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TI ANNOUNCES RECORD PROFIT FOR THIRD QUARTER

 DALLAS, Oct. 15 /PRNewswire/ -- Texas Instruments Incorporated (NYSE: TXN) today reported its third-quarter 1993 results.
 TI's earnings reached record levels in the third quarter of 1993, led by steady improvement in semiconductor profitability and higher royalties. Revenues also reached an all-time high in the quarter.
 Financial Summary
 Net revenues for the quarter ending Sept. 30, 1993, were $2161 million, up 14 percent from $1892 million in the third quarter of 1992. Increases in semiconductor revenues and patent royalties more than offset a decline in defense electronics. Net income was $146 million, compared with $57 million in last year's third quarter. Earnings per share were $1.54, up from $0.58 in the same period of 1992.
 Profit from operations for the quarter was $218 million, compared with $116 million in the third quarter of 1992. Substantially higher semiconductor profits and higher royalties more than offset lower defense profits and a loss in information technology.
 Third-quarter 1993 results include an accrual of $26 million for employee profit-sharing plans, bringing the total for the year to $52 million. There was no accrual for profit sharing in 1992.
 Year-to-date profit after tax return on assets was 7.6 percent, compared with 4.1 percent for the full year in 1992. TI's goal is to achieve a sustained after-tax return on assets of 8-10 percent.
 Royalty revenues for the quarter were $168 million. This includes $37 million in one-time royalties, reflecting previously announced licensing agreements covering TI's computer systems patents with Compaq Computer Corporation, Toshiba Corporation and Packard Bell Electronics, Inc. Last year's third quarter included $83 million in royalty revenues, including $9 million in one-time amounts. Higher ongoing royalties in 3Q93 reflected strength in the world semiconductor market.
 In his letter to stockholders, TI Chairman, President and CEO Jerry R. Junkins says:
 Semiconductors
 "TI's semiconductor business continued its steady improvement in the third quarter. Orders and shipments were better than the typical seasonal pattern and reached record levels because of strength in end- equipment markets, particularly computers and telecommunications. However, customers' semiconductor inventories increased in the quarter. TI's semiconductor revenues grew faster than the total market, supported by increased shipments of linear mixed-signal and advanced bus interface products, memory and application-specific products. Semiconductor margins strengthened over the second quarter of this year, marking the sixth consecutive quarter of improvement, as a result of our emphasis on differentiated products, cost control and manufacturing efficiencies.
 "Progress continues in the rampup of advanced joint-venture wafer- fab capacity. TECH Semiconductor, the joint venture in Singapore involving TI, the Singapore Economic Development Board, Canon and Hewlett-Packard, began shipments during the quarter. This facility is ramping up production of super-shrink 4-megabit dynamic random-access memory (DRAM) chips and is scheduled to begin producing 16-megabit DRAMs in 1994.
 "In August, we announced construction of a new TI semiconductor wafer-fabrication facility in Dallas. This advanced facility will produce circuits with dimensions as small as 0.25 microns, on eight-inch wafers. The first phase of this project will include a production development center. We expect this center to cut cycle time in half for the critical prototype-to-volume production phase of semiconductor manufacturing, helping our customers get to market faster.
 "The convergence of the computer, communications and consumer electronics markets is providing increased opportunities for semiconductor growth. During the quarter, TI introduced several products, including higher performance digital signal processors, communications processors and application-specific integrated circuits for high-speed telecom switching systems. We believe these products will help put TI at the forefront of new market opportunities in telecommunications and multimedia.
 "We believe the ongoing actions we are taking in terms of new product development, reengineering, cycle-time reduction, and customer satisfaction will improve the long-term stability and financial performance of our semiconductor business.
 Defense Electronics
 "Defense electronics revenues declined from last year's third quarter. TI's defense business is in a period where some mature programs such as the High-Speed Antiradar Missile (HARM) are declining and new development programs such as the Javelin antiarmor system, the Joint Stand-Off Weapon system (JSOW) and the Improved Target Acquisition System (ITAS) are in the early, lower revenue phase of their life cycles. We are continuing to focus on controlling costs to maintain stable profitability.
