8-KOther Events

TEXAS INSTRUMENTS INC 8-K Report (Feb 20, 2002)

Filed February 20, 2002For Securities:TXN

Summary

Texas Instruments Incorporated (TXN) filed an 8-K on February 19, 2002, to re-confirm its financial outlook for the first quarter and full year of 2002. This re-confirmation, made under Regulation FD, indicates that the company expects revenue to be approximately even for Q1 2002 compared to Q4 2001. Significant operational improvements are anticipated, with pro forma operating margin expected to improve by about 7 points due to reduced depreciation and stable inventory levels. The company also projects an increase in pro forma non-operating income to approximately $15 million and anticipates pro forma Earnings Per Share (EPS) to be at breakeven for the first quarter. For the full year 2002, TI is projecting consistent research and development (R&D) spending at $1.5 billion, matching 2001 levels. Capital expenditures are set to significantly decrease to $800 million from $1.8 billion in 2001, reflecting the completion of major facility build-outs. Pro forma depreciation is expected to remain stable year-over-year at $1.6 billion, though quarterly depreciation will be lower than the Q4 2001 peak. The filing also provides guidance on the pro forma tax rate and tax benefits.

Key Highlights

  • 1Re-confirms Q1 2002 outlook, expecting revenue to be approximately even with Q4 2001.
  • 2Projects a significant improvement in Q1 2002 pro forma operating margin (about 7 points) due to lower depreciation and steady inventory.
  • 3Anticipates Q1 2002 pro forma non-operating income to increase to about $15 million.
  • 4Expects Q1 2002 pro forma EPS to be at breakeven.
  • 5Maintains 2002 R&D spending at $1.5 billion, same as 2001.
  • 6Significantly reduces 2002 capital expenditures to $800 million from $1.8 billion in 2001.
  • 7Expects stable 2002 pro forma depreciation at $1.6 billion, with quarterly depreciation below the Q4 2001 peak.

Frequently Asked Questions

The primary purpose of this 8-K filing is to re-confirm Texas Instruments' financial outlook for the first quarter and full year of 2002, as previously stated in their January 28, 2002 earnings release. This re-confirmation is made for purposes of Regulation FD.

For the first quarter of 2002, TI expects revenue to be about even compared to the fourth quarter of 2001. The company anticipates a significant improvement in pro forma operating margin by about 7 points, driven by lower depreciation and stable inventory levels. Pro forma non-operating income is projected to reach about $15 million, with pro forma EPS expected to be at breakeven.

For the full year 2002, TI plans to maintain its R&D spending at $1.5 billion, consistent with 2001. However, capital expenditures are expected to decrease substantially to $800 million, down from $1.8 billion in 2001. This reduction is attributed to the completion of major facility build-outs for its new DMOS6 300mm fabrication facility and upgrades to analog fabrication facilities.

The filing highlights several risks and uncertainties that could cause actual results to differ materially from forward-looking statements. These include market demand for semiconductors, TI's ability to innovate and compete, protection of intellectual property, successful integration of acquisitions, global economic and political conditions, customer purchasing patterns, retention of skilled personnel, and the availability of raw materials and manufacturing equipment.