- 4Q TI Revenue Up 9% Sequentially, Up 29% from Year Ago
- 4Q Gross Profit Up 16% Sequentially, Up 55% from Year Ago
- 4Q EPS of $0.29, Including $0.07 from Micron Stock Sale and
$0.02 from Tax Reduction
- 4Q Semiconductor Revenue Up 16% Sequentially, Up 34% from
Year Ago
- 2003 TI Revenue Up 17% from 2002 on 20% Growth in Semiconductor
• Download
Financials in MS Excel Format (64KB)
DALLAS (January 26, 2004) -- Texas Instruments Incorporated (NYSE: TXN)
today reported that fourth quarter 2003 revenue of $2770 million increased
9 percent sequentially and 29 percent from the year-ago period due to robust
growth across almost all of the company's Semiconductor product lines.
For the year, TI revenue was $9834 million, up 17 percent from 2002 due
to growth in Semiconductor that was led by demand for Digital Signal Processors
(DSP) across the wireless, digital consumer and broadband markets.
Earnings per share were $0.29 in the quarter, including a $0.07 contribution
from the sale of Micron Technology, Inc. common stock and a $0.02 contribution
from a reduction in TI's estimated taxes for 2003.
Semiconductor revenue in the fourth quarter increased 16 percent sequentially
and 34 percent from the year-ago period primarily due to strong demand for
a broad range of DSP and Analog products. For the year, Semiconductor revenue
increased 20 percent from 2002, primarily due to strong demand for DSP products.
From an end-equipment perspective, higher shipments into the wireless market
provided the most significant source of growth as wireless revenue increased
23 percent sequentially, 41 percent from the year-ago quarter and 32 percent
for the year.
"The fourth quarter marked the second consecutive
period of double-digit sequential revenue growth in Semiconductor. The new
revenue record for our sales into the wireless market, and the excellent
growth in both DSP and high-performance Analog are particularly noteworthy.
When compared to competitors, I believe TI's performance for the quarter
and for the year will show that this growth is due to both a broad recovery
in the market and to gains in market share," said Tom Engibous, TI chairman,
president and CEO.
"For the year, TI's operating activities generated
more than $2 billion in cash flow. We started the year with a very healthy
balance sheet, and it grew significantly stronger as TI and the market gained
momentum through the course of the year. This strong financial position
has allowed us to remain focused on our strategic objectives.
"Moving
forward, I am pleased by the progress in our high-performance Analog competitiveness,
where our position is strengthening both technologically and with customers.
Additionally, the fundamentals of wireless continue to be attractive as
expanding handset functionality based on TI technology increases our semiconductor
content in each handset. Looking ahead, our R&D investments in OMAP™
application processors, in complete chipset solutions and in new standard
products for the CDMA market should provide new opportunities for our wireless
technologies," Engibous said.
"In wireless and other targeted markets
such as broadband communications and digital consumer, we have combined
our systems skills with our DSP and Analog technologies and leading manufacturing
capabilities to deliver product solutions that generate unprecedented levels
of TI content in our customers' equipment. We will continue to offer our
customers more complete solutions, and as we do, I believe our financial
results will reflect the increased value we bring to their systems.
"Because we have maintained high levels of R&D investment, we are
well-positioned to advance in existing markets and enter new markets early.
This is particularly important as the strength of the overall market for
semiconductors improves. Manufacturing capacity and demand are more in balance
today than at any time in the last three years, resulting in an encouraging
outlook for revenue and profits in the year ahead," he said.
Details
of Financial Results
Revenue
In the fourth quarter, TI revenue of $2770 million increased by
$237 million sequentially and increased by $624 million from the year-ago
quarter.
For the year, TI revenue of $9834 million increased $1451 million from 2002.
Charges
In the fourth quarter, the company incurred $13 million in charges
related to previously announced restructuring actions, of which $11 million
is included in cost of revenue and $2 million is included in selling,
general and administrative (SG&A) expense.
For the year, the company incurred $118 million in restructuring charges,
of which $102 million is included in cost of revenue, $14 million in SG&A
expense and $2 million in research and development (R&D) expense.
When completed at the end of 2004, the restructuring actions are expected
to result in about $105 million of annual savings, of which $65 million
will be in Semiconductor and $40 million will be in Sensors & Controls.
