Texas Instruments 2007 Annual Report Download - page 52

50 TEXAS INSTRUMENTS 2007 ANNUAL REPORT
Other income (expense) net (OI&E) was $195 million, a decrease of $63 million primarily due to lower interest income. OI&E in 2006
included benefits from a refund of state sales tax and final settlement of matters related to grants from the Italian government regarding
our former memory operations.
The tax provision for continuing operations was $1.05 billion, compared with $987 million for the prior year. The increase was due to the
expiration of the tax benefit for export sales and, to a lesser extent, an increase in income before income taxes. These increases were
partially offset by a benefit from changes in net discrete tax items. The tax provision for continuing operations for 2007 contained net
discrete tax benefit items of $28 million. The tax provision for 2006 contained net discrete tax expense items of $14 million (see Note
12 to the Financial Statements for a reconciliation of tax rates to the statutory federal tax rate).
Our annual effective tax rate for 2008 is estimated to be about 31 percent, an increase from 29 percent in 2007. The forecasted tax
rate is based on the current tax law in effect and does not assume reinstatement of the federal R&D tax credit, which expired on
December 31, 2007.
Income from continuing operations was $2.64 billion, about the same as 2006. Earnings per share from continuing operations
were $1.83, up 8 percent from 2006. The increase in earnings per share is due to fewer shares outstanding as a result of our stock
repurchases. Average diluted shares outstanding decreased by 114 million shares from 2006, increasing earnings per share by $0.13.
Our product portfolio now requires less capital spending than in past years, and it is comprised of higher-margin products. As a result,
we have generated greater levels of cash that we have returned to shareholders through stock repurchases and increased dividends.
Income from discontinued operations was $16 million, compared with $1.70 billion in 2006, which included a $1.67 billion gain from
the sale of our former Sensors & Controls business. Earnings per share from discontinued operations were $0.01, compared with $1.09.
Net income was $2.66 billion, or $1.84 per share, compared with $4.34 billion or $2.78 per share, in 2006.
Orders were $13.69 billion, down $327 million from 2006, due to lower demand for semiconductor products.
Semiconductor Segment
Statement of Operations – Semiconductor
For the years ended
December 31,
2007 2006
Net revenue .................................................................... $ 13,309 $ 13,730
Cost of revenue.................................................................. 6,232 6,681
Gross profit..................................................................... 7,077 7,049
Gross profit % of revenue ........................................................ 53.2%51.3%
Profit from operations ............................................................. 3,883 3,831
Operating profit % of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.2%27.9%
Semiconductor revenue was $13.31 billion, a decrease of $421 million, or 3 percent, from 2006. This decrease was primarily due to
fewer shipments resulting from lower demand for RISC microprocessors and DLP products. In addition, although our revenue benefited
from increased shipments resulting from higher demand for products used in cell phone applications, this benefit was insufficient
to offset normal price declines for those products. The collective declines in these areas more than offset strong growth from high-
performance analog products.