 Information Technology
 "Our information technology business continues to be affected by the market transition to smaller, distributed client/server computing systems. In September, we began shipping new products extending our Information Engineering Facility (TM) (IEF(TM)) software to the client/server market, but these products did not have a significant effect on third-quarter revenues. We are continuing actions to reduce costs across the information technology business.
 New Business Opportunities
 "We are accelerating investments in research and development for new technologies, in addition to supporting our base businesses. TI-funded R&D spending for 1993 is expected to be about $570 million, up $100 million from 1992. Our digital micromirror device (DMD) technology could provide the foundation for a significant new business opportunity for TI, but it will require higher investments to support that opportunity. Ford Motor Company has announced plans to use another new TI technology, the TI Registration and Identification System (TIRIS(TM)), in an automotive security system.
 Outlook
 "The world semiconductor market remains strong. The different timing of economic recovery in major geographic regions, and conservative capacity additions relative to industry revenues, are supporting continued market growth, although restrained in the near term by the economic weakness in Japan and Europe. Over the longer term, we believe the world semiconductor market will be less volatile than in the past because of the rapidly increasing use of semiconductors in electronic end-equipment, the emergence of new consumer markets in Asia, and the growing importance of new applications such as multimedia. We believe that expanding growth opportunities in semiconductors and new business opportunities in other areas will more than offset the effect of lower defense revenues for TI.
 Summary
 "While we are encouraged by the continued improvement in semiconductor operations, we will continue actions across the corporation to keep operations aligned with market demand, including organizational consolidations and selective early retirement programs where appropriate. We believe our strategic and operational actions are leading to more stability across TI and contributing to improved return on assets and increased shareholder value," Mr. Junkins concluded.
 TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
 Consolidated Income Statement
 (In millions of dollars, except per-share amounts.)
 For Three Months Ended
 Sept. 30 Sept. 30
 1993 1992
 Net revenues $ 2161 $ 1892
 Operating costs and expenses:
 Cost of revenues 1552 1441
 General, administrative and marketing 316 301
 Employees' retirement and profit sharing
 plans 75 34
 Total 1943 1776
 Profit from operations 218 116
 Interest income 8 8
 Other income (expense) net (18) (23)
 Interest on loans 12 13
 Income before provision for income taxes 196 88
 Provision for income taxes 50 31
 Net income $ 146 $ 57
 Net income, less dividends accrued on
 preferred stock $ 141 $ 48
 Earnings per common and common
 equivalent share (A) $ 1.54 $ 0.58
 Cash dividends declared per share of
 common stock $ 0.18 $ 0.18
 (A) Earnings per common and common equivalent share are based on average common and common equivalent shares outstanding (94.4 million shares and 85.2 million shares for the third quarters of 1993 and 1992). The average number of shares used in computing per-share earnings for the third quarter of 1993 assumes the conversion of the company's conversion preferred stock (3.4 million shares) and convertible debentures (2.4 million shares); for the third quarter of 1992, the average number of shares used assumes the conversion of the company's convertible debentures (2.4 million shares). In computing per-share earnings, "net income, less dividends accrued on preferred stock" is increased by $4 million and $1 million for the third quarters of 1993 and 1992, for dividends and interest (net of tax and profit sharing effect) on the conversion preferred stock and convertible debentures considered dilutive common stock equivalents.
 TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
 Consolidated Income Statement
 (In millions of dollars, except per-share amounts.)
