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54 TEXAS INSTRUMENTS 2007 ANNUAL REPORT
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.
On an end-equipment basis, revenue from wireless products 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 high-definition televisions.
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 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 was $3.83 billion, or 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 of $321 million, or 61.1 percent of revenue, increased $21 million from 2005 due to higher revenue, and, to a lesser extent,
product cost reductions.
Operating profit was $200 million, or 38.0 percent of revenue. This was an increase of $12 million from 2005 due to higher gross profit.
Discontinued Operations
Revenue from the former Sensors & Controls business was $375 million in 2006 compared with $1.06 billion in 2005. Results for 2006
cover the period up to the date of the sale (April 27, 2006). Income from discontinued operations for 2006, which includes the
$1.67 billion gain from the sale of the former Sensors & Controls business, was $1.70 billion, compared with $151 million in 2005
(see Note 2 to the Financial Statements for further discussion).