What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-04 compared with 2021-02-05 · 104 added, 194 removed, 938 unchanged (24% of the section changed)

6 unchanged sentences

• Stockholders’ equity for each of the three years in the period ended December 31, 2021

• Reports of independent registered public accounting firm (PCAOB ID:

Schedules have been omitted because the required information is not present or not present in amounts sufficient to require submission of the schedule or because the information required is included in the consolidated financial statements or the notes thereto.

Consolidated Statements of Income For Years Ended December 31,

(Millions of dollars, except share and per-share amounts) 2020 2019 2018

(In millions, except per-share amounts) 2021 2020 2019

Revenue $ 18,344 $ 14,461 $ 14,383

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Diluted $ 8.26 $ 5.97 $ 5.24

Average shares outstanding (millions):

Average shares outstanding:

Basic 923 921 936

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Consolidated Statements of Comprehensive Income For Years Ended December 31,

(Millions of dollars) 2020 2019 2018

(In millions) 2021 2020 2019

Net income $ 7,769 $ 5,595 $ 5,017

5 unchanged sentences

Prior service credit of defined benefit plans:

Adjustments, net of tax effect of $ 0 , $ 0 and $ 1

Recognized within net income, net of tax effect of $ 0 , $ 0 and $ 0

( 1 ) ( 1 ) —

Derivative instruments:

Change in fair value, net of tax effect of $ 0 , $ 0 and $ 1

Other comprehensive income (loss), net of taxes 203 ( 13 ) 126

2 unchanged sentences

Consolidated Balance Sheets December 31,

(Millions of dollars, except share amounts) 2020 2019

(In millions, except par value) 2021 2020

Current assets:

11 unchanged sentences

Property, plant and equipment 5,141 3,269

Long-term investments 49 300

Goodwill 4,362 4,362

Acquisition-related intangibles 152 340

Deferred tax assets 263 343

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Preferred stock, $ 25 par value.

Authorized – 10,000,000 shares

Participating cumulative preferred – None issued

Shares authorized – 10 ;

Common stock, $ 1 par value.

Authorized – 2,400,000,000 shares

Shares authorized – 2,400 ;

shares issued – 1,741

3 unchanged sentences

( 36,800 ) ( 36,578 )

2019 – 808,784,381

( 36,578 ) ( 34,495 )

Accumulated other comprehensive income (loss), net of taxes (AOCI) ( 157 ) ( 360 )

3 unchanged sentences

Consolidated Statements of Cash Flows For Years Ended December 31,

(Millions of dollars) 2020 2019 2018

(In millions) 2021 2020 2019

Cash flows from operating activities

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Earnings Treasury

(Millions of dollars, except per-share amounts)

(In millions, except per-share amounts)

Balance, December 31, 2018

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Dividend equivalents on RSUs — — ( 17 ) — —

Cumulative effect of accounting changes — — 236 — ( 30 )

Other — ( 2 ) — 1 —

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Dividend equivalents on RSUs — — ( 15 ) — —

Other — ( 1 ) — — —

Balance, December 31, 2021

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They are designed to handle specific tasks and can be optimized for various combinations of performance, power and cost, depending on the application.

During 2020, we reorganized the product lines within our Analog segment to simplify our business structure into our Power and Signal Chain product lines.

These changes had no effect on either our previously reported consolidated financial statements or our reportable segment results.

We report the results of our remaining business activities in Other.

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In Other, we also include items that are not used in evaluating the results of or in allocating resources to our segments.

Examples of these items include acquisition charges (see Note 7);

restructuring charges (see Note 12);

Examples of these items include acquisition, integration and restructuring charges (see Note 11);

and certain corporate-level items, such as litigation expenses, environmental costs, insurance settlements, and gains and losses from other activities, including asset dispositions.

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Property, plant and equipment at our sites in China was $ 570 million and $ 370 million as of December 31, 2021 and 2020, respectively.

Major customer

One of our end customers accounted for 9 %, 10 % and 8 % of revenue in 2021, 2020 and 2019, respectively, recognized primarily in our Analog segment.

