01—Abstract
Summary
Summary of the 10-K filed February 24, 2016. Cited figures are marked; the original filing is the authoritative source.
Texas Instruments Inc. (TXN) filed its 2015 10-K on February 23, 2016, reporting on its performance for the fiscal year ending December 30, 2015.
The company, a global semiconductor designer and manufacturer, generated $13 billiona in revenue. TXN's strategy centers on its Analog and Embedded Processing segments, which represent the vast majority of its revenue and are characterized by long product life cycles, diversity, and lower capital intensity, contributing to stability, profitability, and strong free cash flow generation. This business model underpins their capital management strategy focused on maximizing shareholder value through free cash flow growth.
Financially, the company demonstrated resilience, with revenue largely flat year-over-year at $13 billionb. Gross margin improved to 58.2%, a record high, driven by the company's product portfolio and manufacturing efficiency. Operating profit saw a healthy increase to $4.27 billion, and net income rose by 6% to $2.99 billion, translating to diluted EPS of $2.82.
Free cash flow, a key metric for TXN, also reached a record high, representing 28.6% of revenue, and the company returned $4.2 billionc to shareholders through dividends and stock repurchases. TXN's focus on its core segments and efficient operations position it for continued value creation.
02—Key points
Key Highlights
- Total revenue for 2015 was $13 billion, nearly flat compared to the previous year.
- Analog and Embedded Processing segments accounted for 86% of revenue, demonstrating the company's strategic focus.
- Gross margin improved to a record 58.2%, reflecting operational efficiencies and product mix.
- Operating profit increased by 8% to $4.27 billion, with a margin of 32.9%.
- Net income grew by 6% to $2.99 billion, resulting in diluted EPS of $2.82.
- Free cash flow reached a record $3.72 billion, representing 28.6% of revenue, showcasing strong cash generation.
- The company returned $4.2 billion to shareholders through dividends ($1.44 billion) and stock repurchases ($2.74 billion).
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Texas Instruments kept $0.23.
- Revenue$13.00B100.0%
- Cost of revenue−$5.42B41.7%
- Gross profit$7.58B58.3%
- Operating costs−$3.25B25.0%
- Operating income$4.32B33.2%
- Interest, other & tax−$1.34B10.3%
- Net income$2.99B23.0%
Where FY2015 revenue went
$13.00B- Cost of revenue: $5.42B, 42% of revenue
- Net income: $2.99B, 23% of revenue
- SG&A: $1.73B, 13% of revenue
- R&D: $1.27B, 9.7% of revenue
- Other operating costs: $258.0M, 2.0% of revenue
- Interest, other & tax: $1.34B, 10% of revenue
Kept 23% as net incomeOther operating costs $258.0M · 2.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 24, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $13.00B$13.04B | −0.3% |
| Cost of Revenue | $5.42B$5.62B | −3.4% |
| Gross Profit | $7.58B$7.43B | +2.0% |
| R&D Expenses | $1.27B$1.36B | −6.7% |
| SG&A Expenses | $1.73B$1.84B | −6.2% |
| Operating Income | $4.32B$3.95B | +9.5% |
| Net Income | $2.99B$2.82B | +5.8% |
| EPS (Basic) | $2.86$2.61 | +9.6% |
| EPS (Diluted) | $2.82$2.57 | +9.7% |
| Shares Outstanding (Basic) | 1.03B1.06B | −3.3% |
| Shares Outstanding (Diluted) | 1.04B1.08B | −3.4% |
05—Questions
Frequently Asked Questions
What are Texas Instruments' primary business segments and their performance in 2015?
Texas Instruments operates primarily through two reportable segments: Analog and Embedded Processing. In 2015, the Analog segment generated $8.3 billion in revenue, representing approximately 64% of total revenue and showing a 3% increase year-over-year. The Embedded Processing segment generated $2.8 billion in revenue, accounting for about 21% of total revenue, and saw a 2% increase. The remaining revenue came from the 'Other' segment.
How did Texas Instruments manage its financial resources and return value to shareholders in 2015?
Texas Instruments demonstrated strong financial management in 2015. The company generated a record $3.72 billion in free cash flow, which is a key metric for them. They actively returned capital to shareholders by paying $1.44 billion in dividends and repurchasing $2.74 billion of their common stock, totaling $4.2 billion returned to investors.
What is Texas Instruments' strategy for long-term growth and profitability?
TXN's strategy is built around its Analog and Embedded Processing segments, which offer long product life cycles, intrinsic diversity, and require less capital-intensive manufacturing. This model is designed to provide stability, profitability, and strong cash generation. The company invests over $1 billion annually in R&D to develop new products and maintain its broad portfolio, aiming to solve more customer needs and increase revenue per system.
What were the key risks and challenges highlighted by Texas Instruments in its 2015 10-K?
The company highlighted several key risks, including intense competition in the semiconductor market, rapid technological changes leading to shortened product life cycles, fluctuations in customer demand, and the cyclical nature of the semiconductor industry. They also noted risks associated with their global operations, supply chain, intellectual property protection, and regulatory compliance.
06—Continue