10-KPeriod: FY2015

TEXAS INSTRUMENTS INC Annual Report, Year Ended Dec 31, 2015

Filed February 24, 2016For Securities:TXN

Summary

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 billion 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 billion. 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 billion to shareholders through dividends and stock repurchases. TXN's focus on its core segments and efficient operations position it for continued value creation.

Financial Highlights

53 data points
Beta

Revenue

$13.00B

58.3% Gross Margin

Net Income

$2.99B

23.0% Net Margin

EPS (Diluted)

$2.82

Total Assets

$16.23B

Cash & Equivalents

$1.00B

Free Cash Flow

$3.85B

Financial Statements
Beta
Revenue$13.00B
Cost of Revenue$5.42B
Gross Profit$7.58B
R&D Expenses$1.27B
SG&A Expenses$1.73B
Operating Income$4.32B
Net Income$2.99B
EPS (Basic)$2.86
EPS (Diluted)$2.82
Shares Outstanding (Basic)1.03B
Shares Outstanding (Diluted)1.04B

Key Highlights

  • 1Total revenue for 2015 was $13 billion, nearly flat compared to the previous year.
  • 2Analog and Embedded Processing segments accounted for 86% of revenue, demonstrating the company's strategic focus.
  • 3Gross margin improved to a record 58.2%, reflecting operational efficiencies and product mix.
  • 4Operating profit increased by 8% to $4.27 billion, with a margin of 32.9%.
  • 5Net income grew by 6% to $2.99 billion, resulting in diluted EPS of $2.82.
  • 6Free cash flow reached a record $3.72 billion, representing 28.6% of revenue, showcasing strong cash generation.
  • 7The company returned $4.2 billion to shareholders through dividends ($1.44 billion) and stock repurchases ($2.74 billion).

Frequently Asked Questions

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.

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.

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.

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.