form10k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(mark
one)
x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
fiscal year ended December 31, 2009
OR
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
for the
transition period from ___________ to ___________
Commission
File Number 1-3761
TEXAS
INSTRUMENTS INCORPORATED
(Exact
name of Registrant as specified in its charter)
Delaware
|
75-0289970
|
(State
of Incorporation)
|
(I.R.S. Employer
Identification No.)
|
|
|
12500
TI Boulevard, P.O. Box 660199, Dallas, Texas
|
75266-0199
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Registrant’s
Telephone Number, Including Area Code: 972-995-3773
Securities
registered pursuant to Section 12(b) of the Act:
|
Name
of each exchange on which registered
|
Common
Stock, par value $1.00
|
New
York Stock Exchange
|
Securities registered pursuant to
Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes S No
¨
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
Yes ¨ No S
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes S No ¨
Insert by
check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files).
Yes S No ¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. S
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large
accelerated filer S
|
Accelerated
filer ¨
|
|
|
Non-accelerated
filer ¨
|
Smaller
reporting company ¨
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes ¨ No S
The
aggregate market value of voting stock held by non-affiliates of the Registrant
was approximately $26,413,333,167 as of June 30, 2009.
1,241,888,536 (Number
of shares of common stock outstanding as of January 31, 2010)
Parts I,
II and IV hereof incorporate information by reference to the Registrant’s 2009
annual report to stockholders. Part III hereof incorporates
information by reference to the Registrant’s proxy statement for the 2010 annual
meeting of stockholders.
Company
Overview
At TI, we
design and make semiconductors that we sell to electronics designers and
manufacturers all over the world. We began operations in
1930. We are incorporated in Delaware, headquartered in Dallas,
Texas, and have design, manufacturing or sales operations in more than 30
countries. We have four segments: Analog, Embedded Processing,
Wireless and Other. We expect Analog and Embedded Processing to be
our primary growth engines in the years ahead, and we therefore focus our
resources on these segments.
We were
the world’s fourth largest semiconductor company in 2009 as measured by revenue,
according to preliminary estimates from an external
source. Additionally, we sell calculators and related
products.
Financial
information with respect to our segments and our operations outside the United
States is contained in the note to the financial statements captioned “Segment
and geographic area data” on pages 29 and 30 of TI’s 2009 annual report to
stockholders. It is incorporated herein by reference to such annual
report.
Product
Information
Semiconductors
are electronic components that serve as the building blocks inside modern
electronic systems and equipment. Semiconductors come in two basic
forms: individual transistors and integrated circuits (generally known as
“chips”) that combine multiple transistors on a single piece of material to form
a complete electronic circuit. Our semiconductors are
used to accomplish many different things, such as converting and amplifying
signals, interfacing with other devices, managing and distributing power,
processing data, canceling noise and improving signal resolution. Our
portfolio includes products that are integral to almost all electronic
equipment.
We sell
custom and standard semiconductor products. Custom products are
designed for a specific customer for a specific application, are sold only to
that customer and are typically sold directly to the customer. The
life cycles of custom products are generally determined by end-equipment upgrade
cycles and can be as short as 12 to 24 months. Standard products are
designed for use by many customers and/or many applications and are generally
sold through both distribution and direct channels. They include both
proprietary and commodity products. The life cycles of standard
products are generally longer than for custom products.
Additional
information regarding each segment’s products follows.
Analog
Analog
semiconductors change real-world signals – such as sound, temperature, pressure
or images – by conditioning them, amplifying them and often converting them to a
stream of digital data that can be processed by other semiconductors, such as
digital signal processors (DSPs). Analog semiconductors are also used
to manage power distribution and consumption. Sales to our Analog
segment’s nearly 80,000 customers generated about 40 percent of our revenue in
2009. According to external sources, the worldwide market for analog
semiconductors was about $32 billion in 2009. Our Analog segment’s
revenue in 2009 was $4.3 billion, or about 13 percent of this market, the
leading position. We believe that we are well-positioned to increase
our market share over time.
Our
Analog product lines are: high-performance analog, high-volume analog
& logic and power management.
High-performance
analog products: These include standard analog semiconductors, such
as amplifiers, data converters and interface semiconductors (our portfolio
includes more than 15,000 products), that we market to many different customers
who use them in manufacturing a wide range of products sold in many end markets,
including the industrial, communications, computing and consumer electronics
markets. High-performance analog products generally have long life
cycles, often more than 10 years.
High-volume
analog & logic products: High-volume analog includes products for
specific applications, including custom products. The life cycles of
our high-volume analog products are generally shorter than those of our
high-performance analog products. End markets for high-volume analog
products include communications, automotive, computing and many consumer
electronics products. Logic and standard linear includes commodity
products marketed to many different customers for many different
applications.
Power
management products: These include both standard and custom
semiconductors that help customers manage power in any type of electronic
system. We design and manufacture power management semiconductors for
both portable devices (battery-powered devices, such as handheld consumer
electronics, laptop computers and cordless power tools) and line-powered systems
(products that require an external electrical source, such as computers, digital
TVs, wireless base stations and high-voltage industrial equipment).
Embedded
Processing
Our
Embedded Processing products include our DSPs (other than DSPs specific to our
Wireless segment) and microcontrollers. DSPs perform mathematical
computations almost instantaneously to process or improve digital
data. Microcontrollers are designed to control a set of specific
tasks for electronic equipment. Sales of Embedded Processing products
generated about 15 percent of our revenue in 2009. The worldwide
market for embedded processors was about $14 billion in
2009. According to external sources, we have about 11 percent share
in this fragmented market, and we believe we are well-positioned to increase our
market share over time.
An
important characteristic of our Embedded Processing products is that our
customers often invest their own research and development (R&D) to write
software that operates on our products. This investment tends to
increase the length of our customer relationships because customers prefer to
re-use software from one product generation to the next. We make and
sell standard, or catalog, Embedded Processing products used in many different
applications and custom Embedded Processing products used in specific
applications, such as communications infrastructure equipment and
automotive.
Wireless
Cell
phones require a modem or “baseband” to connect to the wireless carrier’s
network. Many of today’s advanced cell phones, which contain email,
media, games and computing capability, also require an applications processor to
run the phone’s software and services, and semiconductors to enable connectivity
to Bluetooth®
devices, WiFi networks or GPS location services. We design, make and
sell products to satisfy each of these requirements. Wireless
products are typically sold in high volumes, and our Wireless portfolio includes
both standard products and custom products. Sales of Wireless
products generated about 25 percent of our revenue in 2009, and a significant
portion of our Wireless sales were to a single customer.
Our
Wireless segment has shifted focus from baseband chips, a market with shrinking
competitive barriers and slowing growth rates, to applications processors and
connectivity products, markets we expect will grow faster than the baseband
market. Consistent with this shift in market focus, we are
concentrating our Wireless investments on our OMAPTM
applications processors and connectivity products and have discontinued further
development of standard baseband products. While we continue to sell
custom baseband products, we have discontinued essentially all custom baseband
investment. We expect substantially all of our baseband revenue,
which was $1.73 billion in 2009, to cease by the end of 2012.
Other
Our Other
segment includes revenue from sales from our smaller semiconductor product lines
and of our handheld graphing and scientific calculators, as well as royalties
received for our patented technology that we license to other electronics
companies. The semiconductor products in our Other segment include
DLP® products (primarily used in projectors to create high-definition images),
reduced-instruction set computing (RISC) microprocessors (designed to provide
very fast computing and often implemented in servers) and custom semiconductors
known as application-specific integrated circuits (ASICs). This
segment generated about 20 percent of our revenue in 2009.
Applications for our
products
The table
below lists the major end markets that use our products and the approximate
percentage of our product revenue that the market represents. The
chart also lists the most frequent applications and our products used within
these key markets.
