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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1997
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.)
8505 Forest Lane, P.O. Box 660199, Dallas, Texas 75266-0199
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(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
Title of each class which registered
- ----------------------------- ------------------------
Common Stock, par value $1.00 New York Stock Exchange
The Swiss Exchange
Preferred Stock Purchase Rights New York Stock Exchange
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 X 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.
The aggregate market value of voting stock held by non-affiliates of the
Registrant was approximately $17,423,000,000 as of December 31, 1997.
389,498,552
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(Number of shares of common stock outstanding as of December 31, 1997)
Parts I, II and IV hereof incorporate information by reference to the
Registrant's 1997 annual report to stockholders. Part III hereof incorporates
information by reference to the Registrant's proxy statement for the 1998
annual meeting of stockholders.
PART I
ITEM 1. Business.
Semiconductors
- --------------
Texas Instruments Incorporated ("TI," or the "Registrant," including
subsidiaries except where the context indicates otherwise) is a global
semiconductor company and the world's leading designer and supplier of digital
signal processing solutions, the engines driving the digitization of
electronics. These digital signal processing solutions consist primarily of
digital signal processors and mixed-signal/analog devices that convert the
analog signals of the real world into digital data, then back again as analog
output. They enable a wide range of new products and features for TI's more
than 30,000 customers in industrial, commercial and government end-equipment
markets.
TI also is a world leader in the design and manufacturing of other
semiconductor products. Those products include application-specific
integrated circuits, reduced instruction-set microprocessors,
microcontrollers, standard logic, and memories.
Semiconductors comprised 83% of TI's total revenues in 1997. TI's
semiconductor products are used in a diverse range of electronic systems,
including digital cell phones, pagers, computers, printers, mass storage
devices, modems, networking equipment, digital cameras and video recorders,
motor controls, autos, and home appliances. Products are sold primarily to
original-equipment manufacturers and through distributors. In addition, TI's
semiconductor patent portfolio has been established as an ongoing contributor
to semiconductor revenues.
The semiconductor business is intensely competitive, subject to rapid
technological change, and requires high rates of investment. TI faces strong
competition in all of its semiconductor product lines. The rapid pace of
change and technological breakthroughs constantly create new opportunities for
existing competitors and start-ups, which can quickly render existing
technologies less valuable.
In digital signal processors, TI competes with a growing number of large and
smaller companies, both U.S.-based and international. New product development
capabilities, applications support, software knowledge and advanced technology
are the primary competitive factors in this business.
The market for mixed-signal/analog devices is highly fragmented. TI competes
with many large and smaller companies, both U.S.-based and international.
Primary competitive factors in this business are the availability of
innovative designs, a broad range of process technologies and applications
support and in the standard products area, price.
In memory, TI competes with a number of very large companies, primarily in
Japan and Korea. TI is among the smaller competitors in this highly volatile
market. Competitive factors in this business are primarily price and
performance.
Acquisitions and Divestitures
- -----------------------------
From time to time TI considers acquisitions and divestitures that may
strengthen its business portfolio. TI may effect one or more of these
transactions at such time or times as it determines to be appropriate. In
2
1997, as TI tightened its focus on digital signal processing solutions, it
announced the acquisition of technology companies that brought unique
expertise to its core business. In the first quarter, TI acquired Intersect
Technologies, Inc., a developer and designer of hardware, software and
firmware for the mass storage market, a market that increasingly uses digital
signal processing solutions. In the fourth quarter, TI acquired Amati
Communications Corporation, the leading developer of technology for high-speed
Internet connections, a market expected to reach $6 billion over the next
decade. TI also acquired GO DSP Corporation, a developer of software for
digital signal processors, in the first quarter of 1998.
In 1997 TI divested various business units. These divestitures included the
sale of the mobile computing business to The Acer Group in the first quarter,
the software business to Sterling Software, Inc. in the second quarter, and
the defense systems and electronics business (DSE) to Raytheon Company
("Raytheon") in the third quarter. In accordance with generally accepted
accounting principles, the consolidated financial statements have been
restated to classify DSE as discontinued operations. Operating results, net
asset and other information for discontinued operations appear in the note to
the financial statements captioned "Discontinued Operations" on pages 20-21 of
TI's 1997 annual report to stockholders; unless otherwise indicated, the
financial amounts in this Form 10-K have been adjusted to reflect continuing
operations only.
