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TI Reports 4Q01 and 2001 Financial Results
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DALLAS, (Jan. 28, 2002) -- Texas Instruments Incorporated (NYSE: TXN)
today reported fourth-quarter 2001 financial results that were driven
by the resumption of revenue growth in its Semiconductor business after
three consecutive quarters of decline. In the first quarter of 2002, the
company expects revenue to be about level with the fourth quarter of 2001,
and earnings per share should return to about breakeven.
For 2001, pro forma revenue was $8201 million, down 31 percent from the previous year. Semiconductor revenue was $6784 million, down 34 percent from a year ago. Pro forma earnings per share (EPS) were $0.12, compared with $1.22 a year ago. |
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Cash flow from operations was $780 million in the fourth quarter, and free cash flow was $544 million. TI decreased accounts receivable to $1198 million, resulting in a reduction of days sales outstanding to 60, compared with 65 at the end of 2000 and 71 at the end of the third quarter. Also, TI reduced its inventory by $149 million, to $751 million. Days of inventory were reduced to a three-year low of 50, compared with 71 at the end of 2000 and 58 at the end of the third quarter. "2001 was a tough year, but it ended on a much more positive note than it started. Despite the harsh environment, we made great strides in increasing our customer focus and technology leadership with aggressive R&D and equipment upgrades," said Tom Engibous, TI chairman, president and CEO. "TI is coming out of the downturn stronger. We're the only company shipping DSPs that operate at 600 megahertz, twice that of our nearest competitor. We began shipping copper-based products, ramped up 130-nanometer process technology and installed our first 300-millimeter wafer production line. At the same time, we maintained a strong balance sheet, and our actions cut about $600 million out of TI's costs on an annualized basis. As the market recovers, TI's revenue growth should fall through to the bottom line at a high rate." Pro forma information excludes certain costs, charges and gains. For more information, see the financial statements. Summary of 4Q01 Financial Results
Outlook For the first quarter, compared with the fourth quarter of 2001, TI expects the following:
PRO FORMA INCOME (LOSS) INFORMATION
(In millions of dollars, except per-share amounts.)
Pro forma supplemental income (loss) information, which is not prepared in
accordance with generally accepted accounting principles, excludes
amortization of acquisition-related costs (goodwill, other intangibles and
deferred compensation), pooling of interests transaction costs, purchased
in-process research and development costs, special charges and gains, and
income tax adjustments. See notes to the following tables for details.
The effect of these amounts is partially offset, as appropriate, by their
allocated profit sharing and income tax effects.
For Three Months Ended
Dec. 31 Dec. 31 Sept. 30
2001 2000 2001
Net revenues $ 1786 $ 3033 $ 1849
Cost of revenues 1348 1558 1386
Research and development 364 424 341
Selling, general and administrative 269 368 274
Profit (loss) from operations (195) 683 (152)
Other income/interest (8) 113 22
Income (loss) before income taxes (203) 796 (130)
Provision (benefit) for income taxes (98) 247 (73)
Pro forma income (loss) $ (105) $ 549 $ (57)
Pro forma earnings (loss) per common share $ (.06) $ .31 $(.03)
GAAP TO PRO FORMA INCOME (LOSS) RECONCILIATION
(In millions of dollars, except per-share amounts.)
For Three Months Ended
December 31, 2001
GAAP Excluded Pro Forma
Net revenues $1786 $ --- $1786
Cost of revenues 1371 23 1348
Research and development 383 19 364
Selling, general and administrative 301 32 269
Profit (loss) from operations (269) (74) (195)
Other income/interest 1 9 (8)
Income (loss) before income taxes (268) (65) (203)
Provision (benefit) for income taxes (152) (54) (98)
Net income (loss) $(116) $ (11) $(105)
Diluted earnings (loss) per common share $(.07) $(.01) $(.06)
Weighted average shares (millions) 1734.4 1734.4
PRO FORMA INCOME (LOSS) INFORMATION
(In millions of dollars, except per-share amounts.)
Pro forma supplemental income (loss) information, which is not prepared in
accordance with generally accepted accounting principles, excludes
amortization of acquisition-related costs (goodwill, other intangibles and
deferred compensation), pooling of interests transaction costs, purchased
in-process research and development costs, special charges and gains, and
income tax adjustments. See notes to the following tables for details.
The effect of these amounts is partially offset, as appropriate, by their
allocated profit sharing and income tax effects.