End
Market
|
Applications
|
TI
Products
|
Communications
(45%
of product
revenue)
|
Phones
and infrastructure equipment
Mobile
connectivity solutions (including wireless LAN, global positioning
systems, Bluetooth®)
|
Analog,
Embedded Processing, Wireless, Other
|
|
|
|
Computing
(23%
of product
revenue)
|
Printers
Hard
disk drives
Monitors
and projectors
Notebooks,
netbooks, desktop computers and servers
|
Analog,
Embedded Processing, Other
|
|
|
|
Industrial
(11%
of product
revenue)
|
Digital
power controls:
Switch
mode power supplies
Uninterruptible
power supplies
Motor
controls:
Heating/ventilation/air
conditioning
Industrial
control motor drives
Power
tools
Printers/copiers
Security:
Biometrics
(fingerprint identification and authentication)
Intelligent
sensing (smoke and glass-breakage detection)
Video
analytics (surveillance)
|
Analog,
Embedded Processing, Other
|
|
|
|
Consumer
Electronics
(11%
of product
revenue)
|
Digital
cameras, gaming and audio/visual equipment
Medical
(personal and portable medical devices, medical imagery)
Portable
and car audio
Home
appliances
Personal
navigation devices
eBook
readers
|
Analog,
Embedded Processing, Wireless, Other
|
|
|
|
Automotive
(6%
of product
revenue)
|
Body
systems
Chassis
systems
Driver
information/telemetrics
Entertainment
Powertrain
Safety
systems
Security
systems
|
Analog,
Embedded Processing, Other
|
|
|
|
Education
(4%
of product
revenue)
|
Handheld
graphing and scientific calculators
Educational
software
|
Other
|
Market
Characteristics
Product
cycle
The
global semiconductor market is characterized by constant, though generally
incremental, advances in product designs and manufacturing
processes. Semiconductor prices and manufacturing costs tend to
decline over time as manufacturing processes and product life cycles
mature. Typically, new chips are produced in limited quantities at
first and then ramp to high-volume production over time.
Market
cycle
The
“semiconductor cycle” is an important concept that refers to the ebb and flow of
supply. The semiconductor market historically has been characterized
by periods of tight supply caused by strengthening demand and/or insufficient
manufacturing capacity, followed by periods of surplus inventory caused by
weakening demand and/or excess manufacturing capacity. This cycle is
affected by the significant time and money required to build and maintain
semiconductor manufacturing facilities.
Seasonality
Our
revenue and operating results are subject to some seasonal
variation. Our semiconductor sales generally are seasonally weaker in
the first quarter than in other quarters, particularly for products sold into
cell phones and other consumer electronics devices, which have stronger sales
later in the year as manufacturers prepare for the major holiday selling
seasons. Calculator revenue is tied to the U.S. back-to-school season
and is therefore at its highest in the second and third
quarters. Royalty revenue is not always uniform or predictable, in
part due to the performance of our licensees and in part due to the timing of
new license agreements or the expiration and renewal of existing
agreements.
Competitive
landscape
In each
segment, we face significant global competition from numerous large and small
companies, including both broad-based suppliers and niche
suppliers. We believe that competitive performance in the
semiconductor market generally depends on several factors, including the breadth
of a company’s product line, technological innovation, technical support,
customer service, quality, reliability, price and scale. With
expertise in both analog and embedded processing , we believe we are capable of
providing best-in-class solutions and system-level knowledge to help our
customers create more advanced systems and products and bring their products to
market sooner.
The
primary competitive factors for our Analog products include design proficiency,
a diverse product portfolio to meet wide-ranging customer needs, manufacturing
process technologies that provide differentiated levels of performance and
manufacturing expertise. Our primary Analog competitors include
Analog Devices, Inc.; Freescale Semiconductor, Inc.; Infineon Technologies AG;
Intersil Corporation; Linear Technology Corporation; Maxim Integrated Products,
Inc.; National Semiconductor Corporation; NXP B.V.; Richtek Technology
Corporation; and STMicroelectronics NV.
The
primary competitive factors for our Embedded Processing products are the ability
to design and cost-effectively manufacture products, system-level knowledge
about targeted end markets, installed base of software, software expertise,
applications support and a product’s performance and power
characteristics. Primary competitors of our Embedded Processing
segment include Atmel Corporation; Freescale Semiconductor, Inc.; Microchip
Technology, Inc.; NEC Electronics; Renesas Technology Corp.; and
STMicroelectronics NV.
The
primary competitive factors for our Wireless products are the ability to design
and cost-effectively manufacture products, system-level knowledge about targeted
end markets, installed base of software, software expertise, applications
support and a product’s performance and power
characteristics. Primary Wireless competitors include Broadcom Corp.;
CSR plc; Freescale Semiconductor, Inc.; Infineon Technologies AG; Intel
Corporation; Marvell Technology Group, Ltd.; NVIDIA Corporation; QUALCOMM
Incorporated and ST-Ericsson.
Manufacturing
Semiconductor
manufacturing begins with a sequence of photo-lithographic and chemical
processing steps that fabricate a number of semiconductor devices on a thin
silicon wafer. Each device on the wafer is tested and the wafer is
cut into pieces called chips. Each chip is assembled into a package
that then may be retested. The entire process typically requires
between 12 and 18 weeks and takes place in highly specialized
facilities.
We own
and operate semiconductor manufacturing facilities in North America, Asia and
Europe. These include both high-volume wafer fabrication and
assembly/test facilities. Our facilities require substantial
investment to construct and are largely fixed-cost assets once in
operation. Because we own much of our manufacturing capacity, a
significant portion of our operating cost is fixed. In general, these
fixed costs do not decline with reductions in customer demand or utilization of
capacity, potentially hurting our profit margins. Conversely, as
product demand rises and factory utilization increases, the fixed costs are
spread over increased output, potentially benefiting our profit
margins.
The cost
and lifespan of the equipment and processes we use to manufacture semiconductors
varies by product. Our Analog products and most of our Embedded
Processing products can be manufactured using older, less expensive equipment
than is needed for manufacturing advanced logic products, such as our Wireless
products. Advanced logic wafer manufacturing continually requires new
and expensive processes and equipment. In contrast, the processes and
equipment required for manufacturing our Analog products and most of our
Embedded Processing products do not have this requirement.
To
supplement our internal wafer fabrication capacity and maximize our
responsiveness to customer demand and return on capital expenditures, our wafer
manufacturing strategy utilizes the capacity of outside suppliers, commonly
known as foundries. Our strategy involves installing internal wafer
fabrication capacity to a level we believe will remain fully utilized over the
equipment’s useful lifetime and then outsourcing remaining capacity needs to
foundries. In 2009, external foundries provided about 55 percent of
the fabricated wafers for our advanced logic manufacturing needs. We
expect the proportion of our advanced logic wafers provided by foundries will
increase over time. We expect to maintain sufficient internal wafer
fabrication capacity to meet the vast majority of our analog production
needs.
In
addition to using foundries to supplement our wafer fabrication capacity, we
selectively use subcontractors to supplement our assembly/test
capacity. We generally use subcontractors for assembly/test of
products that would be less cost-efficient to complete in-house (e.g.,
relatively low-volume products that are unlikely to keep internal equipment
fully utilized), or when demand temporarily exceeds our internal
capacity. We believe we often have a cost advantage in maintaining
internal assembly/test capacity.
Our
internal/external manufacturing strategy reduces the level of our required
capital expenditures, and thereby reduces our subsequent levels of depreciation
below what it would be if we sourced all manufacturing
internally. Consequently, we experience less fluctuation in our
profit margins due to changing product demand, and lower cash requirements for
expanding and updating our manufacturing capabilities.
In 2009,
to expand our existing wafer fabrication capacity, we began installing equipment
in the industry’s first 300-millimeter analog wafer factory, located in
Richardson, Texas, and are currently qualifying for production. We
also opened a new assembly/test facility in the Philippines to significantly
increase our assembly/test capacity.
Inventory
Our
inventory practices differ by product, but we generally maintain inventory
levels that are consistent with our expectations of customer
demand. Because of the longer product life cycles of standard
products and their inherently lower risk of obsolescence, we generally carry
more of those products than custom products. Additionally, we
sometimes maintain standard-product inventory in unfinished wafer form, allowing
greater flexibility to meet final package and test configurations.
As a
result of two multi-year trends, in general we expect to carry higher levels of
inventory relative to our revenue expectations (commonly viewed by investors as
days of inventory) than in past years. First, standard products have
become a larger part of our portfolio. Second, we have increased
consignment programs for our largest customers and some distributors and, as a
result, we now carry more inventory on average than in the past in order to
service the needs of these customers.
Design
Centers
Our
design centers provide design, engineering and product application support as
well as after-sales customer service. The design centers are
strategically located around the world to take advantage of key technical and
engineering talent and proximity to key customers.
