TI Investor Relations - Reconciliation of Non-GAAP Financial Measure

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Reconciliation of Non-GAAP Financial Measure

Texas Instruments Incorporated
Reconciliation of Non-GAAP Financial Measures

On July 24, 2006, we held a publicly webcast conference call with analysts to discuss our second-quarter earnings. The tables below provide a reconciliation of three non-GAAP items discussed during the conference call to our second-quarter results prepared in accordance with GAAP. We included non-GAAP financial measures not only to respond to specific questions asked during the conference call, but also to enhance understanding of our ongoing operations and to communicate the impact of the excluded items on our second-quarter results.

	TI Operating Margin Detail
(Millions of dollars)	For Three Months Ended June 30, 2006 Results
	Revenue	Operating Expenses	Operating Profit	Operating Margin *



GAAP Measure:	$3,697	$2,744	$953	25.8%
Reconciliation to Non-GAAP: Excluding the effects of: Royalty settlement	(70)	(10)	(60)



Refund of state sales tax	-	57	(57)



Non-GAAP Measure	$3,627	$2,791	$836	23.0%
* Operating profit as a percentage of revenue.

Semiconductor Segment Gross Profit Margin Detail
		Change from
(Millions of dollars)	June 30, 2006		March 31, 2006	June 30, 2005

GAAP Measure:
Semiconductor revenue	$ 3,505		$ 243	$ 714
Semiconductor gross profit	1,815		157	490
Gross profit change as % of revenue change			65%	69%

Reconciliation to Non-GAAP:
Excluding the effects of: Royalty settlement revenue	(70)		(70)	(70)
Royalty settlement gross margin	(60)		(60)	(60)
Refund of state sales tax gross margin	(31)		(31)	(31)

Non-GAAP Measure
Semiconductor revenue	$ 3,435		$ 173	$ 644
Semiconductor gross profit	1,724		66	399
Gross profit change as % of revenue change			38%	62%

Semiconductor Forward-Looking Revenue Growth Detail (Based on Outlook Provided in Second-Quarter 2006 Earnings Release)
	Results for Period Ended June 30, 2006 (GAAP Presentation)	Effect of Royalty Settlement	Results for Period Ended June 30, 2006 (Non-GAAP Presentation Excluding Royalty Settlement)	Third-Quarter 2006 Expectation Range (Based on GAAP Presentation)	Third-Quarter 2006 Expectation Range (Based on Non-GAAP Presentation)
Semiconductor Revenue (in millions)	$3,505	$(70)	$3,435	$3,450-3,750
Semiconductor Revenue Growth Rate*				(2) to 7%	0 to 9%

* Revenue growth rate range is the percentage growth of the minimum and maximum third-quarter 2006 revenue expectations divided by the second quarter of 2006 revenue.

The table above includes forward-looking statements. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially. For a discussion of the risks and uncertainties, see the Safe Harbor Statement included at the end of our Second-Quarter Earnings Release, dated July 24, 2006, and the risk factors listed therein. The forward-looking statements above are made only as of the date of the webcast and the company undertakes no obligation to update the forward-looking statements to reflect subsequent events or circumstances.