Investor Presentaiton
FORM 10-K
Earnings per share (EPS)
Unvested share-based payment awards that contain non-forfeitable rights to receive dividends or dividend equivalents, such as
our restricted stock units (RSUS), are considered to be participating securities and the two-class method is used for purposes of
calculating EPS. Under the two-class method, a portion of Net income is allocated to these participating securities and, therefore,
is excluded from the calculation of EPS allocated to common stock, as shown in the table below.
Computation and reconciliation of earnings per common share are as follows (shares in millions):
For Years Ended December 31,
2016
2015
2014
Net
Income
Shares
EPS
Net
Income
Shares
EPS
Net
Income
Shares
EPS
Basic EPS:
Net income
$3,595
Income allocated to RSUs
(45)
$ 2,986
(43)
$ 2,821
(44)
Income allocated to common stock for
basic EPS calculation
$ 3,550
1,003 $3.54 $2,943
1,030 $2.86
$ 2,777
1,065
$2.61
Adjustment for dilutive shares:
Stock compensation plans
Diluted EPS:
Net income
Income allocated to RSUS
Income allocated to common stock for
diluted EPS calculation
18
13
15
$3,595
(44)
$2,986
(42)
$2,821
(43)
$ 3,551 1,021
$ 3.48 $ 2,944 1,043 $2.82 $2,778
1,080
$ 2.57
No potentially dilutive securities were excluded from the computation of diluted earnings per common share during 2016.
Potentially dilutive securities representing 12 million and 11 million shares of common stock that were outstanding in 2015 and
2014, respectively, were excluded from the computation of diluted earnings per common share for these periods because their
effect would have been anti-dilutive.
Investments
We present investments on our Consolidated Balance Sheets as cash equivalents, short-term investments or long-term
investments. Specific details are as follows:
•
Cash equivalents and short-term investments: We consider investments in debt securities with maturities of 90 days or less
from the date of our investment to be cash equivalents. We consider investments in debt securities with maturities beyond
90 days from the date of our investment as being available for use in current operations and include them in short-term
investments. The primary objectives of our cash equivalent and short-term investment activities are to preserve capital and
maintain liquidity while generating appropriate returns.
• Long-term investments: Long-term investments consist of mutual funds, venture capital funds and non-marketable equity
securities.
Classification of investments: Depending on our reasons for holding the investment and our ownership percentage, we
classify our investments as either available for sale, trading, equity method or cost method, which are more fully described
in Note 8. We determine cost or amortized cost, as appropriate, on a specific identification basis.
Inventories
Inventories are stated at the lower of cost or estimated net realizable value. Cost is generally computed on a currently adjusted
standard cost basis, which approximates cost on a first-in first-out basis. Standard cost is based on the normal utilization of
installed factory capacity. Cost associated with underutilization of capacity is expensed as incurred. Inventory held at consignment
locations is included in our finished goods inventory. Consigned inventory was $334 million and $275 million as of
December 31, 2016 and 2015, respectively.
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TEXAS INSTRUMENTS . 2016 FORM 10-KView entire presentation