No end customer accounted for 10% or more of revenue in 2021 or 2019.

Basis of presentation and significant accounting policies and practices

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All intercompany balances and transactions have been eliminated in consolidation.

All dollar amounts in the financial statements and tables in these notes, except per-share amounts, are stated in millions of U.S.

dollars unless otherwise indicated.

All dollar and share amounts in the financial statements and tables in these notes, except per-share amounts, are presented in millions unless otherwise indicated.

We have reclassified certain amounts in the prior periods’ financial statements to conform to the 2021 presentation.

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Revenue recognition

We generate revenue primarily from the sale of semiconductor products, either directly to a customer or to a distributor.

We have a variety of types of contracts with our customers and distributors.

In determining whether a contract exists, we evaluate the terms of the arrangement, the relationship with the customer or distributor and their ability to pay.

We recognize revenue from sales of our products, including sales to our distributors, when control is transferred.

We generate revenue primarily from the sale of semiconductor products, either directly to a customer or to a distributor, and recognize revenue when control is transferred.

Control is considered transferred when title and risk of loss pass, when the customer becomes obligated to pay and, where required, when the customer has accepted the products.

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The revenue recognized is adjusted based on allowances, which are prepared on a portfolio basis using a most likely amount methodology based on analysis of historical data and contractual terms.

These allowances, which are not material, generally include adjustments for pricing arrangements, product returns and incentives.

The length of time between invoicing and payment is not significant under any of our payment terms.

In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component.

In addition, we record an allowance for credit losses on accounts receivable that we estimate may not be collected.

We monitor collectability of accounts receivable primarily through review of accounts receivable aging.

When collection is at risk, we assess the impact on amounts recorded for credit losses and, if necessary, record a charge in the period such determination is made.

These allowances, which are not material, generally include adjustments for pricing arrangements, product returns , incentives and credit losses.

We recognize shipping fees, if any, received from customers in revenue.

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Under the two-class method, a portion of net income is allocated to RSUs and excluded from the calculation of income allocated to common stock.

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

Computation and reconciliation of earnings per common share are as follows:

For Years Ended December 31,

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Potentially dilutive securities representing 3 million, 4 million and 6 million shares of common stock that were outstanding in 2021, 2020 and 2019 respectively, were excluded from the computation of diluted earnings per common share during these periods because their effect would have been anti-dilutive.

We present investments on our Consolidated Balance Sheets as cash equivalents, short-term investments or long-term investments, which are detailed below.

We present investments on our Consolidated Balance Sheets as cash equivalents, short-term investments or other long-term assets.

See Note 6 for additional information.

• Cash equivalents and short-term investments – We consider investments in available-for-sale debt securities with maturities of 90 days or less from the date of our investment to be cash equivalents.

• Cash equivalents and short-term investments – The primary objectives of our cash equivalent and short-term investment activities are to preserve capital and maintain liquidity while generating appropriate returns.

We consider investments in available-for-sale debt securities with maturities of 90 days or less from the date of our investment to be cash equivalents.

We consider investments in available-for-sale debt securities with maturities beyond 90 days from the date of our investment as being available for use in current operations and include them in short-term investments.

The primary objectives of our cash equivalent and short-term investment activities are to preserve capital and maintain liquidity while generating appropriate returns.

• Long-term investments – Long-term investments consist of mutual funds, venture capital funds and non-marketable equity securities.

• Other long-term assets – Long-term investments, which are included within other long-term assets on our Consolidated Balance Sheets, consist of mutual funds, venture capital funds and non-marketable equity securities.

Inventories are stated at the lower of cost or estimated net realizable value.

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Fair value is determined by available market valuations, if applicable, or by discounted cash flows.

Goodwill is reviewed for impairment annually or more frequently if certain impairment indicators arise.

We perform our annual goodwill impairment test as of October 1 for our reporting units, which compares the fair value for each reporting unit to its associated carrying value, including goodwill.

Goodwill is reviewed for impairment annually in the fourth quarter or more frequently if certain impairment indicators arise.

We perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill.

If, as a result of the qualitative assessment, we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then we perform the quantitative goodwill impairment test.

