DALLAS, Oct. 19 /PRNewswire-FirstCall/ -- Texas Instruments Incorporated (TI) today announced third-quarter revenue of $2.88 billion, net income of $538 million and earnings per share (EPS) of $0.42.
"Our performance in the quarter exceeded our expectations and was led by a second consecutive quarter of 20-percent growth in Analog," said Rich Templeton, TI chairman, president and CEO. "We are encouraged with the strong sequential increase in demand for our products over the past two quarters as our customers are winding down their inventory corrections and have begun to increase production levels in their factories. This revenue growth, combined with our early actions to pare costs so that we would not be dependent upon an uncertain rebound in the overall economy, has resulted in solid improvements in our profitability.
"Our balance sheet is strong and has allowed us to opportunistically make investments in Analog and Embedded Processing throughout this downturn that should provide returns for years to come. For example, we are increasing our investments in manufacturing capacity to support higher levels of growth, including start-up of the world's first facility to produce analog chips on 300-millimeter wafers. Applying advanced manufacturing technology to analog at an attractive cost will give TI an opportunity to accelerate our strategy and extend our leadership.
"Although we still have much work to do, our progress has been good." 3Q09 financial summary ---------------------- Amounts are in millions of dollars, except per-share amounts. 3Q09 3Q08 vs. 3Q08 2Q09 vs. 2Q09 ---- ---- -------- ---- -------- Revenue: $2880 $3387 -15% $2457 17% Operating profit: $ 763 $ 746 2% $ 343 122% Net income: $ 538 $ 563 -4% $ 260 107% Earnings per share: $0.42 $0.43 -2% $0.20 110% Cash flow from operations: $ 834 $1046 -20% $ 557 50%
TI's revenue declined 15 percent compared with the third quarter of 2008 and increased 17 percent compared with the second quarter of 2009. The decline from a year ago was the result of declines across all segments, particularly the Wireless segment. The increase from the prior quarter was due to growth in all segments, particularly the Analog segment.
Despite revenue that was $507 million lower compared with the year-ago quarter, TI's operating profit grew $17 million primarily due to lower operating expenses, as well as lower manufacturing costs. Operating profit increased $420 million compared with the second quarter primarily due to higher revenue and the associated gross profit. Operating profit increased from the prior quarter in all segments.
3Q09 segment results -------------------- 3Q09 3Q08 vs. 3Q08 2Q09 vs. 2Q09 Note ---- ---- -------- ---- -------- ---- Analog: Revenue $1184 $1289 -8% $983 20% (1) Operating profit $ 306 $ 274 12% $ 96 219% Embedded Processing: Revenue $ 393 $ 427 -8% $350 12% (2) Operating profit $ 75 $ 73 3% $ 28 168% Wireless: Revenue $ 675 $ 915 -26% $601 12% (3) Operating profit $ 110 $ 155 -29% $ 58 90% Other: Revenue $ 628 $ 756 -17% $523 20% (4) Operating profit $ 272 $ 244 11% $161 69% The product categories in each segment are as follows: -- Analog: high-volume analog&logic, high-performance analog (includes data converters, amplifiers and interface products) and power management -- Embedded Processing: DSPs and microcontrollers used in catalog, communications infrastructure and automotive applications -- Wireless: DSPs and analog used in basebands for handsets, OMAP(TM) applications processors and connectivity products for wireless applications -- Other: includes DLP(R) products, calculators, ASIC products, RISC microprocessors and royalties (1) The decline in Analog revenue from a year ago was due to lower high- volume analog&logic and high-performance analog revenue. Power management revenue increased slightly. The increase in Analog revenue from the prior quarter was due to growth in all three product categories. (2) The decline in Embedded Processing revenue from a year ago was due to lower revenue from catalog, communications infrastructure and automotive products. The increase in Embedded Processing revenue from the prior quarter was primarily due to higher catalog product revenue, while automotive product revenue grew by a lesser amount and communications infrastructure product revenue was even. (3) Wireless revenue declined from a year ago due to lower baseband revenue. Revenue from OMAP applications processors also declined, although by a lesser amount, while revenue from connectivity products increased. Wireless revenue increased from the prior quarter primarily due to higher revenue from baseband products, and by a lesser amount, increased revenue from connectivity products and OMAP applications processors. (4) Other revenue decreased from a year ago due to declines in RISC microprocessors, DLP products, ASIC products, royalties and calculators. Other revenue increased from the prior quarter due to a seasonal increase in calculators, as well as higher revenue from DLP products, royalties and ASIC products. Revenue from RISC microprocessors declined from the prior quarter.
