Item 1. Financial statements

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Item 1. Financial statements


	For Three Months Ended				For Nine Months Ended
Consolidated Statements of Income	September 30,				September 30,
(Millions of dollars, except share and per-share amounts)	2021		2020		2021		2020
Revenue	$	4,643	$	3,817	$	13,512	$	10,385
Cost of revenue (COR)	1,491		1,364		4,486		3,762
Gross profit	3,152		2,453		9,026		6,623
Research and development (R&D)	388		386		1,165		1,142
Selling, general and administrative (SG&A)	412		407		1,262		1,225
Acquisition charges	47		51		142		151
Restructuring charges/other	—		—		—		24
Operating profit	2,305		1,609		6,457		4,081
Other income (expense), net (OI&E)	15		27		134		151
Interest and debt expense	45		49		135		142
Income before income taxes	2,275		1,587		6,456		4,090
Provision for income taxes	328		234		825		183
Net income	$	1,947	$	1,353	$	5,631	$	3,907

Earnings per common share (EPS):
Basic	$	2.10	$	1.47	$	6.08	$	4.22
Diluted	$	2.07	$	1.45	$	5.99	$	4.17

Average shares outstanding (millions):
Basic	923		917		923		921
Diluted	936		929		936		933

A portion of net income is allocated to unvested restricted stock units (RSUs) on which we pay dividend equivalents. Diluted EPS is calculated using the following:

Net income	$	1,947	$	1,353	$	5,631	$	3,907
Income allocated to RSUs	(9)		(6)		(24)		(19)
Income allocated to common stock for diluted EPS	$	1,938	$	1,347	$	5,607	$	3,888

See accompanying notes.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


	For Three Months Ended				For Nine Months Ended
Consolidated Statements of Comprehensive Income	September 30,				September 30,
(Millions of dollars)	2021		2020		2021		2020
Net income	$	1,947	$	1,353	$	5,631	$	3,907
Other comprehensive income (loss)
Net actuarial losses of defined benefit plans:
Adjustments, net of tax effect of ($1) and $3; ($8) and $4	3		(7)		24		(8)
Recognized within net income, net of tax effect of ($2) and ($2); ($7) and ($7)	8		7		24		21
Prior service credit of defined benefit plans:

Recognized within net income, net of tax effect of $0 and $0; $0 and $0	(1)		(1)		(1)		(1)





Other comprehensive income (loss), net of taxes	10		(1)		47		12
Total comprehensive income	$	1,957	$	1,352	$	5,678	$	3,919

See accompanying notes.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


	September 30,		December 31,
Consolidated Balance Sheets	2021		2020
(Millions of dollars, except share amounts)
Assets
Current assets:
Cash and cash equivalents	$	5,663	$	3,107
Short-term investments	4,119		3,461
Accounts receivable, net of allowances of ($9) and ($11)	1,653		1,414
Raw materials	224		180
Work in process	1,034		964
Finished goods	605		811
Inventories	1,863		1,955
Prepaid expenses and other current assets	287		302
Total current assets	13,585		10,239
Property, plant and equipment at cost	6,661		5,781
Accumulated depreciation	(2,640)		(2,512)
Property, plant and equipment	4,021		3,269
Goodwill	4,362		4,362
Acquisition-related intangibles	9		152
Deferred tax assets	309		343
Capitalized software licenses	88		122
Overfunded retirement plans	252		246
Other long-term assets	647		618
Total assets	$	23,273	$	19,351

