TEXAS INSTRUMENTS ANNOUNCES FIRST-QUARTER 1992 RESULTS; COMPANY RETURNS TO PROFITABILITY
TEXAS INSTRUMENTS ANNOUNCES FIRST-QUARTER 1992 RESULTS; COMPANY RETURNS TO PROFITABILITY DALLAS, April 16 /PRNewswire/ -- Texas Instruments Incorporated (NYSE: TXN) today reported its first-quarter 1992 results. Summary of Financial Results Revenues for the first quarter were $1694 million, up 3 percent from the first quarter of last year. Net income was $40 million, compared with a loss of $54 million last year. Earnings per share were $0.35, compared with a loss of $0.77 per share in the first quarter of 1991. Profit from operations was $63 million. This represents a positive swing of $98 million from the first quarter of 1991, when Texas Instruments ("TI") lost $35 million. Operating results improved in every major TI business, although the semiconductor business continued to operate at a loss, with ongoing pricing pressures. Lower costs resulting from actions initiated in 1991 were the major contributor to TI's return to profitability in the quarter. Results for the first quarter of this year include royalty revenue of $95 million, compared with $76 million in the same period of 1991. The royalty revenue in this year's first quarter includes one-time amounts totalling $30 million from previously announced and recently concluded agreements. The recently concluded agreement is with Rohm Co., Ltd. Highlights of Annual Stockholders Meeting TI is holding its annual meeting of stockholders today in Dallas. Following is a summary of the prepared remarks of TI Chairman, President and Chief Executive Officer Jerry R. Junkins: "Our outlook for 1992 continues to be based on conservative growth estimates for the major economies and markets of the world. "We are beginning to see gradual improvement in the U.S. economy. Distributor orders for semiconductors are on an upward trend, which is a good leading indicator. . . . We now expect the U.S. semiconductor market to grow about 13 percent, a slight increase from our forecast earlier this year. "Semiconductor market growth in Europe is projected to be 8 percent. The fastest growing market, at 21 percent, is the Asia-Pacific region. TI's semiconductor orders reached an all-time high in this region in the first quarter of 1992. "The Japanese market has slowed significantly over the past few months, and we now expect the market in Japan to be about 2 percent below 1991. "Overall, the world semiconductor market is projected to grow 8 percent to $59 billion in 1992, with stronger growth going into 1993. "In setting our operating plans for 1992, we did not anticipate much help from worldwide economies or markets in the near term. Therefore, our own performance remains the key to sustaining TI's profitability." Structural and Cultural Changes Junkins noted that much of TI's strategic effort over the past few years has been to execute major transitions in the company's businesses. These transitions include the move from standard to differentiated products in semiconductor, from hardware to software in information technology, and the need to adapt to a smaller defense market that emphasizes development programs instead of long production cycles. These transitions are driving significant cultural and operational changes in TI. Throughout the company, TI has been re-examining and changing the way it operates by using analytical techniques known generally as "business process re-engineering." TI's semiconductor business has improved on-time shipping by about 30 percent. The company also plans to improve order-fulfillment cycle time for custom semiconductor designs by 70 percent by the end of the year. In defense electronics, TI has reorganized the business into functional units, reduced the number of management levels by two, introduced self-directed work teams, and reduced manufacturing cycle time by 45 percent for the high-speed antiradiation missile (HARM). But this need to make fundamental changes is not unique to TI. Around the globe, economic and political changes are affecting the way companies structure themselves to compete in the 1990s. The increasing need for faster, more flexible responses to changing customer requirements and expectations is creating a significant market opportunity for TI software products and services as companies redesign their management systems. Many of these companies are using TI's software development tool, the Information Engineering Facility(TM), or IEF(TM). With the IEF product, TI emerged in 1991 as the market leader in integrated computer- aided software engineering (CASE). Building on the IEF software base, TI is developing a suite of business process re-engineering tools that will help companies all over the world re-engineer business processes to meet the changing environment. "As business process re-engineering and CASE tools become more pervasive," Junkins said, "they will result in improved software, generated at lower costs and with higher quality. This will increase the demand for computing power and user-friendly interfaces, which we believe will strengthen the worldwide computer industry. "Increased computer demand -- even by a small percentage -- would step up demand for semiconductors, particularly advanced 32-bit microprocessors and more complex memory products." Junkins noted that TI has made significant R&D investments in semiconductors over the past several years, and the results of those investments are evident in 1992. TI has introduced new derivatives of its industry-leading digital signal processor. Over the next few months, TI plans to introduce additional application-specific products, including a powerful reduced instruction set microprocessor with more than 3 million transistors on a single chip. "As we continue to strengthen our ability to integrate multiple functions and technologies onto a single or just a few chips, we believe TI will gain an unparalleled capability to help our customers become even more competitive in both performance and cost. "We are strengthening our relationships with many of our customers by helping them achieve competitive advantage through differentiated semiconductors and software tools to enhance productivity." In summarizing TI's operations, Junkins said that TI is seeing positive signs across the corporation: -- In the semiconductor business, first-quarter orders were up from the fourth quarter of 1991, despite a sharp fall-off in Japan. Good progress is being made in the production ramp-up of 4-megabit dynamic random-access memories (DRAMs). TI expects volume production in its Avezzano facility in Italy by mid-year and in the TI-Acer joint- venture facility in Taiwan before year end. -- The materials and controls business is seeing growth and improved financial results. -- TI's defense business has taken aggressive steps to adapt to the smaller market, while maintaining stable profitability and continuing to win key contracts. During 1991, TI received more than $400 million of replenishment orders for systems used in Operation Desert Storm, and the company expects to receive about that much again in 1992. -- The information technology business is increasing its software value-added and improving its financial performance. Junkins concluded: "I believe TI has more opportunities in terms of new markets and major customer relationships than at any time in our history. The actions we've taken and are taking, both strategic and operational, are clearly making us more competitive in all our businesses. Our priority is to continue improving our financial performance while we maintain our momentum in building a stronger company." TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES Consolidated Income Statement (Millions of dollars, except per-share amounts.) For three months ended March 31: 1992 1991 Net revenues............................