Other TI Businesses
- -------------------
In addition to semiconductors, TI has two other principal segments. The
largest, representing 10% of TI's revenues, is materials and controls. This
business sells electrical and electronic controls, electronic connectors,
sensors, radio-frequency identification systems and clad metals into markets
such as automotive, heating and air conditioning, and home appliances. While
the top supplier in some product areas, TI faces strong multinational
competitors. The primary competitive factors in this business are product
reliability, manufacturing costs, and engineering expertise. The products of
this business are sold directly to original-equipment manufacturers and
through distributors.
Educational & Productivity Solutions (E&PS) represents 5 percent of TI's
revenues and consists largely of educational and graphing calculators. This
business sells primarily through retailers and to schools through
instructional dealers. TI's principal competitors in this business are
several Japanese companies. Technology expertise, price and infrastructure
for education and market understanding are primary competitive factors in this
business.
In addition, TI continues to invest in digital imaging, an emerging business
that produces micro-mirror-based devices that enable revolutionary brightness
and clarity in large-screen video displays. The primary sales route is
directly to original-equipment manufacturers. TI faces competition in this
business primarily from a competing technology known as liquid crystal
displays from Asian manufacturers. Primary competitive factors in this
business are price, brightness and performance of the display, and in some
applications, size and weight.
General Information
- -------------------
TI is headquartered in Dallas, Texas, and has manufacturing, design or sales
operations in more than 25 countries. TI's largest geographic markets are in
the United States, Japan and Europe. TI has been in operation since 1930.
3
The financial information with respect to TI's business segments
and operations outside the United States, which is contained in the note to
the financial statements captioned "Business Segment and Geographic Area Data"
on pages 30-32 of TI's 1997 annual report to stockholders, is incorporated
herein by reference to such annual report.
Backlog
- -------
The dollar amount of backlog of orders believed by the Registrant to
be firm was $1623 million as of December 31, 1997 and 1996. The Registrant's
backlog does not represent actual revenues and is only an indication of future
revenues which may be entered on the books of account of the Registrant.
Backlog orders are, under certain circumstances, subject to cancellation by
the purchaser without penalty and do not reflect any potential adjustments for
price decreases.
Raw Materials
- -------------
The Registrant purchases materials, parts and supplies from a number
of suppliers. The materials, parts and supplies essential to the Registrant's
business are generally available at present and the Registrant believes at
this time that such materials, parts and supplies will be available in the
foreseeable future.
Patents and Trademarks
- ----------------------
The Registrant owns many patents in the United States and other
countries in fields relating to its business. The Registrant has developed a
strong, broad-based patent portfolio. The Registrant also has several
agreements with other companies involving license rights and anticipates that
other licenses may be negotiated in the future. The Registrant does not
consider its business materially dependent upon any one patent or patent
license, although taken as a whole, the rights of the Registrant and the
products made and sold under patents and patent licenses are important to the
Registrant's business. The Registrant's patent portfolio has been established
as an ongoing contributor to the revenues of the Registrant.
The Registrant owns trademarks that are used in the conduct of its
business. These trademarks are valuable assets, the most important of which
are "Texas Instruments" and the Registrant's corporate monogram.
Research and Development
- ------------------------
The Registrant's research and development expense was $1536 million
in 1997, compared with $1181 million in 1996 and $842 million in 1995.
Included is a charge for the value of in-process research and development of
$461 million in 1997 and $192 million in 1996 as a result of the acquisitions
of Amati Communications Corporation and Silicon Systems, Inc., respectively.
Seasonality
- -----------
The Registrant's revenues are subject to some seasonal variation.
Employees
- ---------
The information concerning the number of persons employed by the
Registrant, at December 31, 1997 on page 35 of the Registrant's 1997 annual
report to stockholders is incorporated herein by reference to such annual
report.
4
ITEM 2. Properties.
The Registrant's principal executive offices are located at 8505
Forest Lane, Dallas, Texas. The Registrant owns and leases plants in the
United States and 15 other countries for manufacturing and related purposes.
The following table indicates the general location of the principal plants of
the Registrant and the business segments which make major use of them. Except
as otherwise indicated, the principal plants are owned by the Registrant.
