10-QPeriod: Q3 FY2013

TEXAS INSTRUMENTS INC Quarterly Report for Q3 Ended Sep 30, 2013

Filed November 1, 2013For Securities:TXN

Summary

Texas Instruments (TXN) reported third-quarter 2013 results with revenue of $3.24 billion and net income of $629 million, or $0.56 per diluted share. While revenue declined 4% year-over-year, this was primarily driven by the wind-down of legacy wireless products, with the core Analog and Embedded Processing segments showing strength. These key segments grew 7% year-over-year combined, now representing 80% of total revenue. The company achieved an all-time high gross margin of 54.8%, reflecting improved product mix and operational efficiency despite lower factory utilization. TXN demonstrated strong free cash flow generation, with $2.87 billion for the trailing twelve months, and continued its commitment to returning capital to shareholders through increased dividends and significant stock repurchases. The company's balance sheet remains robust with $3.6 billion in cash and short-term investments. Management expressed confidence in the long-term sustainability of its business model focused on Analog and Embedded Processing, its identified growth engines.

Financial Highlights

53 data points
Beta

Revenue

$3.24B

54.8% Gross Margin

Net Income

$618.00M

19.1% Net Margin

EPS (Diluted)

$0.56

Total Assets

$19.24B

Cash & Equivalents

$1.44B

Free Cash Flow

$1.03B

Financial Statements
Beta
Revenue$3.24B
Cost of Revenue$1.47B
Gross Profit$1.78B
R&D Expenses$368.00M
SG&A Expenses$465.00M
Operating Income$844.00M
Net Income$618.00M
EPS (Basic)$0.56
EPS (Diluted)$0.56
Shares Outstanding (Basic)1.10B
Shares Outstanding (Diluted)1.11B

Key Highlights

  • 1Revenue for Q3 2013 was $3.24 billion, a decrease of 4% from the prior year, largely due to the exit of legacy wireless products.
  • 2Net income for Q3 2013 was $629 million, resulting in diluted EPS of $0.56.
  • 3Gross margin reached an all-time high of 54.8% in Q3 2013, up from 51.3% in the prior year, indicating improved profitability and product mix.
  • 4The Analog and Embedded Processing segments, identified as growth engines, saw a combined 7% revenue increase year-over-year and now constitute 80% of total revenue.
  • 5Free cash flow for the trailing twelve months was $2.87 billion, representing 24% of revenue, and the company returned $3.8 billion to shareholders via dividends and buybacks over the same period.
  • 6The company announced a 7% increase in its quarterly cash dividend, raising it to $0.30 per share, signaling confidence in future cash generation.
  • 7Total cash and short-term investments remained strong at $3.59 billion as of September 30, 2013.

Frequently Asked Questions

Revenue decreased by 4% year-over-year to $3.24 billion, primarily due to lower revenue from the company's legacy wireless products, which are being exited. This decline was partially offset by growth in the Analog and Embedded Processing segments.

Texas Instruments achieved an all-time high gross margin of 54.8% in the third quarter of 2013, an improvement from 51.3% in the same quarter last year. This was attributed to a more favorable product mix and improved manufacturing facility utilization.

TXN is committed to returning capital to shareholders through dividends and stock repurchases. In the trailing twelve months, the company returned $3.8 billion to shareholders, and announced a 7% increase in its quarterly dividend to $0.30 per share.

The company's financial position remains strong, with $3.59 billion in total cash and short-term investments at the end of the third quarter. Free cash flow for the trailing twelve months was robust at $2.87 billion, indicating strong operational cash generation.