UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2019
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ___________
Commission File Number 001-03761
TEXAS INSTRUMENTS INCORPORATED
(Exact Name of Registrant as Specified in Its Charter)
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Delaware |
75-0289970 |
(State of Incorporation) |
(I.R.S. Employer Identification No.) |
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12500 TI Boulevard, Dallas, Texas |
75243 |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code 214-479-3773
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
☒ |
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Accelerated filer |
☐ |
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Non-accelerated filer |
☐ |
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Smaller reporting company |
☐ |
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Emerging growth company |
☐ |
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If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act |
☐ |
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
938,206,171
Number of shares of Registrant’s common stock outstanding as of
April 23, 2019
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. Financial statements
|
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For Three Months Ended |
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|||||||
Consolidated Statements of Income |
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March 31, |
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|||||||
(Millions of dollars, except share and per-share amounts) |
|
2019 |
|
|
2018 |
|
||||
Revenue |
|
$ |
|
3,594 |
|
|
$ |
|
3,789 |
|
Cost of revenue (COR) |
|
|
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1,333 |
|
|
|
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1,342 |
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Gross profit |
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|
|
2,261 |
|
|
|
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2,447 |
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Research and development (R&D) |
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|
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389 |
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|
|
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385 |
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Selling, general and administrative (SG&A) |
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414 |
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433 |
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Acquisition charges |
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79 |
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80 |
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Restructuring charges/other |
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— |
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|
|
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1 |
|
Operating profit |
|
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1,379 |
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|
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1,548 |
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Other income (expense), net (OI&E) |
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36 |
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28 |
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Interest and debt expense |
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38 |
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23 |
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Income before income taxes |
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|
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1,377 |
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1,553 |
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Provision for income taxes |
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|
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160 |
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|
|
|
187 |
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Net income |
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$ |
|
1,217 |
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$ |
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1,366 |
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Earnings per common share (EPS): |
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Basic |
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$ |
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1.29 |
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$ |
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1.38 |
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Diluted |
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$ |
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1.26 |
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$ |
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1.35 |
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Average shares outstanding (millions): |
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Basic |
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939 |
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|
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983 |
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Diluted |
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956 |
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1,005 |
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A portion of net income is allocated to unvested restricted stock units (RSUs) on which we pay dividend equivalents. Diluted EPS is calculated using the following: |
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Net income |
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$ |
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1,217 |
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$ |
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1,366 |
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Income allocated to RSUs |
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(8 |
) |
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(11 |
) |
Income allocated to common stock for diluted EPS |
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$ |
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1,209 |
