Looks like TI hit estimates for this quarter and raised them for next quarter.
biz.yahoo.com
TI Reports 1Q04 Financial Results
Wednesday April 14, 4:00 pm ET
- TI Revenue Increases 6% Sequentially, 34% from Year Ago - Gross Profit Increases 11% Sequentially, 53% from Year Ago - EPS of $0.21 - 2Q04 Revenue Expected between $3085 Million and $3325 Million
Conference Call on TI Web Site at 4 p.m. Central Daylight Time Today www.ti.com
DALLAS, April 14 /PRNewswire-FirstCall/ -- Texas Instruments Incorporated (NYSE: TXN - News; TI) today reported first-quarter 2004 revenue of $2936 million, an increase of 6 percent sequentially and 34 percent from the year-ago quarter due to strength in TI's Semiconductor business. Earnings per share (EPS) were $0.21.
ADVERTISEMENT
Semiconductor revenue increased 5 percent sequentially due to strong demand across a broad range of products, especially Digital Light Processing(TM) (DLP(TM)) and high-performance analog. Growth in these areas more than offset a decline in revenue from wireless applications. TI's wireless revenue was the second highest on record despite the combination of normal handset seasonality and lower demand from TI's largest customer.
Compared with the year-ago quarter, Semiconductor revenue increased 38 percent due to demand across a broad range of products, particularly digital signal processors (DSPs) and analog used in wireless, as well as high- performance analog used in a variety of applications. Wireless revenue increased 35 percent from the year-ago quarter driven by demand for TI's most advanced products. High-performance analog revenue increased 58 percent from the year-ago quarter.
"The growth in Semiconductor revenue demonstrates the diversity in our customer base and our product portfolio," said Tom Engibous, TI chairman, president and CEO. "Shipments increased across most product lines and end markets. Notably, high-performance analog and DLP are both becoming major contributors to TI's growth and bottom line. Revenue from DLP products reached a record level as TI's technology continued to penetrate the business projector and high-definition television markets with an increasing array of customer brands and retail presence. Growth in high-performance analog reflected the significant investments we've made to establish a world-class development team and the quality of products this team has delivered.
"TI's strong wireless growth from the year-ago period continued to outpace the industry's handset shipments, which we believe reflects the company's increasing content per phone. A big factor in this growth was TI's family of OMAP(TM) application processors, used to enable real multimedia capabilities in smartphones and 3G handsets," Engibous said.
"In all, the strength in customer orders and the continuing momentum of TI products lead us to believe that 2004 will be another strong year for our Semiconductor business. For the first time since 2000, we accrued for TI employee profit sharing, reflecting the company's expectations for strong growth and improving profitability," he said. "We are increasing R&D and also are adding capacity for additional assembly and test capabilities and an additional 90-nanometer manufacturing line. These actions will help ensure we can provide customers what they need, when they need it."
Details of Financial Results
Revenue
In the first quarter, TI revenue of $2936 million increased by $166 million sequentially and by $744 million from the year-ago quarter.
Gross Profit
Gross profit of $1322 million increased 11 percent sequentially and 53 percent from the year-ago quarter. Gross profit margin was 45.0 percent of revenue, up 1.9 percentage points sequentially and up 5.7 percentage points from the year-ago quarter. Gross profit and gross profit margin benefited from higher revenue and the resulting increased utilization of TI's fixed-cost Semiconductor manufacturing assets. This more than offset the accrual for profit sharing and the annual compensation expense increases that were incurred in the first quarter.
Operating Expenses
Research and Development (R&D) expense of $494 million increased 10 percent sequentially primarily due to an accrual for profit sharing and annual compensation expense increases that were incurred in the first quarter. R&D expense increased 21 percent compared with the year-ago quarter primarily due to higher Semiconductor product development, particularly for wireless, combined with the profit sharing accrual and the annual compensation expense increases.
Selling, General and Administrative (SG&A) expense of $354 million increased 15 percent sequentially and 18 percent from the year-ago quarter primarily due to the accrual for profit sharing and the annual compensation expense increases.