For the year, the company also incurred a non-tax-deductible $23 million
in-process R&D charge in the third quarter related to the company's
acquisition of Radia Communications, Inc., and a $10 million charge in
other income (expense) net (OI&E) in the first quarter related to
the redemption of $250 million in convertible notes issued by Burr-Brown
Corporation, which TI acquired in 2000.
Gross Profit
In the fourth quarter, gross profit of $1194 million increased
16 percent sequentially and 55 percent from the year-ago period primarily
due to higher revenue. Gross profit margin was 43.1 percent of revenue,
up 2.4 percentage points sequentially primarily due to lower restructuring
charges, and up 7.3 percentage points from the year-ago quarter due to
greater utilization of the company's fixed-cost manufacturing assets in
its Semiconductor operations.
For the year, gross profit of $3962 million, or 40.3 percent of revenue,
increased 29 percent from 2002 due to the impact of higher revenue, which
was partially offset by increased restructuring charges of $77 million.
Expenses
R&D expense of $448 million decreased by $20 million, or
4 percent, sequentially due to the Radia in-process R&D charge incurred
in the third quarter. Compared with the year-ago period, R&D expense
increased 9 percent due to increased product development in Semiconductor,
primarily for wireless. For the year, R&D expense of $1748 million
increased 8 percent from 2002 due to increased product development in
Semiconductor, primarily for wireless.
SG&A expense of $308 million declined 2 percent sequentially due to
lower restructuring charges. Compared with the year-ago quarter, SG&A
expense increased 6 percent primarily due to higher Semiconductor marketing
expenses. For the year, SG&A expense increased 7 percent from 2002
primarily due to higher Semiconductor marketing expenses.
Operating Profit
Operating profit of $438 million, or 15.8 percent of revenue,
increased by $189 million, or 76 percent, sequentially and increased by
$371 million, or 557 percent, from the year-ago quarter due to higher
gross profit.
For the year, operating profit of $965 million, or 9.8 percent of revenue,
increased 235 percent from 2002 due to higher gross profit.
Other Income (Expense) Net and Interest Expense
OI&E of $131 million decreased $12 million sequentially primarily
due to lower gains on the company's fourth-quarter sales of Micron common
stock, which TI received in connection with the sale of its memory business
unit to Micron in 1998.
Compared with the year-ago period, OI&E increased by $751 million.
In the fourth quarter of 2002, the company recorded a $638 million impairment
write-down of its holdings of Micron common stock. As previously announced,
TI sold a portion of its Micron stock in the third quarter of 2003 for
a pre-tax gain of $106 million, and TI sold its remaining shares in the
fourth quarter of 2003 for a pre-tax gain of $97 million.
For the year, OI&E of $324 million increased by $901 million from
2002.
Interest expense of $8 million was about even sequentially. Interest expense
decreased by $6 million compared with the year-ago quarter and by $18
million from 2002 due to the company's lower debt level.
Net Income
Net income in the fourth quarter was $512 million, or $0.29 per
share. The effective tax rate for the quarter was 20 percent. This rate
is exclusive of the tax impact resulting from the recognition of the previously
reserved tax benefit of $62 million associated with TI's impairment write-down
of Micron stock in the fourth quarter of 2002. During the quarter, the
company realized a $37 million tax reduction due to changes in the company's
estimate of its foreign tax liabilities, which resulted in an effective
tax rate that was lower than the company's previous estimate of 26 percent.
For the year, net income of $1198 million, or $0.68 cents per share, increased
by $1542 million from 2002. Within the increase, $993 million was due
to the impact of the Micron stock-related actions, and $440 million was
due to higher operating profit. The effective tax rate for 2003 was 22
percent.
Orders
TI orders of $3076 million increased 16 percent sequentially
and 47 percent from the year-ago quarter due to strength in Semiconductor
orders. Semiconductor orders of $2744 million increased 20 percent sequentially
and 56 percent from the year-ago period due to broad-based demand for
Analog and DSP products. The Semiconductor book-to-bill ratio for the
fourth quarter rose to 1.12.
For the year, TI orders of $10344 million increased 23 percent from 2002,
and Semiconductor orders of $8854 million increased 27 percent, reflecting
broad-based demand for DSP and Analog products.
Cash
At the end of the fourth quarter, total cash (cash and cash equivalents
plus short-term investments and long-term cash investments) of $5664 million
was up $1126 million from the end of the third quarter and up $1522 million
from the end of 2002.
