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Discussion of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s discussion and analysis of financial condition and results of operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
−Removed: The coronavirus (COVID-19) pandemic and its effects are impacting and will likely continue to impact market conditions and business operations across industries worldwide, including at TI.
−Removed: Therefore, we remain cautious about how the economy might behave for the next few years and continue to monitor potential impact on our operations.
−Removed: After a sustained period of growth, a market correction began in 2022.
−Removed: As a result, demand for our products weakened, and we expect this to continue into 2023.
−Removed: During this time, we will continue to manage our operating plan and expenses with a steady hand as we focus on long-term investments to strengthen our competitive advantages.
Results of operations
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While all of these end markets represent good opportunities, we place additional strategic emphasis on designing and selling our products into the industrial and automotive markets, which we believe represent the best long-term growth opportunities.
−Removed: Gross margin of 68.8% reflected the quality of our product portfolio, as well as the efficiency of our manufacturing strategy, including the benefit of 300-mm production.
Our focus on analog and embedded processing allows us to generate strong cash flow from operations.
−Removed: Our cash flow from operations of $8.72 billion underscored the strength of our business model.
+Added: Our cash flow from operations of $6.42 billion underscored the strength of our business model, the quality of our product portfolio and the benefit of 300mm production.
Free cash flow was $1.35 billion and represented 7.7% of revenue.
−Removed: During 2022, we invested $3.37 billion in R&D and SG&A, invested $2.80 billion in capital expenditures and returned $7.91 billion to shareholders through dividends and stock repurchases.
+Added: During 2023, we invested $3.69 billion in R&D and SG&A, invested $5.07 billion in capital expenditures and returned $4.85 billion to shareholders.
Details of financial results – 2023 compared with 2022
−Removed: Revenue of $20.03 billion increased $1.68 billion, or 9.2%, due to higher revenue from Analog and, to a lesser extent, Embedded Processing.
−Removed: This increase benefited from higher prices and the mix of products shipped.
−Removed: Gross profit of $13.77 billion was up $1.40 billion, or 11.3%, primarily due to higher revenue.
−Removed: As a percentage of revenue, gross profit increased to 68.8% from 67.5%.
−Removed: Operating expenses (R&D and SG&A) were $3.37 billion compared with $3.22 billion, as a result of increased investments in R&D and inflation.
−Removed: Restructuring charges/other was $257 million compared with $54 million due to integration charges at our Lehi, Utah, manufacturing facility in both periods, which were partially offset by gains on sales of assets in 2021.
−Removed: The charges associated with our Lehi facility transitioned to cost of revenue once production began in December 2022.
+Added: Revenue of $17.52 billion decreased $2.51 billion, or 12.5%, primarily due to lower revenue from Analog, partially offset by higher revenue from Embedded Processing.
+Added: Gross profit of $11.02 billion was down $2.75 billion, or 20.0%, primarily due to lower revenue and, to a lesser extent, higher manufacturing costs associated with planned capacity expansion and reduced factory loadings.
+Added: As a percentage of revenue, gross profit decreased to 62.9% from 68.8%.
+Added: Operating expenses (R&D and SG&A) were $3.69 billion compared with $3.37 billion.
+Added: This increase was primarily due to higher employee-related costs as we invest to strengthen our competitive advantages.
+Added: Restructuring charges/other in the year-ago period was $257 million due to preproduction costs at our Lehi, Utah, manufacturing facility.
+Added: These costs transitioned primarily to cost of revenue after production began in December 2022.
See Note 11 to the financial statements.
Operating profit was $7.33 billion, or 41.8% of revenue, compared with $10.14 billion, or 50.6% of revenue.
−Removed: Other income and expense (OI&E) was $106 million of income compared with $143 million of income.
+Added: Other income and expense (OI&E) was $440 million of income compared with $106 million of income, due to higher interest income.
See Note 11 to the financial statements.
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See Note 8 to the financial statements.
−Removed: Our provision for income taxes was $1.28 billion compared with $1.15 billion.
−Removed: This increase was primarily due to higher income before income taxes and lower discrete tax benefits compared to 2021.
+Added: Our provision for income taxes was $908 million compared with $1.28 billion.
+Added: This decrease was due to lower income before income taxes.
Our effective tax rate, which includes discrete tax items, was 12.2% in 2023 compared with 12.8% in 2022.
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Operating profit % of revenue 44.6 % 54.4 %
−Removed: Analog revenue increased in both product lines, led by Signal Chain.
−Removed: Operating profit increased primarily due to higher revenue and associated gross profit.
+Added: Analog revenue decreased in both product lines about equally.
+Added: Operating profit decreased primarily due to lower revenue and higher manufacturing costs.
Embedded Processing (includes microcontrollers and processors)
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Operating profit % of revenue 29.9 % 38.4 %
−Removed: Embedded Processing revenue increased.
−Removed: Operating profit increased primarily due to higher revenue and associated gross profit.
