Texas Instruments Inc. (TXN) | Analysis of Investments

Investment Accounting Policy

Texas Instruments Inc. presents investments on balance sheets as cash equivalents, short-term investments or long-term investments. Specific details are as follows:

Cash equivalents and short-term investments

Texas Instruments Inc. considers investments in debt securities with original maturities of three months or less to be cash equivalents. Texas Instruments Inc. considers investments in liquid debt securities with maturities beyond three months from the date of investment as being available for use in current operations and include these investments in short-term investments. The primary objectives of 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 auction-rate securities, mutual funds, venture capital funds and non-marketable equity securities.

Classification of investments

Depending on reasons for holding the investment and ownership percentage, Texas Instruments Inc. classifies investments in securities as available-for-sale, trading, equity-method or cost-method investments. Texas Instruments Inc. determines cost or amortized cost, as appropriate, on a specific identification basis.

Source: Texas Instruments Inc., Annual Report

Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities

Texas Instruments Inc., adjustment to Net Income

	12 months ended	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
	Net income (as reported)
	Add: Changes in available-for-sale investments
	Net income (adjusted)

Adjusted Ratios: Mark to Market Available-for-sale Securities (Summary)

Texas Instruments Inc., adjusted ratios

		Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
	Net Profit Margin
	Reported net profit margin	%	%	%	%	%
	Adjusted net profit margin	%	%	%	%	%
	Return on Equity (ROE)
	Reported ROE	%	%	%	%	%
	Adjusted ROE	%	%	%	%	%
	Return on Assets (ROA)
	Reported ROA	%	%	%	%	%
	Adjusted ROA	%	%	%	%	%

Adjusted Net Profit Margin

		Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
	As Reported
	Net income (USD $ in millions)
	Revenue (USD $ in millions)
	Net profit margin1	%	%	%	%	%
	Adjusted: Mark to Market Available-for-sale Securities
	Adjusted net income (USD $ in millions)
	Revenue (USD $ in millions)
	Adjusted net profit margin2	%	%	%	%	%

2010 Calculations

Adjusted Return On Equity (ROE)

		Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
	As Reported
	Net income (USD $ in millions)
	Stockholders’ equity (USD $ in millions)
	ROE1	%	%	%	%	%
	Adjusted: Mark to Market Available-for-sale Securities
	Adjusted net income (USD $ in millions)
	Stockholders’ equity (USD $ in millions)
	Adjusted ROE2	%	%	%	%	%

2010 Calculations

Adjusted Return On Assets (ROA)

		Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
	As Reported
	Net income (USD $ in millions)
	Total assets (USD $ in millions)
	ROA1	%	%	%	%	%
	Adjusted: Mark to Market Available-for-sale Securities
	Adjusted net income (USD $ in millions)
	Total assets (USD $ in millions)
	Adjusted ROA2	%	%	%	%	%

2010 Calculations