Investor Presentaiton slide image

Investor Presentaiton

FORM 10-K In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This standard provides for several changes to the accounting for stock compensation, including a requirement that certain income-tax effects of awards be recognized in Net income in the period in which the awards are settled or vested, rather than recognized as Paid-in capital in the equity section of the balance sheet. The standard also changes the presentation of excess tax benefits and statutory tax withholdings in the statement of cash flows. This standard is effective for interim and annual periods beginning January 1, 2017; however, early adoption is permitted. We elected to adopt this standard in the fourth quarter of 2016, which requires us to reflect any adjustments as of January 1, 2016, the beginning of the annual period that includes the adoption. Each of the provisions within this standard has its own specified transition method; some have been applied prospectively and others have been applied on a retrospective basis. The primary effects of early adoption on our financial statements are as follows: • . Income statement effects: Prospective basis - Net excess tax benefits and deficiencies will now be included in Provision for income taxes, rather than in Paid-in capital. The new standard requires this to be adopted on a prospective basis, with an initial adjustment to interim periods in the year of adoption. We recorded adjustments within Provision for income taxes, rather than in Paid-in capital, for excess tax benefits of $43 million, $40 million and $50 million for the first, second and third quarters of 2016, respectively. Excess tax benefits for the fourth quarter of 2016 were $17 million, for a total of $150 million recognized for all of 2016. See Note 6 for more information on income taxes. This standard also affects the average shares outstanding used in the diluted EPS calculation. The effects of these adjustments are shown in the table below. Results for prior annual periods were not affected. Cash flow effects: Retrospective basis - Excess tax benefits are now included in Cash flows from operating activities rather than Cash flows from financing activities in our Consolidated Statements of Cash Flows. We elected to apply this change in presentation retrospectively, and thus, prior periods have been adjusted. Taxes paid for employee shares withheld upon the vesting of RSUs are now included in Cash flows from financing activities in our Consolidated Statements of Cash Flows. This change is required to be applied retrospectively, and thus, prior periods have been adjusted. Under this standard, entities are permitted to make an accounting policy election to either estimate forfeitures on stock compensation awards, as previously required, or to recognize forfeitures as they occur. We elected not to change our policy on accounting for forfeitures and will continue to estimate forfeitures expected to occur in determining the amount of compensation cost to be recognized in each period. The effects of our adoption of the new standard on our unaudited quarterly results for 2016 are as follows: 1st Quarter 2nd 3rd Reported Recast Reported Recast Reported Recast Income statement data: Provision for income taxes $ 282 $ 239 Net income 668 711 $ 323 779 $ 283 819 $ 413 $ 363 968 1,018 Average diluted shares outstanding, in millions Basic EPS 1,018 1,022 1,016 1,020 1,017 1,023 $ 0.65 $ 0.70 $ 0.77 $ 0.65 $ 0.69 $ 0.81 $ 0.95 $ 1.00 $ 0.76 $ 0.79 $ 0.94 $ 0.98 Diluted EPS Cash flow data: Cash flows from operating activities Cash flows from financing activities $ 547 (839) $ 653 (945) $ 1,069 (1,180) $ 1,109 (1,220) $1,413 (676) $ 1,465 (728) Certain annual cash flow information has also been adjusted to reflect select aspects of the new standard that are applied retrospectively. The impact to our previously reported annual results is as follows: Cash flows from operating activities Cash flows from financing activities 36 For Years Ended December 31, 2015 2014 Reported Recast $ 4,268 (4,165) $ 4,397 (4,294) Reported $ 3,892 (3,943) Recast $ 4,054 (4,105) TEXAS INSTRUMENTS . 2016 FORM 10-K
View entire presentation