SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 2003
Commission File Number 1-3761
TEXAS INSTRUMENTS INCORPORATED
(Exact name of Registrant as specified in its charter)
| Delaware | 75-0289970 | |
| (State of Incorporation) | (I.R.S. Employer Identification No.) |
| 12500 TI Boulevard, P.O. Box 660199, Dallas, Texas | 75266-0199 | |
| (Address of principal executive offices) | (Zip Code) |
972-995-3773
Registrant’s telephone number, including area code
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 x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
1,731,251,468
Number of shares of Registrant’s common stock outstanding as of June 30, 2003
PART I—FINANCIAL INFORMATION
| ITEM 1. | Financial Statements. |
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Financial Statements
(In millions of dollars, except per-share amounts)
| For Three Months Ended |
For Six Months Ended |
|||||||||||||
| Operations |
June 30, 2003 |
June 30, 2002 |
June 30, 2003 |
June 30, 2002 |
||||||||||
| Net revenue |
$ | 2,339 | $ | 2,162 | $ | 4,531 | $ | 3,989 | ||||||
| Operating costs and expenses: |
||||||||||||||
| Cost of revenue |
1,462 | 1,306 | 2,793 | 2,523 | ||||||||||
| Research and development |
424 | 404 | 832 | 792 | ||||||||||
| Selling, general and administrative |
328 | 297 | 629 | 563 | ||||||||||
| Total |
2,214 | 2,007 | 4,254 | 3,878 | ||||||||||
| Profit from operations |
125 | 155 | 277 | 111 | ||||||||||
| Other income (expense) net |
36 | (24 | ) | 51 | (13 | ) | ||||||||
| Interest on loans |
10 | 14 | 23 | 29 | ||||||||||
| Income before income taxes |
151 | 117 | 305 | 69 | ||||||||||
| Provision for income taxes |
30 | 22 | 67 | 12 | ||||||||||
| Net income |
$ | 121 | $ | 95 | $ | 238 | $ | 57 | ||||||
| Diluted earnings per common share |
$ | .07 | $ | .05 | $ | .14 | $ | .03 | ||||||
| Basic earnings per common share |
$ | .07 | $ | .05 | $ | .14 | $ | .03 | ||||||
| Cash dividends declared per share of common stock. |
$ | .021 | $ | .021 | $ | .043 | $ | .043 | ||||||
2
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Financial Statements
(In millions of dollars, except per-share amounts)
| Balance Sheet |
June 30, 2003 |
Dec. 31, 2002 |
||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 1,019 | $ | 949 | ||||
| Short-term investments |
2,075 | 2,063 | ||||||
| Accounts receivable, net of allowances for customer adjustments |
1,440 | 1,217 | ||||||
| Inventories: |
||||||||
| Raw materials |
113 | 121 | ||||||
| Work in process |
590 | 478 | ||||||
| Finished goods |
297 | 191 | ||||||
| Inventories |
1,000 | 790 | ||||||
| Deferred income taxes |
586 | 545 | ||||||
| Prepaid expenses and other current assets |
327 | 562 | ||||||
| Total current assets |
6,447 | 6,126 | ||||||
| Property, plant and equipment at cost |
9,362 | 9,516 | ||||||
| Less accumulated depreciation |
(4,986 | ) | (4,722 | ) | ||||
| Property, plant and equipment (net) |
4,376 | 4,794 | ||||||
| Long-term cash investments |
1,089 | 1,130 | ||||||
| Equity investments |
924 | 808 | ||||||
| Goodwill |
639 | 638 | ||||||
| Acquisition-related intangibles |
159 | 185 | ||||||
| Deferred income taxes |
529 | 618 | ||||||
| Other assets |
471 | 380 | ||||||
| Total assets |
$ | 14,634 | $ | 14,679 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Loans payable and current portion long-term debt |
$ | 68 | $ | 422 | ||||
| Accounts payable and accrued expenses |
1,295 | 1,204 | ||||||