Customers
Our
products are sold to original equipment manufacturers (OEMs), original design
manufacturers (ODMs), contract manufacturers and distributors. (An
OEM designs and sells products under its own brand that it manufactures in-house
or has manufactured by others. An ODM designs and manufactures
products for other companies, which then sell those products under their own
brand.) Our largest single customer in 2009 was an OEM, the Nokia
group of companies. Sales to Nokia were about 20 percent of our
revenue in 2009, and a majority of this revenue was in our Wireless
segment.
Sales
and Distribution
We market
and sell our semiconductor products through a direct sales force, distributors
and authorized third-party sales representatives. We have sales or
marketing offices in over 30 countries worldwide and have expanded our sales
networks in the emerging markets of China, India and Eastern Europe over the
last few years. Distributors located around the world account for
about 30 percent of our revenue. Our distributors maintain an
inventory of our products and sell directly to a wide range of
customers. They also sell products from our
competitors. Our distribution network holds a mix of
distributor-owned and TI-consigned inventory. Over time, we expect
this mix will shift more toward consignment. We sell our calculator
products primarily through retailers and instructional dealers.
Acquisitions,
Divestitures and Investments
From time
to time we consider acquisitions and divestitures that may strengthen or better
focus our business portfolio. We also make investments directly or
indirectly in private companies. Investments are focused primarily on
next-generation technologies and markets strategic to us.
Backlog
We define
backlog as of a particular date as firm purchase orders with a
customer-requested delivery date within a specified length of
time. As customer requirements and industry conditions change, orders
may be, under certain circumstances, subject to cancellation or modification of
terms such as pricing, quantity or delivery date. Customer order
placement practices continually evolve based on customers’ individual business
needs and capabilities, as well as industry supply and capacity
considerations. Accordingly, our backlog at any particular date may
not be indicative of revenue for any future period. Our backlog of
orders was $1.79 billion at December 31, 2009, and $0.86 billion at December 31,
2008.
Raw
Materials
We
purchase materials, parts and supplies from a number of suppliers. In
some cases we purchase such items from sole source suppliers. The
materials, parts and supplies essential to our business are generally available
at present, and we believe that such materials, parts and supplies will be
available in the foreseeable future.
Intellectual
Property
We own
many patents, and have many patent applications pending, in the United States
and other countries in fields relating to our business. We have
developed a strong, broad-based patent portfolio and continually add patents to
that portfolio. We also have agreements with numerous companies
involving license rights and anticipate that other license agreements may be
negotiated in the future. In general, our license agreements have
multi-year terms and may be renewed after renegotiation.
Our
semiconductor patent portfolio is an ongoing contributor to our
revenue. We do not consider our business materially dependent upon
any one patent or patent license, although taken as a whole, our rights and the
products made and sold under patents and patent licenses are important to our
business.
We often
participate in industry initiatives to set technical standards. Our
competitors may also participate in the same
initiatives. Participation in these initiatives may require us to
license our patents to other companies.
We own
trademarks that are used in the conduct of our business. These
trademarks are valuable assets, the most important of which are “Texas
Instruments” and our corporate monogram. Other valuable trademarks
include OMAPTM and
DLP®.
Research
and Development
Our
primary area of R&D investment is Analog and Embedded Processing
products. We conduct most of our R&D
internally. However, we also closely engage with a wide range of
universities and select external industry consortia, and we collaborate with our
foundry suppliers on semiconductor manufacturing technology.
From time
to time we may terminate R&D projects before completion or decide not to
manufacture and sell a developed product. We do not expect that all
of our R&D projects will result in products that are ultimately released for
sale, or that our projects will contribute significant revenue until at least a
few years following completion.
Our
R&D expense was $1.48 billion in 2009, compared with $1.94 billion in 2008
and $2.14 billion in 2007. The recent decrease in our R&D expense
is largely the result of our decisions to discontinue R&D for advanced logic
manufacturing and Wireless baseband products.
Executive
Officers of the Registrant
The
following is an alphabetical list of the names and ages of the executive
officers of the company and the positions or offices with the company presently
held by each person named:
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
Stephen
A. Anderson
|
|
48
|
|
Senior
Vice President
|
R.
Gregory Delagi
|
|
47
|
|
Senior
Vice President
|
Arthur
L. George, Jr.
|
|
48
|
|
Senior
Vice President
|
Michael
J. Hames
|
|
51
|
|
Senior
Vice President
|
David
K. Heacock
|
|
49
|
|
Senior
Vice President
|
Joseph
F. Hubach
|
|
52
|
|
Senior
Vice President, Secretary and General Counsel
|
Melendy
E. Lovett
|
|
51
|
|
Senior
Vice President (President, Education Technology)
|
Gregg
A. Lowe
|
|
47
|
|
Senior
Vice President
|
Kevin
P. March
|
|
52
|
|
Senior
Vice President and Chief Financial Officer
|
Robert
K. Novak
|
|
44
|
|
Senior
Vice President
|
Kevin
J. Ritchie
|
|
53
|
|
Senior
Vice President
|
John
J. Szczsponik, Jr.
|
|
49
|
|
Senior
Vice President
|
Richard
K. Templeton
|
|
51
|
|
Director;
Chairman of the Board; President and Chief Executive
Officer
|
Teresa
L. West
|
|
49
|
|
Senior
Vice President
|
Darla
H. Whitaker
|
|
44
|
|
Senior
Vice President
|
The term
of office of the above-listed officers is from the date of their election until
their successor shall have been elected and qualified. All executive
officers of the company have been employees of the company for more than five
years. Mses. Lovett and West and Messrs. Hames, Hubach, Lowe, March,
Ritchie and Templeton have served as executive officers of the company for more
than five years. Mr. George and Ms. Whitaker became executive
officers of the company in 2006. Messrs. Delagi and Heacock became
executive officers of the company in 2007. Messrs. Anderson and Novak
became executive officers of the company in 2008. Mr. Szczsponik
became an executive officer of the company in 2009.
Employees
At
December 31, 2009, we had 26,584 employees.
Available
Information
Our
Internet address is www.ti.com. Information on our web site is not a
part of this report. We make available, free of charge, through our
investor relations web site our reports on Forms 10-K, 10-Q and 8-K, and
amendments to those reports, as soon as reasonably practicable after they are
filed with the SEC. Also available through the TI investor relations
web site are reports filed by our directors and executive officers on Forms 3, 4
and 5, and amendments to those reports.
Available
on our web site at www.ti.com/corporategovernance are: (i) our Corporate
Governance Guidelines; (ii) charters for the Audit, Compensation, and Governance
and Stockholder Relations Committees of our board of directors; (iii) our Code
of Business Conduct; and (iv) our Code of Ethics for TI Chief Executive Officer
and Senior Financial Officers. Stockholders may request copies of
these documents free of charge by writing to Texas Instruments Incorporated,
P.O. Box 660199, MS 8657, Dallas, Texas, 75266-0199, Attention: Investor
Relations.
You
should read the following Risk Factors in conjunction with the factors discussed
elsewhere in this and other of our filings with the Securities and Exchange
Commission (SEC) and in materials incorporated by reference in these
filings. These Risk Factors are intended to highlight certain factors
that may affect our financial condition and results of operations and are not
meant to be an exhaustive discussion of risks that apply to companies like TI
with broad international operations. Like other companies, we are
susceptible to macroeconomic downturns in the United States or abroad that may
affect the general economic climate and our performance and the performance of
our customers. Similarly, the price of our securities is subject to
volatility due to fluctuations in general market conditions, actual financial
results that do not meet our and/or the investment community’s expectations,
changes in our and/or the investment community’s expectations for our future
results and other factors, many of which are beyond our
control.
Cyclicality in the
Semiconductor Market May Affect Our Performance.
Semiconductor
products are the principal source of our revenue. The semiconductor
market historically has been cyclical and subject to significant and often rapid
increases and decreases in product demand. These changes could have
adverse effects on our results of operations, and on the market price of our
securities. The results of our operations may be adversely affected
in the future if demand for our semiconductors decreases or if this market or
key end-equipment markets grow at a significantly slower pace than management
expects.
Our Margins May Vary over
Time.