$ 1694 $ 1647 Operating costs and expenses: Cost of revenues....................... 1324 1360 General, administrative and marketing.. 274 299 Employees' pension and profit sharing plans.................. 33 23 Total............................... 1631 1682 Profit (loss) from operations........... 63 (35) Interest income......................... 6 8 Other income (expense) net.............. 5 (7) Interest on loans....................... 11 6 Income (loss) before provision for income taxes....................... 63 (40) Provision for income taxes.............. 23 14 Net income (loss).......................$ 40 $ (54) Net income (loss), less dividends accrued on preferred stock.............$ 29 $ (63) Earnings (loss) per common and common equivalent share (A)............$ 0.35 $(0.77) Cash dividends declared per share of common stock........................$ 0.18 $ 0.18 (A): Earnings (loss) per common and common equivalent share are based on average common and common equivalent shares outstanding (82,382,610 and 81,863,385 shares for the first quarters of 1992 and 1991) and "net income (loss), less dividends accrued on preferred stock." Selected Balance Sheet Items (Millions of dollars) Periods ended: 3/31/92 12/31/91 Cash and short-term investments...........$ 336 $ 601 Accounts receivable (net)................. 907 905 Inventories (net)......................... 830 815 Total current assets...................... 2135 2381 Property, plant and equipment (net)....... 2282 2354 Total assets.............................. 4699 5009 Current liabilities....................... 1446 1568 Long-term debt, loans and current LTD..... 817 926 Stockholders' equity...................... 1904 1955 Supplemental Financial Information TI's orders for the first quarter of 1992 were $1885 million, compared with $1870 million in the same period of 1991. Orders were up 10 percent in the digital products segment and 3 percent in the components segment. Orders were down 2 percent in defense electronics and 3 percent in metallurgical materials. TI's net revenues for the first quarter of 1992 were $1694 million, up 3 percent from the same period of last year. Revenues were up 13 percent in digital products. Strength across the product line and the 1991 acquisition of the European computer-aided software engineering business of James Martin Associates, more than offset the decrease in revenues associated with the 1991 sale of substantially all of the industrial automation and control systems business. Revenues were up 7 percent in components, primarily because of increased shipments of application-specific products and higher royalties.
Revenues were down
9 percent in defense electronics because of program phasing, and down 6 percent in metallurgical materials because of lower shipments to the automotive and connector markets.
Profit from operations for the first quarter of 1992 was $63 million, compared with a loss from operations of $35 million in the same period of 1991. Components operated profitably in the first quarter of this year compared with a loss in the first quarter of last year, mainly because of lower costs, higher royalties and increased revenues in application-specific products, which more than offset semiconductor pricing pressures; defense electronics margins increased on lower revenues; and digital products was profitable. The income tax rate for the first quarter of 1992 was 37 percent, which is the current estimate of the rate for the full year. During the first quarter of 1992, cash and cash equivalents plus short-term investments decreased by $265 million, to $336 million. During the first quarter, the company purchased and retired $100 million of its 2.75-percent convertible subordinated debentures due 2002. The purchases, which were made below par and resulted in an immaterial gain, reduce the amount of the convertible debentures that may be redeemed at the holder's option at par in 1994. Also, the company redeemed $71 million of its auction-rate preferred stock on March 3, 1992. On April 1, 1992, the company issued $150 million of 8.75-percent notes due 2007. The proceeds were used in part to reimburse the company's general funds for the purchases of the convertible debentures. The balance of the proceeds will be used for general corporate purposes, including possible further purchases of existing debt securities of the company. Cash was also used during the quarter to support working capital needs. TI's debt-to-total-capital ratio was 0.30 at the end of the first quarter, down from 0.32 at year-end 1991. TI's backlog of unfilled orders as of March 31, 1992, was $3768 million, down $110 million from the end of last year's first quarter primarily because of changes in digital products and defense electronics. Backlog is up $191 million from the end of last year primarily because of changes in defense electronics. TI-funded R&D was $117 million in the first quarter of 1992, compared with $128 million in the same period of 1991. Capital expenditures in the first quarter of this year were $80 million, compared with $157 million in 1991's first quarter. Depreciation in the first quarter of 1992 was $146 million, compared with $132 million in last year's first quarter. Worldwide employment at the end of the first quarter of 1992 was 61,806, compared with 62,939 as of Dec. 31, 1991. -0- 4/16/92 /NOTE TO EDITORS: Texas Instruments Incorporated, headquartered in Dallas, is a high-technology company with sales or manufacturing operations in more than 30 countries. TI develops, manufactures and markets semiconductors, defense electronics systems, software productivity tools, computer systems and peripheral products, custom engineering and manufacturing services, electrical controls, metallurgical materials, and consumer electronic products. The full text of Junkins' prepared remarks is available from TI. Trademarks: Information Engineering Facility and IEF are trademarks of Texas Instruments Incorporated./ /CONTACT: Terri West, 214-995-3481, or Leslie Price, 214-995-2355, or Sheree Fitzpatrick, 214-995-2984, all of Texas Instruments/ (TXN) CO: Texas Instruments Incorporated ST: Texas IN: CPR SU: ERN
TQ -- NY014 -- 9169 04/16/92 10:20 EDT
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|Date:||Apr 16, 1992|
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