From a year ago, operating profit increased in the Analog segment primarily due to operating expense reductions, as well as higher gross profit. Operating profit in the Embedded Processing and Other segments increased due to operating expense reductions. Operating profit in the Wireless segment declined due to lower gross profit, which was partially offset by lower operating expenses.
Compared with the prior quarter, operating profit increased in the Analog, Embedded Processing and Other segments due to higher gross profit. Operating profit increased in the Wireless segment primarily due to the combination of higher gross profit and lower restructuring charges.
Restructuring charges were as follows: 3Q09 3Q08 2Q09 ---- ---- ---- Analog: $ 4 $-- $35 Embedded Processing: $ 2 $-- $18 Wireless: $ 3 $-- $23 Other: $ 1 $-- $ 9 Total: $10 $-- $85 3Q09 additional financial information -- Orders were $3.11 billion, down 4 percent from a year ago but up 11 percent from the prior quarter. -- Inventory was $1.12 billion, down $459 million from a year ago and up $53 million from the prior quarter. -- Capital expenditures were $226 million in the quarter, an increase from $197 million in the year-ago quarter and an increase from $47 million in the prior quarter. -- TI used $251 million in the quarter to repurchase 10.5 million shares of its common stock and paid dividends of $138 million. -- Cash and cash equivalents plus short-term investments increased to $2.83 billion at the end of the quarter. Outlook For the fourth quarter of 2009, TI expects: -- Revenue: $2.78 - 3.02 billion -- Earnings per share: $0.42 - 0.50
The EPS estimate includes a negative impact of $0.01 per share resulting from restructuring charges.
TI will update its fourth-quarter outlook on December 8, 2009. For the full year of 2009, TI expects approximately the following: -- R&D expense: $1.5 billion -- Capital expenditures: $800 million, up from the prior expectation of $300 million -- Depreciation: $900 million -- Annual effective tax rate: 28%, up from the prior expectation of 27% TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES Consolidated Statements of Income (Millions of dollars, except share and per-share amounts) For Three Months Ended ---------------------- Sept. 30, Sept. 30, June 30, 2009 2008 2009 ----- ----- ----- Revenue $2,880 $3,387 $2,457 Cost of revenue 1,399 1,744 1,333 ----- ----- ----- Gross profit 1,481 1,643 1,124 Research and development (R&D) 368 507 369 Selling, general and administrative (SG&A) 340 390 327 Restructuring expense 10 -- 85 ----- ----- ----- Operating profit 763 746 343 Other income (expense) net 2 10 13 ----- ----- ----- Income before income taxes 765 756 356 Provision for income taxes 227 193 96 ----- ----- ----- Net income $ 538 $ 563 $ 260 ===== ===== ===== Earnings per common share: Basic $ .42 $ .43 $ .20 ===== ===== ===== Diluted $ .42 $ .43 $ .20 ===== ===== ===== Average shares outstanding (millions): Basic 1,255 1,304 1,267 ===== ===== ===== Diluted 1,268 1,315 1,272 ===== ===== ===== Cash dividends declared per share of common stock $ .11 $ .10 $ .11 ===== ===== ===== Percentage of revenue: Gross profit 51.4% 48.5% 45.7% R&D 12.7% 15.0% 15.0% SG&A 11.8% 11.5% 13.3% Operating profit 26.5% 22.0% 14.0% TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES Consolidated Balance Sheets (Millions of dollars, except share amounts) Sept. 30, Sept. 30, June 30, 2009 2008 2009 ----- ----- ----- Assets Current assets: Cash and cash equivalents $ 1,294 $ 1,715 $ 1,765 Short-term investments 1,533 278 792 Accounts receivable, net of allowances of ($22), ($28) and ($23) 1,435 1,774 1,244 Raw materials 89 103 81 Work in process 767 982 699 Finished goods 260 490 283 ----- ----- ----- Inventories 1,116 1,575 1,063 ----- ----- ----- Deferred