Cash flow from operations increased to $1067 million, up $557 million
sequentially and $323 million from the year-ago period. For the year,
cash flow from operations increased to $2151 million, up $159 million
from 2002.
Capital Spending and Depreciation
Capital expenditures of $272 million increased by $39 million
sequentially and $36 million from the year-ago quarter. For the year,
capital expenditures of $800 million decreased by $2 million from 2002.
TI's capital expenditures in 2003 were primarily for the deployment of
advanced Semiconductor manufacturing capabilities.
In the fourth quarter, depreciation of $370 million increased by $14 million
sequentially and decreased $27 million from the year-ago period. For the
year, depreciation was $1429 million, down $145 million from 2002.
Accounts Receivable and Inventory
Accounts receivable of $1451 million decreased $71 million sequentially
due to seasonally lower Education Technology (E&PS) graphing calculator
revenue, and increased by $234 million from the end of 2002 due to higher
Semiconductor revenue. Days sales outstanding were 47 at the end of the
fourth quarter, compared with 54 at the end of the prior quarter and 51
at the end of 2002.
Inventory at the end of the fourth quarter decreased $11 million sequentially,
to $984 million, due to the seasonal decline in E&PS inventory. Inventory
increased by $194 million compared with the end of 2002 to support higher
Semiconductor shipment levels. Days of inventory at the end of the fourth
quarter were 56, down from 60 days at the end of the prior quarter and
up from 52 days at the end of 2002.
Debt
At the end of the fourth quarter, the debt-to-total capital ratio
was 0.07, unchanged from the end of the prior quarter and down from 0.10
at the end of 2002 due to reductions in debt.
Outlook
TI intends to provide a mid-quarter update to its financial outlook
on March 8 by issuing a press release and holding a conference call. Both
will be available on the company's web site.
For the first quarter of 2004, TI expects revenue to be in the following
ranges:
- Total TI, $2720 million to $2950 million;
-
Semiconductor, $2400 million to $2600 million;
-
Sensors & Controls, $255 million to $275 million; and
-
E&PS, $70 million to $80 million.
TI expects earnings per share to be in the range of $0.16 to $0.22.
For 2004, TI expects: R&D to be about $2.0 billion, capital expenditures
to be about $1.1 billion and depreciation to be about $1.4 billion.
The effective tax rate for the year is expected to be about 30 percent.
TI expects that 2004 earnings will reflect revenue growth and higher
operating margins. This performance is expected to exceed the company's
minimum threshold for the TI employee profit-sharing program. As a result,
the company expects to make an accrual for profit sharing in the first
quarter of 2004 and in each subsequent quarter. Profit-sharing expenses
are accrued quarterly based on the company's estimate of its full-year
financial performance. No accrual for profit sharing was made under
this program in any quarter during 2003 and 2002.
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Statement of Operations
(In millions of dollars, except per-share amounts)
For Three Months Ended For Years Ended
Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
2003 2003 2002 2003 2002
Net revenue $2770 $2533 $2146 $9834 $8383
Operating costs
and expenses:
Cost of revenue 1576 1503 1378 5872 5313
Gross profit 1194 1030 768 3962 3070
Gross profit
% of revenue 43.1% 40.7% 35.8% 40.3% 36.6%
Research and
development (R&D) 448 468 412 1748 1619
R&D % of revenue 16.2% 18.5% 19.2% 17.8% 19.3%
Selling, general and
administrative (SG&A) 308 313 289 1249 1163
SG&A % of revenue 11.1% 12.3% 13.5% 12.7% 13.9%
----- ----- ----- ----- -----
Total 2332 2284 2079 8869 8095
----- ----- ----- ----- -----
Profit from operations 438 249 67 965 288
Operating income
% of revenue 15.8% 9.8% 3.1% 9.8% 3.4%
Other income
(expense) net 131 143 (620) 324 (577)
Interest on loans 8 8 14 39 57
----- ----- ----- ----- -----
Income (loss) before
income taxes 561 384 (567) 1250 (346)
Provision (benefit)
for income taxes 49 (63) 22 52 (2)
----- ----- ----- ----- -----
Net income (loss)* $ 512 $ 447 $(589) $1198 $(344)
===== ===== ===== ===== =====
Diluted earnings
(loss) per common
share** $ .29 $ .25 $(.34) $ .68 $(.20)
===== ===== ===== ===== =====
Basic earnings (loss)
