What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-02 compared with 2023-02-03 · 63 added, 78 removed, 984 unchanged (13% of the section changed)

43 unchanged sentences

Recognized within net income, net of tax effect of ($ 5 ), ($ 17 ) and ($ 8 )

Prior service cost of defined benefit plans:

Prior service cost (credit) of defined benefit plans:

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

3 unchanged sentences

Available-for-sale investments:

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

Unrealized gains (losses), net of tax effect of ($ 1 ), $ 1 and $ 0

Other comprehensive income (loss), net of taxes 49 ( 97 ) 203

104 unchanged sentences

Dividend equivalents on RSUs — — ( 15 ) — —

Other — ( 1 ) — — —

Balance, December 31, 2021

8 unchanged sentences

Dividend equivalents on RSUs — — ( 18 ) — —

Other — ( 3 ) — — —

Balance, December 31, 2022

49 unchanged sentences

Geographic area information

The following geographic information is based on product shipment destination, which does not reflect end demand by geography.

For Years Ended December 31,

2022 2021 2020

United States $ 2,267 11 % $ 1,906 10 % $ 1,547 11 %

China (a) 9,844 49 9,998 55 7,881 54

Rest of Asia 2,633 13 2,187 12 1,660 11

Europe, Middle East and Africa 3,520 18 2,802 15 2,249 16

Japan 1,172 6 959 5 734 5

Rest of world 592 3 492 3 390 3

Total revenue $ 20,028 100 % $ 18,344 100 % $ 14,461 100 %

(a) Revenue from products shipped into China 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.

The following additional geographic information includes our estimate for revenue based on the location of our end customers’ headquarters, providing a better representation of the geographic profile for where critical decisions are made.

Our estimate for revenue based on the geographic location of our end customers’ headquarters, which represents where critical decisions are made, is as follows:

For Years Ended December 31,

18 unchanged sentences

Major customer

One of our end customers accounted for 8 %, 9 % and 10 % of revenue in 2022, 2021 and 2020, respectively, recognized primarily in our Analog segment.

No end customer accounted for 10% or more of revenue in 2023, 2022 or 2021.

19 unchanged sentences

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 , incentives and credit losses.

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

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

21 unchanged sentences

Earnings per share (EPS)

We use the two-class method for calculating EPS because the restricted stock units (RSUs) we grant are participating securities containing non-forfeitable rights to receive dividend equivalents.

We use the two-class method for calculating EPS because the restricted stock units (RSUs) we grant are participating securities containing nonforfeitable rights to receive dividend equivalents.

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.

16 unchanged sentences

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.

• 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 securities.

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

10 unchanged sentences

Incentives provided by government entities are recognized when we have reasonable assurance that we will comply with the conditions of the incentive, if any, and the incentive will be received.

Incentives related to the acquisition or construction of fixed assets are recognized as a reduction in the carrying amounts of the related assets and reduce depreciation expense over the useful lives of the assets.

Incentives, which include non-income tax incentives, related to the acquisition or construction of fixed assets are recognized as a reduction in the carrying amounts of the related assets and reduce depreciation expense over the useful lives of the assets.

Incentives for specific operating activities are offset against the related expense in the period the expense is incurred.

3 unchanged sentences

semiconductor manufacturing.

As of December 31, 2022, we have recognized $ 395 million of receivables in other long-term assets with a corresponding reduction to the carrying amounts of the qualifying manufacturing assets.

As of December 31, 2023, we have recognized $ 1.36 billion of receivables with a corresponding reduction to the carrying amounts of the qualifying manufacturing assets.

The receivables are comprised of $ 497 million in prepaid expenses and other current assets and $ 859 million in other long-term assets .

See Note 11 for additional information.

In 2023, cost of revenue benefited by $ 45 million from the investment tax credit, recognized as a reduction of depreciation expense.

Property, plant and equipment;

14 unchanged sentences

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 we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, or if we elect not to use the qualitative assessment, then we perform the quantitative goodwill impairment test.

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

See Note 11 for additional information.

4 unchanged sentences

dollar are remeasured into the functional currency.

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.

Current assets (except inventories), deferred taxes, 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.

30 unchanged sentences

COR $ 44 $ 34 $ 21

R&D 119 90 67

SG&A 199 165 134

90 unchanged sentences

Effective tax rate 12.2 % 12.8 % 12.9 %

On August 16, 2022, the U.S.

government enacted the Inflation Reduction Act, which introduces a new 15% corporate minimum tax based on adjusted financial statement income effective January 1, 2023, and provisions intended to mitigate climate change, including tax credit incentives for investments that reduce greenhouse gas emissions.

Based on our current analysis of the provisions, this legislation will not have a material impact on our consolidated financial statements.

The earnings represented by non-cash operating assets, such as fixed assets and inventory, will continue to be permanently reinvested outside the United States.