income taxes 592 679 668 Prepaid expenses and other current assets 168 191 208 ----- ----- ----- Total current assets 6,138 6,212 5,740 ----- ----- ----- Property, plant and equipment at cost 6,599 7,499 6,739 Less accumulated depreciation (3,654) (3,982) (3,799) ----- ----- ----- Property, plant and equipment, net 2,945 3,517 2,940 ----- ----- ----- Long-term investments 627 717 632 Goodwill 926 840 926 Acquisition-related intangibles 138 99 150 Deferred income taxes 928 688 909 Capitalized software licenses, net 124 202 140 Overfunded retirement plans 20 137 20 Other assets 57 54 53 ----- ----- ----- Total assets $11,903 $12,466 $11,510 ======= ======= ======= Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 467 $ 601 $ 421 Accrued expenses and other liabilities 959 976 931 Income taxes payable 148 35 56 Accrued profit sharing and retirement 88 126 60 ----- ----- ----- Total current liabilities 1,662 1,738 1,468 ----- ----- ----- Underfunded retirement plans 464 186 502 Deferred income taxes 60 52 54 Deferred credits and other liabilities 279 396 273 ----- ----- ----- Total liabilities 2,465 2,372 2,297 ----- ----- ----- 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: Sept. 30, 2009 -- 1,739,770,537; Sept. 30, 2008 -- 1,739,717,573; June 30, 2009 -- 1,739,734,081 1,740 1,740 1,740 Paid-in capital 1,071 973 1,045 Retained earnings 21,562 21,204 21,163 Less treasury common stock at cost: Shares: Sept. 30, 2009 -- 486,897,139; Sept. 30, 2008 -- 443,292,628; June 30, 2009 -- 478,309,646 (14,257) (13,481) (14,061) Accumulated other comprehensive income (loss), net of taxes (678) (342) (674) ----- ----- ----- Total stockholders' equity 9,438 10,094 9,213 ----- ------ ----- Total liabilities and stockholders' equity $11,903 $12,466 $11,510 ======= ======= ======= TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES Consolidated Statements of Cash Flows (Millions of dollars) For Three Months Ended ---------------------- Sept. 30, Sept. 30, June 30, 2009 2008 2009 ---- ---- ---- Cash flows from operating activities: Net income $ 538 $ 563 $ 260 Adjustments to net income: Depreciation 217 252 221 Stock-based compensation 46 53 47 Amortization of acquisition-related intangibles 12 9 12 Deferred income taxes 71 (78) 6 Increase (decrease) from changes in: Accounts receivable (186) 36 (116) Inventories (53) 76 37 Prepaid expenses and other current assets 31 50 (15) Accounts payable and accrued expenses 54 (24) 101 Income taxes payable 94 41 (52) Accrued profit sharing and retirement 28 25 26 Other (18) 43 30 ---- ---- ---- Net cash provided by operating activities 834 1,046 557 ---- ----- ---- Cash flows from investing activities: Additions to property, plant and equipment (226) (197) (47) Purchases of short-term investments (879) -- (343) Sales and maturities of short-term investments 139 49 544 Purchases of long-term investments -- (3) (3) Redemptions and sales of long-term investments 16 32 43 Acquisitions, net of cash acquired -- -- (51) ----- ----- ----- Net cash (used in) provided by investing activities (950) (119) 143 ----- ----- ----- Cash flows from financing activities: Dividends paid (138) (131) (139) Sales and other common stock transactions 34 30 19 Excess tax benefit from share-based payments -- 1 -- Stock repurchases (251) (429) (251) ----- ----- ----- Net cash used in financing activities (355) (529) (371) ----- ----- ----- Net (decrease) increase in cash and cash equivalents (471) 398 329 Cash and cash equivalents, beginning of period 1,765 1,317 1,436 ----- ----- ----- Cash and cash equivalents, end of period $1,294 $1,715 $1,765 ====== ====== ====== Certain amounts in prior periods' financial statements have been reclassified to conform to the current presentation.
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