x

 

Accelerated filer

¨

Non-accelerated filer

¨

(Do not check if a smaller reporting company)

Smaller reporting company

¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ¨    No  x

1,026,385,794

Number of shares of Registrant’s common stock outstanding as of

July 27, 2015

 

 

 

 


TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

 

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements.

Consolidated Statements of Income

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

 

 

 

For Three Months Ended

 

 

For Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Revenue

$

 

3,232

 

 

$

 

3,292

 

 

$

 

6,382

 

 

$

 

6,275

 

Cost of revenue (COR)

 

 

1,351

 

 

 

 

1,411

 

 

 

 

2,685

 

 

 

 

2,787

 

Gross profit

 

 

1,881

 

 

 

 

1,881

 

 

 

 

3,697

 

 

 

 

3,488

 

Research and development (R&D)

 

 

320

 

 

 

 

349

 

 

 

 

658

 

 

 

 

715

 

Selling, general and administrative (SG&A)

 

 

470

 

 

 

 

472

 

 

 

 

909

 

 

 

 

951

 

Acquisition charges

 

 

82

 

 

 

 

82

 

 

 

 

165

 

 

 

 

165

 

Restructuring charges/other

 

 

(1

)

 

 

 

(4

)

 

 

 

(3

)

 

 

 

(15

)

Operating profit

 

 

1,010

 

 

 

 

982

 

 

 

 

1,968

 

 

 

 

1,672

 

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

 

 

3

 

 

 

 

3

 

 

 

 

7

 

 

 

 

9

 

Interest and debt expense

 

 

24

 

 

 

 

24

 

 

 

 

46

 

 

 

 

49

 

Income before income taxes

 

 

989

 

 

 

 

961

 

 

 

 

1,929

 

 

 

 

1,632

 

Provision for income taxes

 

 

293

 

 

 

 

278

 

 

 

 

577

 

 

 

 

462

 

Net income

$

 

696

 

 

$

 

683

 

 

$

 

1,352

 

 

$

 

1,170

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share (EPS):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

 

.66

 

 

$

 

.63

 

 

$

 

1.28

 

 

$

 

1.07

 

Diluted

$

 

.65

 

 

$

 

.62

 

 

$

 

1.26

 

 

$

 

1.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares outstanding (millions):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

1,038

 

 

 

 

1,071

 

 

 

 

1,042

 

 

 

 

1,076

 

Diluted

 

 

1,051

 

 

 

 

1,086

 

 

 

 

1,056

 

 

 

 

1,091

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

$

 

.34

 

 

$

 

.30

 

 

$

 

.68

 

 

$

 

.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

$

 

696

 

 

$

 

683

 

 

$

 

1,352

 

 

$

 

1,170

 

Income allocated to RSUs

 

 

(10

)

 

 

 

(10

)

 

 

 

(19

)

 

 

 

(18

)

Income allocated to common stock for diluted EPS

$

 

686

 

 

$

 

673

 

 

$

 

1,333

 

 

$

 

1,152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2


TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

 

Consolidated Statements of Comprehensive Income

(Millions of dollars)

 

 

 

For Three Months Ended

 

 

For Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Net income

$

 

696

 

 

$

 

683

 

 

$

 

1,352

 

 

$

 

1,170

 

Other comprehensive income (loss), net of taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net actuarial gains (losses) of defined benefit plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments

 

 

 

 

 

 

(5

)

 

 

 

(10

)

 

 

 

(7

)

Recognized within Net income

 

 

17

 

 

 

 

11

 

 

 

 

27

 

 

 

 

21

 

Prior service cost of defined benefit plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recognized within Net income

 

 

 

 

 

 

1

 

 

 

 

1

 

 

 

 

1

 

Derivative instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recognized within Net income

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

1

 

Other comprehensive income (loss)

 

 

17

 

 

 

 

8

 

 

 

 

18

 

 

 

 

16

 

Total comprehensive income

$

 

713

 

 

$

 

691

 

 

$

 

1,370

 

 

$

 

1,186

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3


TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

 

Consolidated Balance Sheets

(Millions of dollars, except share amounts)

 

 

June 30,

 

 

December 31,

 

 

2015

 

 

2014

 

Assets

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

 

1,184

 

 

$

 

1,199

 

Short-term investments

 

 

2,122

 

 

 

 

2,342

 

Accounts receivable, net of allowances of ($17) and ($12)

 

 

1,434

 

 

 

 

1,246

 

Raw materials

 

 

112

 

 

 

 

101

 

Work in process

 

 

940

 

 

 

 

896

 

Finished goods

 

 

833

 

 

 

 

787

 

Inventories

 

 

1,885

 

 

 

 

1,784

 

Deferred income taxes

 

 

347

 

 

 

 

347

 

Prepaid expenses and other current assets

 

 

1,088

 

 

 

 

850

 

Total current assets

 

 

8,060

 

 

 

 

7,768

 

Property, plant and equipment at cost

 

 

6,097

 

 

 

 

6,266

 

Accumulated depreciation

 

 

(3,412

)

 

 

 

(3,426

)

Property, plant and equipment, net

 

 

2,685

 

 

 

 

2,840

 

Long-term investments

 

 

228

 

 

 

 

224

 

Goodwill, net

 

 

4,362

 

 

 

 

4,362

 

Acquisition-related intangibles, net

 

 

1,742

 

 

 

 

1,902

 

Deferred income taxes

 

 

169

 

 

 

 

172

 

