ti.com
TI Reports 1Q00 Financial Results
Revenue of $2653 Million, Up 27% from Year Ago
Pro Forma Earnings Per Share of $0.55
Pro Forma Gross Profit Margin Expands to 49.5%
DSP Revenues Grow 50%, Analog 25% from Year Ago
> Download Financials in MS Excel Format (42KB)
> 1Q conference call and slide presentation
Conference call begins at 4:30p.m. Central Time
DALLAS (April 17, 2000) ? Texas Instruments Incorporated (NYSE: TXN) today announced first-quarter 2000 financial results that showed continued strong growth for the company.
?This is a good start to 2000,? said Tom Engibous, TI chairman, president and CEO. ?Internet and communications applications continued to be our largest growth drivers, reinforcing the importance of programmable digital signal processors (DSPs) and analog products to the Internet age. This quarter we moved into high-volume production of DSPs for broadband applications; we announced two new cores that will provide the highest-performance and the lowest-power DSPs; and our DSPs power a number of new products, including Cisco?s new generation of Internet Protocol phones and Sony?s next Internet audio player.?
Summary of Financial Results
For the first quarter of 2000, TI reported the following:
Total revenues were $2653 million, up 27 percent from $2081 million in the year-ago quarter and up 4 percent sequentially, primarily due to increased strength in semiconductor.
Semiconductor revenues were $2270 million, up 30 percent from $1741 million in the same quarter of 1999 and up 3 percent sequentially.
Pro forma gross profit margin expanded to 49.5 percent, up 3.0 percentage points from the first quarter of 1999 and up 0.7 percentage points sequentially.
On a pro forma basis, profit from operations was $576 million, an increase of 70 percent from $340 million in the year-ago quarter and up slightly from fourth quarter 1999.
Operating margin for the first quarter was 21.7 percent on a pro forma basis, up 5.4 percentage points from 16.3 percent in the year-ago quarter due to increased product shipments. Pro forma operating margin decreased by 0.4 percentage points from the fourth quarter of 1999, due to increased strategic investment in research and development (R&D) for DSP and analog.
Pro forma net income for the quarter increased 69 percent to $470 million, compared with $278 million in the year-ago quarter primarily due to gains in semiconductor. Pro forma net income increased $37 million from the fourth quarter of 1999 primarily due to increased other income resulting from investment gains.
Pro forma earnings per share (EPS) of $0.55 rose 62 percent from $0.34 in the first quarter of 1999 and increased by $0.04 sequentially.
TI orders in the first quarter were $2876 million, up 26 percent from $2281 million in the year-ago quarter and up 5 percent from the fourth quarter primarily due to semiconductor.
Pro forma results for this quarter exclude special charges of $29 million, primarily associated with previously announced actions, including the closing of a Materials & Controls manufacturing facility in Versailles, Kentucky, and TI?s acquisition of Toccata Technology ApS. Also excluded is amortization of goodwill and other acquisition-related intangibles of $25 million.
For the first quarter of 1999, pro forma results exclude special charges of $25 million, primarily for a consolidation of semiconductor manufacturing operations in Japan. Also excluded is amortization of goodwill and other acquisition-related intangibles of $10 million.
For the fourth quarter of 1999, pro forma results exclude acquisition-related costs of $86 million associated with TI's pooling of interests acquisitions of Unitrode Corporation and Power Trends Inc., amortization of goodwill and other acquisition-related intangibles of $26 million, and a tax benefit effect of $67 million, primarily for research and experimental tax credit items.
According to generally accepted accounting principles, for the first quarter of 2000: gross profit margin was 48.4 percent, compared with 45.6 percent in the year-ago quarter; profit from operations was $522 million, compared with $306 million; operating margin was 19.7 percent, compared with 14.7 percent; net income was $426 million, compared with $255 million; and diluted earnings per share were $0.50, compared with $0.31.
Outlook
The company expects accelerating sequential revenue growth overall in the second quarter as it enters a seasonally stronger period in all its business segments, with semiconductor driving most of the growth.
Sequentially, wireless is expected to accelerate, even after better than seasonal growth in the first quarter. Broadband communications, which includes digital subscriber line (DSL) and cable modem, also should continue to grow rapidly although from a low base. The mass market should maintain high growth as new applications for TI's catalog DSP and analog products continue to expand. Hard disk drive revenues are expected to decline in the quarter.
Also, in Educational and Productivity Solutions (E&PS), product shipments will continue to become more aligned with back-to-school retail sales as revenue that traditionally came in the second quarter shifts into the third quarter.
For the year 2000, TI expects robust growth to continue in its semiconductor business, driven by strength in communications end-equipment markets, including wireless and broadband, as well as continued strength in the mass market. By the end of the fourth quarter, TI expects to reach pro forma operating margin of 25 percent.
Additionally, TI is raising its capital expenditure forecast to $2.5 billion for the year, reflecting management's outlook for strong continued demand for its DSP and analog products. Depreciation for the year is expected to be $1.3 billion. R&D for 2000 is expected to be $1.5 billion pro forma, primarily for DSP and analog.
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