Texas Instruments 2012 Annual Report Download - page 47

ANNUAL
REPORT
TEXAS INSTRUMENTS 2012 ANNUAL REPORT • 45
Wireless
2012 2011 Change
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,357 $ 2,518 -46%
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (525) 412 n/a
Operating profit (loss)% of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (38.7)% 16.4%
Restructuring charges/other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 351 $ —
* Included in Operating profit (loss)
Wireless revenue decreased $1.16 billion, or 46 percent, from 2011 primarily due to our planned exit from baseband products.
Revenue from connectivity products, and to a lesser extent, OMAP applications processors also declined. Baseband revenue for 2012
was $294 million, a decrease of $810 million, or 73 percent, compared with 2011. We expect revenue from Wireless products for the
smartphone and consumer tablet markets to wind down to essentially zero by the end of 2013.
Wireless had an operating loss of $525 million for 2012, compared with operating profit of $412 million in 2011. The decrease was
primarily due to lower revenue and associated gross profit, and to a lesser extent, restructuring charges.
Other
2012 2011 Change
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,499 $ 2,732 -9%
Operating profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 682 519 31%
Operating profit % of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.3% 19.0%
Restructuring charges/other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (87) $ 112
Acquisition charges* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450 315
* Included in Operating profit
Revenue from Other was $2.50 billion in 2012. This was a decrease of $233 million, or 9 percent, from 2011 primarily due to the
expiration of transitional supply agreements and, to a lesser extent, a less favorable mix of DLP products shipped. Revenue from
calculators and royalties also declined. The decrease was partially offset by business interruption insurance proceeds resulting from the
2011 Japan earthquake and increased revenue from custom ASIC products.
Operating profit for 2012 from Other was $682 million, or 27.3 percent of revenue. This was an increase of $163 million, or
31 percent, compared with 2011 due to lower restructuring charges, partially offset by higher acquisition charges. Included in
Restructuring charges/other for 2012 was a $144 million gain from the Japan pension program change. The increase in acquisition
charges was due to a full year of increased amortization expense for acquired intangible assets.
Prior results of operations - 2011 compared with 2010
Our 2011 revenue was $13.73 billion, net income was $2.24 billion and EPS was $1.88.
Although 2011 started strong, global economic uncertainty and the March 2011 earthquake in Japan impacted TI, our customers
and our suppliers. Despite these challenges, we successfully completed the acquisition of National, we gained share in the Analog and
Embedded Processing markets, and we continued to wind down our baseband operations.
Revenue in 2011 was $13.73 billion, down $231 million, or 2 percent, from 2010 due to lower revenue from Wireless baseband products.
Gross profit in 2011 was $6.77 billion, a decrease of $720 million, or 10 percent, from 2010. The decrease was primarily due to a
combination of, in decreasing order, lower revenue, lower average levels of factory utilization as we reduced production in response to
weaker demand, acquisition-related charges reflected in COR and inventory charges. Lower factory utilization decreased our gross profit
by $175 million from 2010. Gross profit margin was 49.3 percent of revenue compared with 53.6 percent in 2010.
Operating expenses were $1.72 billion for R&D and $1.64 billion for SG&A. R&D expense increased $145 million, or 9 percent,
from 2010 due to the addition of a partial year of SVA and higher product development costs in our other major Analog product lines,
Embedded Processing and Wireless. R&D expense as a percent of revenue was 12.5 percent compared with 11.2 percent in 2010.
SG&A expense increased $119 million, or 8 percent, from 2010 primarily due to the addition of a partial year of SVA, and to a
lesser extent, higher investments in sales and marketing in support of our other major Analog product lines, Embedded Processing and
Wireless. SG&A expense as a percent of revenue was 11.9 percent compared with 10.9 percent in 2010.
Acquisition charges were $315 million in 2011. There were no acquisition charges in 2010.