per common share $ .30 $ .26 $(.34) $ .69 $(.20)
===== ===== ===== ===== =====
Cash dividends
declared per
share of common stock $.021 $.021 $.021 $.085 $.085
* Income for the fourth quarter of 2003 includes, in millions of dollars,
a charge of $13 for restructuring actions initiated in the second quarter
of 2003, of which $7 is associated with achieving manufacturing efficiencies
in the Semiconductor business and $6 is associated with moving certain
production lines in the Sensors & Controls business from Attleboro
to other TI sites. The $13 restructuring charge is primarily for severance
cost. Of the $13, $11 is included in cost of revenue and $2 is in selling,
general and administrative expense. Income for the fourth quarter of 2003
also includes an investment gain of $97, included in other income, from
the sale of 32.3 million shares of Micron Technology, Inc. (Micron) common
stock. Income for the third quarter of 2003 includes, in millions of dollars,
a charge of $56 for restructuring actions initiated in the second quarter
of 2003, of which $48 is associated with achieving manufacturing efficiencies
in the Semiconductor business and $8 is associated with moving certain
production lines in the Sensors & Controls business from Attleboro
to other TI sites. The $56 restructuring charge is primarily for severance
cost. Of the $56, $48 is included in cost of revenue, $7 is in selling,
general and administrative expense, and $1 is in research and development
expense. Income for the third quarter of 2003 also includes an investment
gain of $106, included in other income, from the sale of 24.7 million
shares of Micron common stock, and a charge of $23 for purchased in-process
R&D costs, included in research and development expense, from the
Radia Communications, Inc. acquisition. Income for the second quarter
of 2003 includes, in millions of dollars, a charge of $49, of which $26
is for the initial phase of restructuring associated with moving certain
production lines in the Sensors & Controls business from Attleboro
to other TI sites, and $23 is for the initial phase of restructuring to
achieve manufacturing efficiencies in the Semiconductor business. The
$49 restructuring charge is primarily for severance cost. Of the $49,
$43 is included in cost of revenue and $6 is in selling, general and administrative
expense. Income for the first quarter of 2003 includes, in millions of
dollars, a charge of $10 in other income (expense) net from the redemption
of $250 million in convertible notes.
Loss for the fourth quarter of 2002 includes, in millions of dollars,
a write-down due to an other-than-temporary reduction in value of $638
below cost basis in the company's holdings in Micron common stock acquired
in connection with the sale of its memory business unit to Micron in
1998, and $17 of net charges for severance cost, of which $13 is associated
with the reduction of 434 jobs, primarily in the manufacturing area,
to align resources with market demand. Of the $17 net charges, $11 is
included in cost of revenue, $4 is in selling, general and administrative
expense and $2 is in research and development expense. Income for the
second quarter of 2002 includes, in millions of dollars, net gains of
$16, of which $20 is the reversal of a warranty reserve taken against
the gain on the sale of the software business unit in 1997, since the
warranty period has expired. Of the $16 net gains, $20 is included in
other income, $5 is in selling, general and administrative expense,
$2 is a reduction in cost of revenue and $1 is in research and development
expense. Loss for the first quarter of 2002 includes, in millions of
dollars, net charges of $17, of which $14 is for restructuring charges
primarily related to the closing of the Semiconductor manufacturing
facility in Merrimack, New Hampshire. Of the $14, $9 is for the acceleration
of depreciation over the remaining service life of the facility, and
$4 is for fixed asset write-downs for assets held for sale. Of the $17
net charges, $16 is included in cost of revenue and $1 is in other income
(expense) net.
Income (loss) includes, in millions of dollars, acquisition-related
amortization of $20, $26 and $28 for the fourth quarter of 2003, third
quarter of 2003 and fourth quarter of 2002, and $99 and $115 for the
years ended December 31, 2003 and 2002. Goodwill is no longer amortized
effective January 1, 2002, in accordance with SFAS 142.