Liabilities and stockholders’ equity
Current liabilities:
Current portion of long-term debt	$	500	$	550
Accounts payable	596		415
Accrued compensation	665		767
Income taxes payable	101		134
Accrued expenses and other liabilities	551		524
Total current liabilities	2,413		2,390
Long-term debt	7,239		6,248
Underfunded retirement plans	129		131
Deferred tax liabilities	86		90
Other long-term liabilities	1,255		1,305
Total liabilities	11,122		10,164
Stockholders’ equity:
Preferred stock, $25 par value. Authorized – 10,000,000 shares; none issued	—		—
Common stock, $1 par value. Authorized – 2,400,000,000 shares
Shares issued – 1,740,815,939	1,741		1,741
Paid-in capital	2,563		2,333
Retained earnings	44,847		42,051
Treasury common stock at cost
Shares: September 30, 2021 – 817,400,928; December 31, 2020 – 821,461,787	(36,687)		(36,578)
Accumulated other comprehensive income (loss), net of taxes (AOCI)	(313)		(360)
Total stockholders’ equity	12,151		9,187
Total liabilities and stockholders’ equity	$	23,273	$	19,351

See accompanying notes.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


	For Nine Months Ended
Consolidated Statements of Cash Flows	September 30,
(Millions of dollars)	2021		2020
Cash flows from operating activities
Net income	$	5,631	$	3,907
Adjustments to net income:
Depreciation	555		553
Amortization of acquisition-related intangibles	142		151
Amortization of capitalized software	44		45
Stock compensation	180		182
Gains on sales of assets	(7)		(3)
Deferred taxes	19		(115)
Increase (decrease) from changes in:
Accounts receivable	(239)		(318)
Inventories	92		(71)
Prepaid expenses and other current assets	99		—
Accounts payable and accrued expenses	87		60
Accrued compensation	(103)		(48)
Income taxes payable	(54)		(316)
Changes in funded status of retirement plans	48		16
Other	(95)		(29)
Cash flows from operating activities	6,399		4,014

Cash flows from investing activities
Capital expenditures	(1,180)		(437)
Proceeds from asset sales	7		3
Purchases of short-term investments	(6,427)		(3,435)
Proceeds from short-term investments	5,770		3,958
Other	(36)		(15)
Cash flows from investing activities	(1,866)		74

Cash flows from financing activities
Proceeds from issuance of long-term debt	1,495		1,498
Repayment of debt	(550)		(500)
Dividends paid	(2,824)		(2,489)
Stock repurchases	(385)		(2,538)
Proceeds from common stock transactions	325		356
Other	(38)		(30)
Cash flows from financing activities	(1,977)		(3,703)

Net change in cash and cash equivalents	2,556		385
Cash and cash equivalents at beginning of period	3,107		2,437
Cash and cash equivalents at end of period	$	5,663	$	2,822

See accompanying notes.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Notes to financial statements

Description of business, including segment and geographic area information

We design, make and sell semiconductors to electronics designers and manufacturers all over the world. We have two reportable segments, Analog and Embedded Processing, each of which represents groups of similar products that are combined on the basis of similar design and development requirements, product characteristics, manufacturing processes and distribution channels.

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 embedded processors. Analog semiconductors are also used to manage power in all electronic equipment by converting, distributing, storing, discharging, isolating and measuring electrical energy, whether the equipment is plugged into a wall or using a battery. Our Analog segment consists of two major product lines: Power and Signal Chain.
Embedded Processing products are the digital “brains” of many types of electronic equipment. They are designed to handle specific tasks and can be optimized for various combinations of performance, power and cost, depending on the application.

We report the results of our remaining business activities in Other. Other includes operating segments that do not meet the quantitative thresholds for individually reportable segments and cannot be aggregated with other operating segments. Other includes DLP® products, calculators and custom ASIC products.

Our centralized manufacturing and support organizations, such as facilities, procurement and logistics, provide support to our operating segments, including those in Other. Costs incurred by these organizations, including depreciation, are charged to the segments on a per-unit basis. Consequently, depreciation expense is not an independently identifiable component within the segments’ results and, therefore, is not provided.

Segment information


	For Three Months Ended				For Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenue:
Analog	$	3,548	$	2,865	$	10,292	$	7,759
Embedded Processing	738		651		2,285		1,850
Other	357		301		935		776
Total revenue	$	4,643	$	3,817	$	13,512	$	10,385

Operating profit:
Analog	$	1,871	$	1,320	$	5,295	$	3,398
Embedded Processing	282		187		881		494
Other (a)	152		102		281		189
Total operating profit	$	2,305	$	1,609	$	6,457	$	4,081

(a)Includes acquisition charges and restructuring charges/other

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Geographic area information

The following geographic area information includes revenue, based on product shipment destination. The geographic revenue information does not necessarily reflect end demand by geography because our products tend to be shipped to the locations where our customers manufacture their products.