Our
profit margins may be adversely affected in the future by a number of factors,
including decreases in our shipment volume, reductions in, or obsolescence of
our inventory and shifts in our product mix. In addition, the highly
competitive market environment in which we operate might adversely affect
pricing for our products. Because we own much of our manufacturing
capacity, a significant portion of our operating costs is fixed. In
general, these fixed costs do not decline with reductions in customer demand or
utilization of manufacturing capacity, and can adversely affect profit margins
as a result.
The Technology Industry Is
Characterized by Rapid Technological Change That Requires Us to Develop New
Technologies and Products.
Our
results of operations depend in part upon our ability to successfully develop,
manufacture and market innovative products in a rapidly changing technological
environment. We require significant capital to develop new
technologies and products to meet changing customer demands that, in turn, may
result in shortened product life cycles. Moreover, expenditures for
technology and product development are generally made before the commercial
viability for such developments can be assured. As a result, there
can be no assurance that we will successfully develop and market these new
products. There also is no assurance that the products we do develop
and market will be well received by customers, nor that we will realize a return
on the capital expended to develop such products.
We Face Substantial
Competition That Requires Us to Respond Rapidly to Product Development and
Pricing Pressures.
We face
intense technological and pricing competition in the markets in which we
operate. We expect this competition will continue to increase from
large competitors and from smaller competitors serving niche
markets. Certain of our competitors possess sufficient financial,
technical and management resources to develop and market products that may
compete favorably against our products. The price and product
development pressures that result from competition may lead to reduced profit
margins and lost business opportunities in the event that we are unable to match
the price declines or cost efficiencies, or meet the technological, product,
support, software or manufacturing advancements of our competitors.
Our Performance Depends in
Part on Our Ability to Enforce Our Intellectual Property Rights and to Develop
and License New Intellectual Property.
Access to
worldwide markets depends in part on the continued strength of our intellectual
property portfolio. There can be no assurance that, as our business
expands into new areas, we will be able to independently develop the technology,
software or know-how necessary to conduct our business or that we can do so
without infringing the intellectual property rights of others. To the
extent that we have to rely on licensed technology from others, there can be no
assurance that we will be able to obtain licenses at all or on terms we consider
reasonable. The lack of a necessary license could expose us to claims
for damages and/or injunction from third parties, as well as claims for
indemnification by our customers in instances where we have a contractual or
other legal obligation to indemnify them against damages resulting from
infringement claims.
With
regard to our own intellectual property, we actively enforce and protect our
rights. However, there can be no assurance that our efforts will be
adequate to prevent the misappropriation or improper use of our protected
technology.
We
benefit from royalty revenue generated from various patent license
agreements. The amount of such revenue depends in part on
negotiations with new licensees, and with existing licensees in connection with
renewals of their licenses. There is no guarantee that such
negotiations will be successful. Future royalty revenue also depends
on the strength and enforceability of our patent portfolio and our enforcement
efforts, and on the sales and financial stability of our
licensees. Additionally, consolidation of our licensees may
negatively affect our royalty revenue. Royalty revenue from licensees
is not always uniform or predictable, in part due to the performance of our
licensees and in part due to the timing of new license agreements or the
expiration and renewal of existing agreements.
A Decline in Demand in
Certain End-User Markets Could Have a Material Adverse Effect on the Demand for
Our Products and Results of Operations.
Our
customer base includes companies in a wide range of industries, but we generate
a significant amount of revenue from sales to customers in the communications-
and computer-related industries. Within these industries, a large
portion of our revenue is generated from sales to customers in the cell phone,
personal computer and communications infrastructure markets. Decline
in one or several of these end-user markets could have a material adverse effect
on the demand for our products and our results of operations and financial
condition.
Our Global Manufacturing,
Design and Sales Activities Subject Us to Risks Associated with Legal,
Political, Economic or Other Changes.
We have
facilities in more than 30 countries worldwide, and in 2009 about 90 percent of
our revenue came from sales to locations outside the United
States. Operating internationally exposes us to changes in export
controls and other laws or policies, as well as political and economic
conditions, security risks, health conditions and possible disruptions in
transportation networks of the various countries in which we
operate. Any of these could result in an adverse effect on our
business operations and our financial results. Additionally, in
periods when the U.S. dollar significantly fluctuates in relation to the
non-U.S. currencies in which we transact business, the remeasurement of non-U.S.
dollar transactions can have an adverse effect on our results of operations and
financial condition.
Our Results of Operations
Could be Affected by Natural Events in the Locations in Which We or Our
Customers or Suppliers Operate.
We have
manufacturing and other operations in locations subject to natural occurrences
such as severe weather and geological events that could disrupt
operations. In addition, our suppliers and customers also have
operations in such locations. A natural disaster that results in a
prolonged disruption to our operations, or the operations of our customers or
suppliers, may adversely affect our results and financial
condition.
The Loss of or Significant
Curtailment of Purchases by Any of Our Largest Customers Could Adversely Affect
Our Results of Operations.
While we
generate revenue from thousands of customers worldwide, the loss of or
significant curtailment of purchases by one or more of our top customers
(including curtailments due to a change in the design or manufacturing sourcing
policies or practices of these customers, or the timing of customer or
distributor inventory adjustments) may adversely affect our results of
operations and financial condition.
Incorrect Forecasts of
Customer Demand Could Adversely Affect Our Results of
Operations.
Our
ability to match inventory and production with the product mix needed to fill
orders may affect our ability to meet a quarter’s revenue
forecast. In addition, when responding to customers’ requests for
shorter shipment lead times, we manufacture products based on forecasts of
customers’ demands. These forecasts are based on multiple
assumptions. If we inaccurately forecast customer demand, we may hold
inadequate, excess or obsolete inventory that would reduce our profit margins
and adversely affect our results of operations and financial
condition.
Our Performance Depends on
the Availability and Cost of Raw Materials, Utilities, Critical Manufacturing
Equipment, Manufacturing Processes and Third-Party Manufacturing
Services.
Our
manufacturing processes and critical manufacturing equipment require that
certain key raw materials and utilities be available. Limited or
delayed access to and high costs of these items could adversely affect our
results of operations. Additionally, the inability to timely
implement new manufacturing technologies or install manufacturing equipment
could adversely affect our results of operations. We subcontract a
portion of our wafer fabrication and assembly and testing of our integrated
circuits. We also depend on third parties to provide advanced logic
manufacturing process technology development. A limited number of
third parties perform these functions, and we do not have long-term contracts
with all of them. Reliance on these third parties involves risks,
including possible shortages of capacity in periods of high demand, the third
parties’ inability to develop and deliver advanced logic manufacturing process
technology in a timely, cost effective and appropriate manner and the
possibility of third parties imposing increased costs on us.
Our Results of Operations
Could be Affected by Changes in Tax-Related Matters.
We have
facilities in more than 30 countries worldwide and as a result are subject to
taxation and audit by a number of taxing authorities. Tax rates vary
among the jurisdictions in which we operate. Our results of
operations could be affected by market opportunities or decisions we make that
cause us to increase or decrease operations in one or more countries, or by
changes in applicable tax rates or audits by the taxing authorities in countries
in which we operate.
In
addition, we are subject to laws and regulations in various jurisdictions that
determine how much profit has been earned and when it is subject to taxation in
that jurisdiction. Changes in these laws and regulations could affect
the locations where we are deemed to earn income, which could in turn affect our
results of operations. We have deferred tax assets on our balance
sheet. Changes in applicable tax laws and regulations or in our
business performance could affect our ability to realize those deferred tax
assets, which could also affect our results of operations. Each
quarter we forecast our tax liability based on our forecast of our performance
for the year. If that performance forecast changes, our forecasted
tax liability will change.
Our Operations Could be
Affected by Changes in Environmental, Safety and Health Laws and
Regulations
We are
subject to environmental, safety and health laws and regulations in the
jurisdictions in which we operate our business, particularly those in which we
manufacture our products. If we fail to comply with these laws and
regulations, we could be subject to fines, penalties or other legal
liability. Furthermore, should these laws and regulations be amended
or expanded, or new ones enacted, we could incur materially greater compliance
costs or restrictions on our ability to manufacture our products and operate our
business, particularly if such laws and regulations: require the use of
abatement equipment beyond what we currently employ; require the addition or
elimination of a raw material or process to or from our current manufacturing
processes; or impose costs, fees or reporting requirements on the direct or
indirect use of energy, or of materials or gases used or emitted into the
environment, in connection with the manufacture of our
products. There can be no assurance that in all instances a
substitute for a prohibited raw material or process would be available, or be
available at reasonable cost.
