Texas Instruments 2005 Annual Report Download - page 35

In December 2004, as a result of certain provisions within the AJCA, the existing deferred compensation plan was closed
to deferral elections for compensation earned after 2004. For compensation earned after 2004, we have allowed deferral
elections in accordance with the provisions of the AJCA.
15. Profit Sharing Plans
We also sponsor various profit sharing plans, the largest of which is the TI Employee Profit Sharing Plan. Profit sharing
benefits are generally formulaic and determined by one or more business or company-wide financial metrics. Beginning
in 2005, profit sharing expense is determined based on a different formula than was used in 2004. The current plan
provides for profit sharing to be paid based solely upon TI’s operating margin for the full calendar year. Under this plan, a
minimum threshold of 10 percent operating margin must be achieved before any profit sharing is paid. Profit sharing at 10
percent operating margin will be 2 percent of eligible payroll. The maximum amount of profit sharing available under the
plan is 20 percent of eligible payroll, and would only be paid when TI’s operating margin meets or exceeds 35 percent for
a full calendar year.
We recognized $115 million and $243 million of profit sharing expense under the TI Employee Profit Sharing Plan in 2005
and 2004 but no expenses under this plan were recognized in 2003.
Certain profit sharing plans worldwide provide that, depending upon the individual plan, a portion of the profit sharing
earned by employees may be contributed to a deferred plan. Several investment options are made available to employees
for deferred amounts, including TI common stock. The TI board of directors has authorized the issuance of 36.9 million
shares of previously unissued TI common shares for deferred profit sharing and savings plans worldwide. None has been
issued in the three years ended December 31, 2005. Instead, the trustees of these plans worldwide have purchased
outstanding TI common shares from the open market to fund the requirements of these plans: 2.1 million shares in 2005,
3.0 million shares in 2004 and 12.3 million shares in 2003.
16. Restructuring Actions
2003 Restructuring Actions
Sensors & Controls Restructuring Action: In 2003, we announced a plan to move certain production lines from Attleboro,
Massachusetts, to other TI sites in order to be geographically closer to customers and their markets and to reduce
manufacturing costs. This restructuring action is expected to affect about 930 jobs through 2006, primarily in
manufacturing operations. The total cost of this restructuring action is expected to be about $72 million. As of
December 31, 2005, a total of 911 employees have been terminated. The remaining payments are expected to be
completed by the end of 2006.
Semiconductor Restructuring Action: In 2003, we announced a restructuring action that affected 897 jobs in
Semiconductor manufacturing operations in the U.S. and international locations, as those operations became
more productive with fewer people. The total cost of this restructuring action was $82 million. As of December 31, 2005,
all employees affected had been terminated, and a balance of $4 million of severance and benefit costs remains to be
paid through 2006.
Prior Actions
Prior to 2003, we conducted various restructuring actions, primarily in Semiconductor operations. All charges were
complete prior to 2003. As of December 31, 2005, all employees affected had been terminated, and a balance of $10
million of severance and benefit costs remains to be paid through 2008.
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TEXAS INSTRUMENTS 2005 ANNUAL REPORT