+Added: Embedded Processing revenue increased due to the mix of products shipped.
+Added: Operating profit decreased primarily due to higher manufacturing costs, partially offset by higher revenue.
Other (includes DLP ® products, calculators and custom ASIC products)
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Operating profit % of revenue 45.2 % 37.5 %
−Removed: * Includes acquisition charges and restructuring charges/other
−Removed: Other revenue increased $163 million, and operating profit increased $135 million.
+Added: * Includes restructuring charges/other
+Added: Other revenue decreased $297 million, and operating profit decreased $26 million.
Financial condition
At the end of 2023, total cash (cash and cash equivalents plus short-term investments) was $8.58 billion, a decrease of $492 million from the end of 2022.
−Removed: Accounts receivable were $1.90 billion, an increase of $194 million compared with the end of 2021.
+Added: Accounts receivable were $1.79 billion, a decrease of $108 million compared with the end of 2022.
Days sales outstanding at the end of 2023 were 39 compared with 37 at the end of 2022.
−Removed: Inventory was $2.76 billion, an increase of $847 million from the end of 2021.
+Added: Inventory was $4.00 billion, an increase of $1.24 billion from the end of 2022.
Days of inventory at the end of 2023 were 219 compared with 157 at the end of 2022.
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As of December 31, 2023, our credit facility was undrawn, and we had no commercial paper outstanding.
−Removed: Cash flows from operating activities for 2022 were $8.72 billion, a decrease of $36 million due to higher cash used for working capital as we continued to strategically build our inventory, offset by higher net income.
+Added: Cash flows from operating activities for 2023 were $6.42 billion, a decrease of $2.30 billion due to lower net income and higher cash used for working capital, as we continued to strategically build inventory.
Investing activities for 2023 used $4.36 billion compared with $3.58 billion in 2022.
−Removed: Capital expenditures were $2.80 billion compared with $2.46 billion in 2021 and were primarily for semiconductor manufacturing equipment and facilities in both periods, including the purchase of our 300-mm semiconductor factory in Lehi, Utah, during 2021.
−Removed: Short-term investments used cash of $826 million in 2022 compared with $1.65 billion in 2021.
−Removed: As we continue to invest to strengthen our competitive advantage in manufacturing and technology as part of our long-term capacity planning, our capital expenditures are expected to be higher than historical levels.
+Added: Capital expenditures were $5.07 billion compared with $2.80 billion in 2022 and were primarily for semiconductor manufacturing equipment and facilities in both periods.
+Added: Short-term investments provided cash proceeds of $682 million in 2023 compared with $826 million of cash used in 2022.
+Added: As we continue to invest to strengthen our competitive advantage in manufacturing and technology as part of our long-term capacity planning, our capital expenditures are expected to continue to be higher than historical levels.
In August 2022, the U.S.
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semiconductor manufacturing.
−Removed: We expect to receive the cash benefit associated with the investment tax credit for qualifying capital expenditures in future periods and to apply for other incentives provided by the legislation.
+Added: We expect to receive the cash benefit associated with the investment tax credit for qualifying capital expenditures in future periods, and we have submitted applications for the manufacturing grants provided by the legislation.
+Added: See Note 11 to the financial statements.
Financing activities for 2023 used $2.14 billion compared with $6.72 billion in 2022.
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In 2022, we received net proceeds of $1.49 billion from the issuance of fixed-rate, long-term debt and retired maturing debt of $500 million.
−Removed: Dividends paid in 2022 were $4.30 billion compared with $3.89 billion in 2021, reflecting an increased dividend rate, partially offset by fewer shares outstanding.
−Removed: We used $3.62 billion to repurchase 22.2 million shares of our common stock compared with $527 million used in 2021 to repurchase 2.9 million shares.
+Added: Dividends paid in 2023 were $4.56 billion compared with $4.30 billion in 2022, reflecting an increased dividend rate.
+Added: We used $293 million to repurchase 1.8 million shares of our common stock compared with $3.62 billion used in 2022 to repurchase 22.2 million shares.
Employee exercises of stock options provided cash proceeds of $263 million compared with $241 million in 2022.
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Although we believe the estimates are reasonable, no assurance can be given that the final outcome of these matters will not be different from what is reflected in the historical income tax provisions and accruals.
−Removed: As part of our financial process, we must assess the likelihood that our deferred tax assets can be recovered.
−Removed: If recovery is not likely, the provision for taxes must be increased by recording a reserve in the form of a valuation allowance for the deferred tax assets that are estimated not to be ultimately recoverable.
−Removed: Our judgment regarding future recoverability of our deferred tax assets may change due to various factors, including changes in U.S.
−Removed: or international tax laws and changes in market conditions and their impact on our assessment of taxable income in future periods.
−Removed: These changes, if any, may require adjustments to the valuation allowances and an accompanying reduction or increase in net income in the period when such determinations are made.
Inventory valuation allowances
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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.