For Years Ended
Dec. 31 Dec. 31
2001 2000
Net revenues $ 8201 $ 11861
Cost of revenues 5539 6008
Research and development 1522 1599
Selling, general and administrative 1136 1552
Profit from operations 4 2702
Other income/interest 145 447
Income before provision for income taxes 149 3149
Provision (benefit) for income taxes (56) 975
Pro forma income $ 205 $ 2174
Pro forma earnings per common share $ .12 $ 1.22
GAAP TO PRO FORMA INCOME (LOSS) RECONCILIATION
(In millions of dollars, except per-share amounts.)
For Years Ended
December 31, 2001
GAAP Excluded Pro Forma
Net revenues $8201 $ --- $8201
Cost of revenues 5824 285 5539
Research and development 1598 76 1522
Selling, general and administrative 1361 225 1136
Profit (loss) from operations (582) (586) 4
Other income/interest 156 11 145
Income (loss) before income taxes (426) (575) 149
Provision (benefit) for income taxes (225) (169) (56)
Net income (loss) $(201) $(406) $ 205
Diluted earnings (loss) per common share $(.12) $(.24) $ .12
Weighted average shares (millions) 1734.5 1781.2
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Statement of Operations
(In millions of dollars, except per-share amounts.)
For Three Months Ended
Dec. 31 Dec. 31
2001 2000
Net revenues $ 1786 $ 3033
Operating costs and expenses:
Cost of revenues 1371 1576
Research and development 383 441
Selling, general and administrative 301 401
Total 2055 2418
Profit (loss) from operations (269) 615
Other income (expense) net 16 274
Interest on loans 15 18
Income (loss) before income taxes (268) 871
Provision (benefit) for income taxes (152) 206
Net income (loss)* $ (116) $ 665
Diluted earnings (loss) per common share** $ (.07) $ .37
Basic earnings (loss) per common share $ (.07) $ .38
Cash dividends declared per share of
common stock $ .021 $ .021
* Loss for the fourth quarter of 2001 includes, in millions of dollars, a
gain of $9 in other income from the sale of two facilities and net special
charges of $18, of which $14 is for restructuring charges primarily related to
the closing of the Semiconductor manufacturing facility in Merrimack, New
Hampshire, and $4 is severance cost for the worldwide cost-reduction program.
Of the $14, $9 is for acceleration of depreciation over the remaining service
life of the facility. Of the $18 net special charges, $14 is included in cost of
revenues, $3 is in research and development expense and $1 is in selling, general
and administrative expense. Income for the fourth quarter of 2000 includes, in
millions of dollars, a gain of $88 from the sale of the memory business, a gain
of $56 from the sale of the materials portion of Sensors & Controls, a credit
to the income tax provision of $69 for deferred tax valuation allowance reductions,
primarily in Japan, a charge of $3 for a severance action by Educational &
Productivity Solutions, and a charge of $9 for additional pooling of interests
transaction costs from the Burr-Brown acquisition.
Income (loss) includes, in millions of dollars, acquisition-related amortization
of $56 and $68 for the fourth quarters of 2001 and 2000.
** Diluted earnings (loss) per common share are based on average common and
dilutive potential common shares outstanding (1734.4 million shares and
1794.7 million shares for the fourth quarters of 2001 and 2000). For the
fourth quarter of 2001, dilutive potential common shares outstanding have been
excluded due to the net loss for the period.
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Statement of Operations
(In millions of dollars, except per-share amounts.)
For Years Ended
Dec. 31 Dec. 31
2001 2000
Net revenues $ 8201 $11875
Operating costs and expenses:
Cost of revenues 5824 6120
Research and development 1598 1747
Selling, general and administrative 1361 1669
Total 8783 9536
Profit (loss) from operations (582) 2339
Other income (expense) net 217 2314
Interest on loans 61 75
Income (loss) before income taxes
and cumulative effect of an accounting change (426) 4578
Provision (benefit) for income taxes (225) 1491
Income (loss) before cumulative effect of
an accounting change (201) 3087
Cumulative effect of an accounting change --- (29)
Net income (loss)* $ (201) $ 3058
Diluted earnings (loss) per common share:**
Income (loss) before cumulative effect of
an accounting change $ (.12) $ 1.73
Cumulative effect of an accounting change --- (.02)
Net income (loss) $ (.12) $ 1.71
Basic earnings (loss) per common share:
Income (loss) before cumulative effect of
an accounting change $ (.12) $ 1.80
Cumulative effect of an accounting change --- (.02)
Net income (loss) $ (.12) $ 1.78
Cash dividends declared per share of
common stock $ .085 $ .085
* Loss for the fourth quarter of 2001 includes, in millions of dollars, a
gain of $9 in other income from the sale of two facilities and net special
charges of $18, of which $14 is for restructuring charges primarily related to
the closing of the Semiconductor manufacturing facility in Merrimack, New
Hampshire, and $4 is severance cost for the worldwide cost-reduction program.