Materials
Semiconductor and Controls E&PS
------------- ------------ ----
Dallas, Texas(1) X X X
Houston, Texas X
Lubbock, Texas X
Sherman, Texas(1)(2) X
Santa Cruz, California X
Attleboro, X X
Massachusetts
Freising, Germany X X
Avezzano, Italy(3) X
Baguio, X
Philippines(4)
Hiji, Japan X
Kuala Lumpur, X X
Malaysia(2)
Miho, Japan X
Singapore(4) X
Taipei, Taiwan X
Aguascalientes, Mexico X X
____________________
(1) Certain plants or portions thereof in Dallas and Sherman are leased to
Raytheon or Raytheon-related entities in connection with the sale of DSE.
(2) Leased or primarily leased.
(3) Owned, subject to mortgage.
(4) Owned on leased land.
The Registrant's facilities in the United States contained
approximately 17,900,000 square feet as of December 31, 1997, of which
approximately 3,700,000 square feet were leased. The Registrant's facilities
outside the United States contained approximately 7,000,000 square feet as of
December 31, 1997, of which approximately 1,700,000 square feet were leased.
The Registrant believes that its existing properties are in good
condition and suitable for the manufacture of its products. At the end of
1997, the Registrant utilized substantially all of the space in its
facilities.
Leases covering the Registrant's leased facilities expire at varying
dates generally within the next 10 years. The Registrant anticipates no
difficulty in either retaining occupancy through lease renewals, month-to-
month occupancy or purchases of leased facilities, or replacing the leased
facilities with equivalent facilities.
5
ITEM 3. Legal Proceedings.
On July 19, 1991, the Registrant filed a lawsuit in Tokyo District
Court against Fujitsu Limited of Japan ("Fujitsu") seeking injunctive relief,
alleging that Fujitsu's manufacture and sale of certain DRAMs infringe the
Registrant's Japanese patent on the invention of the integrated circuit (the
"Kilby" patent). Concurrently, Fujitsu brought a lawsuit in the same court
against the Registrant, seeking a declaration that Fujitsu is not infringing
the Kilby patent. On August 31, 1994, the district court ruled that Fujitsu's
production of 1-megabit and 4-megabit DRAMs and 32K EPROMs does not infringe
the Kilby patent. The Registrant appealed the court's decision to the
Tokyo High Court.
In September 1997, the Tokyo High Court upheld the decision that
Fujitsu's production of such products does not infringe TI's Kilby patent.
The Registrant has appealed the ruling to the Japan Supreme Court. In
November, the Japan Patent Office invalidated the Kilby patent. The Registrant
plans to appeal this decision to the Tokyo High Court. Since the Kilby patent
expires in 2001, the Registrant does not expect the outcome of either appeal
to be material.
The Registrant is involved in various investigations and proceedings
conducted by the federal Environmental Protection Agency and certain state
environmental agencies regarding disposal of waste materials. Although the
factual situations and the progress of each of these matters differ, the
Registrant believes that the amount of its liability will not have a material
adverse effect upon its financial position or results of operations and, in
most cases, the Registrant's liability will be limited to sharing clean-up or
other remedial costs with other potentially responsible parties.
ITEM 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
6
Executive Officers of the Registrant
The following is an alphabetical list of the names and ages of the
executive officers of the Registrant and the positions or offices with the
Registrant presently held by each person named:
Name Age Position
James R. Adams 58 Director; Chairman of the Board
Richard J. Agnich 54 Senior Vice President, Secretary
and General Counsel
William A. Aylesworth 55 Senior Vice President,
Treasurer and Chief Financial
Officer (Chief Accounting
Officer)
Gary D. Clubb 51 Executive Vice President
(President, Digital Imaging)
Thomas J. Engibous 45 Director; President and
Chief Executive
Officer
David D. Martin 58 Executive Vice President
Charles F. Nielson 60 Vice President
Elwin L. Skiles, Jr. 56 Vice President
Richard K. Templeton 39 Executive Vice President
(President, Semiconductor Group)
William P. Weber 57 Director; Vice Chairman
The term of office of each of the above listed officers is from the
date of his election until his successor shall have been elected and
qualified, and the most recent date of election of each of them was April 17,
1997. Mr. Adams, who has been a director of the Registrant since 1989, was
Group President of SBC Communications Inc. from 1992 until his retirement in
1995, and President and Chief Executive Officer of Southwestern Bell Telephone
Company from 1988 to 1992. Messrs. Agnich, Aylesworth, Martin, Nielson,
Skiles and Weber have served as officers of the Registrant for more than five
years. Messrs. Clubb and Engibous have served as officers of the Registrant
since 1993. Messrs. Adams and Templeton have served as officers of the
Registrant since 1996. Messrs. Clubb, Engibous and Templeton have been
employees of the Registrant for more than five years.
