TI reports 1Q13 financial results and shareholder returns

          TI reports 1Q13 financial results and shareholder returns

Conference call on TI website at 4:30 p.m. Central time today

www.ti.com/ir

PR Newswire

DALLAS, April 22, 2013

DALLAS, April 22, 2013 /PRNewswire/ -- Texas Instruments Incorporated (TI)
(NASDAQ: TXN) today announced first-quarter revenue of $2.89 billion, net
income of $362 million and earnings per share of 32 cents.

Regarding the company's performance and returns to shareholders, Rich
Templeton, TI's chairman, president and CEO, made the following comments:

  o"Our revenue and earnings ended the quarter at the high end of our
    expected range. Customers continued to operate in a real-time mode,
    maintaining minimal component inventory and ordering parts as they were
    needed. Our short product lead times, well-positioned inventory and ready
    manufacturing capacity allow us to respond rapidly to changes in demand.

  o"TI is now firmly rooted in Analog and Embedded Processing, and in the
    first quarter these segments contributed 77 percent of our revenue – a
    full five points more than a year ago.

  o"Our business model generates strong cash flow from operations. Free cash
    flow* for the trailing 12 months was almost $3 billion, up 16 percent
    compared with a year ago. Further, free cash flow comprised 23 percent of
    revenue, which is consistent with our target of 20-25 percent. Free cash
    flow is well in excess of net income, and we expect it to remain so for
    some time as non-cash expenses are included in net income.

  o"In the quarter, we announced a 33 percent increase in our dividend to
    $1.12 per share annualized, and we added another $5 billion to our stock
    repurchase authorization. Both increases reflect our confidence in the
    long-term sustainability of our Analog and Embedded Processing business
    model.

  o"We returned $911 million to shareholders through dividends and share
    repurchases in the first quarter. For the trailing 12 months, the return
    to shareholders totaled $3 billion, or 107 percent of free cash flow,
    consistent with our intention to return all our free cash flow to
    shareholders except what is needed to repay debt.

  o"Our balance sheet remains strong, with $3.9 billion of cash and
    short-term investments on hand at the end of the quarter, 84 percent of
    which is owned by the company's U.S. entities. Inventory was 101 days,
    down from 105 a year ago."

* Non-GAAP; Free cash flow is Cash flow from operations less Capital
expenditures.

Earnings summary

Amounts are in millions of dollars, except per-share amounts.

                   1Q13      1Q12      Change
Revenue            $ 2,885   $ 3,121   -8%
Operating profit   $  395  $  397  -1%
Net income         $  362  $  265  37%
Earnings per share $   .32 $   .22 45%

Net income included a discrete tax benefit of $65 million associated with the
retroactive reinstatement of the federal R&D tax credit, which was signed into
law in January 2013.

Cash generation

Amounts are in millions of dollars.

                                      Trailing 12 months
                            1Q13      1Q13      1Q12     Change
Cash flow from operations             $ 3,324   $ 3,188
                            $ 360                      4%
Capital expenditures                  $ 476  $ 725
                            $ 84                     -34%
Free cash flow                        $ 2,848   $ 2,463
                            $ 276                      16%
Free cash flow % of revenue           23%       18%

Capital expenditures for the trailing 12 months were 4 percent of revenue,
consistent with the company's model.

Cash return

Amounts are in millions of dollars.

                             Trailing 12 months
                                      As a
                    
                             1Q13     Percentage of
                    1Q13
                                      Free Cash Flow
Dividends paid      $ 232  $ 856 30%

Share repurchases   $ 679  $ 2,179  77%

Total cash returned $ 911  $ 3,035  107%

Outlook

For the second quarter of 2013, TI expects:

  oRevenue: $2.93 – 3.17 billion
  oEarnings per share: $0.37 – 0.45

Revenue from legacy wireless products is expected to decline by about $60
million sequentially at the middle of this range. The company previously
announced that it is winding down investment in these products for the
smartphone and consumer tablet markets.