	For Three Months Ended				For Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenue:
United States	$	515	$	440	$	1,437	$	1,179
Asia (a)	3,082		2,555		8,933		6,756
Europe, Middle East and Africa	683		578		2,061		1,648
Japan	242		140		716		523
Rest of world	121		104		365		279
Total revenue	$	4,643	$	3,817	$	13,512	$	10,385

(a)Revenue from products shipped into China was $2.5 billion and $2.2 billion in the third quarters of 2021 and 2020, respectively, and $7.3 billion and $5.7 billion in the first nine months of 2021 and 2020, respectively, which includes shipments to customers that manufacture in China and then export end products to their customers around the world, as well as distributors that transship inventory through China to service other countries.

Basis of presentation and significant accounting policies and practices

Basis of presentation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and on the same basis as the audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2020. The Consolidated Statements of Income, Comprehensive Income and Cash Flows for the periods ended September 30, 2021 and 2020, and the Consolidated Balance Sheet as of September 30, 2021, are not audited but reflect all adjustments that are of a normal recurring nature and are necessary for a fair statement of the results of the periods shown. Certain information and note disclosures normally included in annual consolidated financial statements have been omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Because the consolidated interim financial statements do not include all of the information and notes required by GAAP for a complete set of financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in our annual report on Form 10-K for the year ended December 31, 2020. The results for the three- and nine-month periods are not necessarily indicative of a full year’s results.

Significant accounting policies and practices

Earnings per share (EPS)

We use the two-class method for calculating EPS because the restricted stock units (RSUs) we grant are participating securities containing non-forfeitable rights to receive dividend equivalents. Under the two-class method, a portion of net income is allocated to RSUs and excluded from the calculation of income allocated to common stock.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Computation and reconciliation of earnings per common share are as follows (shares in millions):


	For Three Months Ended September 30,
	2021					2020
	Net Income		Shares	EPS		Net Income		Shares	EPS
Basic EPS:
Net income	$	1,947				$	1,353
Income allocated to RSUs	(9)					(6)
Income allocated to common stock	$	1,938	923	$	2.10	$	1,347	917	$	1.47
Dilutive effect of stock compensation plans			13					12

Diluted EPS:
Net income	$	1,947				$	1,353
Income allocated to RSUs	(9)					(6)
Income allocated to common stock	$	1,938	936	$	2.07	$	1,347	929	$	1.45

	For Nine Months Ended September 30,
	2021					2020
	Net Income		Shares	EPS		Net Income		Shares	EPS
Basic EPS:
Net income	$	5,631				$	3,907
Income allocated to RSUs	(23)					(19)
Income allocated to common stock	$	5,608	923	$	6.08	$	3,888	921	$	4.22
Dilutive effect of stock compensation plans			13					12

Diluted EPS:
Net income	$	5,631				$	3,907
Income allocated to RSUs	(24)					(19)
Income allocated to common stock	$	5,607	936	$	5.99	$	3,888	933	$	4.17

Potentially dilutive securities representing 2 million and 3 million shares of common stock that were outstanding during the third quarters of 2021 and 2020, respectively, and 3 million and 4 million shares outstanding during the first nine months of 2021 and 2020, respectively, were excluded from the computation of diluted earnings per common share during these periods because their effect would have been anti-dilutive.

Derivatives and hedging

We use derivative financial instruments to manage exposure to foreign exchange risk. These instruments are primarily forward foreign currency exchange contracts, which are used as economic hedges to reduce the earnings impact that exchange rate fluctuations may have on our non-U.S. dollar net balance sheet exposures. Gains and losses from changes in the fair value of these forward foreign currency exchange contracts are credited or charged to OI&E. We do not apply hedge accounting to our foreign currency derivative instruments.

