Texas Instruments 2013 Annual Report Download - page 48

TEXAS INSTRUMENTS4 6 • 2013 ANNUAL REPORT
ANNUAL
REPORT
In 2012, restructuring charges were $400 million, which consisted of $351 million related to the Wireless action and $49 million
related to the closing of the manufacturing facilities. Of the $400 million, $251 million was for severance and benefit costs and
$149 million was for other charges, including a non-tax-deductible goodwill impairment of $90 million.
All of these charges are reflected on the Restructuring charges/other line and are included in Other. See Note 3 to the financial
statements for more information.
Financial condition
At the end of 2013, total cash (Cash and cash equivalents plus Short-term investments) was $3.83 billion, a decrease of $136 million
from the end of 2012.
Accounts receivable were $1.20 billion at the end of 2013. This was a decrease of $27 million compared with the end of 2012. Days
sales outstanding were 36 at the end of 2013 compared with 37 at the end of 2012.
Inventory was $1.73 billion at the end of 2013. This was a decrease of $26 million from the end of 2012. Days of inventory at the
end of 2013 were 112 compared with 103 at the end of 2012, consistent with our target range of 105 to 115 days.
Liquidity and capital resources
Our primary source of liquidity is cash flow from operations. Additional sources of liquidity are Cash and cash equivalents, Short-term
investments and revolving credit facilities. Cash flow from operating activities for 2013 was $3.38 billion, about even with last year as
the increase in net income was largely offset by the increase in working capital requirements.
We had $1.63 billion of Cash and cash equivalents and $2.20 billion of Short-term investments as of December 31, 2013.
We have a variable-rate revolving credit facility with a consortium of investment-grade banks that allows us to borrow up to
$2 billion until March 2018. This credit facility also serves as support for the issuance of commercial paper. As of December 31, 2013,
our credit facility was undrawn and we had no commercial paper outstanding.
In 2013, investing activities used $3 million compared with $1.04 billion in 2012. For 2013, Capital expenditures were $412 million
compared with $495 million in 2012. Capital expenditures in both periods were primarily for semiconductor manufacturing equipment.
In 2013, we had sales of short-term investments, net of purchases, that provided cash proceeds of $342 million. This compared with
using cash of $604 million in 2012 to make purchases of short-term investments, net of sales.
In 2013, financing activities used net cash of $3.17 billion compared with $1.95 billion in 2012. In 2013, we received proceeds of
$986 million from the issuance of fixed-rate long-term debt (net of original issuance discount) and repaid $1.50 billion of maturing debt.
In 2012, we received net proceeds of $1.49 billion from the issuance of fixed-rate long-term debt and repaid $1.38 billion of debt and
commercial paper. Dividends paid in 2013 were $1.18 billion compared with $819 million in 2012, reflecting increases in the dividend
rate in each year. In 2013, we announced two increases in our quarterly cash dividend. During 2013, the quarterly dividend increased
from $0.21 to $0.30 per share, resulting in an annualized dividend payment of $1.20 per share. In 2013, we used $2.87 billion to
repurchase 77.6 million shares of our common stock. This compared with $1.80 billion used in 2012 to repurchase 59.8 million shares.
Employee exercises of stock options are also reflected in Cash flows from financing activities. In 2013, these exercises provided cash
proceeds of $1.31 billion compared with $523 million in 2012. Stock option exercises in 2013 were higher than historical averages.
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 references to free cash flow and various ratios based on that measure. These are financial measures that were
not prepared in accordance with GAAP. Free cash flow was calculated by subtracting Capital expenditures from the most directly
comparable GAAP measure, Cash flows from operating activities (also referred to as Cash flow from operations).
The free cash flow measures were compared to the following GAAP items to determine the various non-GAAP ratios presented
below and referred to in the MD&A: Revenue, Dividends paid and Stock repurchases. Reconciliation to the most directly comparable
GAAP-based ratios is provided in the tables below.
We believe these non-GAAP measures provide insight into our liquidity, our cash-generating capability and the amount of
cash potentially available to return to investors, as well as insight into our financial performance. These non-GAAP measures are
supplemental to the comparable GAAP measures.