Texas Instruments Incorporated (TXN)’s Fourth Quarter and Year-End 2014 Earnings Call Transcript

In the fourth quarter, TI paid $356 million in dividends and repurchased $698 million of our stock for a total return from $1.05 billion. Total cash return in 2014 was $4.15 billion which is 3% higher than the prior year. Outstanding share count was reduced by 3.3% over the past 12 months and by 39% since the beginning of 2005. These returns demonstrates our confidence in TI’s business model and our commitment to return excess cash to our shareholders. Fundamental to our commitment to return cash in our cash management are our tax practices. We ended the fourth quarter with $3.54 billion of cash and short term investments. TI’s US entities owned 82% of our cash. Because our cash is largely onshore, it is readily available for a variety of uses including paying dividends and repurchasing our stock.

TI orders in the quarter were $3.81 billion, up 11% from a year ago. Turning to our outlook, we expect TI revenue in the range of $3.07 billion to $3.33 billion in the first quarter. At the middle of this range, revenue would increase 7% from a year ago. We expect first quarter earnings per share to be in the range of $0.57 to $0.67. Restructuring charges will be essentially nil. Acquisition charges which are non-cash amortization charges will remain about even and hold at about $80 to $85 million per quarter for the next 5 years. Our expectations for our annual effective tax rate in 2015 is about 30% and this is the tax rate you should use for the first quarter and for the year. The rate is higher than last year because of unexpected increase in profits and does not assume the reinstatement of the R&D tax credit.

In summary, our fourth quarter demonstrates the growing strength of TI’s business model. Our strategy is anchored in our analog and embedded processing and is bolstered by an efficient manufacturing operation and a broad sales channel. The result is a diverse and long live positions in many markets. We remain intent on excellence in execution, being disciplined in allocating our capital, and our firm belief that free cash flow per share is the best long term indicator of shareholder value. With that I will return you back to Dave.

Dave Pahl VP, Head of Investor Relations

Vicki, you can open up the lines for questions. In order to provide as many of you as possible the opportunity to ask a question, please limit yourself to a single question. After our response, we will provide you an opportunity for an additional follow up. Vicki.