What changed in this filing

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Item 1. Financial Statements

2022-07-27 compared with 2022-04-27 · 97 added, 42 removed, 348 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,

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

25 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,

(In millions) 2022 2021 2022 2021

3 unchanged sentences

Adjustments, net of tax effect of $ 8 and ($ 5 );

$ 6 and ($ 7 )

( 40 ) 16 ( 34 ) 21

Recognized within net income, net of tax effect of ($ 4 ) and ($ 2 );

($ 5 ) and ($ 5 )

Available-for-sale investments:

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

( 3 ) — ( 7 ) —

Other comprehensive income (loss), net of taxes ( 27 ) 24 ( 23 ) 37

2 unchanged sentences

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

March 31, December 31,

June 30, December 31,

Consolidated Balance Sheets 2022 2021

41 unchanged sentences

Treasury common stock at cost

March 31, 2022 – 819 ;

June 30, 2022 – 826 ;

December 31, 2021 – 817

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,

(In millions) 2022 2021

54 unchanged sentences

Segment information

For Three Months Ended

For Three Months Ended For Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Analog $ 3,992 $ 3,464 $ 7,808 $ 6,744

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,

2022 2021 2022 2021

United States $ 577 $ 529 $ 1,071 $ 922

4 unchanged sentences

Total revenue $ 5,212 $ 4,580 $ 10,117 $ 8,869

(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.

(a) Revenue from products shipped into China was $ 2.8 billion and $ 2.5 billion in the second quarters of 2022 and 2021, respectively, and $ 5.3 billion and $ 4.8 billion in the first six months 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 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.

The Consolidated Statements of Income, Comprehensive Income and Cash Flows for the periods ended June 30, 2022 and 2021, and the Consolidated Balance Sheet as of June 30, 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.

2 unchanged sentences

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.

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:

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 $ 2,281 930 $ 2.45 $ 1,924 937 $ 2.05

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.

For Six Months Ended June 30,

Net Income Shares EPS Net Income Shares EPS

Net income $ 4,492 $ 3,684

Income allocated to RSUs ( 19 ) ( 15 )

Income allocated to common stock $ 4,473 922 $ 4.85 $ 3,669 923 $ 3.98

Dilutive effect of stock compensation plans 10 13

Net income $ 4,492 $ 3,684

Income allocated to RSUs ( 19 ) ( 15 )

Income allocated to common stock $ 4,473 932 $ 4.80 $ 3,669 936 $ 3.92

Potentially dilutive securities representing 6 million and 2 million shares of common stock that were outstanding during the second quarters of 2022 and 2021, respectively, and 5 million and 3 million shares outstanding during the first six months 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 March 31, 2022.

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

As of June 30, 2022, the carrying value of long-term debt, including the current portion, was $ 7.24 billion, and the estimated fair value was $ 6.72 billion.

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

See Note 4 for a description of fair value and the definition of Level 2 inputs.

Our estimated annual effective tax rate is about 14 %, which does not include discrete tax items.

This differs from the 21 % U.S.

statutory corporate tax rate due to the effect of U.S.

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,

2022 2021 2022 2021

Taxes calculated using the estimated annual effective tax rate $ 395 $ 322 $ 756 $ 597

2 unchanged sentences

Effective tax rate 15 % 14 % 14 % 12 %

The effective tax rate differs from the 21 % U.S.

statutory corporate tax rate due to the effect of U.S.

tax benefits.

Valuation of debt and equity investments and certain liabilities

13 unchanged sentences

Details of our investments are as follows:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

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

8 unchanged sentences

Equity-method investments — — 23 — — 42

Non-marketable equity investments — — 4 — — 4

Non-marketable investments — — 5 — — 4

Cash on hand 722 — — 805 — —

Total $ 3,802 $ 4,585 $ 39 $ 4,631 $ 5,108 $ 62

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.

As of June 30, 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 six months of 2022 and 2021.

Proceeds from sales, redemptions and maturities of short-term available-for-sale investments were $ 4.20 billion and $ 2.46 billion for the second quarters of 2022 and 2021, respectively, and $ 6.97 billion and $ 4.46 billion for the first six months of 2022 and 2021, 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 June 30, 2022:

One year or less $ 5,258

One to two years 74

Fair-value considerations

3 unchanged sentences

• Level 1 – Uses unadjusted quoted prices that are available in active markets for identical assets or liabilities as of the reporting date.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

• Level 2 – Uses inputs other than Level 1 that are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active.

4 unchanged sentences

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

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

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

As of June 30, 2022, our Level 3 assets and liabilities were not material.

As of December 31, 2021, 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, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Level 1 Level 2 Total Level 1 Level 2 Total

7 unchanged sentences

Total liabilities $ 313 $ — $ 313 $ 395 $ — $ 395

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Postretirement benefit plans

3 unchanged sentences

Defined Benefit

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

For Three Months Ended June 30, 2022 2021 2022 2021 2022 2021

Service cost $ 4 $ 6 $ — $ 1 $ 6 $ 9

5 unchanged sentences

Total, including other postretirement losses $ 14 $ 12 $ — $ — $ 6 $ —

Defined Benefit U.S.

Retiree Health Care Non-U.S.

Defined Benefit

For Six Months Ended June 30, 2022 2021 2022 2021 2022 2021

Service cost $ 8 $ 11 $ 1 $ 2 $ 13 $ 18

Interest cost 12 15 5 5 19 19

Expected return on plan assets ( 16 ) ( 17 ) ( 6 ) ( 6 ) ( 35 ) ( 41 )

Recognized net actuarial loss 1 8 — — — 4

Net periodic benefit costs 5 17 — 1 ( 3 ) —

Settlement losses 13 8 — — 9 1

Total, including other postretirement losses $ 18 $ 25 $ — $ 1 $ 6 $ 1

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, 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.

As of June 30, 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.

As of June 30, 2022, our credit facility was undrawn, and we had no commercial paper outstanding.

Long-term debt

2 unchanged sentences

Long-term debt outstanding is as follows:

March 31, December 31,

June 30, December 31,

Notes due 2022 at 1.85 %

15 unchanged sentences

Long-term debt $ 6,745 $ 7,241

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

Interest and debt expense was $ 49 million and $ 44 million for the second quarters of 2022 and 2021, respectively, and $ 101 million and $ 90 million for the first six months 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

12 unchanged sentences

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

Net income — — 2,291 — —

Dividends declared and paid ($ 1.15 per share)

— — ( 1,060 ) — —

Common stock issued for stock-based awards — 31 — 25 —

Stock repurchases — — — ( 1,266 ) —

Stock compensation — 85 — — —

Other comprehensive income (loss), net of taxes — — — — ( 27 )

Dividend equivalents on RSUs — — ( 4 ) — —

Balance, June 30, 2022 $ 1,741 $ 2,783 $ 48,280 $ ( 38,532 ) $ ( 180 )

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

10 unchanged sentences

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 — —

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

Contingencies

12 unchanged sentences

Although it is not possible to predict the outcome of these matters, we believe that the results of these proceedings will not have a material adverse effect on our financial condition, results of operations or liquidity.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Supplemental financial information

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.

During the second quarter and first six months of 2022, restructuring charges/other included $ 66 million and $ 132 million, respectively, 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 first quarters of 2022 and 2021.

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

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,

2022 2021 2022 2021

Net actuarial losses of defined benefit plans:

4 unchanged sentences

Stock compensation

During the first quarter of 2022, 1 million shares were issued from treasury related to stock compensation.

During the second quarter and first six months of 2022, 1 million and 2 million shares, respectively, 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