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
The information which is contained in the note to the financial
statements captioned "Common Stock Prices and Dividends" on page 41 of the
Registrant's 1997 annual report to stockholders, and the information
concerning the number of stockholders of record at December 31, 1997 on
page 35 of such annual report, are incorporated herein by reference to such
annual report.
7
ITEM 6. Selected Financial Data.
The "Summary of Selected Financial Data" for the years 1993 through
1997 which appears on page 35 of the Registrant's 1997 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 Discussion
and Analysis of Financial Condition and Results of Operations" on pages 36-41
of such annual report are incorporated herein by reference to such annual
report.
ITEM 8. Financial Statements and Supplementary Data.
The consolidated financial statements of the Registrant at December
31, 1997 and 1996 and for each of the three years in the period ended December
31, 1997, and the report thereon of the independent auditors, on pages 14-34
of the Registrant's 1997 annual report to stockholders, are incorporated
herein by reference to such annual report.
The "Quarterly Financial Data" on page 42-43 of the Registrant's
1997 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.
PART III
ITEM 10. Directors and Executive Officers of the Registrant.
The information with respect to directors' names, ages, positions,
term of office and periods of service, which is contained under the caption
"Nominees for Directorship" in the Registrant's proxy statement for the 1998
annual meeting of stockholders is incorporated herein by reference to such
proxy statement.
Information concerning executive officers is set forth in Part I
hereof under the caption "Executive Officers of the Registrant."
ITEM 11. Executive Compensation.
The information which is contained under the captions "Directors
Compensation," "Executive Compensation" and "Section 16(a) Beneficial
Ownership Reporting Compliance" in the Registrant's proxy statement for the
1998 annual meeting of stockholders is incorporated herein by reference to
such proxy statement.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
The information concerning (a) the only persons that have reported
beneficial ownership of more than 5% of the common stock of the Registrant,
and (b) the ownership of the Registrant's common stock by the Chief Executive
Officer and the four other most highly compensated executive officers, and all
executive officers and directors as a group, which is contained under the
caption "Voting Securities" in the Registrant's proxy statement for the 1998
annual meeting of stockholders, is incorporated herein by reference to such
proxy statement. The information concerning ownership of the Registrant's
8
common stock by each of the directors, which is contained under the caption
"Nominees for Directorship" in such proxy statement, is also incorporated
herein by reference to such proxy statement.
The aggregate market value of voting stock held by non-affiliates of
the Registrant shown on the cover page hereof excludes the shares held by the
Registrant's directors, some of whom disclaim affiliate status, executive vice
presidents and senior vice presidents. These holdings were considered to
include shares credited to certain individuals' profit sharing accounts.
ITEM 13. Certain Relationships and Related Transactions.
Not applicable.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) 1 and 2. Financial Statements and Financial Statement
Schedules:
The financial statements and financial statement schedules are
listed in the index on page 16 hereof.
3. Exhibits:
Designation of
Exhibit in
this Report Description of Exhibit
-------------- -------------------------------------------------
2 Asset Purchase Agreement dated as of January 4,
1997 between the Registrant and Raytheon Company
(exhibits and schedules omitted) (incorporated by
reference to Exhibit 2.1 to the Registrant's
Current Report on Form 8-K dated January 4,
1997).
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).
9
3(e) Certificate of Designations relating to the
Registrant's Participating Cumulative Preferred
Stock (incorporated by reference to Exhibit 3(d)
to the Registrant's Annual Report on Form 10-K
for the year 1993).
3(f) 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(g) 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(h) Certificate of Ownership and Merger Merging
Tiburon Systems, Inc. into the Company
(incorporated by reference to Exhibit 4(g) to the
Registrant's Registration Statement No.
333-41919 on Form S-8).
3(i) Certificate of Ownership and Merger Merging
Tartan, Inc. into the Company (incorporated by
reference to Exhibit 4(h) to the Registrant's
Registration Statement No. 333-41919 on Form
S-8).