See Note 11 for additional information.

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dollar are remeasured into the functional currency.

Current assets (except inventories), deferred taxes, other assets, current liabilities and long-term liabilities are remeasured at exchange rates in effect at the end of each reporting period.

Current assets (except inventories), deferred taxes, other long-term assets, current liabilities and long-term liabilities are remeasured at exchange rates in effect at the end of each reporting period.

Property, plant and equipment with associated depreciation and inventories are valued at historical exchange rates.

Revenue and expense accounts other than depreciation for each month are remeasured at the appropriate daily rate of exchange.

Revenue and expense accounts other than depreciation for each month are calculated at the appropriate daily rate of exchange.

Currency exchange gains and losses from remeasurement are credited or charged to OI&E.

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In connection with the issuance of long-term debt, we may use financial derivatives such as treasury-rate lock agreements that are recognized in AOCI and amortized over the life of the related debt.

The results of these derivative transactions have not been material.

The results of these derivative transactions were not material.

We do not use derivatives for speculative or trading purposes.

Changes in accounting standards – adopted standards for current period

We adopted the following Accounting Standards Updates (ASU) during the current period, none of which had a material impact on our financial position or results of operations.

ASU Description Adopted Date

2016-13 Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments January 1, 2020

2018-13 Fair Value Measurement (Topic 820):

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement January 1, 2020

2018-15 Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract January 1, 2020

Stock compensation

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Holders of RSUs receive an annual cash payment equivalent to the dividends paid on our common stock.

The fair value per share of RSUs is generally determined based on the closing price of our common stock on the date of grant.

We have options and RSUs outstanding to non-employee directors under director compensation plans.

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Under the plan, the option price per share is 85 % of the fair market value on the exercise date.

As of December 31, 2021, 33 million shares remain available for future issuance under this plan.

Total stock compensation expense recognized is as follows:

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SG&A 134 135 130

Restructuring charges/other 8 — —

Total 230 224 217

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Options issued under our ESPP are expensed over a three -month period.

As of December 31, 2021, total future compensation related to equity awards not yet recognized in our Consolidated Statements of Income was $ 271 million, which we expect to recognize over a weighted average period of 1.7 years.

Fair value methods and assumptions

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Expected dividend yields 2.41 % 2.76 % 2.95 %

We determine expected volatility on all options granted using available implied volatility rates.

We believe that market-based measures of implied volatility are currently the best available indicators of the expected volatility used in these estimates.

We determine expected lives of options based on the historical option exercise experience of our optionees using a rolling 10-year average.

We believe the historical experience method is the best estimate of future exercise patterns currently available.

Risk-free interest rates are determined using the implied yield currently available for zero-coupon U.S.

government issues with a remaining term equal to the expected life of the options.

We use market-based measures of implied volatility to determine expected volatility on all options granted.

We determine expected lives of options based on the historical option exercise experience of our option holders using a rolling 10-year average.

Expected dividend yields are based on the annualized approved quarterly dividend rate and the current market price of our common stock at the time of grant.

No assumption for a future dividend rate change is included unless there is an approved plan to change the dividend in the near term.

The fair value per share of RSUs is determined based on the closing price of our common stock on the date of grant.

Our ESPP is a discount-purchase plan and consequently the Black-Scholes-Merton option-pricing model is not used to determine the fair value per share of these awards.

The fair value per share under this plan equals the amount of the discount.

Long-term incentive and director compensation plans

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Stock options exercised/RSUs vested ( 6 ) 65.89 ( 2 ) 81.31

Forfeited and expired ( 359,919 ) 111.06 ( 157,021 ) 103.90

Outstanding grants, December 31, 2020

Outstanding grants, December 31, 2021 (a)

25 91.58 4 124.80

The weighted average grant date fair values per share of RSUs granted in 2020, 2019 and 2018 were $ 130.59 , $ 106.58 and $ 110.05 , respectively.

In 2020, 2019 and 2018, the total grant date fair values of shares vested from RSU grants were $ 110 million, $ 125 million and $ 123 million, respectively.