TI will update its second-quarter outlook on June 10, 2013.

For the full year of 2013, TI expects approximately the following:

  oR&D expense: $1.5 billion, down from the prior estimate of $1.6 billion
  oCapital expenditures: $0.5 billion, unchanged
  oDepreciation: $0.9 billion, unchanged
  oAnnual effective tax rate: 22 percent, unchanged

Consolidated Statements of Income
(Millions of dollars, except share and per-share amounts)
                                   For Three Months Ended
                                   Mar. 31,       Mar. 31,       Dec. 31,
                                   2013           2012
                                                                 2012
Revenue                            $   2,885    $   3,121    $   2,979
Cost of revenue                    1,511          1,590          1,534
Gross profit                       1,374          1,531          1,445
Research and development (R&D)     419            509            425
Selling, general and               459            462            430
administrative (SG&A)
Acquisition charges                86             153            88
Restructuring charges/other        15             10             363
Operating profit                   395            397            139
Other income (expense), net        2              (14)           39
Interest and debt expense          23             21             23
Income before income taxes         374            362            155
Provision (benefit) for income     12             97             (109)
taxes
Net income                         $    362   $    265   $    264
Earnings per common share:
 Basic                            $     .32  $     .23  $     .23
 Diluted                          $     .32  $     .22  $     .23
Average shares outstanding
(millions):
 Basic                            1,107          1,143          1,113
 Diluted                          1,123          1,165          1,124
Cash dividends declared per share  $     .21  $     .17  $     .21
of common stock
Percentage of revenue:
Gross profit                       47.6%          49.0%          48.5%
R&D                                14.5%          16.3%          14.3%
SG&A                               15.9%          14.8%          14.4%
Operating profit                   13.7%          12.7%          4.7%

As required by accounting rule ASC 260, net income allocated to unvested
restricted stock units (RSUs), on which we pay dividend equivalents, is
excluded from the calculation of EPS. The amount excluded is $7 million, $4
million and $4 million for the quarters ending March 31, 2013, March 31, 2012,
and December 31, 2012, respectively.





Consolidated Balance Sheets
(Millions of dollars, except share amounts)
                                   Mar. 31,        Mar. 31,     Dec. 31,
                                   2013            2012         2012
Assets
Current assets:
 Cash and cash equivalents       $  1,393       $  1,193    $  1,416
 Short-term investments          2,469           1,572        2,549
 Accounts receivable, net of
allowances of ($26), ($32) and     1,333           1,478        1,230
($31)
 Raw materials                   99              114          116
 Work in process                 930             996          935
 Finished goods                  671             743          706
 Inventories                     1,700           1,853        1,757
 Deferred income taxes           1,051           1,192        1,044
 Prepaid expenses and other      259             303          234
current assets
 Total current assets            8,205           7,591        8,230
Property, plant and equipment at   6,773           6,840        6,891
cost
 Less accumulated depreciation   (3,034)         (2,562)      (2,979)
 Property, plant and equipment,  3,739           4,278        3,912
net
Long-term investments              204             239          215
Goodwill, net                      4,362           4,452        4,362
Acquisition-related intangibles,   2,473           2,815        2,558
net
Deferred income taxes              264             302          280
Capitalized software licenses,     169             201          142
net
Overfunded retirement plans        62              37           68
Other assets                       223             94           254
Total assets                       $ 19,701        $ 20,009     $ 20,021
Liabilities and Stockholders'
Equity
Current liabilities:
 Commercial paper borrowings     $      --  $    700  $      --
 Current portion of long-term    1,500           378          1,500
debt
 Accounts payable                440             589          444
 Accrued compensation            365             382          524
 Income taxes payable            109             106          79
 Deferred income taxes           2               2            2
 Accrued expenses and other      694             754          881
liabilities
 Total current liabilities       3,110           2,911        3,430
Long-term debt                     4,183           4,207        4,186
Underfunded retirement plans       258             684          269
Deferred income taxes              598             620          572
Deferred credits and other         600             516          603
liabilities
Total liabilities                  8,749           8,938        9,060
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: Mar. 31,     1,741           1,741        1,741
2013 – 1,740,815,939; Mar. 31,
2012 –
 1,740,814,489; Dec. 31,
2012 – 1,740,815,939
 Paid-in capital                 1,049           1,112        1,176
 Retained earnings               27,330          26,345       27,205
 Less treasury common stock at
cost:
 Shares: Mar. 31, 2013 –     (18,518)        (17,385)     (18,462)
631,661,551; Mar. 31, 2012 –
 596,461,198; Dec. 31, 2012
– 632,636,970
 Accumulated other
comprehensive income (loss), net   (650)           (742)        (699)
of taxes
 Total stockholders' equity      10,952          11,071       10,961
Total liabilities and              $ 19,701       $ 20,009    $ 20,021
stockholders' equity





