Texas Instruments 2012 Annual Report Download - page 50

ANNUAL
REPORT
TEXAS INSTRUMENTS48 • 2012 ANNUAL REPORT
$200 million used to repay commercial paper in 2011. Dividends paid in 2012 of $819 million compared with $644 million in 2011,
reflecting increases in the dividend rate in each year. In September 2012, we announced a 24 percent increase in our quarterly
cash dividend. The quarterly dividend increased from $0.17 to $0.21 per share, resulting in an annualized dividend payment of
$0.84 per share. We used $1.80 billion to repurchase 59.8 million shares of our common stock in 2012 compared with $1.97 billion
used to repurchase 59.5 million shares in 2011. Employee exercises of stock options are also reflected in cash from financing activities.
In 2012, these exercises provided cash proceeds of $523 million compared with $690 million in 2011.
We believe we have the necessary financial resources and operating plans to fund our working capital needs, capital expenditures,
dividend and debt-related payments, and other business requirements for at least the next 12 months.
Non-GAAP financial information
This MD&A includes a discussion of free cash flow, a measure that was not prepared in accordance with generally accepted accounting
principles in the United States (non-GAAP measure). We provide this measure to give investors insight into the company’s liquidity
and cash-generating capability and the amount of its cash available to return to investors. It is supplemental to the comparable
GAAP measure.
Free cash flow was calculated by subtracting capital expenditures (Additions to property, plant and equipment) from Cash flows from
operating activities. The components of this calculation are included in the table below.
For Years Ended
December 31,
2012 2011
Cash flows from operating activities (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,414 $3,256
Less capital expenditures (Additions to property, plant and equipment) . . . . . . . . . . . . . . . . . . . . . . . 495 816
Free cash flow (non-GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,919 $2,440
Long-term contractual obligations
Payments Due by Period
Contractual obligations 2013 2014/2015 2016/2017 Thereafter Total
Long-term debt obligations (a) . . . . . . . . . . . . . . . . . . . . . . . . $ 1,500 $2,000 $1,375 $750 $5,625
Operating lease obligations (b) . . . . . . . . . . . . . . . . . . . . . . . . 102 143 81 80 406
Software license obligations (c). . . . . . . . . . . . . . . . . . . . . . . . 46 47 — — 93
Purchase obligations (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 79 28 22 206
Deferred compensation plan (e) . . . . . . . . . . . . . . . . . . . . . . . 12 31 30 66 139
Total (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,737 $2,300 $1,514 $918 $6,469
(a) Long-term debt obligations include amounts classified as the current portion of long-term debt, i.e., obligations that will be retired
within 12 months. The related interest payments are not included.
(b) Includes minimum payments for leased facilities and equipment, as well as purchases of industrial gases under contracts accounted
for as an operating lease.
(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 $10 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, 2012.
(f) Excluded from the table are $184 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 2013, but funding projections beyond
2013 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.