As of December 31, 2020, the number of shares remaining available for future issuance under these plans was 40,334,683 .

(a) Forfeited and expired shares were not material.

For Years Ended December 31,

2021 2020 2019

Weighted average grant date fair value per share for RSUs $ 176.08 $ 130.59 $ 106.58

Total grant date fair value of shares vested for RSUs $ 115 $ 110 $ 125

Aggregate intrinsic value of options exercised $ 611 $ 681 $ 819

As of December 31, 2021, 37 million shares remain available for future issuance under these plans.

Summarized information about stock options outstanding as of December 31, 2021, is as follows:

Stock Options Outstanding Options Exercisable

Exercise Price Range Number Outstanding (Shares) Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price per Share Number Exercisable (Shares) Weighted Average Exercise Price per Share

Stock Options Outstanding

Exercise Price Range Number Outstanding (Shares) Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price per Share

$ 28.13 to 193.58

25 5.5 $ 91.58

In 2020, 2019 and 2018, the aggregate intrinsic values (i.e., the difference in the closing market price on the date of exercise and the exercise price paid by the optionee) of options exercised were $ 681 million, $ 819 million and $ 561 million, respectively.

Summarized information as of December 31, 2020, about outstanding stock options that are vested and expected to vest, as well as stock options that are currently exercisable, is as follows:

Outstanding Stock Options (Fully Vested and Expected to Vest) (a) Options Exercisable

Number of outstanding (shares) 27,596,705 17,221,451

Options Fully Vested and Expected to Vest (a) Options Exercisable

Options outstanding (shares) 25 16

Weighted average remaining contractual life (in years) 5.5 4.2

Weighted average exercise price per share $ 90.97 $ 69.43

Intrinsic value (millions of dollars) $ 2,346 $ 1,805

Intrinsic value $ 2,408 $ 1,952

(a) Includes effects of expected forfeitures.

Excluding the effects of expected forfeitures, the aggregate intrinsic value of stock options outstanding was $ 2.42 billion.

As of December 31, 2020, total future compensation related to equity awards not yet recognized in our Consolidated Statements of Income was $ 237 million, consisting of $ 103 million related to unvested stock options and $ 134 million related to unvested RSUs.

The $ 237 million is expected to be recognized as follows:

$ 115 million in 2021, $ 77 million in 2022, $ 40 million in 2023 and $ 5 million in 2024.

Employee stock purchase plan

Options outstanding under the ESPP as of December 31, 2020, had an exercise price equal to 85 % of the fair market value of TI common stock on the date of automatic exercise.

The automatic exercise occurred on January 4, 2021, resulting in an exercise price of $ 137.89 per share.

Of the total outstanding options, none were exercisable as of December 31, 2020.

ESPP transactions are as follows:

Shares Exercise Price

Outstanding grants, December 31, 2019

173,849 $ 110.14

Granted 714,680 108.74

Exercised ( 745,483 ) 103.48

Outstanding grants, December 31, 2020

143,046 137.89

The weighted average grant date fair values per share of options granted under the ESPP in 2020, 2019 and 2018 were $ 19.19 , $ 18.05 and $ 15.43 , respectively.

In 2020, 2019 and 2018, the total intrinsic value of options exercised under these plans was $ 14 million, $ 13 million and $ 13 million, respectively.

As of December 31, 2020, the number of shares remaining available for future issuance under this plan was 33,097,602 .

Effect on shares outstanding and treasury shares

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As of December 31, 2021, $ 10.10 billion of stock repurchase authorizations remain, and no expiration date has been specified.

Our current practice is to issue shares of common stock from treasury shares upon exercise of stock options, distribution of director deferred compensation and vesting of RSUs.

Our practice is to issue shares of common stock from treasury shares upon exercise of stock options, distribution of director deferred compensation and vesting of RSUs.

The following table reflects the changes in our treasury shares:

Stock Options RSUs Treasury Shares

Balance, December 31, 2017

Repurchases 49,482,220

Shares used for:

Stock options/RSUs ( 8,432,458 ) ( 2,769,994 )

Stock applied to taxes — 553,720

ESPP ( 819,878 ) —

Director deferred stock units — — ( 5,181 )

Total issued ( 9,252,336 ) ( 2,216,274 ) ( 11,468,610 )

Balance, December 31, 2018

Repurchases 27,398,701

Shares used for:

Stock options/RSUs ( 11,529,174 ) ( 2,370,762 )

Stock applied to taxes — 490,347

ESPP ( 798,806 ) —

Director deferred stock units — — ( 71,571 )

Total issued ( 12,327,980 ) ( 1,880,415 ) ( 14,208,395 )

Balance, December 31, 2019

For Years Ended December 31,

2021 2020 2019

Balance, January 1 821 809 796

Repurchases 3 23 27

Shares used for:

Stock options/RSUs ( 8,392,354 ) ( 2,034,933 )

Stock applied to taxes — 421,518

ESPP ( 745,483 ) —

Director deferred stock units — — ( 1,557 )

Total issued ( 9,137,837 ) ( 1,613,415 ) ( 10,751,252 )

Shares issued ( 7 ) ( 11 ) ( 14 )

Balance, December 31 817 821 809

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$ 7,998 $ 5,210 $ 4,915

807 813 1,014

Total $ 8,919 $ 6,017 $ 5,728

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tax benefit for foreign derived intangible income ( 6.1 ) ( 6.1 ) ( 4.9 )

Impact of changes in uncertain tax positions ( 4.0 ) ( 0.1 ) —

excess tax benefit for stock compensation ( 1.5 ) ( 2.5 ) ( 3.1 )

R&D tax credit ( 0.9 ) ( 1.3 ) ( 1.4 )

Tax Act transitional non-cash expense — — 4.2

Impact of changes in uncertain tax positions ( 0.2 ) ( 4.0 ) ( 0.1 )

Other 0.6 ( 0.1 ) 0.9

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Deferred tax assets:

Deferred loss and tax credit carryforwards $ 207 $ 213

Accrued expenses $ 209 $ 180

Deferred loss and tax credit carryforwards 207 207

Stock compensation 110 106

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International earnings ( 38 ) ( 44 )

Retirement costs for defined benefit and retiree health care ( 15 ) —

Acquisition-related intangibles and fair-value adjustments ( 12 ) ( 40 )

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This assessment is based on our evaluation of relevant criteria, including the existence of deferred tax liabilities that can be used to absorb deferred tax assets, taxable income in prior carryback years and expectations for future taxable income.

Valuation allowances decreased $ 1 million in 2020 and increased $ 8 million and $ 7 million in 2019 and 2018, respectively.

Valuation allowances increased $ 9 million in 2021, decreased $ 1 million in 2020 and increased $ 8 million in 2019.

These changes had no impact to net income in 2021, 2020 or 2019.

We have no tax loss carryforwards as of December 31, 2020.

Cash payments made for income taxes, net of refunds, were $ 720 million, $ 570 million and $ 705 million in 2020, 2019 and 2018, respectively.

We have no material tax loss carryforwards as of December 31, 2021.

Cash payments made for income taxes, net of refunds, were $ 1.20 billion, $ 720 million and $ 570 million in 2021, 2020 and 2019, respectively.

Uncertain tax positions

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All of the $ 69 million and $ 89 million liabilities for uncertain tax positions as of December 31, 2021 and 2020, respectively, are comprised of positions that, if recognized, would lower the effective tax rate.

If these liabilities are ultimately realized, $ 2 million of existing deferred tax assets in both 2020 and 2019 would also be realized.

If these liabilities are ultimately realized, $ 2 million of existing deferred tax assets in 2020 would also be realized.

Reductions for tax positions of prior years in 2020 include a $ 249 million tax benefit for the effective settlement of a depreciation-related uncertain tax position.

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federal tax returns for 2017 and following years.

Audit activities related to our U.S.

federal tax returns through 2015 have been completed except for certain pending tax treaty procedures for relief from double taxation and an Internal Revenue Service appeals process related to the 2013 through 2015 audit.

The procedures for relief from double taxation pertain to U.S.

Certain tax treaty procedures for relief from double taxation remain pending for U.S.

federal tax returns for the years 2011 through 2020.

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Our forward foreign currency exchange contracts outstanding as of December 31, 2021, had a notional value of $ 313 million to hedge our non-U.S.

dollar net balance sheet exposures, including $ 147 million to sell Japanese yen, $ 85 million to sell euros and $ 82 million to sell British pounds.

dollar net balance sheet exposures, including $ 127 million to sell Japanese yen, $ 82 million to sell British pounds and $ 42 million to sell euros.

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.

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Accounts receivable allowances changed to reflect amounts charged (credited) to operating results by ($ 3 ) million, $ 3 million and ($ 11 ) million in 2021, 2020 and 2019, respectively.

Major customer

One of our end customers accounted for 10 %, 8 % and 8 % of revenue in 2020, 2019 and 2018, respectively, recognized primarily in our Analog segment.

No end customer accounted for 10% or more of revenue in 2019 or 2018 .

Valuation of debt and equity investments and certain liabilities

Investments measured at fair value

Available-for-sale debt investments, money market funds and mutual funds are stated at fair value, which is generally based on market prices or broker quotes.

Money market funds, available-for-sale debt investments and mutual funds are stated at fair value, which is generally based on market prices or broker quotes.

See Fair-value considerations .

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Corporate obligations 1,060 1,070 — 256 257 —

government agency and Treasury securities 1,340 3,054 — 604 1,734 —

government and agency securities 642 3,388 — 1,340 3,054 —

government and agency securities 300 650 — — 150 —

Mutual funds — — 16 — — 18

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In 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.

As a result, in 2020, we received proceeds of $ 253 million from the sale of investments in mutual funds that were previously being utilized to offset this exposure.

Fair-value considerations

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Corporate obligations — 2,130 2,130 — 513 513

government agency and Treasury securities 4,394 — 4,394 2,338 — 2,338

government and agency securities 3,629 401 4,030 4,394 — 4,394

government and agency securities — 950 950 — 150 150

Mutual funds 16 — 16 18 — 18

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Total liabilities $ 395 $ — $ 395 $ 350 $ — $ 350

Goodwill and acquisition-related intangibles

Goodwill by segment as of December 31, 2020 and 2019, is as follows:

Analog $ 4,158

Embedded Processing 172

Total $ 4,362

We perform our annual goodwill impairment test as of October 1 and determine whether the fair value of each of our reporting units is in excess of its carrying value.

Determination of fair value is based upon management estimates and judgment, using unobservable inputs in discounted cash flow models to calculate the fair value of each reporting unit.

These unobservable inputs are considered Level 3 measurements, as described in Note 6.

In 2020, 2019 and 2018, we determined no impairment was indicated.

The components of acquisition-related intangibles are as follows:

December 31, 2020

December 31, 2019

Amortization Period (Years) Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net

Developed technology 8 – 10

$ 1,895 $ 1,753 $ 142 $ 2,000 $ 1,660 $ 340

Other intangibles 5 10 — 10 — — —

Total $ 1,905 $ 1,753 $ 152 $ 2,000 $ 1,660 $ 340

Acquisition charges

Acquisition charges represent the ongoing amortization of intangible assets resulting from the acquisition of National Semiconductor Corporation.

These amounts are included in Other for segment reporting purposes, consistent with how management measures the performance of its segments.

Amortization of acquisition-related intangibles was $ 198 million, $ 288 million and $ 318 million in 2020, 2019 and 2018, respectively.

Fully amortized assets are written off against accumulated amortization.

The remaining estimated amortization is $ 144 million in 2021.

Postretirement benefit plans

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As of December 31, 2021 and 2020, as a result of employees’ elections, TI’s U.S.

defined contribution plans held shares of TI common stock totaling 7 million shares and 8 million shares valued at $ 1.12 billion and $ 988 million, respectively.

Dividends paid on these shares in 2020 and 2019 were $ 27 million and $ 26 million, respectively.

defined contribution plans held shares of TI common stock totaling 6 million shares and 7 million shares valued at $ 1.16 billion and $ 1.12 billion, respectively.