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$ |
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1,355 |
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See accompanying notes. |
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2
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
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For Three Months Ended |
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Consolidated Statements of Comprehensive Income |
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March 31, |
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(Millions of dollars) |
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2019 |
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|
2018 |
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||||
Net income |
|
$ |
|
1,217 |
|
|
$ |
|
1,366 |
|
Other comprehensive income (loss), net of taxes |
|
|
|
|
|
|
|
|
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Net actuarial losses of defined benefit plans: |
|
|
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Adjustments |
|
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(2 |
) |
|
|
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(16 |
) |
Recognized within net income |
|
|
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10 |
|
|
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9 |
|
Prior service credit of defined benefit plans: |
|
|
|
|
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Recognized within net income |
|
|
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— |
|
|
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(1 |
) |
Other comprehensive income (loss) |
|
|
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8 |
|
|
|
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(8 |
) |
Total comprehensive income |
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$ |
|
1,225 |
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$ |
|
1,358 |
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See accompanying notes. |
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3
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
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March 31, |
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December 31, |
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Consolidated Balance Sheets |
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2019 |
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2018 |
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(Millions of dollars, except share amounts) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
|
3,720 |
|
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$ |
|
2,438 |
|
Short-term investments |
|
|
|
366 |
|
|
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1,795 |
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Accounts receivable, net of allowances of ($17) and ($19) |
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1,440 |
|
|
|
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1,207 |
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Raw materials |
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|
191 |
|
|
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181 |
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Work in process |
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1,016 |
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1,070 |
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Finished goods |
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924 |
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966 |
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Inventories |
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2,131 |
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2,217 |
|
Prepaid expenses and other current assets |
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294 |
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440 |
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Total current assets |
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7,951 |
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8,097 |
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Property, plant and equipment at cost |
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5,642 |
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5,425 |
|
Accumulated depreciation |
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(2,324 |
) |
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(2,242 |
) |
Property, plant and equipment |
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3,318 |
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3,183 |
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Long-term investments |
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|
281 |
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251 |
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Goodwill |
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4,362 |
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4,362 |
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Acquisition-related intangibles |
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549 |
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628 |
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Deferred tax assets |
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290 |
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295 |
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Capitalized software licenses |
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98 |
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89 |
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Overfunded retirement plans |
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|
96 |
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|
|
92 |
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Other long-term assets |
|
|
|
498 |
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|
|
|
140 |
|
Total assets |
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$ |
|
17,443 |
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$ |
|
17,137 |
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|
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|
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Current portion of long-term debt |