3(j) By-Laws of the Registrant (incorporated by
reference to Exhibit 3 to the Registrant's
Current Report on Form 8-K dated
December 4, 1997).
4(a)(i) Rights Agreement dated as of June 17, 1988
between the Registrant and First Chicago Trust
Company of New York, formerly Morgan Shareholder
Services Trust Company, as Rights Agent, which
includes as Exhibit B the form of Rights
Certificate (incorporated by reference to Exhibit
4(a)(i) to the Registrant's Annual Report on Form
10-K for the year 1993).
4(a)(ii) Assignment and Assumption Agreement dated as of
September 24, 1992 among the Registrant, First
Chicago Trust Company of New York, formerly
Morgan Shareholder Services Trust Company, and
Harris Trust and Savings Bank (incorporated by
reference to Exhibit 4(a)(i) to the Registrant's
Quarterly Report on Form 10-Q for the quarter
ended September 30, 1992).
4(b) The Registrant agrees to provide the Commission,
upon request, copies of instruments defining the
rights of holders of long-term debt of the
Registrant and its subsidiaries.
10(a)(i) TI Deferred Compensation Plan (incorporated by
reference to Exhibit 10(a)(ii) to the
Registrant's Annual Report on Form 10-K for the
year 1994).*
10
10(a)(ii) Amendment No. 1 to TI Deferred Compensation Plan
(incorporated by reference to Exhibit 10(a)(iii)
to the Registrant's Annual Report on Form 10-K
for the year 1994).*
10(a)(iii) Amendment No. 2 to TI Deferred Compensation Plan
(incorporated by reference to the Registrant's
Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).*
10(a)(iv) Amendment No. 3 to TI Deferred Compensation Plan
(incorporated by reference to the Registrant's
Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997).*
10(b) 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(c) 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(d) Texas Instruments Executive Officer Performance
Plan (incorporated by reference to the
Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997).*
10(e) Texas Instruments Restricted Stock Unit Plan for
Directors (incorporated by reference to
Exhibit 10(c) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 1996).
10(f) Texas Instruments Directors Deferred Compensation
Plan (incorporated by reference to the
Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997).
10(g) Statement of Policy of Registrant's Board of
Directors on Top Officer and Board Member
Retirement Practices (incorporated by reference
to Exhibit 10(b)(vi) to the Registrant's Annual
Report on Form 10-K for the year 1993).*
11 Computation of earnings per common and dilutive
potential common share.
12 Computation of Ratio of Earnings to Fixed Charges
and Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends.
13 Registrant's 1997 Annual Report to Stockholders.
(With the exception of the items listed in the
index to financial statements and financial
statement schedules herein, and the items
referred to in ITEMS 1, 5, 6, 7 and 8 hereof, the
1997 Annual Report to Stockholders is not to be
deemed filed as part of this report.)
11
21 List of subsidiaries of the Registrant.
23 Consent of Ernst & Young LLP.
24 Powers of Attorney.
27 Financial Data Schedule.
________________
*Executive Compensation Plans and Arrangements:
TI Deferred Compensation Plan (incorporated by reference to Exhibit
10(a)(ii) to the Registrant's Annual Report on Form 10-K for the
year 1994).
Amendment No. 1 to TI Deferred Compensation Plan (incorporated by
reference to Exhibit 10(a)(iii) to Registrant's Annual Report on
Form 10-K for the year 1994).
Amendment No. 2 to TI Deferred Compensation Plan (incorporated by
reference to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997).
Amendment No. 3 to TI Deferred Compensation Plan (incorporated by
reference to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997).
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).
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).
Texas Instruments Executive Officer Performance Plan (incorporated
by reference to the Registrant's Quarterly Report on form 10-Q for
the quarter ended March 31, 1997).
Statement of Policy of Registrant's Board of Directors on Top
Officer and Board Member Retirement Practices (incorporated by
reference to Exhibit 10(b)(vi) to the Registrant's Annual Report on
Form 10-K for the year 1993).
(b) Reports on Form 8-K:
None.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995:
With the exception of historical information, the matters discussed
or incorporated by reference in this Report on Form 10-K are forward-looking
statements that involve risks and uncertainties including, but not limited to,
global economic conditions, product demand and industry capacity, competitive
products and pricing, manufacturing efficiencies, new product development,
ability to enforce patents, availability of raw materials and critical
manufacturing equipment, new plant startups and continuity of DRAM joint
venture manufacturing operations, timely completion of announced acquisitions,
the regulatory and trade environment, timely completion of Year 2000 software
modifications, and other risks indicated in filings with the Securities and
Exchange Commission.