Our Results of Operations
Could be Affected by Changes in the Financial Markets.
We
maintain bank accounts, a multi-year revolving credit agreement, and a portfolio
of investments to support the financing needs of the company. Our
ability to fund our daily operations, invest in our business, and make strategic
acquisitions requires continuous access to our bank and investment accounts, as
well as access to our bank credit lines that support commercial paper borrowings
and provide additional liquidity through short-term bank loans. If we
are unable to access these accounts and credit lines (for example, due to
instability in the financial markets), our results of operations and financial
condition could be adversely affected. Similarly, such circumstances
could also restrict our ability to access the capital markets or redeem our
investments. If our customers or suppliers are unable to access
credit markets and other sources of needed liquidity, we may receive fewer
customer orders or be unable to obtain needed supplies, collect accounts
receivable or access needed technology.
Material Impairments of Our
Goodwill Could Adversely Affect Our Results of Operations
Charges
associated with impairments of our goodwill could adversely affect our financial
condition and results of operations. Goodwill is reviewed for
impairment annually or more frequently if certain impairment indicators arise or
upon the disposition of a significant portion of a reporting
unit. The review compares the fair value for each reporting unit to
its associated book value including goodwill. A decrease in the fair
value associated with a reporting unit resulting from, among other things,
unfavorable changes in the estimated future discounted cash flow of the
reporting unit, may require us to recognize impairments of
goodwill.
Our Results of Operations
Could be Affected by Warranty Claims, Product Recalls or Product
Liability.
We could
be subject to warranty or product liability claims or claims based on epidemic
or delivery failures that could lead to significant expenses as we defend such
claims or pay damage awards. The risk of a significant claim is
generally greater for products used in health and safety
applications. In the event of a warranty claim, we may also incur
costs if we decide to compensate the affected customer or end
consumer. We maintain product liability insurance, but there is no
guarantee that such insurance will be available or adequate to protect against
all such claims. In addition, it is possible for one of our customers
to recall a product containing a TI part. In such instances, we may
incur costs and expenses relating to the recall. Costs or payments we
may make in connection with warranty, epidemic failure and delivery claims or
product recalls may adversely affect our results of operations and financial
condition.
Our Continued Success
Depends in Part on Our Ability to Retain and Recruit a Sufficient Number of
Qualified Employees in a Competitive Environment.
Our
continued success depends in part on the retention and recruitment of skilled
personnel, including technical, marketing, management and staff
personnel. There can be no assurance that we will be able to
successfully retain and recruit the key personnel that we require.
ITEM
1B.
|
Unresolved
Staff Comments.
|
Not
applicable.
Our
principal executive offices are located at 12500 TI Boulevard, Dallas,
Texas. The following table indicates the general location of our
principal manufacturing and design operations and the reportable segments that
make major use of them. Except as otherwise indicated, we own these
facilities.
|
Analog
|
Embedded Processing
|
Wireless
|
Dallas,
Texas
|
X
|
X
|
X
|
Sherman,
Texas(1)
|
X
|
|
|
Houston,
Texas
|
X
|
X
|
|
Miho,
Japan
|
X
|
X
|
X
|
Kuala
Lumpur, Malaysia(1)
|
X
|
X
|
|
Freising,
Germany
|
X
|
X
|
X
|
Baguio,
Philippines(1)
|
X
|
X
|
X
|
Taipei,
Taiwan(1)
|
X
|
X
|
X
|
Hiji,
Japan(1)
|
X
|
X
|
X
|
Tucson,
Arizona(1)
|
X
|
|
|
Bangalore,
India(1)
|
X
|
X
|
X
|
Nice,
France(1)
|
X
|
|
X
|
Aguascalientes,
Mexico(2)
|
X
|
|
|
Pampanga
(Clark), Philippines(1)
|
X
|
X
|
X
|
Tokyo,
Japan(2)
|
X
|
X
|
X
|
_______
(1)
|
Portions
of the facilities are leased and
owned.
|
Our
facilities in the United States contained approximately 14.1 million square feet
at December 31, 2009, of which approximately 1.7 million square feet were
leased. Our facilities outside the United States contained
approximately 6.8 million square feet at December 31, 2009, of which
approximately 1.5 million square feet were leased.
At the
end of 2009, we occupied substantially all of the space in our
facilities.
Leases
covering our currently occupied leased facilities expire at varying dates
generally within the next 7 years. We believe our current properties
are suitable and adequate for both their intended purpose and our current and
foreseeable future needs.
ITEM
3.
|
Legal
Proceedings.
|
We are
involved in various inquiries and proceedings regarding laws and regulations
related to the protection of the environment. These matters involve
various parties, including government agencies and, in certain cases, other
potentially responsible parties. Although the factual situations and
the progress of each of these matters differ, we believe that the amount of our
liability, if any, will not have a material adverse effect upon our financial
condition, results of operations or liquidity.
The
Internal Revenue Code requires that companies disclose in their Form 10-K
whether they have been required to pay penalties to the Internal Revenue Service
for certain transactions that have been identified by the IRS as abusive or that
have a significant tax avoidance purpose. We have not been required
to pay any such penalties.
ITEM
4.
|
Submission
of Matters to a Vote of Security
Holders.
|
Not
applicable.
PART
II
ITEM
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
|
The
information contained under the caption “Common stock prices and dividends” on
page 47 of TI’s 2009 annual report to stockholders, and the information
concerning the number of stockholders of record at December 31, 2009, on
page 34 of such annual report are incorporated herein by reference to such
annual report.
The
following table shows our repurchases of our common stock in the fourth quarter
of 2009:
ISSUER
PURCHASES OF EQUITY SECURITIES
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Total
Number
of
Shares
Purchased
|
|
|
Average
Price
Paid
per
Share
|
|
|
Total
Number
of
Shares
Purchased
as
Part
of
Publicly
Announced
Plans
or
Programs
|
|
|
Approximate
Dollar
Value
of
Shares that
May
Yet Be
Purchased
Under
the
Plans
or
Programs
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
October
1 through October 31, 2009
|
|
14,773,300 |
|
|
$23.68 |
|
|
14,773,300 |
|
|
$2.60
billion
|
November
1 through November 30, 2009
|
|
70,000 |
|
|
$18.67 |
|
|
70,000 |
|
|
$2.60
billion
|
December
1 through December 31, 2009
|
|
220,000 |
|
|
$18.70 |
|
|
220,000 |
|
|
$2.59
billion
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
15,063,300 |
|
|
$23.59 |
|
|
15,063,300(2)(3) |
|
|
$2.59
billion(3)
|
_______
(1)
|
All
purchases during the quarter were made under the authorization from our
board of directors to purchase up to $5 billion of additional shares of TI
common stock announced on September 21, 2007. No expiration
date has been specified for this
authorization.
|
(2)
|
The
purchases in October were made through open-market
purchases. The purchases in November and December were made
through a privately negotiated forward purchase contract with a
non-affiliated financial institution. The forward purchase
contract was designed to minimize the impact on our earnings from the
effect of stock market value fluctuations on the portion of our deferred
compensation obligations denominated in TI
stock.
|
(3)
|
The
table includes the purchase of 220,000 shares for which trades were
settled in the first three business days of January
2010.
|
ITEM
6.
|
Selected
Financial Data.
|
The
“Summary of selected financial data” for the years 2005 through 2009, which
appears on page 34 of TI’s 2009 annual report to stockholders, is
incorporated herein by reference to such annual report.
ITEM
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
|
The
information contained under the caption “Management’s discussion and analysis of
financial condition and results of operations” on pages 35 through 45
of TI’s 2009 annual report to stockholders is incorporated herein by reference
to such annual report.
ITEM
7A.
|
Quantitative
and Qualitative Disclosures about Market
Risk.
|
The
information concerning market risk contained on page 45 of TI’s 2009 annual
report to stockholders is incorporated herein by reference to such annual
report.
ITEM
8.
|
Financial
Statements and Supplementary Data.
|
The
consolidated financial statements of the company at December 31, 2009 and 2008,
and for each of the three years in the period ended December 31, 2009, and the
report thereon of the independent registered public accounting firm, on pages
2 through 31 of TI’s 2009 annual report to stockholders, are incorporated
herein by reference to such annual report.