13 unchanged sentences

Capitalized R&D $ 750 $ 380

Deferred loss and tax credit carryforwards 201 207

Accrued expenses 236 182

Deferred loss and tax credit carryforwards 205 201

Stock compensation 163 132

7 unchanged sentences

International earnings ( 33 ) ( 35 )

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

Acquisition-related intangibles and fair-value adjustments ( 14 ) ( 13 )

9 unchanged sentences

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 increased $ 1 million in 2022, increased $ 9 million in 2021 and decreased $ 1 million in 2020.

Valuation allowances increased $ 9 million in 2023, increased $ 1 million in 2022 and increased $ 9 million in 2021.

These changes had no impact to net income in 2023, 2022 or 2021.

We have no material tax loss carryforwards as of December 31, 2023.

Cash payments made for income taxes, net of refunds, were $ 1.48 billion, $ 1.20 billion and $ 720 million in 2022, 2021 and 2020, respectively.

Cash payments made for income taxes, net of refunds, were $ 1.35 billion, $ 1.48 billion and $ 1.20 billion in 2023, 2022 and 2021, respectively.

Uncertain tax positions

12 unchanged sentences

Balance, December 31 $ 82 $ 82 $ 69

Interest income (expense) recognized in the year ended December 31 $ ( 1 ) $ ( 5 ) $ 39

Interest expense recognized in the year ended December 31 $ ( 9 ) $ ( 1 ) $ ( 5 )

Interest payable as of December 31 $ 10 $ 3 $ 13

The liability for uncertain tax positions is a component of other long-term liabilities on our Consolidated Balance Sheets.

All of the $ 82 million and $ 69 million liabilities for uncertain tax positions as of December 31, 2022 and 2021, respectively, are comprised of positions that, if recognized, would lower the effective tax rate.

All of the $ 82 million liabilities for uncertain tax positions at both December 31, 2023 and 2022 are comprised of positions that, if recognized, would lower the effective tax rate.

If these liabilities are ultimately realized, no existing deferred tax assets in 2023 or 2022 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.

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

As of December 31, 2023, the statute of limitations remains open for U.S.

33 unchanged sentences

Other investments

Our other investments include equity-method investments and non-marketable investments, which are not measured at fair value.

These investments consist of interests in venture capital funds and other non-marketable securities.

Our other investments include equity-method investments and nonmarketable investments, which are not measured at fair value.

These investments consist of interests in venture capital funds and other nonmarketable securities.

Gains and losses from equity-method investments are recognized in OI&E based on our ownership share of the investee’s financial results.

Non-marketable securities are measured at cost with adjustments for observable changes in price or impairments.

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

Nonmarketable securities are measured at cost with adjustments for observable changes in price or impairments.

Gains and losses on nonmarketable investments are recognized in OI&E.

Details of our investments are as follows:

11 unchanged sentences

Equity-method investments — — 17 — — 18

Non-marketable investments — — 5 — — 4

Nonmarketable investments — — 5 — — 5

Total — — 22 — — 23

Cash on hand 801 — — 707 — —

7 unchanged sentences

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

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

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

36 unchanged sentences

As of December 31, 2023 and 2022, as a result of employees’ elections, TI’s U.S.

defined contribution plans held shares of TI common stock totaling 6 million shares in both periods valued at $ 940 million and $ 1.16 billion, respectively.

defined contribution plans held shares of TI common stock totaling 5 million shares and 6 million shares valued at $ 873 million and $ 940 million, respectively.

Dividends paid on these shares in 2023 and 2022 were $ 27 million and $ 28 million, respectively.

30 unchanged sentences

Amortization of prior service cost (credit) — — — — ( 2 ) ( 2 ) 1 1 1

Recognized net actuarial loss 3 15 7 — — — 1 7 14

Net periodic benefit costs 20 35 20 — 2 2 ( 6 ) — 9

Recognized net actuarial losses (gains) 6 3 15 ( 5 ) — — 12 1 7

Net periodic benefit costs (credits) 19 20 35 ( 7 ) — 2 23 ( 6 ) —

Settlement losses 7 64 13 — — — — 10 2

Total, including other postretirement losses $ 84 $ 48 $ 36 $ — $ 2 $ 2 $ 4 $ 2 $ 10

Total, including other postretirement losses (gains) $ 26 $ 84 $ 48 $ ( 7 ) $ — $ 2 $ 23 $ 4 $ 2

All defined benefit and retiree health care benefit plan expense components other than service cost are recognized in OI&E in our Consolidated Statements of Income.

30 unchanged sentences

Effects of exchange rate changes — — — — ( 13 ) ( 271 )

Other — — ( 19 ) — — —

Fair value of plan assets at end of year $ 418 $ 421 $ 264 $ 280 $ 1,866 $ 1,822

24 unchanged sentences

Defined Benefit Total

Net Actuarial Loss Net Actuarial Loss Prior Service Cost Net Actuarial Loss Prior Service Cost Net Actuarial Loss Prior Service Cost

Net Actuarial Loss Net Actuarial Gain Prior Service Cost Net Actuarial Loss Prior Service Cost Net Actuarial Loss Prior Service Cost

AOCI balance, net of taxes, December 31, 2022

120 unchanged sentences

Long-term debt

In March 2023, we issued two series of senior unsecured notes for an aggregate principal amount of $ 1.4 billion, consisting of $ 750 million of 4.90 % notes due in 2033 and $ 650 million of 5.00 % notes due in 2053.

