TI reports 4Q16 and 2016 financial results and shareholder returns

 

Compared with the prior year:

Analog: 

  • Revenue increased due to Silicon Valley Analog and High Performance Analog. Power Management also grew, while High Volume Analog & Logic declined.
  • Operating profit increased due to higher gross profit, which benefited from lower manufacturing costs.

Embedded Processing: 

  • Revenue increased due to growth in all three product lines, led by Processors.
  • Operating profit increased primarily due to higher revenue and associated gross profit.

Other: 

  • Revenue declined due to royalties, custom ASIC products and calculators. This was partially offset by growth in DLP products.
  • Operating profit decreased $12 million.

Non-GAAP financial information

This release includes references to free cash flow and 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 company believes that free cash flow and the associated ratios provide insight into its liquidity, its cash-generating capability and the amount of cash potentially available to return to shareholders, as well as insight into its financial performance. These non-GAAP measures are supplemental to the comparable GAAP measures.

Reconciliation to the most directly comparable GAAP measures is provided in the table below.

Amounts are in millions of dollars.



For Years Ended





December 31,





2016


2015


Change

Cash flow from operations (GAAP)


$

4,614


$

4,397


5%

Capital expenditures



(531)



(551)



Free cash flow (non-GAAP)


$

4,083


$

3,846


6%










Revenue


$

13,370


$

13,000












Cash flow from operations as a percent of revenue (GAAP)



34.5%



33.8%



Free cash flow as a percent of revenue (non-GAAP)



30.5%



29.6%



 

Supplemental financial information

With the fourth-quarter 2016 adoption of ASU 2016-09 related to stock compensation, we were required to apply the new standard only as of the beginning of 2016 for the Consolidated Statements of Income and on a full retrospective basis for all periods in the Consolidated Statements of Cash Flows. The recast amounts can be found in the chart below.


4Q16 (a)

3Q16

2Q16

1Q16



Reported

Reported

Recast

Reported

Recast

Reported

Recast


Income statement data:
















Provision for income taxes

$

450

$

413

$

363

$

323

$

283

$

282

$

239


Net income


1,047


968


1,018


779


819


668


711


















Average diluted shares outstanding, in millions


1,018


1,017


1,023


1,016


1,020


1,018


1,022


Basic EPS

$

1.04

$

0.95

$

1.00

$

0.77

$

0.81

$

0.65

$

0.70


Diluted EPS

$

1.02

$

0.94

$

0.98

$

0.76

$

0.79

$

0.65

$

0.69


















Cash flow data:
















Cash flows from operating activities (GAAP)


1,387


1,413


1,465


1,069


1,109


547


653


Capital expenditures


(110)


(139)


(139)


(158)


(158)


(124)


(124)


Free cash flow
















(non-GAAP) (c)


1,277


1,274


1,326


911


951


423


529


















Cash flows from financing activities


(917)


(676)


(728)


(1,180)


(1,220)


(839)


(945)



















2016 (b)

2015











Total

Reported

Recast










Income statement data:
















Provision for income taxes

$

1,335

$

1,230


*










Net income


3,595


2,986


*


























Average diluted shares outstanding, in millions


1,021


1,043


*










Basic EPS

$

3.54

$

2.86


*










Diluted EPS

$

3.48

$

2.82


*


























Cash flow data:
















Cash flows from operating activities (GAAP)


4,614


4,268


4,397










Capital expenditures


(531)


(551)


(551)










Free cash flow
















(non-GAAP) (c)


4,083


3,717


3,846


























Cash flows from financing activities


(3,810)


(4,165)


(4,294)












(a) 4Q16 amounts reflect adoption of ASU 2016-09.


(b) 2016 total is the sum of recast 1Q16, 2Q16 and 3Q16, and reported 4Q16.


(c) Free cash flow is Cash flow from operating activities less Capital expenditures.


* Accounting standard ASU 2016-09 allowed only prospective adoption for the income statement, therefore the prior annual periods were not recast.



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