TI reports 3Q16 financial results and shareholder returns, including 32% dividend increase
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TI reports 3Q16 financial results and shareholder returns, including 32% dividend increase

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

DALLAS, Oct. 26, 2016 — (PRNewswire) —  Texas Instruments Incorporated (TI) (NASDAQ: TXN) today reported third-quarter revenue of $3.68 billion, net income of $968 million and earnings per share of 94 cents.

TI also increased its quarterly dividend by 32 percent to 50 cents per share, or $2.00 annualized. The increase reflects TI's continued strength in free cash flow generation and its commitment to return excess cash to shareholders. The quarterly dividend was declared and will be payable November 21, 2016, to shareholders of record on November 7, 2016. 

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

Free cash flow is a non-GAAP financial measure. Free cash flow is cash flow from operations less capital expenditures.

Earnings summary

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



3Q16


3Q15


Change

Revenue


$   3,675


$   3,429


7%

Operating profit


$   1,395


$   1,164


20%

Net income


$      968


$      798


21%

Earnings per share


$     0.94


$     0.76


24%

 

Cash generation

Amounts are in millions of dollars.





Trailing 12 Months




3Q16


3Q16


3Q15


Change


Cash flow from operations


$   1,413


$   4,459


$   4,110


8%


Capital expenditures


$      139


$      585


$      512


14%


Free cash flow


$   1,274


$   3,874


$   3,598


8%


Free cash flow % of revenue




29.5%


27.5%




 

Capital expenditures for the past 12 months were 4 percent of revenue, consistent with TI's long-term expectations.

Cash return

Amounts are in millions of dollars.






Trailing 12 Months



3Q16


3Q16


3Q15


Change

Dividends paid


$    382


$   1,533


$   1,414


8%

Stock repurchases


$    500


$   2,284


$   2,812


-19%

Total cash returned


$    882


$   3,817


$   4,226


-10%

 


TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Income

(Millions of dollars, except share and per-share amounts)




For Three Months Ended




September 30,




2016


2015


Revenue


$

3,675


$

3,429


Cost of revenue (COR)



1,395



1,432


Gross profit



2,280



1,997


Research and development (R&D)



356



316


Selling, general and administrative (SG&A)



448



434


Acquisition charges



80



83


Restructuring charges/other



1




Operating profit



1,395



1,164


Other income (expense), net (OI&E)



4



6


Interest and debt expense



18



22


Income before income taxes



1,381



1,148


Provision for income taxes



413



350


Net income


$

968


$

798










Diluted earnings per common share


$

.94


$

.76










Average diluted shares outstanding (millions)



1,017



1,035










Cash dividends declared per common share


$

.38


$

.34










As a result of accounting rule ASC 260, which requires a portion of Net income to be allocated to unvested restricted stock units (RSUs) on which we pay dividend equivalents, diluted EPS is calculated using the following:











Net income


$

968


$

798


Income allocated to RSUs



(11)



(11)


Income allocated to common stock for diluted EPS


$

957


$

787


 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheets

(Millions of dollars, except share amounts)




September 30,



2016


2015

Assets







Current assets:







Cash and cash equivalents


$

1,369


$

1,133

Short-term investments



1,768



1,602

Accounts receivable, net of allowances of ($14) and ($16)



1,447



1,481

Raw materials



104



108

Work in process



949



913

Finished goods



755



750

Inventories



1,808



1,771

Prepaid expenses and other current assets



789



945

Total current assets



7,181



6,932

Property, plant and equipment at cost



4,982



5,742

Accumulated depreciation



(2,437)



(3,113)

Property, plant and equipment, net



2,545



2,629

Long-term investments



233



216

Goodwill, net



4,362



4,362

Acquisition-related intangibles, net



1,344



1,662

Deferred income taxes



355



247

Capitalized software licenses, net



50



54

Overfunded retirement plans



64



76

Other assets



82



81

Total assets


$

16,216


$

16,259








Liabilities and stockholders' equity







Current liabilities:







Current portion of long-term debt


$

634


$

1,000

Accounts payable



428



367

Accrued compensation



647



615

Income taxes payable



68



84

Accrued expenses and other liabilities



393



431

Total current liabilities



2,170



2,497

Long-term debt



2,977



3,121

Underfunded retirement plans



201



247

Deferred income taxes



35



41

Deferred credits and other liabilities



547



383

Total liabilities



5,930



6,289

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 – 1,740,815,939



1,741



1,741

Paid-in capital



1,757



1,562

Retained earnings



32,432



30,731

Treasury common stock at cost







Shares: September 30, 2016 – 739,693,480; September 30, 2015 – 721,186,352



(25,102)



(23,551)

Accumulated other comprehensive income (loss), net of taxes (AOCI)



(542)



(513)

Total stockholders' equity



10,286



9,970

Total liabilities and stockholders' equity


$

16,216


$

16,259


Certain amounts in the prior period's balance sheet have been reclassified to conform to the current presentation.

 


TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Millions of dollars)




For Three Months Ended



September 30,



2016


2015

Cash flows from operating activities







Net income


$

968


$

798

Adjustments to Net income:







Depreciation



150



193

Amortization of acquisition-related intangibles



80



80

Amortization of capitalized software



7



12

Stock-based compensation



56



66

Deferred income taxes



(125)



(50)

Increase (decrease) from changes in:







Accounts receivable



(98)



(47)

Inventories



68



114

Prepaid expenses and other current assets



95



40

Accounts payable and accrued expenses



9



(48)

Accrued compensation



149



132

Income taxes payable



47



99

Changes in funded status of retirement plans



24



24

Other



(17)



(4)

Cash flows from operating activities



1,413



1,409








Cash flows from investing activities







Capital expenditures



(139)



(139)

Purchases of short-term investments



(978)



(459)

Proceeds from short-term investments



515



980

Other



(1)



7

Cash flows from investing activities



(603)



389








Cash flows from financing activities







Repayment of debt





(750)

Dividends paid



(382)



(348)

Stock repurchases



(500)



(790)

Proceeds from common stock transactions



159



35

Excess tax benefit from share-based payments



47



4

Cash flows from financing activities



(676)



(1,849)








Net change in Cash and cash equivalents



134



(51)

Cash and cash equivalents at beginning of period



1,235



1,184

Cash and cash equivalents at end of period


$

1,369


$

1,133

 


Segment results

Amounts are in millions of dollars.




3Q16



3Q15


Change

Analog:









Revenue


$

2,323


$

2,182


6%

Operating profit


$

949


$

812


17%

Embedded Processing:









Revenue


$

795


$

725


10%

Operating profit


$

220


$

174


26%

Other:









Revenue


$

557


$

522


7%

Operating profit*


$

226


$

178


27%


* Includes Acquisition charges and Restructuring charges/other.

 

Compared with the year-ago quarter:

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

Embedded Processing: (includes Microcontrollers, Processors and Connectivity)

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

Non-GAAP financial information 

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

The company believes that free cash flow and the associated ratios provide insight into its liquidity, its cash-generating capability and the amount of cash potentially available to return to shareholders, as well as insight into its financial performance. These non-GAAP measures are supplemental to the comparable GAAP measures.

Reconciliation to the most directly comparable GAAP measures is provided in the table below.

Amounts are in millions of dollars.




For 12 Months Ended





September 30,





2016


2015


Change

Cash flow from operations (GAAP)


$

4,459


$

4,110


8%

Capital expenditures



(585)



(512)



Free cash flow (non-GAAP)


$

3,874


$

3,598


8%










Revenue


$

13,145


$

13,080












Cash flow from operations as a percent of revenue (GAAP)



33.9%



31.4%



Free cash flow as a percent of revenue (non-GAAP)



29.5%



27.5%



 

Notice regarding forward-looking statements

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:

For a more detailed discussion of these factors, see the Risk Factors discussion in Item 1A of TI'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 we undertake 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-G

 

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SOURCE Texas Instruments Incorporated

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