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$ |
|
750 |
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$ |
|
749 |
|
Accounts payable |
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|
|
477 |
|
|
|
|
478 |
|
Accrued compensation |
|
|
|
342 |
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|
|
724 |
|
Income taxes payable |
|
|
|
113 |
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|
|
|
103 |
|
Accrued expenses and other liabilities |
|
|
|
477 |
|
|
|
|
420 |
|
Total current liabilities |
|
|
|
2,159 |
|
|
|
|
2,474 |
|
Long-term debt |
|
|
|
5,057 |
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|
|
|
4,319 |
|
Underfunded retirement plans |
|
|
|
120 |
|
|
|
|
118 |
|
Deferred tax liabilities |
|
|
|
43 |
|
|
|
|
42 |
|
Other long-term liabilities |
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|
|
1,545 |
|
|
|
|
1,190 |
|
Total liabilities |
|
|
|
8,924 |
|
|
|
|
8,143 |
|
Stockholders’ equity: |
|
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Preferred stock, $25 par value. Authorized – 10,000,000 shares |
|
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Participating cumulative preferred – None issued |
|
|
|
— |
|
|
|
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— |
|
Common stock, $1 par value. Authorized – 2,400,000,000 shares |
|
|
|
|
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Shares issued – 1,740,815,939 |
|
|
|
1,741 |
|
|
|
|
1,741 |
|
Paid-in capital |
|
|
|
1,927 |
|
|
|
|
1,950 |
|
Retained earnings |
|
|
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38,396 |
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|
|
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37,906 |
|
Treasury common stock at cost |
|
|
|
|
|
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Shares: March 31, 2019 – 802,016,668; December 31, 2018 – 795,665,646 |
|
|
|
(33,080 |
) |
|
|
|
(32,130 |
) |
Accumulated other comprehensive income (loss), net of taxes (AOCI) |
|
|
|
(465 |
) |
|
|
|
(473 |
) |
Total stockholders’ equity |
|
|
|
8,519 |
|
|
|
|
8,994 |
|
Total liabilities and stockholders’ equity |
|
$ |
|
17,443 |
|
|
$ |
|
17,137 |
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes. |
|
|
|
|
|
|
|
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4
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
|
For Three Months Ended |
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Consolidated Statements of Cash Flows |
|
March 31, |
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(Millions of dollars) |
|
2019 |
|
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2018 |
|
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Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
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Net income |
|
$ |
|
1,217 |
|
|
$ |
|
1,366 |
|
Adjustments to net income: |
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
166 |
|
|
|
|
137 |
|
Amortization of acquisition-related intangibles |
|
|
|
79 |
|
|
|
|
80 |
|
Amortization of capitalized software |
|
|
|
13 |
|
|
|
|
12 |
|
Stock compensation |
|
|
|
61 |
|
|
|
|
70 |
|
Gains on sales of assets |
|
|
|
(2 |
) |
|
|
|
— |
|
Deferred taxes |
|
|
|
4 |
|
|
|
|
(31 |
) |
Increase (decrease) from changes in: |
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
|
(233 |
) |
|
|
|
(176 |
) |
Inventories |
|
|
|
86 |
|
|
|
|
(97 |
) |
Prepaid expenses and other current assets |
|
|
|
223 |
|
|
|
|
356 |
|
Accounts payable and accrued expenses |
|
|
|
(67 |
) |
|
|
|
(51 |
) |
Accrued compensation |
|
|
|
(373 |
) |
|
|
|
(372 |
) |
Income taxes payable |
|
|
|
(94 |
) |
|
|
|
(131 |
) |
Changes in funded status of retirement plans |
|
|
|
7 |
|
|
|
|
(15 |
) |
Other |
|
|
|
20 |
|
|
|
|
(36 |
) |
Cash flows from operating activities |
|
|
|
1,107 |
|
|
|
|
1,112 |
|
|
|
|
|
|
|
|
|
|
|
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Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
|
(251 |
) |
|
|
|
(189 |
) |
Proceeds from asset sales |
|
|
|
2 |
|
|
|
|
— |
|
Purchases of short-term investments |
|
|
|
(149 |
) |
|
|
|
(996 |
) |
Proceeds from short-term investments |
|
|
|
1,584 |
|
|
|
|
1,455 |
|
Other |
|
|
|
(13 |
) |
|
|
|
(4 |
) |
Cash flows from investing activities |
|
|
|
1,173 |
|
|
|
|
266 |
|
|
|
|
|
|
|
|
|
|
|
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Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of long-term debt |
|
|
|
743 |
|
|
|
|
— |
|
Dividends paid |
|
|
|
(724 |
) |
|
|
|
(611 |
) |
Stock repurchases |
|
|
|
(1,152 |
) |
|
|
|
(873 |
) |
Proceeds from common stock transactions |
|
|
|
151 |
|
|
|
|
178 |
|
Other |
|
|
|
(16 |
) |
|
|
|
(11 |
) |
Cash flows from financing activities |
|
|
|
(998 |
) |
|
|
|
(1,317 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
|
|
1,282 |
|
|
|
|
61 |
|
Cash and cash equivalents at beginning of period |
|
|
|
2,438 |
|
|
|
|
1,656 |
|
Cash and cash equivalents at end of period |
|
$ |
|
3,720 |
|
|
$ |
|
1,717 |
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes. |
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5
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
1. Description of business, including segment and geographic area information
We design, make and sell semiconductors to electronics designers and manufacturers all over the world. We have two reportable segments, which are established along major categories of products as follows:
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• |
Analog – consisting of the following product lines: Power, Signal Chain and High Volume. |
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• |
Embedded Processing – consisting of the following product lines: Connected Microcontrollers and Processors. |
We report the results of our remaining business activities in Other. Other includes operating segments that do not meet the quantitative thresholds for individually reportable segments and cannot be aggregated with other operating segments. Other includes DLP® products, calculators and custom ASIC products.
Our centralized manufacturing and support organizations, such as facilities, procurement and logistics, provide support to our operating segments, including those in Other. Costs incurred by these organizations, including depreciation, are charged to the segments on a per-unit basis. Consequently, depreciation expense is not an independently identifiable component within the segments’ results and, therefore, is not provided.