Dividends paid on these shares in both 2021 and 2020 were $ 27 million.

Effective April 1, 2016, the TI common stock fund was frozen to new contributions or transfers into the fund.

Our aggregate expense for the U.S.

defined contribution plans was $ 61 million in 2020, 2019 and 2018.

defined contribution plans was $ 63 million in 2021 and $ 61 million in 2020 and 2019.

The defined benefit pension plans include employees still accruing benefits, as well as employees and participants who no longer accrue service-related benefits, but instead, may participate in the enhanced defined contribution plan.

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Settlements ( 162 ) ( 94 ) — — ( 12 ) ( 8 )

Curtailments — — — — — ( 1 )

Actuarial loss (gain) ( 79 ) 194 ( 18 ) 40 ( 111 ) 143

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Funded status at end of year $ 39 $ ( 36 ) $ 25 $ — $ 239 $ 140

The actuarial loss (gain) for all pension plans was primarily related to a change in the discount rate used to measure the benefit obligations of those plans in 2020 and 2019.

Changes in actuarial gains and losses in the projected benefit obligations are generally driven by discount rate movement.

Amounts recognized on our Consolidated Balance Sheets as of December 31, are as follows:

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As of December 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.

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

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

Long-term debt

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

In September 2021, we issued three series of senior unsecured notes for an aggregate principal amount of $ 1.5 billion, consisting of $ 500 million of 1.125 % notes due in 2026, $ 500 million of 1.90 % notes due in 2031 and $ 500 million of 2.70 % notes due in 2051.

We incurred $ 10 million of issuance costs.

The proceeds of the offering were $ 1.5 billion, net of the original issuance discounts, which will be used for general corporate purposes.

In March 2020, we issued a principal amount of $ 750 million of fixed-rate, long-term debt due in 2025.

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The proceeds of the offering were $ 748 million, net of the original issuance discount, and were used for general corporate purposes.

In May 2018, we retired $ 500 million of maturing debt.

In the second quarter of 2018, we issued an aggregate principal amount of $ 1.5 billion of fixed-rate, long-term debt due in 2048, comprised of the issuance of $ 1.3 billion in May 2018 and an additional $ 200 million in June 2018.

We incurred $ 16 million of issuance and other related costs.

The proceeds of the offering were $ 1.5 billion, net of the original issuance discount and premium, and were used for general corporate purposes.

Long-term debt outstanding is as follows:

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Notes due 2039 at 3.875 %

Notes due 2048 at 4.15 %

Notes due 2051 at 2.70 %

Total debt 7,800 6,850

16 unchanged sentences

For Years Ended

2021 2020 2019

Lease cost related to lease liabilities $ 69 $ 70 $ 66

3 unchanged sentences

Lease assets obtained in exchange for new lease liabilities $ 210 $ 59 $ 167

Weighted average remaining lease term 8.9 years 8.2 years

Weighted average discount rate 3.02 % 3.37 %

As of December 31, 2021, we had committed to make the following minimum payments under our non-cancellable operating leases:

3 unchanged sentences

Total lease liabilities $ 465

The weighted-average remaining lease term was 9.2 years and 8.9 years as of December 31, 2021 and 2020, respectively.

The weighted-average discount rate was 2.51 % and 3.02 % as of December 31, 2021 and 2020, respectively.

Commitments and contingencies

23 unchanged sentences

Restructuring charges (a) $ — $ 25 $ ( 15 )

Gains on sales of assets ( 1 ) ( 21 ) ( 3 )

Integration charges (b) 104 — —

Gains on sales of assets (c) ( 50 ) ( 1 ) ( 21 )

Restructuring charges/other $ 54 $ 24 $ ( 36 )

(a) Includes severance and benefits, accelerated depreciation, changes in estimates and other exit costs.

(b) Includes costs related to our purchase of the Lehi, Utah, manufacturing facility, as well as ongoing costs until production begins in early 2023.

Changes in accrued restructuring balances

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Balance, December 31 $ 5 $ 18 $ —

(a) Reflects charges for impacts of accelerated depreciation and changes in exchange rates.

