Texas Instruments 2008 Annual Report Download - page 45

TEXAS INSTRUMENTS 2008 ANNUAL REPORT [ 43 ]
Other
2008 2007
2008
vs. 2007 2006
2007
vs. 2006
Revenue ................................................ $2,630 $ 3,125 -16% $3,647 -14%
Operating profit ........................................... 772 896 -14% 1,024 -13%
Operating profit % of revenue ............................. 29.3%28.7%28.1%
Revenue from Other was $2.63 billion in 2008. This was a decline of $495 million, or 16 percent, from 2007 due to, in decreasing order,
a decrease in shipments across a broad range of products, the effect of the sale of our DSL customer-premises equipment product line
in 2007 and lower royalties.
Operating profit for 2008 from Other was $772 million, or 29.3 percent of revenue. This was a decrease of $124 million compared
with 2007 due to lower revenue.
Prior results of operations
2007 compared with 2006
Certain amounts below have been reclassified to conform to the current financial statement presentation.
Revenue in 2007 was $13.83 billion, down $420 million, or 3 percent, from 2006. This decrease was primarily due to decreased
shipments of RISC microprocessors and DLP products, both of which are included in Other. In addition, although our Wireless revenue
benefited from increased shipments of 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 Analog growth from high-performance analog products.
Gross profit was $7.37 billion, or 53.3 percent of revenue. This was an increase of $110 million from 2006 due to the combination
of a greater percentage of revenue coming from more-profitable Analog and Wireless products, and continued manufacturing cost
reductions.
Operating expenses were $2.14 billion for R&D and $1.68 billion for SG&A. R&D decreased $55 million from 2006 because we
benefited from more efficient development of advanced logic manufacturing process technologies through our collaborative work with
foundries. SG&A for 2007 decreased $17 million from 2006.
Operating profit was $3.50 billion, or 25.3 percent of revenue. This was an increase of $130 million, or 4 percent, from 2006
primarily due to strong gross profit, and to a lesser extent, lower operating expenses.
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 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 2007 contained net discrete tax benefit items of $28 million. The tax
provision for 2006 contained net discrete tax expense items of $14 million.
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 was 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 required less capital spending than in past years and is comprised of higher-margin products. As a result, we
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.
Analog
Analog revenue in 2007 was $4.93 billion, an increase of $181 million, or 4 percent, from 2006. The increase was due to increased
shipments of high-performance analog products.
Operating profit was $1.55 billion, or 31.4 percent of revenue. This was an increase of $93 million from 2006 due to higher gross
profit partially offset by higher operating expenses.