Operating Profit
Operating profit of $474 million, or 16.2 percent of revenue, increased by $36 million sequentially and increased by $321 million compared with the year- ago quarter due to higher gross profit, which more than offset increased R&D and SG&A expenses.
Other Income (Expense) Net (OI&E) and Interest Expense
OI&E of $50 million decreased by $81 million from the prior quarter, which included $97 million of pre-tax gain associated with the company's sale of its remaining shares of Micron Technology, Inc. common stock. Compared with the year-ago quarter, OI&E increased $36 million reflecting TI's investment write- downs and the charges associated with the retirement of Burr-Brown debt, both of which occurred in the year-ago quarter.
Interest expense of $8 million was even sequentially and declined by $5 million from the year-ago quarter due to the company's lower debt level.
Net Income
Net income was $367 million, or $0.21 per share, down $145 million sequentially due to the prior quarter's gain from the sale of Micron stock and the company's recognition of a previously reserved tax benefit associated with an impairment write-down of TI's Micron stock in the fourth quarter of 2002, and due to an increase in the company's effective tax rate. Compared with the year-ago quarter, net income increased $250 million due to higher operating profit. Net income in the first quarter reflects a higher effective tax rate of 29 percent compared with the earlier periods.
Orders
TI orders of $3231 million increased 5 percent sequentially due to growth in Semiconductor, Educational & Productivity Solutions (E&PS) and Sensors & Controls. Compared with the year-ago quarter, orders increased 41 percent primarily due to strength in Semiconductor. Semiconductor orders were $2810 million, up 2 percent sequentially. Compared with the year-ago quarter, Semiconductor orders were up 47 percent due to broad-based demand for the company's products. The Semiconductor book-to-bill ratio in the first quarter was 1.09.
Cash
At the end of the first quarter, total cash (cash and cash equivalents plus short-term investments and long-term cash investments) was $5493 million.
Cash flow from operations was $393 million, down $674 million sequentially primarily due to an increase in receivables and inventory. Compared with the year-ago quarter, cash flow was up $197 million due to higher net income.
Capital Expenditures and Depreciation
Capital expenditures of $401 million increased by $129 million sequentially and $269 million from the year-ago quarter. TI's capital expenditures in the first quarter primarily were used to increase assembly and test capacity, as well as for Semiconductor equipment to establish an additional 90-nanometer production line.
Depreciation of $348 million decreased by $22 million sequentially and was about even with the year-ago quarter.
Accounts Receivable and Inventory
Accounts receivable of $1678 million increased $227 million sequentially due to a higher revenue level in the final month of the first quarter compared with the final month of the prior quarter. Accounts receivable increased by $313 million from the end of the year-ago quarter due to higher revenue. Days sales outstanding were 51 at the end of the first quarter, compared with 47 at the end of the prior quarter and 56 at the end of the year-ago quarter.
Inventory of $1148 million at the end of the first quarter increased $164 million sequentially and $266 million from the year-ago quarter to support anticipated higher shipments. Days of inventory at the end of the first quarter were 64, up from 56 days at the end of the prior quarter and up from 60 days at the end of the year-ago quarter.
Debt
At the end of the first quarter, TI's debt-to-total-capital ratio was 0.06, down from 0.07 at the end of the prior quarter, and down from 0.09 at the end of the year-ago quarter primarily due to the company's lower debt level.
Outlook
TI intends to provide a mid-quarter update to its financial outlook on June 7 by issuing a press release and holding a conference call. Both will be available on the company's web site.
For the second quarter of 2004, TI expects revenue to be in the following ranges:
Total TI, $3085 million to $3325 million; -- Semiconductor, $2650 million to $2850 million; -- Sensors & Controls, $280 million to $300 million; and -- E&PS, $160 million to $180 million.
TI expects earnings per share to be in the range of $0.23 to $0.26.
For 2004, TI expects: R&D to be about $2.1 billion, up from the prior estimate of $2.0 billion; capital expenditures to be about $1.3 billion, up from the prior estimate of $1.1 billion; and depreciation to be about $1.5 billion, up from the prior estimate of $1.4 billion.
The effective tax rate for the year is expected to be about 29 percent, compared with the company's prior expectation of about 30 percent. |