** Diluted earnings (loss) per common share are based on average common
and dilutive potential common shares outstanding (in millions of shares,
1780.1, 1766.8 and 1731.6 for the fourth quarter of 2003, third quarter
of 2003 and fourth quarter of 2002, and 1766.4 and 1733.3 for the years
ended December 31, 2003 and 2002). For the fourth quarter of 2002 and
the year ended December 31, 2002 presented in this statement of operations,
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)
Dec. 31 Sept. 30 Dec. 31
2003 2003 2002
Assets
Current assets:
Cash and cash equivalents $ 1818 $ 943 $ 949
Short-term investments 2511 2360 2063
Accounts receivable, net
of allowances for customer
adjustments and doubtful
accounts of $47 million at
December 31, 2003, $62 million
at September 30, 2003, and
$60 million at December 31, 2002 1451 1522 1217
Inventories:
Raw materials 106 106 121
Work in process 624 625 478
Finished goods 254 264 191
------ ------ ------
Inventories 984 995 790
------ ------ ------
Deferred income taxes 449 576 545
Prepaid expenses and
other current assets 496 398 562
------ ------ ------
Total current assets 7709 6794 6126
------ ------ ------
Property, plant and
equipment at cost 9549 9443 9516
Less accumulated depreciation (5417) (5202) (4722)
------ ------ ------
Property, plant and
equipment (net) 4132 4241 4794
------ ------ ------
Long-term cash investments 1335 1235 1130
Equity investments 265 684 808
Goodwill 693 703 638
Acquisition-related intangibles 169 184 185
Deferred income taxes 626 612 618
Other assets 581 633 380
------ ------ ------
Total assets $15510 $15086 $14679
====== ====== ======
Liabilities and
Stockholders' Equity
Current liabilities:
Loans payable and current
portion long-term debt $ 437 $ 434 $ 422
Accounts payable and
accrued expenses 1496 1436 1204
Income taxes payable 250 284 293
Accrued retirement and
profit sharing contributions 17 15 15
------ ------ ------
Total current liabilities 2200 2169 1934
------ ------ ------
Long-term debt 395 402 833
Accrued retirement costs 628 647 777
Deferred income taxes 59 87 129
Deferred credits and
other liabilities 364 353 272
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: December 31, 2003
- 1,737,739,654; September 30, 2003
- 1,740,470,215; December 31, 2002
- 1,740,364,197 1738 1740 1740
Paid-in capital 901 953 1042
Retained earnings 9535 9059 8484
Less treasury common
stock at cost:
Shares: December 31, 2003
- 5,401,665; September 30, 2003
- 9,844,861; December 31, 2002
- 9,775,781 (135) (198) (229)
Accumulated other comprehensive
income (loss) (159) (105) (262)
Deferred compensation (16) (21) (41)
------ ------ ------
Total stockholders' equity 11864 11428 10734
------ ------ ------
Total liabilities and
stockholders' equity $15510 $15086 $14679
====== ====== ======
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Statement of Cash Flows
(In millions of dollars)
For Three Months Ended For Years Ended
Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
2003 2003 2002 2003 2002
Cash flows from
operating activities:
Net income (loss) $ 512 $447 $(589) $1198 $(344)
Depreciation 370 356 397 1429 1574
Amortization of
acquisition-related
costs 20 26 28 99 115
Purchased in-process
research and
development -- 23 -- 23 1
Write-downs of
equity investments 8 11 683 42 808
Gains on sale of
equity investments (99) (108) -- (213) (7)
Deferred income taxes 174 (79) 105 75 13
(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 85 (72) 209 (197) (114)
Inventories 11 5 33 (194) (39)
Prepaid expenses
and other current
assets (93) (70) (14) (183) 191
Accounts payable and
accrued expenses 48 139 (136) 264 (81)
Income taxes payable 112 32 93 118 (5)
Accrued retirement
and profit sharing
contributions 15 1 9 11 (27)
Increase (decrease) in
noncurrent accrued
retirement costs 6 (141) 5 (132) (45)
Other (102) (60) (79) (189) (48)
----- ----- ----- ----- -----
Net cash provided by
operating activities 1067 510 744 2151 1992
Cash flows from
investing activities:
Additions to property,
plant and equipment (272) (233) (236) (800) (802)
Purchases of
short-term
investments (640) (879) (314) (2203) (1239)
Sales and maturities
of short-term
investments 741 743 272 3288 2775
Purchases of
long-term
cash investments (445) (311) (447) (2199) (1907)
Sales of long-term
cash investments 90 -- -- 444 115
Purchases of equity
investments (3) (8) -- (22) (26)
