What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-07-22 compared with 2021-04-28 · 98 added, 42 removed, 344 unchanged (29% of the section changed)

Financial statements

For Three Months Ended

Consolidated Statements of Income March 31,

For Three Months Ended For Six Months Ended

Consolidated Statements of Income June 30, June 30,

(Millions of dollars, except share and per-share amounts) 2021 2020 2021 2020

5 unchanged sentences

Acquisition charges 48 50 95 100

Restructuring charges/other — 24 — 24

Operating profit 2,213 1,228 4,152 2,472

17 unchanged sentences

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

For Three Months Ended

Consolidated Statements of Comprehensive Income March 31,

For Three Months Ended For Six Months Ended

Consolidated Statements of Comprehensive Income June 30, June 30,

(Millions of dollars) 2021 2020 2021 2020

3 unchanged sentences

Adjustments, net of tax effect of ($ 5 ) and $ 4 ;

($ 7 ) and $ 1

16 ( 10 ) 21 ( 1 )

Recognized within net income, net of tax effect of ($ 2 ) and ($ 3 );

($ 5 ) and ($ 5 )

Available-for-sale investments:

Unrealized gains, net of tax effect of $ 0 and $ 0

Unrealized losses, net of tax effect of $ 0 and $ 0 ;

Other comprehensive income (loss), net of taxes 24 ( 6 ) 37 13

2 unchanged sentences

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

March 31, December 31,

June 30, December 31,

Consolidated Balance Sheets 2021 2020

42 unchanged sentences

Treasury common stock at cost

March 31, 2021 – 817,573,099 ;

June 30, 2021 – 817,729,258 ;

December 31, 2020 – 821,461,787

5 unchanged sentences

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

For Three Months Ended

Consolidated Statements of Cash Flows March 31,

For Six Months Ended

Consolidated Statements of Cash Flows June 30,

(Millions of dollars) 2021 2020

55 unchanged sentences

Segment information

For Three Months Ended

For Three Months Ended For Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Analog $ 3,464 $ 2,434 $ 6,744 $ 4,894

12 unchanged sentences

The geographic revenue information does not necessarily reflect end demand by geography because our products tend to be shipped to the locations where our customers manufacture their products.

For Three Months Ended

For Three Months Ended For Six Months Ended

June 30, June 30,

2021 2020 2021 2020

United States $ 529 $ 349 $ 922 $ 739

4 unchanged sentences

Total revenue $ 4,580 $ 3,239 $ 8,869 $ 6,568

(a) Revenue from products shipped into China was $ 2.3 billion and $ 1.7 billion in the first quarters of 2021 and 2020, respectively, which includes shipments to customers that manufacture in China and then export end products to their customers around the world, as well as distributors that transship inventory through China to service other countries.

(a) Revenue from products shipped into China was $ 2.5 billion and $ 1.8 billion in the second quarters of 2021 and 2020, respectively, and $ 4.8 billion and $ 3.5 billion in the first six months of 2021 and 2020, respectively, which includes shipments to customers that manufacture in China and then export end products to their customers around the world, as well as distributors that transship inventory through China to service other countries.

Basis of presentation and significant accounting policies and practices

1 unchanged sentence

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and on the same basis as the audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2020.

The Consolidated Statements of Income, Comprehensive Income and Cash Flows for the periods ended March 31, 2021 and 2020, and the Consolidated Balance Sheet as of March 31, 2021, are not audited but reflect all adjustments that are of a normal recurring nature and are necessary for a fair statement of the results of the periods shown.

The Consolidated Statements of Income, Comprehensive Income and Cash Flows for the periods ended June 30, 2021 and 2020, and the Consolidated Balance Sheet as of June 30, 2021, are not audited but reflect all adjustments that are of a normal recurring nature and are necessary for a fair statement of the results of the periods shown.

Certain information and note disclosures normally included in annual consolidated financial statements have been omitted pursuant to the rules and regulations of the U.S.

1 unchanged sentence

Because the consolidated interim financial statements do not include all of the information and notes required by GAAP for a complete set of financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in our annual report on Form 10-K for the year ended December 31, 2020.

The results for the three-month periods are not necessarily indicative of a full year’s results.

The results for the three- and six-month periods are not necessarily indicative of a full year’s results.

Significant accounting policies and practices

4 unchanged sentences

Computation and reconciliation of earnings per common share are as follows (shares in millions):

For Three Months Ended March 31,

For Three Months Ended June 30,

Net Income Shares EPS Net Income Shares EPS

6 unchanged sentences

Income allocated to common stock $ 1,924 937 $ 2.05 $ 1,373 927 $ 1.48

Potentially dilutive securities representing 3 million and 9 million shares of common stock that were outstanding during the first quarters of 2021 and 2020, respectively, were excluded from the computation of diluted earnings per common share during these periods because their effect would have been anti-dilutive.