The
“Quarterly financial data” on page 46 of TI’s 2009 annual report to
stockholders is also incorporated herein by reference to such annual
report.
ITEM
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure.
|
Not
applicable.
ITEM
9A.
|
Controls
and Procedures.
|
Disclosure Controls and
Procedures
An
evaluation as of the end of the period covered by this report was carried out
under the supervision and with the participation of TI's management, including
its Chief Executive Officer and Chief Financial Officer, of the effectiveness of
the design and operation of TI’s disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934). Based upon that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that those disclosure controls and procedures
were effective.
Internal Control over
Financial Reporting
Management’s
assessment of our internal control over financial reporting is contained in the
report by management on internal control over financial reporting on
page 32 of our 2009 annual report to stockholders and is incorporated
herein by reference to such annual report.
The
report of independent registered public accounting firm on internal control over
financial reporting opining on our internal control over financial reporting is
contained on page 33 of our 2009 annual report to stockholders and is
incorporated herein by reference to such annual report.
ITEM
9B.
|
Other
Information.
|
Not
applicable.
PART
III
ITEM
10.
|
Directors,
Executive Officers and Corporate
Governance.
|
The
information with respect to directors’ names, ages, positions, term of office
and periods of service, which is contained under the caption “Election of
directors” in our proxy statement for the 2010 annual meeting of stockholders,
is incorporated herein by reference to such proxy statement.
The
information with respect to directors’ business experience, which is contained
under the caption “Board diversity and nominee qualifications” in our proxy
statement for the 2010 annual meeting of stockholders, is incorporated herein by
reference to such proxy statement.
The
information with respect to the company’s audit committee financial expert
contained under the caption “Board organization” in our proxy statement for the
2010 annual meeting of stockholders is incorporated herein by reference to such
proxy statement.
The
information with respect to Section 16(a) beneficial ownership reporting
compliance contained under the caption of the same name in our proxy statement
for the 2010 annual meeting of stockholders is incorporated herein by reference
to such proxy statement.
A list of
our executive officers and their biographical information appears in Part I,
Item 1 of this report.
We have
adopted the Code of Ethics for TI Chief Executive Officer and Senior Financial
Officers. A copy of the Code can be found on our web site at
www.ti.com/corporategovernance. We intend to satisfy the disclosure
requirements of the SEC regarding amendments to, or waivers from, the Code by
posting such information on the same web site.
Audit
Committee
We have a
separately designated standing audit committee established in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The
following directors are members of TI’s Audit Committee: Pamela H.
Patsley (Chair), David L. Boren, Stephen P. MacMillan and Wayne R.
Sanders.
ITEM
11.
|
Executive
Compensation.
|
The
information contained under the captions “Director compensation” and “Executive
compensation” in our proxy statement for the 2010 annual meeting of stockholders
is incorporated herein by reference to such proxy statement.
The
information contained under the caption “Compensation committee interlocks and
insider participation” in our proxy statement for the 2010 annual meeting of
stockholders is incorporated herein by reference to such proxy
statement.
ITEM
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
|
Equity Compensation Plan
Information
The
following table sets forth information about the company’s equity compensation
plans as of December 31, 2009:
Plan
Category
|
|
Number
of Securities
to
be Issued Upon
Exercise
of
Outstanding
Options,
Warrants
and Rights
|
|
|
Weighted-Average
Exercise
Price of
Outstanding
Options,
Warrants
and Rights
|
|
|
Number
of Securities
Remaining
Available
for
Future
Issuance
under
Equity
Compensation
Plans (excluding securities reflected in column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity
compensation plans approved by security holders
|
|
108,126,713 |
(1) |
|
$
34.01 |
(2) |
|
111,477,709 |
(3) |
Equity
compensation plans not approved by security holders
|
|
81,713,825 |
(4) |
|
$
25.51 |
(2) |
|
0 |
|
Total
|
|
189,840,538 |
(5) |
|
$
30.50 |
|
|
111,477,709 |
|
(1)
|
Includes
shares of TI common stock to be issued under the Texas Instruments 2009
Long-Term Incentive Plan and predecessor plans, the Texas Instruments 2009
Director Compensation Plan and the TI Employees 2005 Stock Purchase
Plan.
|
Also
includes the following:
|
Ÿ
|
957,073
shares of TI common stock to be issued upon exercise of outstanding
options originally granted under the Burr-Brown Corporation 1993 Stock
Incentive Plan, a plan approved by the stockholders of Burr-Brown
Corporation. The options were assumed by the company in connection with
the acquisition of Burr-Brown Corporation;
and
|
|
Ÿ
|
10,391
shares of TI common stock to be issued upon exercise of outstanding
options originally granted under the Radia Communications, Inc. 2000 Stock
Option/Stock Issuance Plan, a plan approved by the stockholders of Radia
Communications, Inc. The options were assumed by the company in connection
with the acquisition of Radia.
|
(2)
|
Restricted
stock units and stock units credited to directors’ deferred compensation
accounts are settled in shares of TI common stock on a one-for-one basis.
Accordingly, such units have been excluded for purposes of computing the
weighted-average exercise price.
|
(3)
|
Shares
of TI common stock available for issuance under the Texas Instruments 2009
Long-Term Incentive Plan, the Texas Instruments 2009 Director Compensation
Plan and the TI Employees 2005 Stock Purchase
Plan.
|
(4)
|
Includes
shares to be issued under the Texas Instruments 2003 Long-Term Incentive
Plan. This plan was replaced by the Texas Instruments 2009
Long-Term Incentive Plan, which was approved by stockholders, and no
further grants may be made under
it.
|
Also
includes shares to be issued under the Texas Instruments Directors Deferred
Compensation Plan, the Texas Instruments Restricted Stock Unit Plan for
Directors and the Texas Instruments Stock Option Plan for Non-Employee
Directors. These plans were replaced by the Texas Instruments 2003 Director
Compensation Plan, (which was replaced by the stockholder-approved 2009 Director
Compensation Plan), and no further grants may be made under them.
(5)
|
Includes
174,713,222 shares for issuance upon exercise of outstanding grants of
options, 14,409,002 shares for issuance upon vesting of outstanding grants
of restricted stock units, 579,681 shares for issuance under the TI
Employees 2005 Stock Purchase Plan and 138,633 shares for issuance in
settlement of directors’ deferred compensation
accounts.
|
Security Ownership of
Certain Beneficial Owners and Management
The
information that is contained under the captions “Security ownership of certain
beneficial owners” and “Security ownership of directors and management” in our
proxy statement for the 2010 annual meeting of stockholders is incorporated
herein by reference to such proxy statement.
ITEM
13.
|
Certain
Relationships and Related Transactions, and Director
Independence.
|
The
information contained under the caption “Related person transactions” in the
company’s proxy statement for the 2010 annual meeting of stockholders is
incorporated herein by reference to such proxy statement.
The
information contained under the caption “Director independence” in the company’s
proxy statement for the 2010 annual meeting of stockholders is incorporated
herein by reference to such proxy statement.
ITEM
14.
|
Principal
Accountant Fees and Services.
|
The
information with respect to principal accountant fees and services contained
under the caption “Proposal to ratify appointment of independent registered
public accounting firm” in our proxy statement for the 2010 annual meeting of
stockholders is incorporated herein by reference to such proxy
statement.
PART
IV
ITEM
15.
|
Exhibits
and Financial Statement Schedules.
|
(a) 1 and
2. Financial Statements and Financial Statement
Schedules:
The
financial statements are listed in the index on page 23 hereof.