12
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/ WILLIAM A. AYLESWORTH
------------------------------
William A. Aylesworth
Senior Vice President,
Treasurer and Chief
Financial Officer
Date: February 23, 1998
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, 1998.
Signature Title
*JAMES R. ADAMS Chairman of the Board; Director
- ------------------------------------
James R. Adams
*DAVID L. BOREN Director
- ------------------------------------
David L. Boren
*JAMES B. BUSEY IV Director
- ------------------------------------
James B. Busey IV
*DANIEL A. CARP Director
- ------------------------------------
Daniel A. Carp
*THOMAS J. ENGIBOUS President; Chief Executive Officer;
- ------------------------------------ Director
Thomas J. Engibous
*GERALD W. FRONTERHOUSE Director
- ------------------------------------
Gerald W. Fronterhouse
*DAVID R. GOODE Director
- ------------------------------------
David R. Goode
*WAYNE R. SANDERS Director
- ------------------------------------
Wayne R. Sanders
*GLORIA M. SHATTO Director
- ------------------------------------
Gloria M. Shatto
13
*WILLIAM P. WEBER Vice Chairman; Director
- ------------------------------------
William P. Weber
*CLAYTON K. YEUTTER Director
- ------------------------------------
Clayton K. Yeutter
/s/ WILLIAM A. AYLESWORTH Senior Vice President; Treasurer;
- ------------------------------------ Chief Financial Officer; Chief
William A. Aylesworth Accounting Officer
*By:
/s/ WILLIAM A. AYLESWORTH
-----------------------------
William A. Aylesworth
Attorney-in-fact
14
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(Item 14(a))
Page Reference
--------------
Annual
Report to
Form 10-K Stockholders
--------- ------------
Information incorporated by reference
to the Registrant's 1997 Annual Report
to Stockholders:
Consolidated Financial Statements:
Income for each of the three 14
years in the period ended
December 31, 1997
Balance sheet at December 31, 15
1997 and 1996
Cash flows for each of the 16-17
three years in the period
ended December 31, 1997
Stockholders' equity for each of 18
the three years in the period
ended December 31, 1997
Notes to financial statements 19-33
Report of Independent Auditors 34
Consolidated Schedule for each of the three
years in the period ended December 31, 1997:
II. Allowance for losses 16
All other schedules have been omitted since 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.
15
Schedule II
-----------
TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
ALLOWANCE FOR LOSSES
(IN MILLIONS OF DOLLARS)
Years Ended December 31, 1997, 1996, and 1995
Additions
Balance at Charged to Balance
Beginning Costs and at End
of Year Expenses Deductions of Year
1997 $90 $133 $150 $73
- ---- ==== ==== ==== ====
1996 $45 $163 $118 $90
- ---- ==== ==== ==== ====
1995 $37 $113 $105 $45
- ---- ==== ==== ==== ====
Allowances for losses from uncollectible accounts, returns, etc., are deducted
from accounts receivable in the balance sheet.
16
Exhibit Index
Designation of
Exhibit in Electronic
this Report Description of Exhibit or Paper
-------------- ---------------------- ---------
2 Asset Purchase Agreement dated as
of January 4, 1997 between the
Registrant and Raytheon Company
(exhibits and schedules omitted)
(incorporated by reference to
Exhibit 2.1 to the Registrant's
Current Report on Form 8-K dated
January 4, 1997).
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 Designations relating
to the Registrant's Participating
Cumulative Preferred Stock
(incorporated by reference
to Exhibit 3(d) to the Registrant's
Annual Report on Form 10-K for the
year 1993).
3(f) 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(g) 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(h) Certificate of Ownership and Merger
Merging Tiburon Systems, Inc. into
the Company (incorporated by reference
to Exhibit 4(g) to the Registrant's
Registration Statement No. 333-41919
on Form S-8).
3(i) Certificate of Ownership and Merger
Merging Tartan, Inc. into the Company
(incorporated by reference to Exhibit
4(h) to the Registrant's Registration
Statement No. 333-41919 on Form S-8).
3(j) By-Laws of the Registrant
(incorporated by reference to
Exhibit 3 to the Registrant's
Current Report on Form 8-K
dated December 4, 1997).