Consolidated Statements of Cash Flows
(Millions of dollars)
                                         For Three Months Ended
                                         Mar. 31,     Mar. 31,     Dec. 31,
                                         2013         2012         2012
Cash flows from operating activities:
 Net income                            $    362  $    265  $    264
 Adjustments to net income:
 Depreciation                        228          243          232
 Amortization of                     85           86           85
acquisition-related intangibles
 Stock-based compensation            75           69           64
 Gains on sales of assets            (3)          --           --
 Deferred income taxes               15           (4)          (72)
 Increase (decrease) from changes in:
 Accounts receivable                 (112)        63           381
 Inventories                         57           (91)         91
  Prepaid expenses and other current  21           5            147
assets
  Accounts payable and accrued        (244)        (37)         222
expenses
 Accrued compensation                (154)        (211)        (41)
  Income taxes payable                29           67           (52)
 Changes in funded status of           29           26           (257)
retirement plans
 Other                                 (28)         (32)         21
Cash flows from operating activities     360          449          1,085
Cash flows from investing activities:
 Capital expenditures                  (84)         (103)        (96)
 Proceeds from asset sales             18           --           --
 Purchases of short-term investments   (536)        (242)        (661)
 Proceeds from short-term investments  615          613          559
 Purchases of long-term investments    --           (1)          --
 Proceeds from long-term investments   9            3            9
Cash flows from investing activities     22           270          (189)
Cash flows from financing activities:
 Repayment of commercial paper         --           (300)        --
borrowings
 Dividends paid                        (232)        (195)        (235)
 Stock repurchases                     (679)        (300)        (600)
 Proceeds from common stock            454          259          133
transactions
 Excess tax benefit from share-based   52           18           12
payments
Cash flows from financing activities     (405)        (518)        (690)
Net change in cash and cash equivalents  (23)         201          206
Cash and cash equivalents, beginning of  1,416        992          1,210
period
Cash and cash equivalents, end of        $  1,393    $  1,193    $  1,416
period

Certain amounts in prior periods' financial statements have been reclassified
to conform to the current presentation.

1Q13 segment results

Beginning with this financial report, TI has transitioned its segment
reporting to align with the company's strategic focus and new organizational
structure. The Wireless segment has been eliminated, as the company has
announced that it is winding down investment in Wireless products for the
smartphone and consumer tablet markets. Financial results for these legacy
wireless products are included in the Other segment. Financial results for
Wireless products that address embedded applications, a strategic focus for
the company, are reported in the Embedded Processing segment. In addition,
some products, mostly RFID products used in automotive applications, were
moved from the Other segment into Embedded Processing. Historical information
for the new segment structure is available at ti.com/ir.

                               1Q13        1Q12      Change  4Q12      Change
Analog:
 Revenue                 $ 1,648     $ 1,686   -2%     $ 1,669   -1%
 Operating profit        $  300    $  335  -10%    $  419  -28%
Embedded Processing:
 Revenue                  $  561    $  540  4%      $  546  3%
 Operating profit         $    7  $   35 -80%    $   11 -36%
Other:
 Revenue                  $  676    $  895  -24%    $  764  -12%
 Operating profit (loss)* $   88   $   27 226%    $  (291) n/a

* Includes Acquisition charges and Restructuring charges/other.

