Texas Instruments 2012 Annual Report Download - page 46

ANNUAL
REPORT
TEXAS INSTRUMENTS44 • 2012 ANNUAL REPORT
Restructuring charges/other were $264 million in 2012 and $112 million in 2011. The increase was primarily due to the
restructuring action in the Wireless segment, partially offset by a $144 million gain we recognized from the transfer of the obligations
and assets of a portion of our Japan pension program from the pension trust to the government of Japan. See Note 3 to the financial
statements for details.
Operating profit was $1.97 billion, or 15.4 percent of revenue, compared with $2.99 billion, or 21.8 percent of revenue, in 2011.
The decrease was due to, in decreasing order, lower gross profit, higher operating expenses, higher restructuring charges and higher
acquisition charges.
OI&E for 2012 was income of $47 million compared with $5 million for 2011. The increase was primarily due to tax-related
interest income.
Interest and debt expense was $85 million compared with $42 million in the year-ago period. The increase over 2011 was primarily
due to having debt outstanding for a full year in 2012 compared with about eight months in 2011. We issued debt in May 2011
and assumed debt in September 2011, both in connection with our acquisition of National. See Note 12 to the financial statements
for details.
The annual effective tax rate for 2012 was 22 percent. Taxes at this rate were reduced by discrete tax benefits of $252 million,
resulting in a total tax provision for 2012 of $176 million compared with a total tax provision of $719 million for the prior year. The
decrease in the total tax provision was due to the combination of lower income before income taxes and the impact of the discrete tax
benefits. The decrease was partially offset by the impact of the expiration of the federal research tax credit at the end of 2011. The
discrete tax benefits in 2012 were primarily due to additional U.S. tax benefits for manufacturing related to the years 2000 through
2011. The tax provision for 2012 did not include the January 2013 reinstatement of the federal research tax credit. The effect of the
reinstatement of about $65 million for 2012 will be recorded as a discrete tax benefit in the first quarter of 2013.
See Note 7 to the financial statements for a reconciliation of effective tax rates to the statutory federal tax rate.
Net income was $1.76 billion, a decrease of $477 million, or 21 percent, from 2011. EPS for 2012 was $1.51 compared with $1.88
for 2011. The decline in EPS was due to lower net income. EPS benefitted $0.03 from 2011 due to a lower number of average shares
outstanding as a result of our stock repurchase program.
Segment results
A detailed discussion of our segment results appears below.
Analog
2012 2011 Change
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,998 $ 6,375 10%
Operating profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,650 1,693 -3%
Operating profit % of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.6% 26.6%
Analog revenue increased $623 million, or 10 percent, from 2011 primarily due to the inclusion of a full year of SVA, and to a lesser
extent, growth in Power Management. Partially offsetting the increase was lower revenue from High Performance Analog. Revenue from
High Volume Analog & Logic products was about even.
Operating profit was $1.65 billion, or 23.6 percent of revenue. This was a decrease of $43 million, or 3 percent, compared with
2011 primarily due to higher operating expenses from the inclusion of a full year of SVA, partially offset by higher gross profit.
Embedded Processing
2012 2011 Change
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,971 $2,110 -7%
Operating profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 368 -55%
Operating profit % of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4% 17.4%
Embedded Processing revenue decreased $139 million, or 7 percent, compared with 2011 due to lower revenue from products sold into
communications infrastructure applications and, to a lesser extent, a less favorable mix of catalog products shipped. The decrease was
partially offset by revenue from products sold into automotive applications.
Operating profit was $166 million, or 8.4 percent of revenue. This was a decrease of $202 million, or 55 percent, compared with
2011 primarily due to lower gross profit.