For Six Months Ended June 30,

Net Income Shares EPS Net Income Shares EPS

Net income $ 3,684 $ 2,554

Income allocated to RSUs ( 15 ) ( 13 )

Income allocated to common stock $ 3,669 923 $ 3.98 $ 2,541 923 $ 2.75

Dilutive effect of stock compensation plans 13 12

Net income $ 3,684 $ 2,554

Income allocated to RSUs ( 15 ) ( 13 )

Income allocated to common stock $ 3,669 936 $ 3.92 $ 2,541 935 $ 2.72

Potentially dilutive securities representing 2 million and 9 million shares of common stock that were outstanding during the second quarters of 2021 and 2020, respectively, and 3 million and 9 million shares outstanding during the first six months of 2021 and 2020, respectively, were excluded from the computation of diluted earnings per common share during these periods because their effect would have been anti-dilutive.

Derivatives and hedging

9 unchanged sentences

We do not use derivatives for speculative or trading purposes.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Fair values of financial instruments

The fair values of our derivative financial instruments were not material as of March 31, 2021.

The fair values of our derivative financial instruments were not material as of June 30, 2021.

Our investments in cash equivalents, short-term investments and certain long-term investments, as well as our deferred compensation liabilities, are carried at fair value.

The carrying values for other current financial assets and liabilities, such as accounts receivable and accounts payable, approximate fair value due to the short maturity of such instruments.

As of March 31, 2021, the carrying value of long-term debt, including the current portion, was $ 6.25 billion, and the estimated fair value was $ 6.74 billion.

As of June 30, 2021, the carrying value of long-term debt, including the current portion, was $ 6.25 billion, and the estimated fair value was $ 6.97 billion.

The estimated fair value is measured using broker-dealer quotes, which are Level 2 inputs.

4 unchanged sentences

tax benefits.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Provision for income taxes is based on the following:

For Three Months Ended

For Three Months Ended For Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Taxes calculated using the estimated annual effective tax rate $ 322 $ 164 $ 597 $ 330

2 unchanged sentences

Effective tax rate 14 % ( 8 ) % 12 % ( 2 ) %

Our provision for income taxes for the second quarter and first six months of 2020 included a $ 249 million discrete tax benefit for the settlement of a depreciation-related uncertain tax position.

Accrued interest of $ 46 million related to this uncertain tax position was reversed and included in OI&E.

Valuation of debt and equity investments and certain liabilities

11 unchanged sentences

Gains and losses on non-marketable equity investments are recognized in OI&E.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Details of our investments are as follows:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Cash and Cash Equivalents Short-Term Investments Long-Term Investments Cash and Cash Equivalents Short-Term Investments Long-Term Investments

10 unchanged sentences

Total $ 3,649 $ 3,741 $ 71 $ 3,107 $ 3,461 $ 49

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

As of March 31, 2021, and December 31, 2020, unrealized gains and losses associated with our available-for-sale investments were not material.

We did no t recognize any credit losses related to available-for-sale investments for the first three months of 2021 and 2020.

Proceeds from sales, redemptions and maturities of short-term available-for-sale investments were $ 2.00 billion and $ 1.39 billion for the first quarters of 2021 and 2020, respectively.

As of June 30, 2021, and December 31, 2020, unrealized gains and losses associated with our available-for-sale investments were not material.

We did no t recognize any credit losses related to available-for-sale investments for the first six months of 2021 and 2020.

Proceeds from sales, redemptions and maturities of short-term available-for-sale investments were $ 2.46 billion and $ 1.81 billion for the second quarters of 2021 and 2020, respectively, and $ 4.46 billion and $ 3.20 billion for the first six months of 2021 and 2020, respectively.

Gross realized gains and losses from these sales were not material.

The following table presents the aggregate maturities of our available-for-sale debt investments as of March 31, 2021:

The following table presents the aggregate maturities of our available-for-sale debt investments as of June 30, 2021:

One year or less $ 4,451

One to two years 100

During the first quarter of 2020, we entered into total return swaps to economically hedge the variability of certain deferred compensation obligations to employees.

During the first six months of 2020, we entered into total return swaps to economically hedge the variability of certain deferred compensation obligations to employees.

As a result, we received proceeds of $ 253 million from the sale of investments in mutual funds that were previously being utilized to offset this exposure.

8 unchanged sentences

We verify these valuations for reasonableness relative to unadjusted quotes obtained from brokers or dealers based on observable prices for similar assets in active markets.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

• Level 3 – Uses inputs that are unobservable, supported by little or no market activity and reflect the use of significant management judgment.

These values are generally determined using pricing models that utilize management estimates of market participant assumptions.

As of March 31, 2021, and December 31, 2020, we had no Level 3 assets or liabilities.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

As of June 30, 2021, and December 31, 2020, we had no Level 3 assets or liabilities.

The following are our assets and liabilities that were accounted for at fair value on a recurring basis.

These tables do not include cash on hand, assets held by our postretirement plans, or assets and liabilities that are measured at historical cost or any basis other than fair value.

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Level 1 Level 2 Total Level 1 Level 2 Total

7 unchanged sentences

Postretirement benefit plans

Expense related to defined benefit and retiree health care benefit plans is as follows:

Expenses related to defined benefit and retiree health care benefit plans are as follows:

Defined Benefit U.S.

