Texas Instruments Incorporated
Reconciliation of Non-GAAP Financial Measure
Gross Margin and Operating Margin excluding Stock-based Compensation Expense
(In millions of dollars)

On January 23, 2006, TI held a publicly webcast conference call with analysts to discuss our fourth-quarter and fiscal year 2005 financial results. During that call, we noted that, excluding stock-based compensation expense, we held our margin goals first achieved in the third quarter (again excluding stock-based compensation expense). This goal was set prior to our implementation of stock option expensing under FAS 123(R). The above table provides a reconciliation of our third and fourth quarter 2005 gross margin and operating margin excluding the impact of stock-based compensation expense to gross margin and operating margin on a GAAP basis. We referred to the margins exclusive of stock-based compensation expense because we wanted to be sure our investors understood our continued performance relative to the goals.