 For Nine Months Ended
 Sept. 30 Sept. 30
 1993 1992
 Net revenues $ 6149 $ 5453
 Operating costs and expenses:
 Cost of revenues 4515 4182
 General, administrative and marketing 906 864
 Employees' retirement and profit
 sharing plans 198 100
 Total 5619 5146
 Profit from operations 530 307
 Interest income 22 20
 Other income (expense) net (23) (30)
 Interest on loans 35 38
 Income before provision for income taxes and
 cumulative effect of accounting changes 494 259
 Provision for income taxes 151 89
 Income before cumulative effect of
 accounting changes 343 170
 Cumulative effect of accounting changes (4) --
 Net income $ 339 $ 170
 Net income, less dividends accrued on
 preferred stock $ 319 $ 140
 Earnings per common and common equivalent share(A):
 Income before cumulative effect of
 accounting changes $ 3.65 $ 1.68
 Cumulative effect of accounting changes (0.05) --
 Net income $ 3.60 $ 1.68
 Cash dividends declared per share of
 common stock $ 0.54 $ 0.54
 (A) Earnings per common and common equivalent share are based on average common and common equivalent shares outstanding (93.5 million shares and 85.2 million shares for the nine months ended Sept. 30, 1993 and 1992). The average number of shares used in computing per-share earnings for the nine months ended Sept. 30, 1993, assumes the conversion of the company's conversion preferred stock (5.2 million shares) and convertible debentures (2.4 million shares); for the nine months ended September 30, 1992, the average number of shares used assumes the conversion of the company's convertible debentures (2.7 million shares). In computing per-share earnings, "net income, less dividends accrued on preferred stock" is increased by $18 million and $3 million for the nine months ended Sept. 30, 1993 and 1992, for dividends and interest (net of tax and profit sharing effect) on the conversion preferred stock and convertible debentures considered dilutive common stock equivalents.
 SELECTED BALANCE SHEET ITEMS
 (Millions of dollars)
 Sept. 30 Dec. 31
 1993 1992
 Cash and short-term investments $ 922 $ 859
 Accounts receivable (net) 1181 975
 Inventories (net) 893 734
 Total current assets 3367 2626
 Property, plant and equipment (net) 2157 2133
 Total assets 6056 5185
 Current liabilities 2049 1665
 Long-term debt, loans and current LTD 923 963
 Stockholders' equity 2294 1947
 Debt-to-total-capital ratio .29 .33
 Supplemental Financial Information
 TI's orders for the third quarter of 1993 were $2050 million, up 21 percent from the third quarter of 1992. Orders in the components segment were up 32 percent from the third quarter of last year, with strength across the semiconductor product line and in all major regions of the world. Metallurgical materials orders were up 23 percent. Digital products segment orders were up 17 percent because of increased orders for notebook computers. Orders in defense electronics were down 19 percent from the third quarter of 1992 because of the timing of receipt of orders.
 TI's net revenues for the third quarter were $2161 million, up 14 percent from the third quarter of 1992. Revenues in the components segment were up 29 percent from last year's third quarter as the result of increased shipments, higher royalties and higher semiconductor prices. Revenues in the digital products segment were up 13 percent from the third quarter of 1992. Excluding the multiuser minicomputer systems and services operation sold to Hewlett-Packard in 1992, third- quarter revenues in digital products segment were up 32 percent from the third quarter of 1992, primarily because of strength in shipments of notebook computers. Metallurgical materials revenues were up 8 percent from the third quarter of 1992. Defense electronics revenues were down 17 percent from last year's third quarter.
 Profit from operations for the third quarter of 1993 was $218 million, compared with $116 million in the third quarter of last year. Profit in the components segment was up substantially from the third quarter of last year, with strong improvement in semiconductor margins. Defense electronics margins were down slightly, reflecting the changing mix of production and development
programs. In digital products, segment profit increased significantly from the third quarter of 1992 because of higher royalty revenues. However, the loss in the information technology business widened from the second quarter of this year, primarily because of lower custom manufacturing revenues and higher investment in new software products. The consumer business made a slight profit.
 The provision for income taxes in the third quarter of 1993 includes a credit of $17 million for the effect of the increase in the U.S. statutory income tax rate on the company's net deferred tax assets. Excluding the effect of this one-time credit, the year-to-date income tax rate is 34 percent.
 For the first nine months of 1993, TI's orders were $6348 million, up 17 percent from the first nine months of 1992. Orders were up 32 percent in components, with a strong increase in semiconductors. Orders were up 12 percent in metallurgical materials and 7 percent in digital products. Orders were down 14 percent in defense electronics because of lower quantities of HARM and Paveway systems. Paveway orders were elevated in 1992 because of supplemental orders related to Operation Desert Storm.