4(a)(i) Rights Agreement dated as of
June 17, 1988 between the Registrant
and First Chicago Trust Company
of New York, formerly Morgan
Shareholder Services Trust Company,
as Rights Agent, which includes as
Exhibit B the form of Rights
Certificate (incorporated by
reference to Exhibit 4(a)(i)
to the Registrant's Annual Report
on Form 10-K for the year 1993).
4(a)(ii) Assignment and Assumption Agreement
dated as of September 24, 1992
among the Registrant, First Chicago
Trust Company of New York, formerly
Morgan Shareholder Services Trust
Company, and Harris Trust and
Savings Bank (incorporated by
reference to Exhibit 4(a)(i) to
the Registrant's Quarterly Report
on Form 10-Q for the quarter
ended September 30, 1992).
4(b) The Registrant agrees to provide
the Commission, upon request, copies
of instruments defining the rights
of holders of long-term debt of
the Registrant and its subsidiaries.
10(a)(i) TI Deferred Compensation Plan
(incorporated by reference to
Exhibit 10(a)(ii) to the
Registrant's Annual Report on
Form 10-K for the year 1994).*
10(a)(ii) Amendment No. 1 to TI Deferred
Compensation Plan (incorporated
by reference to Exhibit
10(a)(iii) to the Registrant's
Annual Report on Form 10-K
for the year 1994).*
10(a)(iii) Amendment No. 2 to TI Deferred
Compensation Plan (incorporated
by reference to the Registrant's
Quarterly Report on Form 10-Q
for the quarter ended
June 30, 1997).*
10(a)(iv) Amendment No. 3 to TI Deferred
Compensation Plan (incorporated
by reference to the Registrant's
Quarterly Report on Form 10-Q
for the quarter ended
September 30, 1997).*
10(b) 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(c) 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(d) Texas Instruments Executive
Officer Performance Plan
(incorporated by reference
to the Registrant's Quarterly
Report on Form 10-Q for the
quarter ended March 31, 1997).*
10(e) Texas Instruments Restricted
Stock Unit Plan for Directors
(incorporated by reference to
Exhibit 10(c) to the
Registrant's Quarterly Report
on Form 10-Q for the quarter
ended June 30, 1996).
10(f) Texas Instruments Directors
Deferred Compensation Plan
(incorporated by reference
to the Registrant's Quarterly
Report on Form 10-Q for the
quarter ended September 30, 1997).
10(g) Statement of Policy of Registrant's
Board of Directors on Top Officer
and Board Member Retirement
Practices (incorporated by reference
to Exhibit 10(b)(vi) to the
Registrant's Annual Report on Form
10-K for the year 1993).*
11 Computation of earnings per common E
and dilutive potential common share.
12 Computation of Ratio of Earnings to E
Fixed Charges and Ratio of Earnings
to Combined Fixed Charges and
Preferred Stock Dividends.
13 Registrant's 1997 Annual Report to E
Stockholders. (With the exception
of the items listed in the index
to financial statements and
financial statement schedules
herein, and the items referred to
in ITEMS 1, 5, 6, 7 and 8 hereof,
the 1996 Annual Report to Stockholders
is not to be deemed filed as part
of this report.)
21 List of subsidiaries of the Registrant. E
23 Consent of Ernst & Young LLP. E
24 Powers of Attorney. E
27 Financial Data Schedule. E
________________
*Executive Compensation Plans and Arrangements:
TI Deferred Compensation Plan (incorporated by reference to
Exhibit 10(a)(ii) to the Registrant's Annual Report on Form 10-K for
the year 1994).
Amendment No. 1 to TI Deferred Compensation Plan
(incorporated by reference to Exhibit 10(a)(iii) to Registrant's Annual Report
on Form 10-K for the year 1994).
Amendment No. 2 to TI Deferred Compensation Plan
(incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997).
Amendment No. 3 to TI Deferred Compensation Plan
(incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30,
1997).
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).
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).
Texas Instruments Executive Officer Performance Plan
(incorporated by reference to the Registrant's Quarterly Report on form
10-Q for the quarter ended March 31, 1997).
Statement of Policy of Registrant's Board of Directors on Top
Officer and Board Member Retirement Practices (incorporated by
reference to Exhibit 10(b)(vi) to the Registrant's Annual Report on
Form 10-K for the year 1993).