Texas Instruments 2014 Annual Report Download - page 26

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FORM 10-K
Financial condition
At the end of 2014, total cash (Cash and cash equivalents plus Short-term investments) was $3.54 billion, a decrease of $288 million
from the end of 2013.
Accounts receivable were $1.25 billion at the end of 2014. This was an increase of $43 million compared with the end of 2013 due to
higher revenue. Days sales outstanding were 34 at the end of 2014 compared with 36 at the end of 2013.
Inventory was $1.78 billion at the end of 2014. This was an increase of $53 million from the end of 2013. Days of inventory at the end
of 2014 were 117 compared with 112 at the end of 2013. As sales to distributors become a larger portion of our revenue, we expect
consignment inventory to become a larger portion of our total inventory. This may lead to changes in the level of inventory we carry in
the future.
Liquidity and capital resources
Our primary source of liquidity is cash flow from operations. Additional sources of liquidity are Cash and cash equivalents, Short-term
investments and revolving credit facilities. Cash flow from operating activities for 2014 was $3.89 billion, an increase of $508 million
from 2013 due to an increase in Net income.
We had $1.20 billion of Cash and cash equivalents and $2.34 billion of Short-term investments as of December 31, 2014. Our U.S.
entities owned 82 percent of total cash at the end of 2014.
We have a variable-rate revolving credit facility with a consortium of investment-grade banks that allows us to borrow up to $2 billion
until March 2019. This credit facility also serves as support for the issuance of commercial paper. As of December 31, 2014, our credit
facility was undrawn and we had no commercial paper outstanding.
In 2014, investing activities used $377 million compared with $3 million in 2013. For 2014, Capital expenditures were $385 million
compared with $412 million in 2013. Capital expenditures in both periods were primarily for semiconductor manufacturing equipment.
In 2014, we had purchases of short-term investments, net of sales, that used cash of $141 million. In comparison, in 2013, we had
sales of short-term investments, net of purchases, that provided cash proceeds of $342 million. In addition, we had proceeds from sales
of assets of $142 million in 2014 compared with $21 million in 2013.
In 2014, financing activities used net cash of $3.94 billion compared with $3.17 billion in 2013. In 2014, we received proceeds of
$498 million from the issuance of fixed-rate long-term debt (net of original issuance discount) and repaid $1.00 billion of maturing debt.
In 2013, we received proceeds of $986 million from the issuance of fixed-rate long-term debt (net of original issuance discount) and
repaid $1.50 billion of maturing debt. Dividends paid in 2014 were $1.32 billion compared with $1.18 billion in 2013, reflecting increases
in the dividend rate. During 2014, the quarterly dividend increased from $0.30 to $0.34 per share, resulting in an annualized dividend
payment of $1.36 per share. In 2013, we announced two increases in our quarterly dividend, increasing from $0.21 to $0.30 per share.
In 2014, we used $2.83 billion to repurchase 61.7 million shares of our common stock. This compared with $2.87 billion used in 2013 to
repurchase 77.6 million shares. Employee exercises of stock options are also reflected in Cash flows from financing activities. In 2014,
these exercises provided cash proceeds of $616 million compared with $1.31 billion in 2013. Stock option exercises in 2013 were higher
than historical averages.
We believe we have the necessary financial resources and operating plans to fund our working capital needs, capital expenditures,
dividend and debt-related payments, and other business requirements for at least the next 12 months.
Non-GAAP financial information
This MD&A includes references to free cash flow and ratios based on that measure. These are financial measures that were not
prepared in accordance with generally accepted accounting principles in the United States (GAAP). Free cash flow was calculated
by subtracting Capital expenditures from the most directly comparable GAAP measure, Cash flows from operating activities (also
referred to as cash flow from operations). We believe that free cash flow and the associated ratios provide insight into our liquidity,