Texas Instruments Incorporated
Reconciliation of Non-GAAP Financial Measures


On March 8, 2012, we held a publicly webcast conference call with analysts to discuss our first-quarter 2012 business outlook. During the call we made a non-GAAP reference to our fourth-quarter 2011 gross margin, adjusted for acquisition-related charges and a baseband inventory charge, as being almost 50 percent. We provided this non-GAAP measure to give investors additional insight into TI's underlying business conditions and results without the impact of some quarter-specific charges.

In the fourth quarter of 2011, we had an acquisition-related inventory write-up of $103 million and inventory charges of $44 million related to wireless baseband inventory. These amounts, totaling $147 million, were recognized in Cost of revenue.

The table below provides a reconciliation of the non-GAAP item (gross margin excluding the impact of the acquisition-related inventory and inventory charges) to our fourth-quarter results prepared in accordance with GAAP.

 
For Three Months Ended
 
Dec. 31, 2011
 
TI as
Reported
(GAAP)
Adjustments
TI as
Adjusted
(Non-GAAP)
Revenue
$         3,420  
 
--    
 
$         3,420  
Cost of revenue
1,872  
 
(147)  
 
1,725  
Gross profit
1,548  
 
147   
 
1,695  
Gross margin
45.3%  
 
4.3%   
 
49.6%