Of the $14, $9 is for acceleration of depreciation over the remaining service
life of the facility. Of the $18 net special charges, $14 is included in cost
of revenues, $3 is in research and development expense and $1 is in selling,
general and administrative expense. Loss for the third quarter of 2001
includes, in millions of dollars, net special charges of $37, of which $19 is
severance cost for the worldwide cost-reduction program and $16 relates to
restructuring charges for the closing of three Semiconductor facilities (Santa
Cruz, California; Merrimack, New Hampshire; and Tustin, California).
Of the $16, $15 is for acceleration of depreciation over the remaining
service life of the facilities. Of the $37 net special charges, $27 is included
in cost of revenues, $8 is in selling, general and administrative expense
and $2 is in research and development expense. Loss for the second quarter of 2001
includes, in millions of dollars, net special charges of $252, of which
$214 is severance cost for the worldwide cost-reduction program and $35 relates
to restructuring charges for the closing of three Semiconductor facilities.
Of the $35, $14 is for severance cost and $16 is for acceleration of depreciation
over the remaining service life of the facilities. Of the $252 net special
charges, $162 is included in cost of revenues, $84 is in selling, general and
administrative expense and $6 is in research and development expense. Also included
in the second quarter of 2001 is a $68 increase in the income tax provision to
adjust to the expected tax rate for the year. Income for the first quarter of
2001 includes, in millions of dollars, net special charges of $50, of which $11
is severance cost for current-quarter employee acceptances under the U.S.
voluntary retirement program, $16 is severance cost for restructuring actions
in international locations, mostly in Germany, and $25 relates to the fourth
quarter 2001 closing of a Semiconductor manufacturing facility in Santa Cruz,
California. Of the $25, $16 is for severance cost and $5 is for acceleration of
depreciation over the remaining service life of the facility. Of the $50 of
net special charges, $44 is included in cost of revenues, $7 is in selling,
general and administrative expense, $2 is in research and development expense
and $3 is in other income.
Income for the fourth quarter of 2000 includes, in millions of dollars, a
gain of $88 from the sale of the memory business, a gain of $56 from the sale
of the materials portion of Sensors & Controls, a credit to the income tax
provision of $69 for deferred tax valuation allowance reductions, primarily in
Japan, a charge of $3 for a severance action by Educational & Productivity
Solutions, and a charge of $9 for additional pooling of interests transaction
costs from the Burr-Brown acquisition. Income for the third quarter of 2000
includes, in millions of dollars, investment gains of $425 in other income
from the sale of 5.6 million shares of Micron Technology, Inc. (Micron) common
stock, and net special charges of $163, of which $112 is for purchased
in-process R&D costs from the Dot Wireless, Inc. and Alantro Communications,
Inc. acquisitions, $41 is for pooling of interests transaction costs from the
Burr-Brown acquisition, and $10, net, is for several Semiconductor and Sensors
& Controls restructuring and other actions in the U.S., Japan and Europe.
Of the $163, $112 is included in research and development expense, $46 is in
selling, general and administrative expense, $31 is in cost of revenues, $15
is in net revenues and $11 is in other income. Income for the second quarter
of 2000 includes, in millions of dollars, an investment gain of $1211 in other
income from the sale of 20 million shares of Micron common stock. Income for
the first quarter of 2000 includes, in millions of dollars, net special
charges of $29 associated with actions including the closing of the Sensors &
Controls manufacturing facility in Versailles, Kentucky, and TI's acquisition
of Toccata Technology ApS. Of the $29, $20 is included in cost of revenues,
$6 is in selling, general and administrative expense and $3 is in research and
development expense.
Income includes, in millions of dollars, acquisition-related amortization
of $229 and $160 in 2001 and 2000.
** Diluted earnings per common share are based on average common and
dilutive potential common shares outstanding (1734.5 million shares and
1791.6 million shares for the years ended December 31, 2001 and 2000). For the
year ended December 31, 2001, dilutive potential common shares outstanding
have been excluded due to the net loss for the period.
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheet
(In millions of dollars, except per-share amounts.)