 Net revenues for the first nine months of 1993 were $6149 million, up 13 percent from the same period of 1992. Revenues were up 26 percent in components, with increased shipments of semiconductors. Revenues were up 6 percent in metallurgical materials and up 6 percent in digital products. Excluding the multiuser minicomputer business sold to Hewlett-Packard, year-to-date digital segment revenues were up 27 percent over the first nine months of 1992, primarily because of higher royalties and increased notebook computer revenues. Revenues were down 9 percent in defense electronics because of reduced HARM shipments. Year-to-date 1993 revenues include royalty revenues of $387 million, compared with $302 million in the first nine months of 1992.
 Profit from operations for the first nine months of 1993 was $530 million, up 73 percent from the same period of 1992. Components segment profit more than doubled, with substantial improvement in semiconductor operations resulting from TI's emphasis on differentiated products, cost control and manufacturing efficiencies. Digital segment profit increased, as higher royalty revenues more than offset the effect of operating losses in information technology. Defense electronics profit margins were essentially flat with the first nine months of 1992.
 Effective Jan. 1, 1993, the company adopted two new accounting standards: SFAS No. 106, which requires accrual of expected retiree health-care benefit costs during the employees' working careers, and SFAS No. 109, which requires increased recording of deferred income tax assets. This resulted in a charge of $294 million ($3.15 per share) for SFAS No. 106 and a credit of $290 million ($3.10 per share) for SFAS No. 109. The net effect of the two cumulative accounting change amounts was a $4 million charge, or $0.05 per share.
 During the first three quarters of 1993, cash and cash equivalents plus short-term investments increased by $63 million to $922 million as of September 30, 1993. Cash provided by operating activities net of additions to property, plant and equipment was positive for the nine months ended Sept. 30, 1993. TI's debt-to-total-capital ratio was .29 at the end of the third quarter, down .01 from the second quarter and down .04 from year-end 1992. TI's goal is to reduce this ratio to about .25.
 In a series of three redemptions of approximately equal numbers of shares, the company has redeemed all of its Series A Conversion Preferred Stock and related depositary shares during 1993. In exchange for the aggregate 11,114,000 depositary shares redeemed, the company issued the following number of shares of TI common stock: 2,412,829 on June 25; 2,025,024 on Sept. 10; and 1,828,665 on Sept. 27. At the end of the third quarter, the company classified as a current liability its $200 million of 2.75 percent convertible subordinated debentures due 2002, since these debentures may be redeemed at the holder's option, by prior notice, during a 30-day period beginning September 29, 1994. In anticipation of this potential redemption, the company is considering various financing alternatives.
 On Sept. 20, 1993, the company announced that it would redeem its remaining two series of auction-rate preferred stock (liquidation values of $74.6 million and $75.0 million) on Oct. 19 and Nov. 2, 1993, respectively, at liquidation value plus accrued and unpaid dividends. The funds for redemption will come from cash on hand.
 TI's backlog of unfilled orders as of Sept. 30, 1993, was $3931 million, up 5 percent from year-end 1992, with higher semiconductor orders more than offsetting a decrease in defense electronics orders.
 TI-funded research and development expense was $150 million in the third quarter of 1993, compared with $112 million in the third quarter of 1992. For the first nine months of 1993, R&D expense was $421 million, compared with $349 million for the first nine months of 1992. The increases from 1992 include higher investments in advanced CMOS technology for application-specific semiconductors, and in digital micromirror device technology.
 Capital expenditures in the third quarter of this year were $186 million, compared with $115 million in the third quarter of last year. For the first nine months of this year, capital expenditures were $512 million, compared with $282 million in the same period of last year.
 Depreciation in the third quarter of 1993 was $157 million, compared with $154 million in the same period of 1992. For the first nine months of 1993, depreciation was $450 million, compared with $454 million for the first nine months of 1992.
 Texas Instruments Incorporated, headquartered in Dallas, Texas, is a high-technology company with sales or manufacturing operations in more than 30 countries. TI products and services include semiconductors, defense electronics systems, software productivity tools, notebook computers and printers, custom engineering and manufacturing services, electrical controls, metallurgical materials and consumer electronics products.
 -0- 10/15/93
 /CONTACT: Buddy Price of Texas Instruments, 214-995-2355/
 (TXN)


CO: Texas Instruments Incorporated ST: Texas IN: CPR SU: ERN

LD -- NY005 -- 2544 10/15/93 00:43 EDT
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Date:Oct 15, 1993
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