Capitalized software licenses, net

 

 

63

 

 

 

 

83

 

Overfunded retirement plans

 

 

127

 

 

 

 

127

 

Other assets

 

 

96

 

 

 

 

244

 

Total assets

$

 

17,532

 

 

$

 

17,722

 

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

$

 

1,750

 

 

$

 

1,001

 

Accounts payable

 

 

417

 

 

 

 

437

 

Accrued compensation

 

 

481

 

 

 

 

651

 

Income taxes payable

 

 

117

 

 

 

 

71

 

Deferred income taxes

 

 

3

 

 

 

 

4

 

Accrued expenses and other liabilities

 

 

425

 

 

 

 

498

 

Total current liabilities

 

 

3,193

 

 

 

 

2,662

 

Long-term debt

 

 

3,134

 

 

 

 

3,641

 

Underfunded retirement plans

 

 

254

 

 

 

 

225

 

Deferred income taxes

 

 

355

 

 

 

 

399

 

Deferred credits and other liabilities

 

 

391

 

 

 

 

405

 

Total liabilities

 

 

7,327

 

 

 

 

7,332

 

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

 

 

1,504

 

 

 

 

1,368

 

Retained earnings

 

 

30,286

 

 

 

 

29,653

 

Treasury common stock at cost.

 

 

 

 

 

 

 

 

 

Shares: June 30, 2015 – 706,714,155; December 31, 2014 – 694,189,127

 

 

(22,812

)

 

 

 

(21,840

)

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

 

 

(514

)

 

 

 

(532

)

Total stockholders’ equity

 

 

10,205

 

 

 

 

10,390

 

Total liabilities and stockholders’ equity

$

 

17,532

 

 

$

 

17,722

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes.

 

 

 

 

 

 

 

 

 

 

 

 

 

4


TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

 

Consolidated Statements of Cash Flows

(Millions of dollars)

 

 

For Six Months Ended

 

 

June 30,

 

 

2015

 

 

2014

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

Net income

$

 

1,352

 

 

$

 

1,170

 

Adjustments to Net income:

 

 

 

 

 

 

 

 

 

Depreciation

 

 

401

 

 

 

 

426

 

Amortization of acquisition-related intangibles

 

 

160

 

 

 

 

161

 

Amortization of capitalized software

 

 

26

 

 

 

 

30

 

Stock-based compensation

 

 

162

 

 

 

 

155

 

Gains on sales of assets

 

 

(3

)

 

 

 

(39

)

Deferred income taxes

 

 

(56

)

 

 

 

(57

)

Increase (decrease) from changes in:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(194

)

 

 

 

(314

)

Inventories

 

 

(101

)

 

 

 

(13

)

Prepaid expenses and other current assets

 

 

49

 

 

 

 

(15

)

Accounts payable and accrued expenses

 

 

(142

)

 

 

 

(176

)

Accrued compensation

 

 

(169

)

 

 

 

(76

)

Income taxes payable

 

 

(78

)

 

 

 

(48

)

Changes in funded status of retirement plans

 

 

41

 

 

 

 

41

 

Other

 

 

(19

)

 

 

 

(8

)

Cash flows from operating activities

 

 

1,429

 

 

 

 

1,237

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(248

)

 

 

 

(157

)

Proceeds from asset sales

 

 

10

 

 

 

 

40

 

Purchases of short-term investments

 

 

(1,254

)

 

 

 

(1,466

)

Proceeds from short-term investments

 

 

1,475

 

 

 

 

2,079

 

Other

 

 

1

 

 

 

 

1

 

Cash flows from investing activities

 

 

(16

)

 

 

 

497

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

 

498

 

 

 

 

498

 

Repayment of debt

 

 

(250

)

 

 

 

(1,000

)

Dividends paid

 

 

(710

)

 

 

 

(648

)

Stock repurchases

 

 

(1,324

)

 

 

 

(1,463

)

Proceeds from common stock transactions

 

 

297

 

 

 

 

408

 

Excess tax benefit from share-based payments

 

 

64

 

 

 

 

64

 

Other

 

 

(3

)

 

 

 

(4

)

Cash flows from financing activities

 

 

(1,428

)

 

 

 

(2,145

)

 

 

 

 

 

 

 

 

 

 

Net change in Cash and cash equivalents

 

 

(15

)

 

 

 

(411

)

Cash and cash equivalents at beginning of period

 

 

1,199

 

 

 

 

1,627

 

Cash and cash equivalents at end of period

$

 

1,184

 

 

$

 

1,216

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes.

 

 

 

 

 

 

 

 

 

 

 

 

 

5


TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

 

Notes to financial statements

1. Description of business, including segment information

We design, make and sell semiconductors to electronics designers and manufacturers all over the world. We have two reportable segments, which are established along major categories of products as follows:

·

Analog – consists of the following product lines: High Volume Analog & Logic; Power Management; High Performance Analog; and Silicon Valley Analog, which consists primarily of products that we acquired through our purchase of National Semiconductor Corporation (National) in 2011.

·

Embedded Processing – consists of the following product lines: Processors, Microcontrollers and Connectivity.

We report the results of our remaining business activities in Other.

Segment information

 

 

For Three Months Ended

 

 

For Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Analog

$

 

2,049

 

 

$

 

1,995

 

 

$

 

4,084

 

 

$

 

3,832

 

Embedded Processing

 

 

690

 

 

 

 

703

 

 

 

 

1,362

 

 

 

 

1,359

 

Other

 

 

493