3. Exhibits:
Designation
of
Exhibit
in
this
Report
|
Description
of Exhibit
|
|
|
3(a)
|
Restated
Certificate of Incorporation of the Registrant (incorporated by reference
to Exhibit 3(a) to the Registrant’s Annual Report on Form 10-K for the
year 1993).
|
|
|
3(b)
|
Certificate
of Amendment to Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3(b) to the Registrant’s Annual
Report on Form 10-K for the year 1993).
|
|
|
3(c)
|
Certificate
of Amendment to Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3(c) to the Registrant’s Annual
Report on Form 10-K for the year 1993).
|
|
|
3(d)
|
Certificate
of Amendment to Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3 to the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended June 30,
1996).
|
|
|
3(e)
|
Certificate
of Ownership merging Texas Instruments Automation Controls, Inc. into the
Registrant (incorporated by reference to Exhibit 3(e) to the Registrant’s
Annual Report on Form 10-K for the year 1993).
|
|
|
3(f)
|
Certificate
of Elimination of Designations of Preferred Stock of the Registrant
(incorporated by reference to Exhibit 3(f) to the Registrant’s Annual
Report on Form 10-K for the year 1993).
|
|
|
3(g)
|
Certificate
of Ownership and Merger merging Tiburon Systems, Inc. into the Registrant
(incorporated by reference to Exhibit 4(g) to the Registrant’s
Registration Statement No. 333-41919 on Form
S-8).
|
|
|
3(h)
|
Certificate
of Ownership and Merger merging Tartan, Inc. into the Registrant
(incorporated by reference to Exhibit 4(h) to the Registrant’s
Registration Statement No. 333-41919 on Form
S-8).
|
Designation of
Exhibit in
this Report
|
Description of Exhibit
|
|
|
3(i)
|
Certificate
of Designation relating to the Registrant’s Participating Cumulative
Preferred Stock (incorporated by reference to Exhibit 4(a) to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended September
30, 1998).
|
|
|
3(j)
|
Certificate
of Elimination of Designation of Preferred Stock of the Registrant
(incorporated by reference to Exhibit 3(j) to the Registrant’s Annual
Report on Form 10-K for the year 1998).
|
|
|
3(k)
|
Certificate
of Ownership and Merger merging Intersect Technologies, Inc. with and into
the Registrant (incorporated by reference to Exhibit 3(k) to the
Registrant’s Annual Report on Form 10-K for the year
1999).
|
|
|
3(l)
|
Certificate
of Ownership and Merger merging Soft Warehouse, Inc. with and into the
Registrant (incorporated by reference to Exhibit 3(l) to the Registrant’s
Annual Report on Form 10-K for the year 1999).
|
|
|
3(m)
|
Certificate
of Ownership and Merger merging Silicon Systems, Inc. with and into the
Registrant (incorporated by reference to Exhibit 3(m) to the Registrant’s
Annual Report on Form 10-K for the year 1999).
|
|
|
3(n)
|
Certificate
of Amendment to Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3(n) to the Registrant’s Registration Statement on
Form S-4 No. 333-41030 filed on July 7,
2000).
|
|
|
3(o)
|
Certificate
of Ownership and Merger merging Power Trends, Inc. with and into the
Registrant (incorporated by reference to Exhibit 3(o) to the Registrant’s
Annual Report on Form 10-K for the year 2001).
|
|
|
3(p)
|
Certificate
of Ownership and Merger merging Amati Communications Corporation with and
into the Registrant (incorporated by reference to Exhibit 3(p) to the
Registrant’s Annual Report on Form 10-K for the year
2001).
|
|
|
3(q)
|
Certificate
of Ownership and Merger merging Texas Instruments San Diego Incorporated
with and into the Registrant (incorporated by reference to Exhibit 3(q) to
the Registrant’s Annual Report on Form 10-K for the year
2002).
|
|
|
3(r)
|
Certificate
of Ownership and Merger merging Texas Instruments Burlington Incorporated
with and into the Registrant (incorporated by reference to Exhibit 3(r) to
the Registrant’s Annual Report on Form 10-K for the year
2003).
|
|
|
3(s)
|
Certificate
of Ownership and Merger merging Texas Instruments Automotive Sensors and
Controls San Jose Inc. with and into the Registrant (incorporated by
reference to Exhibit 3(i) to the Registrant’s Current Report on Form 8-K
dated October 31, 2004).
|
|
|
3(t)
|
Certificate
of Elimination of Series B Participating Cumulative Preferred Stock
(incorporated by reference to Exhibit 3 to the Registrant’s Current Report
on Form 8-K dated June 23, 2008).
|
|
|
3(u)
|
By-Laws
of the Registrant (incorporated by reference to Exhibit 3 to the
Registrant’s Current Report on Form 8-K dated July 18,
2008).
|
|
|
10(a)(i)
|
TI
Deferred Compensation Plan (incorporated by reference to Exhibit 10(a) to
the Registrant’s Current Report on Form 8-K dated January 1,
2009).*
|
|
|
|
Amendment
No. 1 to the TI Deferred Compensation
Plan.*
|
Designation of
Exhibit in
this Report
|
Description of Exhibit
|
|
|
10(b)(i)
|
TI
Employees Non-Qualified Pension Plan (formerly named the TI Employees
Supplemental Pension Plan) (incorporated by reference to Exhibit 10(b)(i)
to the Registrant’s Annual Report on Form 10-K for the year
1999).*
|
|
|
10(b)(ii)
|
First
Amendment to TI Employees Non-Qualified Pension Plan (formerly named the
TI Supplemental Pension Plan) (incorporated by reference to Exhibit
10(b)(ii) to the Registrant’s Annual Report on Form 10-K for the year
1999).*
|
|
|
10(b)(iii)
|
Second
Amendment to TI Employees Non-Qualified Pension Plan (formerly named the
TI Supplemental Pension Plan) (incorporated by reference to Exhibit
10(b)(iii) to the Registrant’s Annual Report on Form 10-K for the year
2002).*
|
|
|
10(b)(iv)
|
Third
Amendment to TI Employees Non-Qualified Pension Plan (formerly named the
TI Supplemental Pension Plan) (incorporated by reference to Exhibit
10(b)(iv) to the Registrant’s Annual Report on Form 10-K for the year
2002).*
|
|
|
10(b)(v)
|
Fourth
Amendment to TI Employees Non-Qualified Pension Plan (formerly named the
TI Supplemental Pension Plan) (incorporated by reference to Exhibit
10(b)(v) to the Registrant’s Annual Report on Form 10-K for the year
2003).*
|
|
|
10(b)(vi)
|
TI
Employees Non-Qualified Pension Plan II (incorporated by reference to
Exhibit 10(b) to the Registrant’s Current Report on Form 8-K dated January
1, 2009).*
|
|
|
10(c)
|
Texas
Instruments Long-Term Incentive Plan (incorporated by reference to Exhibit
10(a)(ii) to the Registrant’s Annual Report on Form 10-K for the year
1993).*
|
|
|
10(d)
|
Texas
Instruments 1996 Long-Term Incentive Plan (incorporated by reference to
Exhibit 10 to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996).*
|
|
|
10(e)
|
Texas
Instruments 2000 Long-Term Incentive Plan as amended October 16, 2008
(incorporated by reference to Exhibit 10(e) to the Registrant’s Annual
Report on Form 10-K for the year ended December 31,
2009).*
|
|
|
10(f)
|
Texas
Instruments 2003 Long-Term Incentive Plan as amended October 16, 2008
(incorporated by reference to Exhibit 10(f) to the Registrant’s Annual
Report on Form 10-K for the year ended December 31,
2009).
|
|
|
10(g)
|
Texas
Instruments Executive Officer Performance Plan as amended September 17,
2009 (incorporated by reference to Exhibit 10.2 to the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended September 30,
2009).*
|
|
|
10(h)
|
Texas
Instruments Restricted Stock Unit Plan for Directors (incorporated by
reference to Exhibit 10(e) to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended March 31, 1998).
|
|
|
10(i)
|
Texas
Instruments Directors Deferred Compensation Plan (incorporated by
reference to Exhibit 10(f) to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended March 31, 1998).
|
|
|
10(j)
|
Texas
Instruments Stock Option Plan for Non-Employee Directors (incorporated by
reference to Exhibit 10(i) to the Registrant’s Annual Report on Form 10-K
for the year 2000).
|
|
|
10(k)
|
Texas
Instruments 2003 Director Compensation Plan as amended October 16, 2008
(incorporated by reference to Exhibit 10(k) to the Registrant’s Annual
Report on Form 10-K for the year ended December 31,
2009).
|
Designation of
Exhibit in
this Report
|
Description of Exhibit
|
|
|
|
Form
of Stock Option Agreement for Executive Officers under the Texas
Instruments 2009 Long-Term Incentive Plan.*
|
|
|
|
Form
of Restricted Stock Unit Agreement under the Texas Instruments 2009
Long-Term Incentive Plan.*
|
|
|
10(n)
|
Asset
and Stock Purchase Agreement dated as of January 8, 2006, between Texas
Instruments Incorporated and S&C Purchase Corp. (incorporated by
reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K
dated January 8, 2006).
