Texas Instruments 2014 Annual Report Download - page 27

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FORM 10-K
our cash-generating capability and the amount of cash potentially available to return to investors, as well as insight into our financial
performance. These non-GAAP measures are supplemental to the comparable GAAP measures. Reconciliation to the most directly
comparable GAAP-based measures is provided in the table below.
For Years Ended December 31,
2014 2013
Cash flow from operations (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,892 $ 3,384
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (385) (412)
Free cash flow (non-GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,507 $ 2,972
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,045 $ 12,205
Cash flow from operations as a percent of revenue (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . 30% 28%
Free cash flow as a percent of revenue (non-GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27% 24%
Long-term contractual obligations
Payments Due by Period
Contractual Obligations 2015 2016/2017 2018/2019 Thereafter Total
Long-term debt obligations (a) . . . . . . . . . . . . . . . . . . . . . $ 1,000 $ 1,625 $ 1,250 $ 750 $ 4,625
Operating lease obligations (b) . . . . . . . . . . . . . . . . . . . . . 87 111 54 80 332
Software license obligations (c) . . . . . . . . . . . . . . . . . . . . 39 27 — — 66
Purchase obligations (d) . . . . . . . . . . . . . . . . . . . . . . . . 96 87 24 2 209
Deferred compensation plan (e) . . . . . . . . . . . . . . . . . . . . 16 40 32 80 168
Total (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,238 $ 1,890 $ 1,360 $ 912 $ 5,400
(a) Includes amounts classified as the current portion of long-term debt, specifically obligations that will mature within 12 months. The
related interest payments are not included.
(b) Includes minimum payments for leased facilities and equipment and purchases of industrial gases under contracts accounted for as
operating leases.
(c) Includes payments under license agreements for electronic design automation software.
(d) Includes contractual arrangements with suppliers where there is a fixed, non-cancellable payment schedule or minimum payments
due with a reduced delivery schedule. Excluded from the table are cancellable arrangements. However, depending on when certain
purchase arrangements may be cancelled, an additional $2 million of cancellation penalties may be required to be paid, which are
not reflected in the table.
(e) Includes an estimate of payments under this plan for the liability that existed at December 31, 2014.
(f) Excluded from the table are $108 million of uncertain tax liabilities under ASC 740, as well as any planned future funding
contributions to retirement benefit plans. Amounts associated with uncertain tax liabilities have been excluded because of the
difficulty in making reasonably reliable estimates of the timing of cash settlements with the respective taxing authorities. Regarding
future funding of retirement benefit plans, we plan to contribute about $100 million in 2015, but funding projections beyond
2015 are not practical to estimate due to the rules affecting tax-deductible contributions and the impact from the plans’ asset
performance, interest rates and potential U.S. and non-U.S. legislation.
Critical accounting policies
In preparing our consolidated financial statements in conformity with accounting principles generally accepted in the United States, we
use statistical analyses, estimates and projections that affect the reported amounts and related disclosures and may vary from actual
results. We consider the following accounting policies to be both those that are most important to the portrayal of our financial condition
and that require the most subjective judgment. If actual results differ significantly from management’s estimates and projections, there
could be a significant effect on our financial statements.