Reconciliation of Non-GAAP Financial Measure


Texas Instruments Incorporated
Reconciliation of Non-GAAP Financial Measure

On October 23, 2006, we held a publicly webcast conference call with analysts to discuss our third-quarter earnings. The table below provides a reconciliation of a non-GAAP item discussed during the conference call to our third-quarter results prepared in accordance with GAAP. We included the non-GAAP financial measure not only to respond to a specific question asked during the conference call, but also to enhance understanding of our ongoing operations and to communicate the impact of the excluded second-quarter items in comparison to our third-quarter results.

Semiconductor Segment Gross Profit Margin Detail
          Change from
(Millions of dollars) Sept 30, 2006   June 30, 2006   June 30, 2006
           
GAAP Measure:
 
 
Semiconductor revenue
$ 3,579
 
$ 3,505
 
$ 74
Semiconductor gross profit
1,844
 
1,815
 
29
Gross profit change as % of revenue change
 
 
39%
 
 
 
Reconciliation to Non-GAAP:
 
 
Excluding the effects of:
    Royalty settlement revenue
   
(70)
   
    Royalty settlement gross margin    
(60)
   
    Refund of state sales tax gross margin    
(31)
   
 
 
 
Non-GAAP Measure
 
 
Semiconductor revenue
$ 3,579
 
$ 3,435
 
$ 144
Semiconductor gross profit
1,844
 
1,724
 
120
Gross profit change as % of revenue change
 
 
83%