Texas Instruments 2010 Annual Report Download - page 44

TEXAS INSTRUMENTS 2010 ANNUAL REPORT
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Other
2009 2008
2009฀
vs.฀2008
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,128 $2,630 -19%
Operating profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 712 772 -8%
Operating profit % of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.5% 29.3%
Restructuring expense* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ฀23 $ 40
* Included in operating profit
Revenue from Other was $2.13 billion in 2009. This was a decline of $502 million, or 19 percent, from 2008 due to a decrease in
shipments across a broad range of products, especially RISC microprocessors.
Operating profit for 2009 from Other was $712 million, or 33.5 percent of revenue. This was a decrease of $60 million, or 8 percent,
compared with 2008 due to lower revenue and associated gross profit, partially offset by lower operating expenses.
Financial condition
At the end of 2010, total cash (cash and cash equivalents plus short-term investments) was $3.07 billion, an increase of $147 million
from the end of 2009.
Accounts receivable were $1.52 billion at the end of 2010. This was an increase of $241 million compared with the end of 2009.
Days sales outstanding were 39 at the end of 2010 compared with 38 at the end of 2009. The increase in accounts receivable was the
result of higher revenue.
Inventory was $1.52 billion at the end of 2010. This was an increase of $318 million from the end of 2009. Days of inventory at the
end of 2010 were 83 compared with 76 at the end of 2009. Eighty-three days approximates a more normal carrying level of inventory
for our current business model.
Liquidity and capital resources
Our sources of liquidity are cash flow from operations, cash and cash equivalents, short-term investments, and a revolving credit facility.
Our primary source of liquidity is cash flow from operations. Cash flow from operations for 2010 was $3.82 billion, an increase of
$1.18 billion from the prior year due to higher net income.
We had $1.32 billion of cash and cash equivalents and $1.75 billion of short-term investments as of December 31, 2010. We have
a variable-rate revolving credit facility that allows us to borrow up to $1 billion until August 2011 and up to $920 million from August
2011 until August 2012. As of December 31, 2010, this credit facility was not being utilized. See Note 11 to the Financial Statements for
additional information.
In 2010, investing activities used $1.06 billion in cash, primarily for capital expenditures, and to a lesser extent, acquisitions.
For 2010, capital expenditures were $1.20 billion compared with $753 million used in 2009. Capital expenditures in 2010 were
for assembly/test equipment and analog wafer manufacturing equipment. Additionally, in 2010 we used $199 million for business
acquisitions that included wafer fabrication facilities and related equipment. See Note 8 to the Financial Statements for details regarding
acquisitions. In comparison, we used $155 million for acquisitions in 2009.
For 2010, net cash used in financing activities was $2.63 billion compared with $1.41 billion in 2009. We used $2.45 billion to
repurchase 94 million shares of our common stock in 2010, compared with $954 million used to repurchase 45 million shares of our
common stock in 2009. Dividends paid in 2010 of $592 million, compared with $567 million in 2009, reflect the effect of increases in
the quarterly dividend rate, partially offset by the lower number of shares outstanding. Employee exercises of TI stock options are also
reflected in cash from financing activities. In 2010, these exercises provided cash proceeds of $407 million compared with $109 million
in 2009.
Cumulatively, our board of directors has authorized $27.50 billion in stock repurchases since the beginning of September 2004. At
year-end 2010, $7.64 billion of these authorizations remained. From September 2004 through December 2010, we reduced our shares
outstanding by 32.4 percent.
We believe we have the necessary financial resources and operating plans to fund our working capital needs, capital expenditures,
dividend payments and other business requirements for at least the next 12 months.