We are exposed to variability in compensation charges related to certain deferred compensation obligations to employees. We use total return swaps to economically hedge this exposure and offset the related compensation expense, recognizing changes in the value of the swaps and the related deferred compensation liabilities in SG&A.

In connection with the issuance of long-term debt, we may use financial derivatives such as treasury-rate lock agreements that are recognized in AOCI and amortized over the life of the related debt. The results of these derivative transactions have not been material.

We do not use derivatives for speculative or trading purposes.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Fair values of financial instruments

The fair values of our derivative financial instruments were not material as of September 30, 2021. Our investments in cash equivalents, short-term investments and certain long-term investments, as well as our deferred compensation liabilities, are carried at fair value. The carrying values for other current financial assets and liabilities, such as accounts receivable and accounts payable, approximate fair value due to the short maturity of such instruments. As of September 30, 2021, the carrying value of long-term debt, including the current portion, was $7.74 billion, and the estimated fair value was $8.43 billion. The estimated fair value is measured using broker-dealer quotes, which are Level 2 inputs. See Note 4 for a description of fair value and the definition of Level 2 inputs.

Income taxes

Our estimated annual effective tax rate is about 14%, which does not include discrete tax items. This differs from the 21% U.S. statutory corporate tax rate due to the effect of U.S. tax benefits.

Provision for income taxes is based on the following:


	For Three Months Ended						For Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Taxes calculated using the estimated annual effective tax rate	$	337		$	231		$	934		$	561
Discrete tax items	(9)			3			(109)			(378)
Provision for income taxes	$	328		$	234		$	825		$	183

Effective tax rate	14		%	15		%	13		%	4		%

Our provision for income taxes for the first nine months of 2020 included a $249 million discrete tax benefit for the settlement of a depreciation-related uncertain tax position. Accrued interest of $46 million related to this uncertain tax position was reversed and included in OI&E.

Valuation of debt and equity investments and certain liabilities

Investments measured at fair value

Available-for-sale debt investments, money market funds and mutual funds are stated at fair value, which is generally based on market prices or broker quotes. See Fair-value considerations below. Unrealized gains and losses from available-for-sale debt securities are recorded as an increase or decrease, net of taxes, in AOCI on our Consolidated Balance Sheets and any credit losses on available-for-sale debt securities are recorded as an allowance for credit losses with an offset recognized in OI&E in our Consolidated Statements of Income.

Our mutual funds hold a variety of debt and equity investments intended to generate returns that offset changes in certain deferred compensation liabilities. We record changes in the fair value of these mutual funds and the related deferred compensation liabilities in SG&A.

Other investments

Our other investments include equity-method investments and non-marketable equity investments, which are not measured at fair value. These investments consist of interests in venture capital funds and other non-marketable equity securities. Gains and losses from equity-method investments are recognized in OI&E based on our ownership share of the investee’s financial results.

Non-marketable equity securities are measured at cost with adjustments for observable changes in price or impairments. Gains and losses on non-marketable equity investments are recognized in OI&E.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Details of our investments are as follows:


	September 30, 2021						December 31, 2020
	Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments		Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments
Measured at fair value:
Money market funds	$	2,132	$	—	$	—	$	886	$	—	$	—
Corporate obligations	1,136		1,109		—		256		257		—
U.S. government and agency securities	1,140		2,587		—		1,340		3,054		—
Non-U.S. government and agency securities	385		423		—		—		150		—
Mutual funds	—		—		15		—		—		18
Total	4,793		4,119		15		2,482		3,461		18

Other measurement basis:
Equity-method investments	—		—		54		—		—		27
Non-marketable equity investments	—		—		4		—		—		4
Cash on hand	870		—		—		625		—		—
Total	$	5,663	$	4,119	$	73	$	3,107	$	3,461	$	49

As of September 30, 2021, and December 31, 2020, unrealized gains and losses associated with our available-for-sale investments were not material. We did not recognize any credit losses related to available-for-sale investments for the first nine months of 2021 and 2020. All of our debt securities classified as available for sale as of September 30, 2021, have maturities within one year.

Proceeds from sales, redemptions and maturities of short-term available-for-sale investments were $1.32 billion and $510 million for the third quarters of 2021 and 2020, respectively, and $5.77 billion and $3.71 billion for the first nine months of 2021 and 2020, respectively. Gross realized gains and losses from these sales were not material.

During the first nine months of 2020, we entered into total return swaps to economically hedge the variability of certain deferred compensation obligations to employees. As a result, we received proceeds of $253 million from the sale of investments in mutual funds that were previously being utilized to offset this exposure.

Fair-value considerations

We measure and report certain financial assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The three-level hierarchy described below indicates the extent and level of judgment used to estimate fair-value measurements.

Level 1 – Uses unadjusted quoted prices that are available in active markets for identical assets or liabilities as of the reporting date.
Level 2 – Uses inputs other than Level 1 that are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data. We utilize a third-party data service to provide Level 2 valuations. We verify these valuations for reasonableness relative to unadjusted quotes obtained from brokers or dealers based on observable prices for similar assets in active markets.
Level 3 – Uses inputs that are unobservable, supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models that utilize management estimates of market participant assumptions. As of September 30, 2021, and December 31, 2020, we had no Level 3 assets or liabilities.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

The following are our assets and liabilities that were accounted for at fair value on a recurring basis. These tables do not include cash on hand, assets held by our postretirement plans, or assets and liabilities that are measured at historical cost or any basis other than fair value.


	September 30, 2021						December 31, 2020
	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Money market funds	$	2,132	$	—	$	2,132	$	886	$	—	$	886
Corporate obligations	—		2,245		2,245		—		513		513
U.S. government and agency securities	3,326		401		3,727		4,394		—		4,394
Non-U.S. government and agency securities	—		808		808		—		150		150
Mutual funds	15		—		15		18		—		18
Total assets	$	5,473	$	3,454	$	8,927	$	5,298	$	663	$	5,961

Liabilities:
Deferred compensation	$	367	$	—	$	367	$	350	$	—	$	350
Total liabilities	$	367	$	—	$	367	$	350	$	—	$	350

Postretirement benefit plans

Expenses related to defined benefit and retiree health care benefit plans are as follows:


	U.S. Defined Benefit				U.S. Retiree Health Care				Non-U.S. Defined Benefit
For Three Months Ended September 30,	2021		2020		2021		2020		2021		2020
Service cost	$	5	$	5	$	—	$	1	$	9	$	9
Interest cost	8		7		3		3		9		9
Expected return on plan assets	(8)		(9)		(2)		(2)		(20)		(20)
Recognized net actuarial loss	3		1		—		—		2		4
Amortization of prior service cost (credit)	—		—		(1)		(1)		—		—
Net periodic benefit costs	8		4		—		1		—		2
Settlement losses	4		3		—		—		1		1
Total, including other postretirement losses	$	12	$	7	$	—	$	1	$	1	$	3

	U.S. Defined Benefit				U.S. Retiree Health Care				Non-U.S. Defined Benefit
For Nine Months Ended September 30,	2021		2020		2021		2020		2021		2020
Service cost	$	16	$	14	$	2	$	2	$	27	$	25
Interest cost	23		24		8		9		28		28
Expected return on plan assets	(25)		(27)		(8)		(8)		(61)		(58)
Recognized net actuarial loss	11		5		—		—		6		11
Amortization of prior service cost (credit)	—		—		(1)		(1)		—		—
Net periodic benefit costs	25		16		1		2		—		6
Settlement losses	12		10		—		—		2		2
Total, including other postretirement losses	$	37	$	26	$	1	$	2	$	2	$	8

Debt and lines of credit

Short-term borrowings

We maintain a line of credit to support commercial paper borrowings, if any, and to provide additional liquidity through bank loans. As of September 30, 2021, we had a variable-rate revolving credit facility from a consortium of investment-grade banks that allows us to borrow up to $2 billion until March 2024. The interest rate on borrowings under this credit facility, if drawn, is indexed to the applicable London Interbank Offered Rate (LIBOR). As of September 30, 2021, our credit facility was undrawn, and we had no commercial paper outstanding.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Long-term debt

In September 2021, we issued three series of senior unsecured notes for an aggregate principal amount of $1.50 billion, consisting of:

$500 million of 1.125% notes due in 2026;
$500 million of 1.90% notes due in 2031; and
$500 million of 2.70% notes due in 2051.

We incurred $10 million of issuance costs. The proceeds of the offering were $1.50 billion, net of the original issuance discounts, which will be used for general corporate purposes.

In February 2021, we retired $550 million of maturing debt.

Long-term debt outstanding is as follows:


	September 30,		December 31,
	2021		2020
Notes due 2021 at 2.75%	$	—	$	550
Notes due 2022 at 1.85%	500		500
Notes due 2023 at 2.25%	500		500
Notes due 2024 at 2.625%	300		300
Notes due 2025 at 1.375%	750		750
Notes due 2026 at 1.125%	500		—
Notes due 2027 at 2.90%	500		500
Notes due 2029 at 2.25%	750		750
Notes due 2030 at 1.75%	750		750
Notes due 2031 at 1.90%	500		—
Notes due 2039 at 3.875%	750		750
Notes due 2048 at 4.15%	1,500		1,500
Notes due 2051 at 2.70%	500		—
Total debt	7,800		6,850
Net unamortized discounts, premiums and issuance costs	(61)		(52)
Total debt, including net unamortized discounts, premiums and issuance costs	7,739		6,798
Current portion of long-term debt	(500)		(550)
Long-term debt	$	7,239	$	6,248

Interest and debt expense was $45 million and $49 million for the third quarters of 2021 and 2020, respectively, and $135 million and $142 million for the first nine months of 2021 and 2020, respectively. This was net of the amortized discounts, premiums and issuance costs. Capitalized interest was not material.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Stockholders’ equity

Changes in equity are as follows:


	Common Stock		Paid-in Capital		Retained Earnings		Treasury Common Stock		AOCI
Balance, December 31, 2020	$	1,741	$	2,333	$	42,051	$	(36,578)	$	(360)

2021
Net income	—		—		1,753		—		—
Dividends declared and paid ($1.02 per share)	—		—		(940)		—		—
Common stock issued for stock-based awards	—		(3)		—		199		—
Stock repurchases	—		—		—		(100)		—
Stock compensation	—		61		—		—		—
Other comprehensive income (loss), net of taxes	—		—		—		—		13
Dividend equivalents on RSUs	—		—		(4)		—		—

Balance, March 31, 2021	1,741		2,391		42,860		(36,479)		(347)

Net income	—		—		1,931		—		—
Dividends declared and paid ($1.02 per share)	—		—		(942)		—		—
Common stock issued for stock-based awards	—		25		—		29		—
Stock repurchases	—		—		—		(146)		—
Stock compensation	—		69		—		—		—
Other comprehensive income (loss), net of taxes	—		—		—		—		24
Dividend equivalents on RSUs	—		—		(4)		—		—
Other	—		—		1		—		—
Balance, June 30, 2021	1,741		2,485		43,846		(36,596)		(323)

Net income	—		—		1,947		—		—
Dividends declared and paid ($1.02 per share)	—		—		(942)		—		—
Common stock issued for stock-based awards	—		27		—		48		—
Stock repurchases	—		—		—		(139)		—
Stock compensation	—		50		—		—		—
Other comprehensive income (loss), net of taxes	—		—		—		—		10
Dividend equivalents on RSUs	—		—		(3)		—		—
Other	—		1		(1)		—		—
Balance, September 30, 2021	$	1,741	$	2,563	$	44,847	$	(36,687)	$	(313)

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


	Common Stock		Paid-in Capital		Retained Earnings		Treasury Common Stock		AOCI
Balance, December 31, 2019	$	1,741	$	2,110	$	39,898	$	(34,495)	$	(347)

2020
Net income	—		—		1,174		—		—
Dividends declared and paid ($0.90 per share)	—		—		(841)		—		—
Common stock issued for stock-based awards	—		(77)		—		223		—
Stock repurchases	—		—		—		(1,730)		—
Stock compensation	—		63		—		—		—
Other comprehensive income (loss), net of taxes	—		—		—		—		19
Dividend equivalents on RSUs	—		—		(4)		—		—

Balance, March 31, 2020	1,741		2,096		40,227		(36,002)		(328)

Net income	—		—		1,380		—		—
Dividends declared and paid ($0.90 per share)	—		—		(823)		—		—
Common stock issued for stock-based awards	—		17		—		70		—
Stock repurchases	—		—		—		(793)		—
Stock compensation	—		69		—		—		—
Other comprehensive income (loss), net of taxes	—		—		—		—		(6)
Dividend equivalents on RSUs	—		—		(4)		—		—

Balance, June 30, 2020	1,741		2,182		40,780		(36,725)		(334)

Net income	—		—		1,353		—		—
Dividends declared and paid ($0.90 per share)	—		—		(825)		—		—
Common stock issued for stock-based awards	—		26		—		97		—
Stock repurchases	—		—		—		(15)		—
Stock compensation	—		50		—		—		—
Other comprehensive income (loss), net of taxes	—		—		—		—		(1)
Dividend equivalents on RSUs	—		—		(3)		—		—
Other	—		(1)		—		—		—
Balance, September 30, 2020	$	1,741	$	2,257	$	41,305	$	(36,643)	$	(335)

Contingencies

Indemnification guarantees

We routinely sell products with an intellectual property indemnification included in the terms of sale. Historically, we have had only minimal, infrequent losses associated with these indemnities. Consequently, we cannot reasonably estimate any future liabilities that may result.

Warranty costs/product liabilities

We accrue for known product-related claims if a loss is probable and can be reasonably estimated. During the periods presented, there have been no material accruals or payments regarding product warranty or product liability. Historically, we have experienced a low rate of payments on product claims. Although we cannot predict the likelihood or amount of any future claims, we do not believe they will have a material adverse effect on our financial condition, results of operations or liquidity. Our stated warranties for semiconductor products obligate us to repair, replace or credit the purchase price of a covered product back to the buyer. Product claim consideration may exceed the price of our products.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

General

We are subject to various legal and administrative proceedings. Although it is not possible to predict the outcome of these matters, we believe that the results of these proceedings will not have a material adverse effect on our financial condition, results of operations or liquidity.

Supplemental financial information

Property, plant and equipment at cost

In October 2021, we completed our acquisition of Micron Technology’s 300-millimeter semiconductor factory in Lehi, Utah, for cash consideration of about $900 million.

Details on amounts reclassified out of accumulated other comprehensive income (loss), net of taxes, to net income

Our Consolidated Statements of Comprehensive Income include items that have been recognized within net income during the third quarters and first nine months of 2021 and 2020. The table below details where these transactions are recorded in our Consolidated Statements of Income.


	For Three Months Ended				For Nine Months Ended				Impact to Related Statement of Income Lines
	September 30,				September 30,
	2021		2020		2021		2020
Net actuarial losses of defined benefit plans:
Recognized net actuarial loss and settlement losses (a)	$	10	$	9	$	31	$	28	Decrease to OI&E
Tax effect	(2)		(2)		(7)		(7)		Decrease to provision for income taxes
Recognized within net income, net of taxes	$	8	$	7	$	24	$	21	Decrease to net income

Prior service credit of defined benefit plans:
Amortization of prior service credit (a)	$	(1)	$	(1)	$	(1)	$	(1)	Increase to OI&E
Tax effect	—		—		—		—		Increase to provision for income taxes
Recognized within net income, net of taxes	$	(1)	$	(1)	$	(1)	$	(1)	Increase to net income

(a)Detailed in Note 5.

Stock compensation

Total shares of 1,064,600 and 6,163,997 were issued from treasury shares during the third quarter and first nine months of 2021, respectively, related to stock compensation.

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