|
|
|
10(o)
|
Texas
Instruments 2009 Long-Term Incentive Plan as amended September 17, 2009
(incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended September 30,
2009).
|
|
|
|
Texas
Instruments 2009 Director Compensation Plan as amended December 3,
2009.
|
|
|
|
Portions
of Registrant’s 2009 Annual Report to Stockholders incorporated by
reference herein.
|
|
|
|
List
of Subsidiaries of the Registrant.
|
|
|
|
Consent
of Independent Registered Public Accounting Firm.
|
|
|
|
Rule
13a-14(a)/15(d)-14(a) Certification of Chief Executive
Officer.
|
|
|
|
Rule
13a-14(a)/15(d)-14(a) Certification of Chief Financial
Officer.
|
|
|
|
Section
1350 Certification of Chief Executive Officer.
|
|
|
|
Section
1350 Certification of Chief Financial Officer.
|
|
|
101.ins
|
Instance
Document**
|
|
|
101.sch
|
XBRL
Taxonomy Schema**
|
|
|
101.cal
|
XBRL
Taxonomy Calculation Linkbase**
|
|
|
101.lab
|
XBRL
Taxonomy Labels Linkbase**
|
|
|
101.pre
|
XBRL
Taxonomy Presentation Linkbase**
|
|
|
101.def
|
XBRL
Taxonomy Definitions Document**
|
*
|
Management
compensation plans and
arrangements.
|
** Furnished, not filed.
“Safe
Harbor” Statement under the Private Securities Litigation Reform Act of
1995:
This
report includes forward-looking statements intended to qualify for the safe
harbor from liability established by the Private Securities Litigation Reform
Act of 1995. These forward-looking statements generally can be
identified by phrases such as TI or its management “believes,” “expects,”
“anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of
similar import. Similarly, statements herein that describe TI’s
business strategy, outlook, objectives, plans, intentions or goals also are
forward-looking statements. All such forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those in forward-looking
statements.
We urge
you to carefully consider the following important factors that could cause
actual results to differ materially from the expectations of TI or its
management:
|
•
|
Market
demand for semiconductors, particularly in key markets such as
communications, entertainment electronics and
computing;
|
|
•
|
TI’s
ability to maintain or improve profit margins, including its ability to
utilize its manufacturing facilities at sufficient levels to cover its
fixed operating costs, in an intensely competitive and cyclical
industry;
|
|
•
|
TI’s
ability to develop, manufacture and market innovative products in a
rapidly changing technological
environment;
|
|
•
|
TI’s
ability to compete in products and prices in an intensely competitive
industry;
|
|
•
|
TI’s
ability to maintain and enforce a strong intellectual property portfolio
and obtain needed licenses from third
parties;
|
|
•
|
Expiration
of license agreements between TI and its patent licensees, and market
conditions reducing royalty payments to
TI;
|
|
•
|
Economic,
social and political conditions in the countries in which TI, its
customers or its suppliers operate, including security risks, health
conditions, possible disruptions in transportation networks and
fluctuations in foreign currency exchange
rates;
|
|
•
|
Natural
events such as severe weather and earthquakes in the locations in which
TI, its customers or its suppliers
operate;
|
|
•
|
Availability
and cost of raw materials, utilities, manufacturing equipment, third-party
manufacturing services and manufacturing
technology;
|
|
•
|
Changes
in the tax rate applicable to TI as the result of changes in tax law, the
jurisdictions in which profits are determined to be earned and taxed, the
outcome of tax audits and the ability to realize deferred tax
assets;
|
|
•
|
Changes
in laws and regulations to which TI or its suppliers are or may become
subject, such as those imposing fees or reporting or substitution costs
relating to the discharge of emissions into the environment or the use of
certain raw materials in our manufacturing
processes;
|
|
•
|
Losses
or curtailments of purchases from key customers and the timing and amount
of distributor and other customer inventory
adjustments;
|
|
•
|
Customer
demand that differs from our
forecasts;
|
|
•
|
The
financial impact of inadequate or excess TI inventory that results from
demand that differs from
projections;
|
|
•
|
The
ability of TI and its customers and suppliers to access their bank
accounts and lines of credit or otherwise access the capital
markets;
|
|
•
|
Impairments
of our non-financial assets;
|
|
•
|
Product
liability or warranty claims, claims based on epidemic or delivery failure
or recalls by TI customers for a product containing a TI
part;
|
|
•
|
TI’s
ability to recruit and retain skilled personnel;
and
|
|
•
|
Timely
implementation of new manufacturing technologies, installation of
manufacturing equipment and the ability to obtain needed third-party
foundry and assembly/test subcontract
services.
|
For a
more detailed discussion of these factors see the Risk Factors discussion in
Item 1A of this report. The forward-looking statements included in
this report are made only as of the date of this report and TI undertakes no
obligation to update the forward-looking statements to reflect subsequent events
or circumstances.
SIGNATURE
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
TEXAS
INSTRUMENTS INCORPORATED
|
|
|
|
|
By:
|
/s/
Kevin
P. March |
|
|
Kevin
P. March
|
|
|
Senior
Vice President,
|
|
|
Chief
Financial Officer
|
|
|
and
Chief Accounting Officer
|
Date:
February 23, 2010
Each
person whose signature appears below constitutes and appoints each of Richard K.
Templeton, Kevin P. March and Joseph F. Hubach, or any of them, each acting
alone, his or her true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for such person and in his or her name,
place and stead, in any and all capacities in connection with the annual report
on Form 10-K of Texas Instruments Incorporated for the year ended December 31,
2009, to sign any and all amendments to the Form 10-K, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitutes or substitute, may lawfully do or cause to be done
by virtue hereof.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this Report has been
signed below by the following persons on behalf of the Registrant and in the
capacities indicated on the 23rd day of February 2010.
/s/
James R. Adams |
|
Director
|
James
R. Adams
|
|
|
|
|
|
/s/
David L. Boren |
|
Director
|
David
L. Boren
|
|
|
|
|
|
/s/
Daniel A. Carp |
|
Director
|
Daniel
A. Carp
|
|
|
|
|
|
/s/
Carrie S. Cox |
|
Director |
Carrie
S. Cox
|
|
|
|
|
|
/s/
David R. Goode |
|
Director
|
David
R. Goode
|
|
|
|
|
|
/s/
Stephen P. MacMillan |
|
Director
|
Stephen
P. MacMillan
|
|
|
|
|
|
/s/
Pamela H. Patsley |
|
Director
|
Pamela
H. Patsley
|
|
|
|
|
|
/s/
Wayne R. Sanders |
|
Director
|
Wayne
R. Sanders
|
|
|
|
|
|
/s/
Ruth J. Simmons |
|
Director
|
Ruth
J. Simmons
|
|
|
|
|
|
/s/
Richard K.Templeton |
|
Chairman
of the Board; Director; President and
|
Richard
K. Templeton
|
|
Chief Executive Officer |
|
|
|
/s/
Christine Todd Whitman |
|
Director
|
Christine
Todd Whitman
|
|
|
|
|
|
/s/
Kevin P. March |
|
Senior
Vice President; Chief Financial Officer;
|
Kevin
P. March
|
|
Chief Accounting
Officer |
TEXAS
INSTRUMENTS INCORPORATED AND SUBSIDIARIES
INDEX TO
FINANCIAL STATEMENTS
(Item
15(a))
|
Page
Reference in 2009 Annual Report to Stockholders
|
Information
incorporated by reference to the Registrant’s 2009 annual report to
stockholders
|
|
|
|
Consolidated
financial statements:
|
|
|
|
Income
for each of the three years in the period ended December 31,
2009
|
2
|
|
|
Comprehensive
income for each of the three years in the period ended December 31,
2009
|
3
|
|
|
Balance
sheets at December 31, 2009 and 2008
|
4
|
|
|
Cash
flows for each of the three years in the period ended December 31,
2009
|
5
|
|
|
Stockholders’
equity for each of the three years in the period ended December 31,
2009
|
6
|
|
|
Notes
to financial statements
|
7
|
|
|
Report
of independent registered public accounting firm
|
31
|
|
|
Report
by management on internal control over financial reporting
|
32
|
|
|
Report
of independent registered public accounting firm on internal control over
financial reporting
|
33
|
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.
23