| Income taxes payable |
264 | 293 | ||||||
| Accrued retirement and profit sharing contributions |
14 | 15 | ||||||
| Total current liabilities |
1,641 | 1,934 | ||||||
| Long-term debt |
809 | 833 | ||||||
| Accrued retirement costs |
813 | 777 | ||||||
| Deferred income taxes |
87 | 129 | ||||||
| Deferred credits and other liabilities |
342 | 272 | ||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $25 par value. Authorized—10,000,000 shares. |
— | — | ||||||
| Common stock, $1 par value. Authorized—2,400,000,000 shares. |
1,740 | 1,740 | ||||||
| Paid-in capital |
966 | 1,042 | ||||||
| Retained earnings |
8,648 | 8,484 | ||||||
| Less treasury common stock at cost. |
||||||||
| Shares: 2003—9,218,747; 2002—9,775,781 |
(185 | ) | (229 | ) | ||||
| Accumulated other comprehensive income (loss) |
(207 | ) | (262 | ) | ||||
| Deferred compensation |
(20 | ) | (41 | ) | ||||
| Total stockholders’ equity |
10,942 | 10,734 | ||||||
| Total liabilities and stockholders’ equity |
$ | 14,634 | $ | 14,679 | ||||
3
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Financial Statements
(In millions of dollars)
| For Six Months Ended |
||||||||||
| Cash Flows |
June 30, 2003 |
June 30, 2002 |
||||||||
| Cash flows from operating activities: |
||||||||||
| Net income |
$ | 238 | $ | 57 | ||||||
| Depreciation |
702 | 787 | ||||||||
| Amortization of acquisition-related costs |
53 | 57 | ||||||||
| Write-downs of equity investments |
23 | 116 | ||||||||
| Deferred income taxes |
(20 | ) | 8 | |||||||
| (Increase) decrease in working capital (excluding cash and cash equivalents, short-term |
||||||||||
| Accounts receivable |
(210 | ) | (346 | ) | ||||||
| Inventories |
(210 | ) | (69 | ) | ||||||
| Prepaid expenses and other current assets |
(20 | ) | 167 | |||||||
| Accounts payable and accrued expenses |
77 | (50 | ) | |||||||
| Income taxes payable |
(26 | ) | (111 | ) | ||||||
| Accrued retirement and profit sharing contributions |
(5 | ) | 123 | |||||||
| Increase (decrease) in noncurrent accrued retirement costs |
3 | (101 | ) | |||||||
| Other |
(31 | ) | 45 | |||||||
| Net cash provided by operating activities |
574 | 683 | ||||||||
| Cash flows from investing activities: |
||||||||||
| Additions to property, plant and equipment |
(294 | ) | (297 | ) | ||||||
| Purchases of short-term investments |
(685 | ) | (709 | ) | ||||||
| Sales and maturities of short-term investments |
1,804 | 1,548 | ||||||||
| Purchases of long-term cash investments |
(1,443 | ) | (957 | ) | ||||||
| Sales of long-term cash investments |
354 | 46 | ||||||||
| Purchases of equity investments |
(11 | ) | (20 | ) | ||||||
| Sales of equity investments |
14 | 30 | ||||||||
| Acquisition of businesses, net of cash acquired |
— | (69 | ) | |||||||
| Net cash used in investing activities |
(261 | ) | (428 | ) | ||||||
| Cash flows from financing activities: |
||||||||||
| Additions to loans payable |
— | 9 | ||||||||
| Payments on loans payable |
(5 | ) | (1 | ) | ||||||
| Payments on long-term debt |
(385 | ) | (19 | ) | ||||||
| Dividends paid on common stock |
(74 | ) | (74 | ) | ||||||
| Sales and other common stock transactions |
63 | 92 | ||||||||
| Common stock repurchase program |
(109 | ) | (210 | ) | ||||||
| Decrease in current assets for restricted cash |
261 | — | ||||||||
| Net cash used in financing activities |
(249 | ) | (203 | ) | ||||||
| Effect of exchange rate changes on cash |
6 | 4 | ||||||||