TI reports 2Q18 financial results and shareholder returns
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TI reports 2Q18 financial results and shareholder returns

Conference call on TI website at 3:30 p.m. Central time today

DALLAS, July 24, 2018 — (PRNewswire) —  Texas Instruments Incorporated (TI) (NASDAQ: TXN) reported second-quarter revenue of $4.02 billion, net income of $1.41 billion and earnings per share of $1.40. Earnings per share include a 3 cent discrete tax benefit not in the company's original guidance.

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

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

Earnings summary

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



2Q18


2Q17


Change

Revenue

$

4,017

$

3,693


9%

Operating profit

$

1,712

$

1,480


16%

Net income

$

1,405

$

1,056


33%

Earnings per share

$

1.40

$

1.03


36%

 

Cash generation

Amounts are in millions of dollars.






Trailing 12 Months




2Q18



2Q18



2Q17


Change

Cash flow from operations


$

1,826


$

6,589


$

4,564


44%

Capital expenditures


$

249


$

855


$

527


62%

Free cash flow


$

1,577


$

5,734


$

4,037


42%

Free cash flow % of revenue






36.6%



28.5%



 

Cash return

Amounts are in millions of dollars.






Trailing 12 Months




2Q18



2Q18



2Q17


Change

Dividends paid


$

606


$

2,323


$

1,879


24%

Stock repurchases


$

1,018


$

3,247


$

2,175


49%

Total cash returned


$

1,624


$

5,570


$

4,054


37%


 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Income

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




For Three Months Ended



June 30,



2018


2017

Revenue


$

4,017


$

3,693

Cost of revenue (COR)



1,398



1,319

Gross profit



2,619



2,374

Research and development (R&D)



384



378

Selling, general and administrative (SG&A)



441



434

Acquisition charges



79



79

Restructuring charges/other



3



3

Operating profit



1,712



1,480

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



24



26

Interest and debt expense



30



20

Income before income taxes



1,706



1,486

Provision for income taxes



301



430

Net income


$

1,405


$

1,056








Diluted earnings per common share


$

1.40


$

1.03








Average shares outstanding (millions):







Basic



977



994

Diluted



997



1,015








Cash dividends declared per common share


$

.62


$

.50









Supplemental Information

(Quarterly, except as noted)


Provision for income taxes is based on the following:


Operating taxes (calculated using the estimated annual effective tax rate)


$

344


$

458

Discrete tax items



(43)



(28)

Provision for income taxes (effective taxes)


$

301


$

430


Annual operating tax rate



20%



31%

Effective tax rate



18%



29%


A portion of Net income is allocated to unvested restricted stock units (RSUs) on which we pay dividend equivalents. Diluted EPS is calculated using the following:


Net income


$

1,405


$

1,056

Income allocated to RSUs



(11)



(10)

Income allocated to common stock for diluted EPS


$

1,394


$

1,046


 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheets

(Millions of dollars, except share amounts)




June 30,



2018


2017

Assets







Current assets:







Cash and cash equivalents


$

2,919


$

1,140

Short-term investments



2,211



1,844

Accounts receivable, net of allowances of ($9) and ($16)



1,551



1,469

Raw materials



155



109

Work in process



1,079



1,099

Finished goods



856



739

Inventories



2,090



1,947

Prepaid expenses and other current assets



821



1,111

Total current assets



9,592



7,511

Property, plant and equipment at cost



5,025



4,656

Accumulated depreciation



(2,170)



(2,142)

Property, plant and equipment



2,855



2,514

Long-term investments



271



250

Goodwill



4,362



4,362

Acquisition-related intangibles



787



1,105

Deferred tax assets



205



412

Capitalized software licenses



101



114

Overfunded retirement plans



205



99

Other long-term assets



149



71

Total assets


$

18,527


$

16,438








Liabilities and stockholders' equity







Current liabilities:







Current portion of long-term debt


$


$

499

Accounts payable



492



450

Accrued compensation



472



489

Income taxes payable



120



86

Accrued expenses and other liabilities



382



353

Total current liabilities



1,466



1,877

Long-term debt



5,066



3,084

Underfunded retirement plans



82



101

Deferred tax liabilities



50



33

Other long-term liabilities



1,229



635

Total liabilities



7,893



5,730

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



1,867



1,683

Retained earnings



36,413



34,149

Treasury common stock at cost







Shares: June 30, 2018 – 766,450,417; June 30, 2017 – 749,098,850



(29,016)



(26,345)

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



(371)



(520)

Total stockholders' equity



10,634



10,708

Total liabilities and stockholders' equity


$

18,527


$

16,438


 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Millions of dollars)




For Three Months Ended



June 30,



2018


2017

Cash flows from operating activities







Net income


$

1,405


$

1,056

Adjustments to Net income:







Depreciation



144



134

Amortization of acquisition-related intangibles



79



79

Amortization of capitalized software



10



12

Stock compensation



74



75

Deferred taxes



1



(54)

Increase (decrease) from changes in:







Accounts receivable



(97)



(132)

Inventories



(58)



(104)

Prepaid expenses and other current assets



61



83

Accounts payable and accrued expenses



6



12

Accrued compensation



123



131

Income taxes payable



120



(385)

Changes in funded status of retirement plans



29



19

Other



(71)



(9)

Cash flows from operating activities



1,826



917








Cash flows from investing activities







Capital expenditures



(249)



(151)

Purchases of short-term investments



(1,213)



(1,130)

Proceeds from short-term investments



1,375



1,265

Other



6



8

Cash flows from investing activities



(81)



(8)








Cash flows from financing activities







Proceeds from issuance of long-term debt



1,500



605

Repayment of debt



(500)



(375)

Dividends paid



(606)



(498)

Stock repurchases



(1,018)



(650)

Proceeds from common stock transactions



102



84

Other



(21)



(8)

Cash flows from financing activities



(543)



(842)








Net change in Cash and cash equivalents



1,202



67

Cash and cash equivalents at beginning of period



1,717



1,073

Cash and cash equivalents at end of period


$

2,919


$

1,140


 

Segment results

Amounts are in millions of dollars.




2Q18



2Q17


Change

Analog:









Revenue


$

2,690


$

2,411


12%

Operating profit


$

1,263


$

1,077


17%

Embedded Processing:









Revenue


$

943


$

868


9%

Operating profit


$

334


$

271


23%

Other:









Revenue


$

384


$

414


(7)%

Operating profit*


$

115


$

132


(13)%


* Includes Acquisition charges and Restructuring charges/other.

 

Compared with the year-ago quarter:

Analog: (includes Power, Signal Chain and High Volume)

Embedded Processing: (includes Connected Microcontrollers and Processors)

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

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).

We believe that free cash flow and the associated ratios provide insight into our liquidity, our cash-generating capability and the amount of cash potentially available to return to shareholders, as well as insight into our financial performance. These non-GAAP measures are supplemental to the comparable GAAP measures.

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

Amounts are in millions of dollars.    



For 12 Months Ended





June 30,





2018


2017


Change

Cash flow from operations (GAAP)


$

6,589


$

4,564


44%

Capital expenditures



(855)



(527)



Free cash flow (non-GAAP)


$

5,734


$

4,037


42%










Revenue


$

15,672


$

14,184












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



42.0%



32.2%



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



36.6%



28.5%



 

This release also includes references to an annual operating tax rate, a non-GAAP term we use to describe the estimated annual effective tax rate, a GAAP measure that by definition does not include discrete tax items. We believe the term annual operating tax rate more clearly communicates that discrete tax items are excluded from such rate. The term also helps differentiate from the effective tax rate, which includes discrete tax items. No adjustments are made to the estimated annual effective tax rate when using the term annual operating tax rate.

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 our management:

For a more detailed discussion of these factors, see the Risk Factors discussion in Item 1A of TI's most recent Form 10-K. 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 approximately 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

 

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SOURCE Texas Instruments Incorporated

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Financial data for Texas Instruments Incorporated