We incurred $ 11 million of issuance and other related costs.

The proceeds of the offering were $ 1.4 billion, net of the original issuance discounts, which will be used for general corporate purposes.

In May 2023, we issued three series of senior unsecured notes for an aggregate principal amount of $ 1.6 billion, consisting of $ 200 million of 4.60 % notes due in 2028, $ 200 million of 4.90 % notes due in 2033 and $ 1.2 billion of 5.05 % notes due in 2063.

We incurred $ 7 million of issuance and other related costs.

The proceeds of the offering were $ 1.6 billion, net of the original issuance discounts and premiums, which will be used for general corporate purposes.

In May 2023, we retired $ 500 million of maturing debt.

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

9 unchanged sentences

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.

We incurred $ 4 million of issuance costs.

The proceeds of the offering were $ 749 million, net of the original issuance discount, and were used for general corporate purposes and the repayment of maturing debt.

In April 2020, we retired $ 500 million of maturing debt.

In May 2020, we issued a principal amount of $ 750 million of fixed-rate, long-term debt due in 2030.

We incurred $ 5 million of issuance costs.

The proceeds of the offering were $ 749 million, net of the original issuance discount, and were used for general corporate purposes.

Long-term debt outstanding is as follows:

15 unchanged sentences

Notes due 2052 at 4.10 %

Notes due 2053 at 5.00 %

Notes due 2063 at 5.05 %

Total debt 11,300 8,800

6 unchanged sentences

Cash payments for interest on long-term debt were $ 321 million, $ 198 million and $ 181 million in 2023, 2022 and 2021, respectively.

Capitalized interest was not material.

Capitalized interest was $ 11 million, $ 6 million and $ 8 million in 2023, 2022 and 2021, respectively.

We conduct certain operations in leased facilities and also lease a portion of our data processing and other equipment.

13 unchanged sentences

Lease assets obtained in exchange for new lease liabilities $ 285 $ 37 $ 210

As of December 31, 2022, we had committed to make the following minimum payments under our non-cancellable operating leases:

As of December 31, 2023, we had committed to make the following minimum payments under our noncancelable operating leases:

2024 2025 2026 2027 2028 Thereafter Total

6 unchanged sentences

Purchase commitments

Our purchase commitments include payments for software licenses and contractual arrangements with suppliers when there is a fixed, non-cancellable payment schedule or when minimum payments are due with a reduced delivery schedule.

Our purchase commitments include payments for software licenses and contractual arrangements with suppliers when there is a fixed, noncancelable payment schedule or when minimum payments are due with a reduced delivery schedule.

As of December 31, 2023, we had committed to make the following minimum payments under our purchase commitments:

19 unchanged sentences

2023 2022 2021

Restructuring charges (a) $ — $ — $ 25

Integration charges (b) 257 104 —

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

Integration charges (a) $ — $ 257 $ 104

Gains on sales of assets (b) — — ( 50 )

Restructuring charges/other $ — $ 257 $ 54

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

(b) Includes costs related to our purchase of the Lehi, Utah, manufacturing facility, as well as preproduction costs before December 2022.

(a) Includes costs related to our purchase of the Lehi, Utah, manufacturing facility, as well as preproduction costs before December 2022.

(b) Includes a $ 50 million gain from the sale of property in October 2021.

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

4 unchanged sentences

Total $ 440 $ 106 $ 143

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

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

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

Prepaid expenses and other current assets

CHIPS and Science Act investment tax credit $ 497 $ —

Other 264 302

Total $ 761 $ 302

Property, plant and equipment at cost

9 unchanged sentences

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 2022, 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 changes 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 2023, 2022 and 2021, we determined no impairment was indicated.

Accrued expenses and other liabilities

Accrued construction retainage $ 149 $ 82

Other long-term assets

CHIPS and Science Act investment tax credit $ 859 $ 395

Other 853 740

Total $ 1,712 $ 1,135

Other long-term liabilities

Operating lease liabilities $ 344 $ 383

Deferred compensation plans 326 395

Long-term portion of transition tax on indefinitely reinvested earnings 302 403

Accrued expenses and other liabilities

Accrued capital-related expenditures $ 341 $ 191

Other 570 455

4 unchanged sentences

Prior service cost — ( 1 )

Unrealized losses on available-for-sale investments ( 3 ) —

Unrealized gains (losses) on available-for-sale investments 2 ( 3 )

Cash flow hedge derivative instruments — ( 1 )

9 unchanged sentences

Recognized within net income, net of taxes $ 15 $ 61 $ 29 Decrease to net income

Prior service cost of defined benefit plans:

Amortization of prior service cost (a) $ ( 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 ) Increase to net income

Prior service cost (credit) of defined benefit plans:

Amortization of prior service cost (credit) (a) $ 1 $ ( 1 ) $ ( 1 ) Decrease (increase) to OI&E

Tax effect — — — (Decrease) increase to provision for income taxes

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

(a) Detailed in Note 7

40 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