1 unchanged sentence

Defined Benefit

For Three Months Ended March 31, 2021 2020 2021 2020 2021 2020

For Three Months Ended June 30, 2021 2020 2021 2020 2021 2020

Service cost $ 6 $ 5 $ 1 $ — $ 9 $ 8

5 unchanged sentences

Total, including other postretirement losses $ 12 $ 9 $ — $ — $ — $ 2

Defined Benefit U.S.

Retiree Health Care Non-U.S.

Defined Benefit

For Six Months Ended June 30, 2021 2020 2021 2020 2021 2020

Service cost $ 11 $ 9 $ 2 $ 1 $ 18 $ 16

Interest cost 15 17 5 6 19 19

Expected return on plan assets ( 17 ) ( 18 ) ( 6 ) ( 6 ) ( 41 ) ( 38 )

Recognized net actuarial loss 8 4 — — 4 7

Net periodic benefit costs 17 12 1 1 — 4

Settlement losses 8 7 — — 1 1

Total, including other postretirement losses $ 25 $ 19 $ 1 $ 1 $ 1 $ 5

Debt and lines of credit

1 unchanged sentence

We maintain a line of credit to support commercial paper borrowings, if any, and to provide additional liquidity through bank loans.

As of March 31, 2021, we had a variable-rate revolving credit facility from a consortium of investment-grade banks that allows us to borrow up to $ 2 billion until March 2024.

As of June 30, 2021, we had a variable-rate revolving credit facility from a consortium of investment-grade banks that allows us to borrow up to $ 2 billion until March 2024.

The interest rate on borrowings under this credit facility, if drawn, is indexed to the applicable London Interbank Offered Rate (LIBOR).

As of March 31, 2021, our credit facility was undrawn, and we had no commercial paper outstanding.

As of June 30, 2021, our credit facility was undrawn, and we had no commercial paper outstanding.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Long-term debt

In February 2021, we retired $ 550 million of maturing debt.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Long-term debt outstanding is as follows:

March 31, December 31,

June 30, December 31,

Notes due 2021 at 2.75 %

13 unchanged sentences

Long-term debt $ 5,752 $ 6,248

Interest and debt expense was $ 46 million and $ 45 million for the first quarters of 2021 and 2020, respectively.

Interest and debt expense was $ 44 million and $ 48 million for the second quarters of 2021 and 2020, respectively, and $ 90 million and $ 93 million for the first six months of 2021 and 2020, respectively.

This was net of the amortized discounts, premiums and issuance costs.

Capitalized interest was not material.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Stockholders’ equity

11 unchanged sentences

Balance, March 31, 2021 1,741 2,391 42,860 ( 36,479 ) ( 347 )

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Net income — — 1,931 — —

Dividends declared and paid ($ 1.02 per share)

— — ( 942 ) — —

Common stock issued for stock-based awards — 25 — 29 —

Stock repurchases — — — ( 146 ) —

Stock compensation — 69 — — —

Other comprehensive income (loss), net of taxes — — — — 24

Dividend equivalents on RSUs — — ( 4 ) — —

Other — — 1 — —

Balance, June 30, 2021 $ 1,741 $ 2,485 $ 43,846 $ ( 36,596 ) $ ( 323 )

Common Stock Paid-in Capital Retained Earnings Treasury Common Stock AOCI

9 unchanged sentences

Balance, March 31, 2020 1,741 2,096 40,227 ( 36,002 ) ( 328 )

Net income — — 1,380 — —

Dividends declared and paid ($ 0.90 per share)

— — ( 823 ) — —

Common stock issued for stock-based awards — 17 — 70 —

Stock repurchases — — — ( 793 ) —

Stock compensation — 69 — — —

Other comprehensive income (loss), net of taxes — — — — ( 6 )

Dividend equivalents on RSUs — — ( 4 ) — —

Balance, June 30, 2020 $ 1,741 $ 2,182 $ 40,780 $ ( 36,725 ) $ ( 334 )

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Contingencies

13 unchanged sentences

Supplemental financial information

Property, plant and equipment at cost

On June 30, 2021, we announced that we signed an agreement to acquire Micron Technology’s 300-millimeter semiconductor factory in Lehi, Utah, for cash consideration of $ 900 million.

We plan to complete the transaction by the end of 2021.

Details on amounts reclassified out of accumulated other comprehensive income (loss), net of taxes, to net income

Our Consolidated Statements of Comprehensive Income include items that have been recognized within net income during the first quarters of 2021 and 2020.

Our Consolidated Statements of Comprehensive Income include items that have been recognized within net income during the second quarters and first six months of 2021 and 2020.

The table below details where these transactions are recorded in our Consolidated Statements of Income.

For Three Months Ended Impact to Related Statement of Income Lines

For Three Months Ended For Six Months Ended Impact to Related Statement of Income Lines

June 30, June 30,

2021 2020 2021 2020

Net actuarial losses of defined benefit plans:

3 unchanged sentences

(a) Detailed in Note 5.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Stock compensation

Total shares of 4,465,552 were issued from treasury shares during the first quarter of 2021 related to stock compensation.

Total shares of 633,845 and 5,099,397 were issued from treasury shares during the second quarter and first six months of 2021, respectively, related to stock compensation.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements