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

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Question and Answer Session

Operator

Thank you. We will take our first question from Chris Danely with Citi.

Chris Danely, Citigroup

Thanks guys, good quarter. Kevin, I guessed if you had to characterize the overall environment now versus say a quarter ago or a year ago, would you say broadly speaking not much has changed for us to own this fine and roughly seasonal environment or have you seen any changes in visibility of your overall business?

Kevin March, SVP & Chief Financial Officer

Well, Chris I think you said it well. It probably hasn’t really changed all that much. There was a slight change in our book-to-bill on a year-over-year basis. This quarter was about 0.97%, a year ago quarter was 0.94%. But frankly because more and more of our orders are coming in on consignment, I think book-to-bill means less and less about a particular on where our revenue is going. So I think that to summarize our sense, it is more steady as it goes, just like we have seen for the last few years. Our economy just kind of grow in long on a steady basis and we are trying to take advantage and grow little faster than that.

Dave Pahl VP, Head of Investor Relations

And Chris let me add, the other things that we speak, if you look at our inventory, it is in a healthy level. Our channel inventories are actually down a week as I said earlier from a year ago, just under 4.5 weeks. Our lead times remain consistent. Our cancellations and reschedules remain very very low. And in addition, we continue to deliver products on time for customers. Those types of thing are always a good indication for the overall environment too. Do you have a follow up?

Chris Danely, Citigroup

Yes. These all sounds like things are pretty normal, seasonal to this this year. Can you give us any sense of the relative growth rate of your major product lines this year — what you are expecting between analog, embedded and the other stuff?

Dave Pahl VP, Head of Investor Relations

No, we don’t try to forecast out a year on the major product lines or even that, but the company level. I will point out that both of those product lines turned in another year of market share gains. And certainly, we are working really hard to do that for another year and we will just have to see how the year turns out. So thanks Chris and we will go to the next caller please.

Operator

We go next to Ambrish Srivastava, BMO Capital Markets

Ambrish Srivastava, BMO Capital Markets

Thank you. On the inventory front, are we to assume now that your visibility now vis-a-vis in the past is higher also because of higher percentage is consignment after [indiscernible] and within that [indiscernible] gives you a better visibility? Is that the right way to think about it? So the days are going up versus what your targeted range is and really not comparable to if you look at the last 5 years and 10 years maybe. And then I have a quick follow up.

Kevin March, SVP & Chief Financial Officer

Ambrish, I do not know that I would necessarily go to improved visibility but we do get, I’d say a much more improved real-time feedback from what is actually going on with true end demand for our products. The real benefit of that is that we can adjust our factories on a real-time basis, whereas as you point out, if we went back a number of years, we carried far few days of inventory but the signal as to how fast our products are actually been consumed in the end market also took a lot longer to get to us so we would respond later. Now we can respond much more quickly. So it is less the question of improved visibility, as it is a question of much more real-time feed backs as to just how fast our products are being consumed.

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