Texas Instruments 2009 Annual Report Download - page 2

To our shareholders
For many, 2009 is a year best forgotten. But for TI, it’s a year to be
remembered.
In the face of an historic economy of whipsawing contraction and
growth, we accelerated our commitment to Analog and Embedded
Processing by investing in new products and redeploying resources
from less promising areas. The soundness of our strategy was
underscored as we improved our growth relative to our competitors
each quarter of the year. We have strong momentum going into 2010.
Through the downturn, we continued to increase investments
in areas that we believe will fuel future growth. For example, we
expanded our field sales and applications resources to serve
customers in fast-growing regions like China, India and Eastern
Europe. We made strategic acquisitions to bolster the portfolios of
our core businesses. Luminary Micro expanded our Embedded
Processing microcontroller offerings, while CICLON Semiconductor
strengthened our Analog power management portfolio.
We expanded Kilby Labs, which provides an environment where
TI technologists can innovate, collaborate and test their ideas. And we
established new product lines to penetrate important opportunities
in the LED lighting, smart metering and solar energy markets.
We were also one of the very few semiconductor companies
to expand our manufacturing capacity in the downturn to position
our company for future growth. We began to outfit the world’s first
300-millimeter analog manufacturing facility, RFAB, in Richardson,
Texas, which will let us ship $3 billion more in Analog products when
fully equipped. We also added 800,000 square feet of assembly/test
capacity with our new TI Clark facility located in the Philippines.
Our financial performance in 2009 offered a glimpse into the
power of a business model focused on Analog and Embedded
Processing. By the time the downturn troughed in the first quarter of
2009, TI revenue had declined 38 percent from six months earlier,
one of the steepest drops in our history. This decline was followed by
an unprecedented 44 percent snapback in cumulative growth in the
following three quarters. Yet, through it all, TI remained profitable,
demonstrating a resiliency that often eluded us in prior downturns.
For the year, revenue dropped 17 percent, but our operating margin
was virtually unchanged from 2008, and in the fourth quarter of 2009,
our operating margin set a new record high.
In this environment, our manufacturing operations demonstrated
their agility. As demand declined, we slowed and temporarily
suspended many of our operations to minimize costs, while being
careful not to impair our long-term ability to grow. When demand
unexpectedly turned back up in the second quarter, our operations
responded again, doubling production output inside of six months.
Even so, the rapid growth in demand for our products required
additional capital spending in the second half of the year as we work
to deliver the volume of products our customers need.
We also returned value directly to you, our shareholders, by
continuing to repurchase stock and paying higher dividends. While
many companies suspended their stock repurchases in the downturn,
TI bought back our stock in every quarter of 2009, repurchasing
almost $1 billion in total and reducing our outstanding shares another
3 percent. In addition, we paid over half a billion dollars in dividends
and raised our dividend for the sixth consecutive year. Even with our
capacity expansions, stock repurchases and dividends, our cash and
short-term investments increased by $385 million to more than
$2.9 billion.
The most important thing we learned in 2009 is that our work is
not yet done. Our positions in Analog and Embedded Processing are
strong, but we have the opportunity to make them much stronger.
That’s our mission for 2010.
Richard K. Templeton
Chairman, President and
Chief Executive Officer