Segment information
|
For Three Months Ended |
|
|||||||
|
March 31, |
|
|||||||
|
2019 |
|
|
2018 |
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
Analog |
$ |
|
2,518 |
|
|
$ |
|
2,566 |
|
Embedded Processing |
|
|
796 |
|
|
|
|
926 |
|
Other |
|
|
280 |
|
|
|
|
297 |
|
Total revenue |
$ |
|
3,594 |
|
|
$ |
|
3,789 |
|
|
|
|
|
|
|
|
|
|
|
Operating profit: |
|
|
|
|
|
|
|
|
|
Analog |
$ |
|
1,088 |
|
|
$ |
|
1,166 |
|
Embedded Processing |
|
|
249 |
|
|
|
|
328 |
|
Other |
|
|
42 |
|
|
|
|
54 |
|
Total operating profit |
$ |
|
1,379 |
|
|
$ |
|
1,548 |
|
Geographic area information
The following geographic area information includes revenue based on product shipment destination. The revenue information is not necessarily indicative of the geographic area in which the end applications containing our products are ultimately consumed because our products tend to be shipped to the locations where our customers manufacture their products. Specifically, many of our products are shipped to our customers in China who may include these parts in the manufacture of their own end products, which they may in turn export to their customers around the world.
|
For Three Months Ended |
|
|||||||
|
March 31, |
|
|||||||
|
2019 |
|
|
2018 |
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
United States |
$ |
|
477 |
|
|
$ |
|
504 |
|
Asia (a) |
|
|
2,092 |
|
|
|
|
2,215 |
|
Europe, Middle East and Africa |
|
|
743 |
|
|
|
|
771 |
|
Japan |
|
|
191 |
|
|
|
|
220 |
|
Rest of world |
|
|
91 |
|
|
|
|
79 |
|
Total revenue |
$ |
|
3,594 |
|
|
$ |
|
3,789 |
|
(a) |
Revenue from products shipped into China was $1.7 billion and $1.6 billion in the first quarters of 2019 and 2018, respectively. |
6
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
2. Basis of presentation and significant accounting policies and practices
Basis of presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and on the same basis as the audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2018, except for the effects of adopting Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The Consolidated Statements of Income, Comprehensive Income and Cash Flows for the periods ended March 31, 2019 and 2018, and the Consolidated Balance Sheet as of March 31, 2019, are not audited but reflect all adjustments that are of a normal recurring nature and are necessary for a fair statement of the results of the periods shown. Certain information and note disclosures normally included in annual consolidated financial statements have been omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Because the consolidated interim financial statements do not include all of the information and notes required by GAAP for a complete set of financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in our annual report on Form 10-K for the year ended December 31, 2018. The results for the three-month periods are not necessarily indicative of a full year’s results.
Significant accounting policies and practices
Leases
We determine if an arrangement is a lease at inception. Leases are included in other long-term assets, accrued expenses and other liabilities, and other long-term liabilities on our Consolidated Balance Sheets.
Lease assets represent our right to use underlying assets for the lease term, and lease liabilities represent our obligations to make lease payments over the lease term. On the commencement date, leases are evaluated for classification, and assets and liabilities are recognized based on the present value of lease payments over the lease term. We use our incremental borrowing rate based on the information available at commencement in determining the present value of lease payments. Operating lease expense is generally recognized on a straight-line basis over the lease term. Our lease values include options to extend or not to terminate the lease when it is reasonably certain that we will exercise such options.
We have agreements with lease and non-lease components, which are accounted for as a single lease component. Leases with a lease term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.
Earnings per share (EPS)
We use the two-class method for calculating EPS because the restricted stock units (RSUs) we grant are participating securities containing non-forfeitable rights to receive dividend equivalents. Under the two-class method, a portion of net income is allocated to RSUs and excluded from the calculation of income allocated to common stock, as shown in the table below.