(a) Reflects charges for impacts of changes in exchange rates and accelerated depreciation.

The restructuring accrual balances are reported as a component of either accrued expenses and other liabilities or other long-term liabilities on our Consolidated Balance Sheets, depending on the expected timing of payment.

1 unchanged sentence

As of December 31, 2021, $ 21 million of payments have been made.

In January 2020, we announced a multiyear plan to close our two remaining factories with 150-millimeter production, which are more than 50 years old and located in Sherman and Dallas, Texas.

Production will be transitioned from these sites to our more advanced and cost-effective 300-millimeter wafer fabrication facilities in North Texas.

We expect this transition to be completed in the next two to four years .

Charges for these closures cannot be reasonably estimated until a later phase of the transition.

In 2020, we announced a multiyear plan to close our two remaining factories with 150-millimeter production, located in Sherman and Dallas, Texas.

During 2021 we decided not to close a portion of our factory in Dallas.

We expect this plan to be completed no later than 2025.

Charges for the closures cannot be reasonably estimated at this time.

Other income (expense), net (OI&E)

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Total $ 143 $ 313 $ 175

(a) Other income includes royalty income, reversals of tax interest accruals, interest and lease income, as well as investment gains and losses.

(a) Other income includes royalty and lease income, investment gains and losses, interest income, as well as reversals of tax interest accruals.

(b) Other expense includes a portion of pension and other retiree benefit costs, currency gains and losses and miscellaneous items.

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Total $ 7,858 $ 5,781

In October 2021, we completed our purchase of a 300-millimeter semiconductor factory in Lehi, Utah, for cash consideration of $ 893 million.

The estimated fair value of assets acquired was determined based on market comparable information to purchase or build comparable assets and allocated on a relative basis to purchase consideration.

Assets acquired included $ 28 million of land, $ 305 million of buildings and improvements and $ 526 million of machinery and equipment.

Goodwill by segment as of December 31, 2021 and 2020, is as follows:

Analog $ 4,158

Embedded Processing 172

Total $ 4,362

We perform our annual goodwill impairment test in the fourth quarter and determine whether the fair value of each of our reporting units is in excess of its carrying value.

In 2021, we elected to perform a qualitative analysis to assess impairment of goodwill rather than to perform the quantitative goodwill impairment test.

The key qualitative factors considered in the assessment included the change in the industry and competitive environment, market capitalization and overall financial performance.

Based on this qualitative analysis, we determined that it was more likely than not that the fair value of each reporting unit exceeded its carrying value.

In 2021, 2020 and 2019, we determined no impairment was indicated.

Other long-term liabilities

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Operating lease liabilities 383 249

Uncertain tax positions 89 303

Other 186 249

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(a) Detailed in Note 7.

Quarterly financial data (unaudited)

2020 Quarters

2019 Quarters

4th 3rd 2nd 1st 4th 3rd 2nd 1st

Revenue $ 4,076 $ 3,817 $ 3,239 $ 3,329 $ 3,350 $ 3,771 $ 3,668 $ 3,594

Gross profit 2,646 2,453 2,082 2,088 2,097 2,446 2,360 2,261

Included in operating profit:

Acquisition charges 47 51 50 50 50 79 80 79

Restructuring charges/other — — 24 — — — ( 36 ) —

Operating profit 1,813 1,609 1,228 1,244 1,249 1,589 1,506 1,379

Net income 1,688 1,353 1,380 1,174 1,070 1,425 1,305 1,217

Basic EPS $ 1.83 $ 1.47 $ 1.50 $ 1.25 $ 1.14 $ 1.51 $ 1.38 $ 1.29

Diluted EPS $ 1.80 $ 1.45 $ 1.48 $ 1.24 $ 1.12 $ 1.49 $ 1.36 $ 1.26

Report of independent registered public accounting firm

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We believe that our audits provide a reasonable basis for our opinion.

Critical a udit matter

The critical audit matter communicated is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

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We also evaluated the adequacy of the Company’s financial statement disclosures in Note 4 to the consolidated financial statements related to these tax matters.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1952.

4 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data