Analog: (includes High Volume Analog & Logic, Power Management, High
Performance Analog and Silicon Valley Analog)

  oCompared with a year ago, revenue decreased due to lower Silicon Valley
    Analog revenue. High Volume Analog & Logic revenue and High Performance
    Analog revenue also declined while revenue from Power Management
    increased.
  oCompared with the prior quarter, revenue was about even as lower revenue
    from High Volume Analog & Logic and Power Management was offset by higher
    revenue from Silicon Valley Analog and High Performance Analog.
  oOperating profit decreased from a year ago primarily due to lower revenue
    and associated gross profit. Operating profit declined from the prior
    quarter primarily due to higher operating expenses.

Embedded Processing: (includes Processors, Microcontrollers and Connectivity)

  oCompared with the year-ago quarter, the increase in revenue was primarily
    due to higher Microcontroller revenue. Revenue from Connectivity also
    increased, while Processor revenue was about even.
  oCompared with the prior quarter, revenue increased due to
    Microcontrollers. Processor revenue declined while Connectivity revenue
    was about even.
  oOperating profit declined from a year ago primarily due to lower gross
    profit. Operating profit decreased from the prior quarter due to higher
    operating expenses.

Other: (includes DLP^® products, custom ASIC products, calculators, royalties
and legacy wireless products)

  oCompared with the year-ago quarter, revenue declined primarily due to
    lower revenue from legacy wireless products. The year-ago quarter also
    included proceeds that did not recur from business interruption insurance
    associated with the Japan earthquake. Revenue from custom ASIC products
    and calculators also declined. Revenue from DLP products and royalties
    increased.
  oCompared with the prior quarter, revenue declined primarily due to lower
    revenue from legacy wireless products. Revenue from custom ASIC products
    and royalties also declined. Revenue from calculators increased and from
    DLP products was about even.
  oOperating profit increased from a year ago primarily due to lower
    operating expenses. Operating profit increased from the prior quarter due
    to lower restructuring charges.

Non-GAAP financial information

This earnings release includes references to free cash flow and various ratios
based on that measure. These are financial measures that were not prepared in
accordance with generally accepted accounting principles in the United States
(non-GAAP measures). Free cash flow was calculated by subtracting Capital
expenditures from the most directly comparable GAAP measure of Cash flows from
operating activities (also referred to as Cash flow from operations).

The free cash flow measures were compared to the following GAAP items to
determine the various non-GAAP ratios presented below and referred to in the
release: Revenue, Dividends paid and Stock repurchases. Reconciliation to
the most directly comparable GAAP-based ratios is provided in the table below.

The company believes all of these non-GAAP measures provide insight into its
liquidity, its cash-generating capability and the amount of cash available to
return to investors as well as insight into its financial performance. These
non-GAAP measures are supplemental to the comparable GAAP measures.

TEXAS INSTRUMENTS INCORPORATED
(Millions of dollars)
                                 For the Twelve        As a
                                 Months Ended          Percentage of
                                 Mar. 31, 2013         Revenue
Revenue                          $      12,589
Cash flow from operations (GAAP) $       3,324  26%
Less Capital expenditures        476                   4%
Free cash flow (non-GAAP)        $       2,848  23%

The Cash flow from operations and Capital expenditures as a percentage of
Revenue provided in the above chart will not calculate to the free cash flow
as a percentage of Revenue due to rounding.

                                           For the   As a          As a
                                           Twelve    Percentage    Percentage
                                           Months    of Cash Flow  of Free
                                           Ended     from
                                                     Operations    Cash Flow
                                           Mar. 31,  (GAAP)
                                           2013                    (Non-GAAP)
Dividends                                  $   
paid            26%           30%
                                            856
Stock repurchases                          2,179     66%           77%
                                           $   
Total cash returned                              91%           107%
                                           3,035

The Dividends paid and Stock repurchases as a percentage of Cash flow from
operations provided in the above chart will not sum to the total cash returned
as a percentage of Cash flow from operations due to rounding.

Safe Harbor Statement

"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, statements herein that describe TI'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 TI or its
management:

  oMarket demand for semiconductors, particularly in key markets such as
    communications, computing, industrial, consumer electronics and
    automotive;
  oTI's ability to maintain or improve profit margins, including its ability
    to utilize its manufacturing facilities at sufficient levels to cover its
    fixed operating costs, in an intensely competitive and cyclical industry;
  oTI's ability to develop, manufacture and market innovative products in a
    rapidly changing technological environment;
  oTI's ability to compete in products and prices in an intensely competitive
    industry;
  oTI's ability to maintain and enforce a strong intellectual property
    portfolio and obtain needed licenses from third parties;
  oExpiration of license agreements between TI and its patent licensees, and
    market conditions reducing royalty payments to TI;
  oEconomic, social and political conditions in the countries in which TI,
    its customers or its suppliers operate, including security risks, health
    conditions, possible disruptions in transportation, communications and
    information technology networks and fluctuations in foreign currency
    exchange rates;
  oNatural events such as severe weather and earthquakes in the locations in
    which TI, its customers or its suppliers operate;
  oAvailability and cost of raw materials, utilities, manufacturing
    equipment, third-party manufacturing services and manufacturing
    technology;
  oChanges in the tax rate applicable to TI as the result of changes in tax
    law, the jurisdictions in which profits are determined to be earned and
    taxed, the outcome of tax audits and the ability to realize deferred tax
    assets;
  oChanges in laws and regulations to which TI or its suppliers are or may
    become subject, such as those imposing fees or reporting or substitution
    costs relating to the discharge of emissions into the environment or the
    use of certain raw materials in our manufacturing processes;
  oLosses or curtailments of purchases from key customers and the timing and
    amount of distributor and other customer inventory adjustments;
  oCustomer demand that differs from our forecasts;
  oThe financial impact of inadequate or excess TI inventory that results
    from demand that differs from projections;
  oImpairments of our non-financial assets;
  oProduct liability or warranty claims, claims based on epidemic or delivery
    failure or recalls by TI customers for a product containing a TI part;
  oTI's ability to recruit and retain skilled personnel;
  oTimely implementation of new manufacturing technologies and installation
    of manufacturing equipment, and the ability to obtain needed third-party
    foundry and assembly/test subcontract services;
  oTI's obligation to make principal and interest payments on its debt;
  oTI's ability to successfully integrate and realize opportunities for
    growth from acquisitions, and our ability to realize our expectations
    regarding the amount and timing of restructuring charges and associated
    cost savings; and
  oBreaches of our information technology systems.

For a more detailed discussion of these factors, see the Risk Factors
discussion in Item 1A of TI's Form 10-K for the year ended December 31, 2012.
The forward-looking statements included in this release are made only as of
the date of this release, and TI undertakes no obligation to update the
forward-looking statements to reflect subsequent events or circumstances.

About Texas Instruments

Texas Instruments Incorporated (TI) is a global semiconductor design and
manufacturing company that develops analog ICs and embedded processors. By
employing the world's brightest minds, TI creates innovations that shape the
future of technology. TI is helping more than 100,000 customers transform the
future, today. Learn more at www.ti.com.

TI trademarks:
 DLP
Other trademarks are the property of their respective owners.

TXN-F

SOURCE Texas Instruments Incorporated

Website: http://www.ti.com
Contact: Media Contacts: Chris Rongone, +1-214-479-6868, c-rongone@ti.com, Kim
Morgan, +1-214-479-0707, kim-morgan@ti.com; Investor Relations Contacts: Ron
Slaymaker, +1-214-479-6388, rslaymaker@ti.com, Dave Pahl, +1-214-479-4629,
dpahl@ti.com, Brandon Hodge, +1-214-479-3515, brandonhodge@ti.com
 
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