Sales of equity
investments 414 350 14 778 44
Acquisition of
business, net of
cash acquired -- (128) -- (128) (69)
----- ----- ----- ----- -----
Net cash used in
investing activities (115) (466) (711) (842) (1109)
Cash flows from
financing activities:
Additions to
loans payable -- -- -- -- 9
Payments on
loans payable -- (3) (3) (8) (16)
Payments on
long-term debt (3) (30) -- (418) (22)
Dividends paid
on common stock (36) (37) (36) (147) (147)
Sales and other common
stock transactions 77 17 52 157 167
Common stock
repurchase program (115) (60) (72) (284) (370)
Decrease in current
assets for
restricted cash -- -- -- 261 --
----- ----- ----- ----- -----
Net cash used in
financing activities (77) (113) (59) (439) (379)
Effect of exchange rate
changes on cash -- (7) 11 (1) 14
----- ----- ----- ----- -----
Net increase (decrease)
in cash and cash
equivalents 875 (76) (15) 869 518
Cash and cash
equivalents at
beginning of period 943 1019 964 949 431
----- ----- ----- ----- -----
Cash and cash
equivalents at
end of period $1818 $ 943 $ 949 $1818 $ 949
===== ===== ===== ===== =====
Business Segment Net Revenue
(In millions of dollars)
For Three Months Ended For Years Ended
Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
2003 2003 2002 2003 2002
Semiconductor
Trade $2444 $2115 $1829 $8345 $6934
Intersegment 3 3 2 15 10
----- ----- ----- ----- -----
2447 2118 1831 8360 6944
----- ----- ----- ----- -----
Sensors & Controls
Trade 251 242 239 1004 954
Intersegment 1 1 1 5 4
----- ----- ----- ----- -----
252 243 240 1009 958
----- ----- ----- ----- -----
Educational &
Productivity Solutions
Trade 76 177 78 485 494
Corporate activities (5) (5) (3) (20) (13)
----- ----- ----- ----- -----
Total net revenue $2770 $2533 $2146 $9834 $8383
===== ===== ===== ===== =====
Business Segment Profit (Loss)
(In millions of dollars)
For Three Months Ended For Years Ended
Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
2003 2003 2002 2003 2002
Semiconductor $433 $264 $ 81 $969 $254
Sensors & Controls 64 58 58 251 214
Educational &
Productivity Solutions 11 73 14 157 154
Corporate activities (38) (41) (41) (172) (182)
Charges/gains and
acquisition-related
amortization 65 1 (683) (47) (772)
Interest on loans/other
income (expense) net,
excluding a fourth-quarter
2003 gain of $97, a third-
quarter 2003 gain of $106,
a first-quarter 2003
charge of $10, a fourth-
quarter 2002 charge of
$638, a second-quarter
2002 gain of $20 and a
first-quarter 2002 charge
of $1 included above in
Charges/gains and
acquisition-related
amortization 26 29 4 92 (14)
---- ---- ----- ----- -----
Income (loss) before
income taxes $561 $384 $(567) $1250 $(346)
==== ==== ===== ===== =====
Semiconductor
-
In the fourth quarter, Semiconductor revenue of $2447 million increased
16 percent sequentially and 34 percent from the year-ago period as
revenue grew across almost all of the company's Semiconductor product
lines in a robust semiconductor market environment. For the year,
Semiconductor revenue was $8360 million, up 20 percent from 2002 primarily
due to strong demand for DSP products and share gains in both DSP
and Analog markets.
-
Gross profit was $1083 million, or 44.2 percent of revenue, an increase
of $184 million from the prior quarter and $417 million from the year-ago
quarter due to higher revenue. Gross profit margin increased 1.8 percentage
points sequentially and 7.8 points from the year-ago period due to
greater utilization of the company's fixed-cost manufacturing assets.
For the year, Semiconductor gross profit of $3472 million, or 41.5
percent of revenue, increased by $913 million from 2002 due to higher
revenue and greater manufacturing utilization.
-
Semiconductor operating profit was $433 million, or 17.7 percent of revenue,
up $169 million sequentially and $352 million from the year-ago period
due to higher gross profit. For the year, operating profit was $969
million, or 11.6 percent of revenue, up $715 million from 2002 due
to higher gross profit.
-
Analog revenue increased 16 percent sequentially and 26 percent from
the year-ago period due to increased shipments across a breadth of
products resulting from strong demand. For the year, Analog revenue
increased 13 percent from 2002 due to increased demand for high-performance
Analog products. In 2003, about 40 percent of total Semiconductor
revenue came from Analog.