Dec. 31 Dec. 31
2001 2000
Assets
Current assets:
Cash and cash equivalents $ 431 $ 745
Short-term investments 2513 3258
Accounts receivable, less allowance for
losses of $61 million in 2001 and
$54 million in 2000 1198 2204
Inventories:
Raw materials 133 245
Work in process 407 681
Finished goods 211 307
Inventories 751 1233
Deferred income taxes 554 595
Prepaid expenses and other current assets 328* 80
Total current assets 5775* 8115
Property, plant and equipment at cost 9683 9099
Less accumulated depreciation (4094) (3652)
Property, plant and equipment (net) 5589 5447
Long-term cash investments 407 ---
Equity investments 2214 2400
Goodwill and other acquisition-related
intangibles 748 961
Deferred income taxes 421 106
Other assets 625 691
Total assets $15779* $17720
Liabilities and Stockholders' Equity
Current liabilities:
Loans payable and current portion
long-term debt $ 38 $ 148
Accounts payable and accrued expenses 1205 1921
Income taxes payable 327* 323
Accrued retirement and profit sharing
contributions 10 421
Total current liabilities 1580* 2813
Long-term debt 1211 1216
Accrued retirement costs 485 378
Deferred income taxes 331 469
Deferred credits and other liabilities 293 256
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: 2001 - 1,740,329,364;
2000 - 1,733,237,248 1740 1733
Paid-in capital 1216 1185
Retained earnings 8975 9323
Less treasury common stock at cost.
Shares: 2001 - 6,395,488; 2000 - 1,184,880 (235) (93)
Accumulated other comprehensive income 269 574
Deferred compensation (86) (134)
Total stockholders' equity 11879 12588
Total liabilities and stockholders' equity $15779* $17720
* Certain reclassifications have been made as noted above to the unaudited balance
sheet in the company's January 28, 2002, press release on 4Q01 and YR01 results.
These reclassifications were made to conform to the audited financial statements for
the year ended December 31, 2001.
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Statement of Cash Flows
(In millions of dollars)
For Three Months Ended
Dec. 31 Sept. 30 June 30 Mar. 31
2001 2001 2001 2001
Cash flows from operating activities:
Income (loss) before cumulative
effect of accounting change $(116) $(118) $(197) $ 230
Depreciation 454 414 387 344
Amortization of
acquisition-related costs 56 56 58 59
Deferred income taxes 16* (11) (7) 21
Net currency exchange (gains)
losses (1) --- 4 1
(Increase) decrease in working
capital (excluding cash and cash
equivalents, short-term
investments, deferred income
taxes, and loans payable and
current portion long-term debt):
Accounts receivable 236 228 279 234
Inventories 149 182 97 54
Prepaid expenses and other
current assets 48* (259) 18 (61)
Accounts payable and accrued
expenses (84) (95) (165) (343)
Income taxes payable 154* 47 (8) (81)
Accrued retirement and profit
sharing contributions 10 (43) 15 (371)
Increase (decrease) in noncurrent
accrued retirement costs 6 (30) 9 (9)
Other (148)* (37) 96 41
Net cash provided by operating
activities 780 334 586 119
Cash flows from investing activities:
Additions to property, plant
and equipment (236) (312) (342) (900)
Purchases of short-term
investments (874) (938) (908) (527)
Sales and maturities of
short-term investments 1028 809 1201 1002
Purchases of long-term cash
investments (488) --- --- ---
Sales of long-term cash investments 10 --- --- ---
Purchases of equity investments (60) (17) (129) (48)
Sales of equity investments 1 63 6 33
Net cash used in investing
activities (619) (395) (172) (440)
Cash flows from financing activities:
Payments on loans payable (1) (2) --- ---
Additions to long-term debt --- --- --- 3
Payments on long-term debt (3) (1) (20) (108)
Dividends paid on common stock (37) (37) (37) (37)
Sales and other common stock
transactions 73 24 45 42
Common stock repurchase program (85) (152) (151) (7)
Net cash used in financing activities (53) (168) (163) (107)
Effect of exchange rate changes
on cash (64) 74 (13) (13)
Net increase (decrease) in cash
and cash equivalents 44 (155) 238 (441)
Cash and cash equivalents at
beginning of period 387 542 304 745
Cash and cash equivalents at
end of period $ 431 $ 387 $ 542 $ 304
* Certain reclassifications have been made as noted above to the unaudited
statement of cash flows in the company's January 28, 2002, press release on
4Q01 and YR01 results. These reclassifications were made to conform to the
audited financial statements for the year ended December 31, 2001.