Computation and reconciliation of earnings per common share are as follows (shares in millions):
|
For Three Months Ended March 31, |
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|||||||||||||||||||||||||
|
2019 |
|
|
2018 |
|
||||||||||||||||||||||
|
Net |
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|
|
|
|
|
|
Net |
|
|
|
|
|
|
|
|
||||||||
|
Income |
|
|
Shares |
|
|
EPS |
|
|
Income |
|
|
Shares |
|
|
EPS |
|
||||||||||
Basic EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
|
1,217 |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
1,366 |
|
|
|
|
|
|
|
|
|
|
Income allocated to RSUs |
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(11 |
) |
|
|
|
|
|
|
|
|
|
Income allocated to common stock |
$ |
|
1,209 |
|
|
|
939 |
|
|
$ |
|
1.29 |
|
|
$ |
|
1,355 |
|
|
|
983 |
|
|
$ |
|
1.38 |
|
Dilutive effect of stock compensation plans |
|
|
|
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
|
1,217 |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
1,366 |
|
|
|
|
|
|
|
|
|
|
Income allocated to RSUs |
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(11 |
) |
|
|
|
|
|
|
|
|
|
Income allocated to common stock |
$ |
|
1,209 |
|
|
|
956 |
|
|
$ |
|
1.26 |
|
|
$ |
|
1,355 |
|
|
|
1,005 |
|
|
$ |
|
1.35 |
|
Potentially dilutive securities representing 9 million and 5 million shares of common stock that were outstanding during the first quarters of 2019 and 2018, respectively, were excluded from the computation of diluted earnings per common share during these periods because their effect would have been anti-dilutive.
7
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
We use derivative financial instruments to manage exposure to foreign exchange risk. These instruments are primarily forward foreign currency exchange contracts, which are used as economic hedges to reduce the earnings impact that exchange rate fluctuations may have on our non-U.S. dollar net balance sheet exposures. Gains and losses from changes in the fair value of these forward foreign currency exchange contracts are credited or charged to OI&E. We do not apply hedge accounting to our foreign currency derivative instruments.
In connection with the issuance of long-term debt, we may use financial derivatives such as treasury-rate lock agreements that are recognized in AOCI and amortized over the life of the related debt. The results of these derivative transactions have not been material.
We do not use derivatives for speculative or trading purposes.
Fair values of financial instruments
The fair values of our derivative financial instruments were not material as of March 31, 2019. Our investments in cash equivalents, short-term investments and certain long-term investments, as well as our deferred compensation liabilities, are carried at fair value. The carrying values for other current financial assets and liabilities, such as accounts receivable and accounts payable, approximate fair value due to the short maturity of such instruments. The carrying value of our long-term debt approximates the fair value as measured using broker-dealer quotes, which are Level 2 inputs. See Note 4 for a description of fair value and the definition of Level 2 inputs.
Changes in accounting standards – adopted standards for current period
ASU No. 2016-02, Leases (Topic 842)
We adopted ASU No. 2016-02, Leases (ASC 842) effective January 1, 2019, using the modified retrospective transition method applied to leases existing at, or entered into after, the adoption date. The reported results for 2019 reflect the application of the new accounting guidance, while the reported results for prior periods are not adjusted and continue to be reported in accordance with our historical accounting under ASC 840, Leases. In addition, we elected the package of practical expedients permitted under the transition guidance that allowed us to apply prior conclusions related to lease definition, classification and initial direct costs.
The adoption of the new standard resulted in the recognition of $229 million of lease liabilities with corresponding lease assets as of January 1, 2019. The standard did not materially impact our consolidated results of operations and had no impact on cash flows.
Other standards
The following standards were also adopted:
ASU |
|
Description |
|
Adopted Date |
ASU No. 2017-12 |
|
Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities |
|
January 1, 2019 |
ASU No. 2018-14 |
|
Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans |
|
January 1, 2019 |
Changes in accounting standards – standards not yet adopted
ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
This standard requires entities to use a current lifetime expected credit loss methodology to measure impairments of certain financial assets. Using this methodology will result in earlier recognition of losses than under the current incurred loss approach, which requires waiting to recognize a loss until it is probable of having been incurred. There are other provisions within the standard that affect how impairments of other financial assets may be recorded and presented, and that expand disclosures. This standard will be effective for our interim and annual periods beginning January 1, 2020, with early adoption permitted beginning January 1, 2019, and must be applied on a modified retrospective basis. We are currently evaluating the potential impact of this standard, but we do not expect it to have a material impact on our financial position and results of operations.
8
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
We are evaluating the impact of the following standards, but we do not expect them to have a material impact on our financial position and results of operations. We plan to adopt these standards as of their effective dates.