-
DSP revenue increased 18 percent sequentially due to higher demand in
the wireless market. DSP revenue increased 52 percent from the year-ago
quarter and 36 percent for the year primarily due to higher demand
in the wireless market, as well as higher demand in the digital consumer
and broadband communications markets. In 2003, about 35 percent of
total Semiconductor revenue came from DSP.
-
TI's remaining Semiconductor revenue increased 11 percent sequentially
and 23 percent from the year-ago quarter due to higher demand for
Digital Light Processing™ (DLP™) products, RISC (Reduced
Instruction Set Computer) microprocessors and standard logic products,
and higher royalties. Revenue from microcontrollers was about even
sequentially and increased compared with the year-ago quarter. For
the year, remaining Semiconductor revenue increased 14 percent from
2002 due to higher demand for DLP, RISC microprocessors and standard
logic products, and higher royalties, which more than offset a decline
in microcontrollers.
-
Results for TI Semiconductor products sold into key end equipments were
as follows:
-
Wireless revenue in the fourth quarter increased 23 percent sequentially
primarily due to higher demand for 2.5G modems. Compared with
the year-ago quarter, revenue increased 41 percent due to higher
demand for 2.5G modems as well as higher demand for OMAP application
processors. Demand was strong for complete chipset solutions,
which include 2G and 2.5G modems. For the year, wireless revenue
grew 32 percent compared with 2002 primarily due to increased
shipments of 2.5G modems and OMAP application processors. In 2003,
about 35 percent of total Semiconductor revenue came from the
wireless market.
-
Revenue from TI's catalog products, composed of high-performance Analog
and catalog DSP, increased 17 percent sequentially, 35 percent
from the year-ago quarter and 24 percent for the year due to increased
demand for TI products in both categories. In 2003, about 15 percent
of total Semiconductor revenue came from catalog products.
-
Broadband communications revenue, which includes DSL and cable modems,
voice over packet (VoP) and wireless LAN (WLAN), increased 12
percent sequentially primarily due to higher demand for DSL products.
Compared with the year-ago period, broadband revenue increased
75 percent due to higher demand for DSL and WLAN products resulting
from aggressive industry deployments of these broadband and networking
technologies. For the year, broadband communications revenue increased
71 percent from 2002 due to higher demand for DSL and WLAN products
as TI's position and market share strengthened in both of these
fast-growing market areas. In 2003, about 5 percent of total Semiconductor
revenue came from the broadband communications market.
-
Semiconductor orders were $2744 million, up 20 percent sequentially and
56 percent from the year-ago period due to broad-based demand for
the company's products. For the year, orders increased 27 percent
to $8854 million due to higher broad-based demand for Analog and DSP
products.
2003 Semiconductor Highlights
In wireless:
-
TI introduced a new OMAP processor that is the industry's first wireless
multimedia application processor developed in a 90-nanometer manufacturing
process, which increases performance and reduces power.
-
TI and STMicroelectronics jointly developed and began sampling standard
products for cdma2000® 1X wireless communications,
and active original equipment manufacturer (OEM) customer design engagements
are underway based on this chipset. The companies also began developing
a standard cdma2000 1xEV-DV (1xEvolution for Data and Voice) solution,
which will bring high-speed Internet connectivity and advanced multimedia
services to next-generation CDMA devices.
-
Hewlett Packard selected TI's WLAN technology, single-chip Bluetooth®
solution and Bluetooth/WLAN coexistence package for two new iPAQ Pocket
PCs.
-
Handspring, Inc. selected TI's OMAP310 application processor to power
the new Treo 600 smartphone. BenQ Corp. selected TI's OMAP1510 application
processor and GSM/GPRS chipset technology for BenQ's first smartphone.
-
Motorola, Inc. selected TI's OMAP application processors and 802.11 wireless
networking solutions for a new Wi-Fi/cellular dual system phone.
-
Hewlett Packard selected TI's 802.11b technology for commercial PCs.
Additionally, SMC Networks, U.S. Robotics, NETGEAR, Samsung and Sitecom
selected TI WLAN technology for 802.11g and multi-mode 802.11 WLAN
products.