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Statement of Cash Flows
(In millions of dollars)
For Years Ended
Dec. 31 Dec. 31
2001 2000
Cash flows from operating activities:
Income (loss) before cumulative effect
of accounting change $(201) $3087
Depreciation 1599 1216
Amortization of acquisition-related costs 229 160
Purchased in-process research and development --- 112
Deferred income taxes 19* 1
Net currency exchange losses 4 11
(Increase) decrease in working capital
(excluding cash and cash equivalents,
short-term investments, deferred income taxes,
and loans payable and current portion
long-term debt):
Accounts receivable 977 (348)
Inventories 482 (372)
Prepaid expenses and other current assets (254)* 27
Accounts payable and accrued expenses (687) 246
Income taxes payable 112* (55)
Accrued retirement and profit sharing
contributions (389) 51
Gains on sale of Micron stock --- (1636)
Decrease in noncurrent accrued retirement costs (24) (369)
Other (48)* 54
Net cash provided by operating activities 1819 2185
Cash flows from investing activities:
Additions to property, plant and equipment (1790) (2762)
Purchases of short-term investments (3247) (5409)
Sales and maturities of short-term investments 4040 4178
Purchases of long-term cash investments (488) ---
Sales of long-term cash investments 10 ---
Purchases of equity investments (254) (133)
Sales of equity investments 103 2198
Acquisition of businesses, net of cash acquired --- (3)
Proceeds from sale of businesses --- 107
Net cash used in investing activities (1626) (1824)
Cash flows from financing activities:
Additions to loans payable --- 23
Payments on loans payable (3) (19)
Additions to long-term debt 3 250
Payments on long-term debt (132) (307)
Dividends paid on common stock (147) (141)
Sales and other common stock transactions 183 242
Common stock repurchase program (395) (155)
Increase in noncurrent assets for
restricted cash --- (261)
Net cash used in financing activities (491) (368)
Effect of exchange rate changes on cash (16) (29)
Net decrease in cash and cash equivalents (314) (36)
Cash and cash equivalents at beginning of year 745 781
Cash and cash equivalents at end of year $ 431 $ 745
* Certain reclassifications have been made as noted above to the unaudited
statement of cash flows in the company's January 28, 2002, press release on
4Q01 and YR01 results. These reclassifications were made to conform to the
audited financial statements for the year ended December 31, 2001.
BUSINESS SEGMENT NET REVENUES
(In millions of dollars)
For Three Months Ended For Years Ended
Dec. 31 Dec. 31 Dec. 31 Dec. 31
2001 2000 2001 2000
Semiconductor
Trade $ 1492 $ 2690 $ 6767 $10267
Intersegment 6 5 17 17
1498 2695 6784 10284
Sensors & Controls
Trade 218 250 955 1029
Intersegment --- --- 3 1
218 250 958 1030
Educational & Productivity
Solutions
Trade 76 66 465 446
Corporate activities (6) (4) (18) 3
Divested activities --- 26 12 112
Total net revenues $ 1786 $ 3033 $ 8201 $11875
BUSINESS SEGMENT PROFIT (LOSS)
(In millions of dollars)
For Three Months Ended For Years Ended
Dec. 31 Dec. 31 Dec. 31 Dec. 31
2001 2000 2001 2000
Semiconductor $(204) $679 $(155) $2607
Sensors & Controls 45 42 192 191
Educational & Productivity
Solutions 10 6 132 111
Corporate activities (46) (54) (170) (234)
Special charges/gains, and
acquisition-related
amortization, net of
applicable profit sharing (65) 76 (575) 1429
Interest on loans/other
income (expense), excluding
a fourth-quarter 2001 gain
of $9, first-quarter
2001 gain of $3,
third-quarter 2000 gain
of $436, and second-quarter
2000 gain of $1211 included
above in Special charges/gains
and acquisition-related
amortization (8) 113 144 447
Divested activities --- 9 6 27
Income (loss) before income
taxes and cumulative effect
of an accounting change $(268) $ 871 $(426) $4578
Semiconductor
#
# #
"Safe Harbor"
Statement under the Private Securities Litigation Reform Act of 1995: 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,
such statements herein that describe the company'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 the company or its management:
For a more
detailed discussion of these factors, see the text under the heading "Cautionary
Statements Regarding Future Results of Operations" in Item 1 of the
company'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 the company
undertakes no obligation to update the forward-looking statements to reflect
subsequent events or circumstances. TI Trademarks:
OMAP
TMS320C2000
TMS320C5000
TMS320C6000
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