ASU |
|
Description |
|
Effective Date |
ASU No. 2018-13 |
|
Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement |
|
January 1, 2020 |
ASU No. 2018-15 |
|
Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract |
|
January 1, 2020 |
3. Income taxes
Our estimated annual effective tax rate is about 16%, which does not include discrete tax items. This differs from the 21% statutory corporate tax rate due to the effect of U.S. tax benefits.
Provision for income taxes is based on the following:
|
For Three Months Ended |
|
|||||||
|
March 31, |
|
|||||||
|
2019 |
|
|
2018 |
|
||||
Taxes calculated using the estimated annual effective tax rate |
$ |
|
220 |
|
|
$ |
|
316 |
|
Discrete tax items |
|
|
(60 |
) |
|
|
|
(129 |
) |
Provision for income taxes |
$ |
|
160 |
|
|
$ |
|
187 |
|
|
|
|
|
|
|
|
|
|
|
Actual effective tax rate |
|
|
12 |
% |
|
|
|
12 |
% |
4. Valuation of debt and equity investments and certain liabilities
Debt and equity investments measured at fair value
Available-for-sale debt investments and trading securities are stated at fair value, which is generally based on market prices or broker quotes. See Fair-value considerations below. Unrealized gains and losses from available-for-sale debt securities are recorded as an increase or decrease, net of taxes, in AOCI on our Consolidated Balance Sheets. Other-than-temporary impairments on available-for-sale debt securities are recorded in OI&E in our Consolidated Statements of Income.
We classify certain mutual funds as trading securities. These mutual funds hold a variety of debt and equity investments intended to generate returns that offset changes in certain deferred compensation liabilities. We record changes in the fair value of these mutual funds and the related deferred compensation liabilities in SG&A.
Other equity investments
Our other investments include equity-method investments and non-marketable equity investments, which are not measured at fair value. These investments consist of interests in venture capital funds and other non-marketable equity securities. Gains and losses from equity-method investments are recognized in OI&E based on our ownership share of the investee’s financial results.
Non-marketable equity securities are measured at cost with adjustments for observable changes in price or impairments. Gains and losses on non-marketable equity investments are recognized in OI&E.
9
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Details of our investments are as follows:
|
March 31, 2019 |
|
|
December 31, 2018 |
|
||||||||||||||||||||||||
|
Cash and Cash |
|
|
Short-Term |
|
|
Long-Term |
|
|
Cash and Cash |
|
|
Short-Term |
|
|
Long-Term |
|
||||||||||||
|
Equivalents |
|
|
Investments |
|
|
Investments |
|
|
Equivalents |
|
|
Investments |
|
|
Investments |
|
||||||||||||
Measured at fair value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
$ |
|
1,073 |
|
|
$ |
|
— |
|
|
$ |
|
— |
|
|
$ |
|
747 |
|
|
$ |
|
— |
|
|
$ |
|
— |
|
Corporate obligations |
|
|
865 |
|
|
|
|
266 |
|
|
|
|
— |
|
|
|
|
473 |
|
|
|
|
748 |
|
|
|
|
— |
|
U.S. government agency and Treasury securities |
|
|
1,497 |
|
|
|
|
100 |
|
|
|
|
— |
|
|
|
|
988 |
|
|
|
|
1,047 |
|
|
|
|
— |
|
Trading securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds |
|
|
— |
|
|
|
|
— |
|
|
|
|
250 |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
226 |
|
Total |
|
|
3,435 |
|
|
|
|
366 |
|
|
|
|
250 |
|
|
|
|
2,208 |
|
|
|
|
1,795 |
|
|
|
|
226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other measurement basis: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity-method investments |
|
|
— |
|
|
|
|
— |
|
|
|
|
27 |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
21 |
|
Non-marketable equity investments |
|
|
— |
|
|
|
|
— |
|
|
|
|
4 |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
4 |
|
Cash on hand |
|