-
TI introduced the industry's first ADSL modem-on-a-chip, the AR7, which
is a single-chip solution that increases TI's system content while
reducing overall system cost. More than 45 manufacturers have selected
this single-chip solution, including more than 20 original design
manufacturers (ODM) in Asia.
-
Several manufacturers introduced new DLP-based high-definition digital
televisions (HDTV), including Thomson (RCA brand), Samsung and LG
Electronics. At year-end, DLP-based HDTVs were on sale at more than
5,000 retail outlets worldwide.
-
TI announced three new DSPs with industry-leading performance of 720
MHz, breaking the company's previous industry record of 600 MHz. In
addition, TI demonstrated the world's first DSP to reach the 1-gigahertz
speed threshold.
-
In the fourth quarter, Sensors & Controls revenue was $252 million,
up 4 percent sequentially and 5 percent from the year-ago quarter
due to higher demand for sensor products in the automotive market.
For the year, revenue was $1009 million, up 5 percent from 2002 due
to higher demand for sensor products in the automotive market.
-
Gross profit was $95 million, or 37.8 percent of revenue, an increase
of $5 million from the prior quarter primarily due to higher revenue.
Gross profit increased by $7 million compared with the year-ago quarter
due to reduced manufacturing costs. For the year, gross profit was
$373 million, an increase of $44 million from 2002 due to reduced
manufacturing costs.
-
Operating profit was $64 million, or 25.4 percent of revenue, an increase
of $6 million from both the prior and year-ago quarters. For the year,
operating profit was $251 million, or 24.9 percent of revenue, an
increase of $37 million from 2002. The gains in operating profit were
due to higher gross profit.
Educational & Productivity Solutions (E&PS)
-
In the fourth quarter, E&PS revenue was $76 million, down 57 percent
sequentially due to the seasonal decline in product demand, primarily
for graphing calculators, associated with the end of the back-to-school
sales season. Compared with the year-ago quarter, revenue declined
3 percent due to reductions in channel inventories. For the year,
revenue was $485 million, down 2 percent from 2002 due to reductions
in channel inventories.
-
Gross profit was $37 million, or 49.2 percent of revenue, a decrease
of $66 million sequentially due to seasonally lower revenue. Gross
profit decreased by $1 million compared with the year-ago quarter
due to lower revenue. For the year, gross profit of $267 million increased
by $6 million from 2002 due to product cost reductions.
-
Operating profit was $11 million, or 15.0 percent of revenue, a decrease
of $62 million from the prior quarter due to lower gross profit. Operating
profit decreased by $3 million from the year-ago quarter due to higher
SG&A expenses. For the year, operating profit was $157 million,
or 32.3 percent of revenue, an increase of $3 million from 2002 due
to higher gross profit.
###
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 in this release 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:
- Market demand for semiconductors, particularly for digital signal
processors and analog chips in key markets, such as telecommunications
and computers;
- TI'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;
- TI's ability to develop, manufacture and market innovative products
in a rapidly changing technological environment;
- TI's ability to compete in products and prices in an intensely competitive
industry;
- TI's ability to maintain and enforce a strong intellectual property
portfolio and obtain needed licenses from third parties;
- Consolidation of TI's patent licensees and market conditions reducing
royalty payments to TI;
- Timely completion and successful integration of announced acquisitions;
- Economic, social and political conditions in the countries in which
TI, its customers or its suppliers operate, including security risks,
possible disruptions in transportation networks and fluctuations in
foreign currency exchange rates;
- Losses or curtailments of purchases from key customers or the timing
of customer inventory adjustments;
- Availability of raw materials and critical manufacturing equipment;
- TI's ability to recruit and retain skilled personnel;
- Fluctuations in the market value of TI's investments and in interest
rates; and
- Timely implementation of new manufacturing technologies and installation
of manufacturing equipment.
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 publication,
and the company undertakes no obligation to update the forward-looking
statements to reflect subsequent events or circumstances.
Texas Instruments Incorporated provides innovative DSP and Analog technologies
to meet our customers' real world signal processing requirements. In addition
to Semiconductor, the company's businesses include Sensors & Controls
and Education Technology. TI is headquartered in Dallas, Texas, and has
manufacturing, design or sales operations in more than 25 countries.
Texas Instruments is traded on the New York Stock Exchange under the symbol
TXN. More information is located on the World Wide Web at www.ti.com.
TI Trademarks:
OMAP
Digital Light Processing
DLP
Other trademarks are the property of their respective owners.
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