Texas Instruments 2006 Annual Report Download - page 49

TEXAS INSTRUMENTS 2006 ANNUAL REPORT 4747
For the year, analog revenue increased 18 percent primarily due to increased shipments resulting from higher demand for
high-performance analog products. Revenue from high-performance analog products increased 33 percent primarily due to
market-share gains. In 2006, about 40 percent of total Semiconductor revenue came from analog.
In 2006, DSP revenue increased 16 percent due to increased shipments resulting from higher demand for wireless products.
About 40 percent of total Semiconductor revenue in 2006 came from DSP.
Our 2006 remaining Semiconductor revenue increased 14 percent as increased shipments resulting from growth in demand
for standard logic products, DLP products, reduced instruction set computing (RISC) microprocessors (designed to provide
very fast computing, typically for a specialized application such as servers) and microcontrollers (a microprocessor designed
to control a very specific task for electronic equipment) more than offset a decline in royalties.
During 2006, we signed new patent license agreements to replace agreements that had previously expired. In total, royalties
in 2006 decreased by $87 million from 2005 due to the expiration of older agreements. With the signing of the new agreements,
we expect royalties to range from about $80-90 million per quarter in 2007.
On an end-equipment basis, revenue from wireless products in 2006 was up 16 percent from 2005 as 3G handset revenue grew
about 50 percent from 2005 and sales to the low-priced handset market increased.
In DLP products, revenue increased 15 percent from 2005 primarily due to higher demand resulting in increased shipments of
products for front projectors and, to a lesser extent, products for cinema projectors and HDTVs.
In total, we estimate that our 2006 Semiconductor product revenue came from the following broad markets: communications
(including wireless and broadband communications) was about 50 percent; computing (including peripherals and computers)
was about 25 percent; consumer electronics was about 10 percent; industrial was less than 10 percent; and automotive was
about 5 percent.
Gross profit in 2006 was $7.05 billion, or 51.3 percent of revenue. This was an increase of $1.28 billion, or 22 percent, from 2005
primarily due to higher revenue and, to a lesser extent, lower depreciation.
Operating profit in 2006 was $3.83 billion, or a record 27.9 percent of revenue. This was an increase of $1.02 billion from 2005
due to higher gross profit.
For the year, Semiconductor orders were $13.49 billion. This was an increase of 9 percent due to higher demand for analog
products.
Education Technology Segment
Statement of Operations – Education Technology
FOR THE YEARS ENDED
DECEMBER 31,
2006 2005
Net revenue.............................................................................. $525 $ 506
Cost of revenue........................................................................... 204 206
Gross profit.............................................................................. 321 300
Gross profit % of revenue................................................................ 61.1% 59.2%
Profit from operations..................................................................... 200 188
Operating profit % of revenue............................................................ 38.0% 37.2%
For the year, Education Technology revenue was $525 million. This was a 4 percent increase from 2005 due to increased
shipments resulting from higher demand for graphing calculators.
Gross profit in 2006 of $321 million, or a record 61.1 percent of revenue, increased $21 million from 2005 due to higher revenue,
and, to a lesser extent, product cost reductions.
Operating profit in 2006 was $200 million, or a record 38.0 percent of revenue. This was an increase of $12 million from 2005
due to higher gross profit.