What changed in this filing

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Item 1. Financial Statements

2022-04-27 compared with 2021-10-27 · 55 added, 143 removed, 335 unchanged (37% of the section changed)

Financial statements

For Three Months Ended For Nine Months Ended

Consolidated Statements of Income September 30, September 30,

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

For Three Months Ended

Consolidated Statements of Income March 31,

(In millions, except per-share amounts) 2022 2021

Revenue $ 4,905 $ 4,289

14 unchanged sentences

Diluted $ 2.35 $ 1.87

Average shares outstanding (millions):

Average shares outstanding:

Basic 923 922

7 unchanged sentences

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

For Three Months Ended For Nine Months Ended

Consolidated Statements of Comprehensive Income September 30, September 30,

(Millions of dollars) 2021 2020 2021 2020

For Three Months Ended

Consolidated Statements of Comprehensive Income March 31,

(In millions) 2022 2021

Net income $ 2,201 $ 1,753

2 unchanged sentences

Adjustments, net of tax effect of ($ 2 ) and ($ 2 )

($ 8 ) and $ 4

3 ( 7 ) 24 ( 8 )

Recognized within net income, net of tax effect of ($ 1 ) and ($ 3 )

($ 7 ) and ($ 7 )

Prior service credit of defined benefit plans:

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

( 1 ) ( 1 ) ( 1 ) ( 1 )

Available-for-sale investments:

Unrealized losses, net of tax effect of $ 1 and $ 0

Other comprehensive income (loss), net of taxes 4 13

2 unchanged sentences

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

September 30, December 31,

March 31, December 31,

Consolidated Balance Sheets 2022 2021

(Millions of dollars, except share amounts)

(In millions, except par value)

Current assets:

12 unchanged sentences

Goodwill 4,362 4,362

Acquisition-related intangibles 9 152

Deferred tax assets 273 263

18 unchanged sentences

Preferred stock, $ 25 par value.

Authorized – 10,000,000 shares;

Shares authorized – 10 ;

Common stock, $ 1 par value.

Authorized – 2,400,000,000 shares

Shares authorized – 2,400 ;

shares issued – 1,741

2 unchanged sentences

Treasury common stock at cost

September 30, 2021 – 817,400,928 ;

March 31, 2022 – 819 ;

December 31, 2021 – 817

5 unchanged sentences

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

For Nine Months Ended

Consolidated Statements of Cash Flows September 30,

(Millions of dollars) 2021 2020

For Three Months Ended

Consolidated Statements of Cash Flows March 31,

(In millions) 2022 2021

Cash flows from operating activities

25 unchanged sentences

Cash flows from financing activities

Proceeds from issuance of long-term debt 1,495 1,498

Repayment of debt — ( 550 )

26 unchanged sentences

Segment information

For Three Months Ended For Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

For Three Months Ended

Analog $ 3,816 $ 3,280

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 Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

For Three Months Ended

United States $ 494 $ 393

4 unchanged sentences

Total revenue $ 4,905 $ 4,289

(a) Revenue from products shipped into China was $ 2.5 billion and $ 2.2 billion in the third quarters of 2021 and 2020, respectively, and $ 7.3 billion and $ 5.7 billion in the first nine 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.

(a) Revenue from products shipped into China was $ 2.5 billion and $ 2.3 billion in the first quarters of 2022 and 2021, 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, 2021.

The Consolidated Statements of Income, Comprehensive Income and Cash Flows for the periods ended September 30, 2021 and 2020, and the Consolidated Balance Sheet as of September 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.

The Consolidated Statements of Income, Comprehensive Income and Cash Flows for the periods ended March 31, 2022 and 2021, and the Consolidated Balance Sheet as of March 31, 2022, 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, 2021.

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

Certain amounts in prior periods' financial statements have been reclassified to conform to the current presentation.

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

Significant accounting policies and practices

3 unchanged sentences

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

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

For Three Months Ended September 30,

Net Income Shares EPS Net Income Shares EPS

Net income $ 1,947 $ 1,353

Income allocated to RSUs ( 9 ) ( 6 )

Income allocated to common stock $ 1,938 923 $ 2.10 $ 1,347 917 $ 1.47

Dilutive effect of stock compensation plans 13 12

Net income $ 1,947 $ 1,353

Income allocated to RSUs ( 9 ) ( 6 )

Income allocated to common stock $ 1,938 936 $ 2.07 $ 1,347 929 $ 1.45

For Nine Months Ended September 30,

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

For Three Months Ended March 31,

Net Income Shares EPS Net Income Shares EPS

6 unchanged sentences

Income allocated to common stock $ 2,192 934 $ 2.35 $ 1,745 935 $ 1.87

Potentially dilutive securities representing 2 million and 3 million shares of common stock that were outstanding during the third quarters of 2021 and 2020, respectively, and 3 million and 4 million shares outstanding during the first nine 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.

Potentially dilutive securities representing 5 million and 3 million shares of common stock that were outstanding during the first quarters of 2022 and 2021, 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 September 30, 2021.

The fair values of our derivative financial instruments were not material as of March 31, 2022.

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 September 30, 2021, the carrying value of long-term debt, including the current portion, was $ 7.74 billion, and the estimated fair value was $ 8.43 billion.

As of March 31, 2022, the carrying value of long-term debt, including the current portion, was $ 7.74 billion, and the estimated fair value was $ 7.76 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 Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

For Three Months Ended

Taxes calculated using the estimated annual effective tax rate $ 361 $ 275

2 unchanged sentences

Effective tax rate 13 % 10 %

Our provision for income taxes for the first nine 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

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.

See Fair-value considerations below.

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 .

Unrealized gains and losses from available-for-sale debt securities are recorded as an increase or decrease, net of taxes, in AOCI on our Consolidated Balance Sheets, and any credit losses on available-for-sale debt securities are recorded as an allowance for credit losses with an offset recognized in OI&E in our Consolidated Statements of Income.

9 unchanged sentences

Details of our investments are as follows:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

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

11 unchanged sentences

Total $ 3,505 $ 6,320 $ 50 $ 4,631 $ 5,108 $ 62

As of September 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 nine months of 2021 and 2020.

All of our debt securities classified as available for sale as of September 30, 2021, have maturities within one year.

Proceeds from sales, redemptions and maturities of short-term available-for-sale investments were $ 1.32 billion and $ 510 million for the third quarters of 2021 and 2020, respectively, and $ 5.77 billion and $ 3.71 billion for the first nine months of 2021 and 2020, respectively.

As of March 31, 2022, and December 31, 2021, 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 2022 and 2021.

All of our debt securities classified as available for sale as of March 31, 2022, have maturities within one year.

Proceeds from sales, redemptions and maturities of short-term available-for-sale investments were $ 2.77 billion and $ 2.00 billion for the first quarters of 2022 and 2021, respectively.

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

During the first nine 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.

Fair-value considerations

9 unchanged sentences

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

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

As of March 31, 2022, and December 31, 2021, we had no Level 3 assets or liabilities.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

1 unchanged sentence

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.

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Level 1 Level 2 Total Level 1 Level 2 Total

12 unchanged sentences

Defined Benefit

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

Service cost $ 5 $ 5 $ — $ 1 $ 9 $ 9

Interest cost 8 7 3 3 9 9

Expected return on plan assets ( 8 ) ( 9 ) ( 2 ) ( 2 ) ( 20 ) ( 20 )

Recognized net actuarial loss 3 1 — — 2 4

Amortization of prior service cost (credit) — — ( 1 ) ( 1 ) — —

Net periodic benefit costs 8 4 — 1 — 2

Settlement losses 4 3 — — 1 1

Total, including other postretirement losses $ 12 $ 7 $ — $ 1 $ 1 $ 3

Defined Benefit U.S.

Retiree Health Care Non-U.S.

Defined Benefit

For Nine Months Ended September 30, 2021 2020 2021 2020 2021 2020

For Three Months Ended March 31, 2022 2021 2022 2021 2022 2021

Service cost $ 4 $ 5 $ 1 $ 1 $ 7 $ 9

2 unchanged sentences

Recognized net actuarial loss — 4 — — — 2

Amortization of prior service cost (credit) — — ( 1 ) ( 1 ) — —

Net periodic benefit costs 2 9 — 1 ( 1 ) —

4 unchanged sentences

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

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

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

As of March 31, 2022, we had a variable-rate revolving credit facility from a consortium of investment-grade banks that allows us to borrow up to $ 1 billion until March 2023.

The interest rate on borrowings under this credit facility, if drawn, is indexed to the applicable Term Secured Overnight Financing Rate (Term SOFR).

As of March 31, 2022, our credit facility was undrawn, and we had no commercial paper outstanding.

Long-term debt

In September 2021, we issued three series of senior unsecured notes for an aggregate principal amount of $ 1.50 billion, consisting of:

• $ 500 million of 1.125 % notes due in 2026;

• $ 500 million of 1.90 % notes due in 2031;

• $ 500 million of 2.70 % notes due in 2051.

We incurred $ 10 million of issuance costs.

The proceeds of the offering were $ 1.50 billion, net of the original issuance discounts, which will be used for general corporate purposes.

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

In April 2022, we retired $ 500 million of maturing debt.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Long-term debt outstanding is as follows:

September 30, December 31,

Notes due 2021 at 2.75 %

March 31, December 31,

Notes due 2022 at 1.85 %

15 unchanged sentences

Long-term debt $ 7,242 $ 7,241

Interest and debt expense was $ 45 million and $ 49 million for the third quarters of 2021 and 2020, respectively, and $ 135 million and $ 142 million for the first nine months of 2021 and 2020, respectively.

Interest and debt expense was $ 52 million and $ 46 million for the first quarters of 2022 and 2021, respectively.

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

Capitalized interest was not material.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Stockholders’ equity

10 unchanged sentences

Dividend equivalents on RSUs — — ( 5 ) — —

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

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 ) 1 — —

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

Net income — — 1,947 — —

Dividends declared and paid ($ 1.02 per share)

— — ( 942 ) — —

Common stock issued for stock-based awards — 27 — 48 —

Stock repurchases — — — ( 139 ) —

Stock compensation — 50 — — —

Other comprehensive income (loss), net of taxes — — — — 10

Dividend equivalents on RSUs — — ( 3 ) — —

Other — 1 ( 1 ) — —

Balance, September 30, 2021 $ 1,741 $ 2,563 $ 44,847 $ ( 36,687 ) $ ( 313 )

Balance, March 31, 2022 $ 1,741 $ 2,667 $ 47,053 $ ( 37,291 ) $ ( 153 )

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

10 unchanged sentences

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

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 )

Net income — — 1,353 — —

Dividends declared and paid ($ 0.90 per share)

— — ( 825 ) — —

Common stock issued for stock-based awards — 26 — 97 —

Stock repurchases — — — ( 15 ) —

Stock compensation — 50 — — —

Other comprehensive income (loss), net of taxes — — — — ( 1 )

Dividend equivalents on RSUs — — ( 3 ) — —

Other — ( 1 ) — — —

Balance, September 30, 2020 $ 1,741 $ 2,257 $ 41,305 $ ( 36,643 ) $ ( 335 )

Contingencies

10 unchanged sentences

Product claim consideration may exceed the price of our products.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

We are subject to various legal and administrative proceedings.

1 unchanged sentence

Supplemental financial information

Property, plant and equipment at cost

In October 2021, we completed our acquisition of Micron Technology’s 300-millimeter semiconductor factory in Lehi, Utah, for cash consideration of about $ 900 million.

Restructuring charges/other

During the first quarter of 2022, restructuring charges/other included $ 66 million related to integration charges at our Lehi, Utah, manufacturing facility.

These costs are included in Other for segment reporting purposes.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

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 third quarters and first nine months of 2021 and 2020.

Our Consolidated Statements of Comprehensive Income include items that have been recognized within net income during the first quarters of 2022 and 2021.

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

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

September 30, September 30,

2021 2020 2021 2020

For Three Months Ended Impact to Related Statement of Income Lines

Net actuarial losses of defined benefit plans:

2 unchanged sentences

Recognized within net income, net of taxes $ 2 $ 8 Decrease to net income

Prior service credit of defined benefit plans:

Amortization of prior service credit (a) $ ( 1 ) $ ( 1 ) $ ( 1 ) $ ( 1 ) Increase to OI&E

Tax effect — — — — Increase to provision for income taxes

Recognized within net income, net of taxes $ ( 1 ) $ ( 1 ) $ ( 1 ) $ ( 1 ) Increase to net income

(a) Detailed in Note 5.

Stock compensation

Total shares of 1,064,600 and 6,163,997 were issued from treasury shares during the third quarter and first nine months of 2021, respectively, related to stock compensation.

During the first quarter of 2022, 1 million shares were issued from treasury 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