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52 TEXAS INSTRUMENTS 2007 ANNUAL REPORT
Education Technology Segment
Statement of Operations – Education Technology
For the years ended
December 31,
2007 2006
Net revenue ........................................................................ $526 $ 525
Cost of revenue...................................................................... 186 204
Gross profit......................................................................... 340 321
Gross profit % of revenue ............................................................ 64.6%61.1%
Profit from operations ................................................................. 208 200
Operating profit % of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.4% 38.0%
Revenue was $526 million, about even with 2006.
Gross profit was $340 million, or 64.6 percent of revenue. This was an increase of $19 million from 2006 due to lower product costs.
Operating profit was $208 million, or 39.4 percent of revenue. This was an increase of $8 million from the prior year due to greater
gross profit, partially offset by higher SG&A expense.
Prior Results of Operations
2006 Compared with 2005
We delivered important financial achievements in 2006. Specifically, our semiconductor revenue grew more than one and a half times
faster than the market, our earnings per share increased almost twice as fast as our revenue, and our return on invested capital
expanded to 21.5 percent. Most important to these results was our high-performance analog product line, which grew revenue
33 percent and continued to raise the bar on gross margin for the entire company.
Details of 2006 Financial Results
For the year, our revenue grew 16 percent to $14.25 billion. Growth was driven primarily by strong demand for our analog products,
especially high-performance analog, and DSP products.
Earnings per share (EPS) from continuing operations of $1.69 increased 30 percent from the prior year. EPS in 2006 included a full year
of stock-option expense of $0.14 resulting in $0.07 of additional expense, compared with the prior year when stock-option expense was
included for only six months.
Gross profit was $7.26 billion, or 50.9 percent of revenue. This was an increase of $1.24 billion, or 21 percent, from the prior year
due primarily to higher revenue and, to a lesser extent, lower depreciation in the Semiconductor segment. Stock-based compensation
expense in cost of revenue increased $32 million from the prior year.
R&D expense of $2.20 billion, or 15.4 percent of revenue, increased $209 million from the prior year due to higher investment in new
semiconductor technology, particularly for wireless applications, and $48 million of additional stock-based compensation expense.
SG&A expense of $1.70 billion, or 11.9 percent of revenue, increased $226 million from the prior year primarily due to the combination
of higher marketing expense in the Semiconductor segment, particularly for DLP product advertising, and $77 million of higher stock-
based compensation expense.