Texas Instruments 2007 Annual Report Download - page 51

TEXAS INSTRUMENTS 2007 ANNUAL REPORT 49
In 2007, we delivered more value to shareholders and built momentum with customers. Perhaps most important to our future
performance, we sharpened our focus on analog with increases in dedicated research and development, sales support and
manufacturing capacity. Evidence of our potential in this area was notable in high-performance analog where we made substantial
market share gains again this year.
Statement of Operations – Selected Items
For the years ended
December 31,
2007 2006 2005
Revenue by segment:
Semiconductor ..................................................... $ 13,309 $ 13,730 $ 11,829
Education Technology ............................................... 526 525 506
Net revenue ....................................................... 13,835 14,255 12,335
Cost of revenue ...................................................... 6,502 6,996 6,319
Gross profit ......................................................... 7,333 7,259 6,016
Gross profit % of revenue ............................................. 53.0%50.9%48.8%
Research and development (R&D) ........................................ 2,155 2,195 1,986
R&D % of revenue .................................................. 15.6%15.4%16.1%
Selling, general and administrative (SG&A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,681 1,697 1,471
SG&A % of revenue ................................................. 12.1%11.9%11.9%
Profit from operations ................................................. 3,497 3,367 2,559
Operating profit % of revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.3%23.6% 20.7%
Other income (expense) net ............................................. 195 258 196
Income from continuing operations before income taxes . . . . . . . . . . . . . . . . . . . . . . . 3,692 3,625 2,755
Provision for income taxes .............................................. 1,051 987 582
Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,641 $2,638 $2,173
Diluted income from continuing operations per common share . . . . . . . . . . . . . . . . . . $1.83 $1.69 $1.30
Details of 2007 Financial Results
Revenue was $13.83 billion, down $420 million, or 3 percent, from 2006. This decrease was primarily due to decreased shipments
resulting from lower demand for reduced instruction set computing (RISC) microprocessors (designed to provide very fast computing,
typically for a specialized application such as servers) and DLP® products. In addition, although our revenue benefited from increased
shipments resulting from higher demand for products used in cell phone applications, this benefit was insufficient to offset normal
price declines for those products. The collective declines in these areas more than offset strong growth from high-performance analog
products.
Gross profit was $7.33 billion, or 53.0 percent of revenue. This was an increase of $74 million from 2006 due to the combination of a
greater percentage of revenue coming from more-profitable analog and DSP products, and continued manufacturing cost reductions.
Operating expenses were $2.15 billion for research and development (R&D) and $1.68 billion for selling, general and administrative
(SG&A). R&D decreased $40 million from 2006 because we benefited from more efficient development of advanced digital
manufacturing process technologies through our collaborative work with foundries. R&D was 15.6 percent of revenue in 2007,
compared with 15.4 percent in 2006. SG&A for 2007 decreased $16 million from 2006. SG&A was 12.1 percent of revenue in 2007,
compared with 11.9 percent a year ago.
Operating profit was $3.50 billion, or 25.3 percent of revenue. This was an increase of $130 million, or 4 percent, from 2006 primarily
due to strong gross profit, and to a lesser extent, lower operating expenses.