Instructions:

1. Time Duration 45 minutes

2. Please fill in the Yellow cells only
3. Do not insert or delete any rows or columns
4. Try to LINK yellow cells with the financial statements given rather than MANUALLY PUNCHING the numbers
5. Please write down the assumptions (if any) in the box provided

Definitions:

EBIT: EBIT is Earnings Before Interest and Taxes (Operating profit)

EBITDA: EBITDA is Earnings Before Interest, Taxes, Depreciation and Amortization

Enterprise Value (EV): Enterprise value is a measure of a company's value, often used as an alternative to
straightforward market capitalization. EV is calculated as market cap plus debt, minority interest and preferred
shares, minus total cash and cash e

Market capitalization (Market Cap): It refers to the value of a company, i.e. the market value of its outstanding
shares.

Net Debt: Net debt is calculated as short- and long-term interest-bearing debt minus cash (and equivalents).

Free Cash Flow: Free cash flow (FCF) represents the cash that a company is able to generate (EBITDA) after
laying out the money required to maintain/expand its asset base (Capital expenditure).
 From the information provided please calculate the following:

Consolidated Statements of Income Particulars (in USD mn) 2005

(Millions of dollars, except share and per share amounts) EBIT
2005 2004 EBITDA
Net revenue 13,392 12,580 Market Capitalization
Operating costs and expenses: Net Debt
Cost of revenue 7,029 6,954 Enterprise value
Research and development (R&D) 2,015 1,978 Free Cash Flow
Selling, general and administrative (SG&A) 1,557 1,441 Working Capital
Total 10,601 10,373
Profit from operations 2,791 2,207 Ratio Analysis 2005
Other income (expense) net 206 235 P/E ratio
Interest expense on loans 9 21 Gross margin ratio
Income before income taxes 2,988 2,421 Inventory turnover ratio
Provision for income taxes 664 560 Interest coverage ratio
Net income 2,324 1,861 Receivables turnover ratio
Earnings per common share: Return on equity
Basic 1.42 1.08 Dividend payout ratio
Diluted 1.39 1.05 R&D as percentage of sales
Average shares outstanding (millions):
Basic 1,640 1,730 Growth (YoY) 2005
Diluted 1,671 1,768 Sales
Cash dividends declared per share of common stock 0.11 0.09 Gross margin
EBIT
SG&A
Consolidated Statements of Cash Flows R&D
(Millions of dollars) Net Income
2005 2004
Cash flows from operating activities: Multiples 2005
Net income 2,324 1,861 EV/Sales
Adjustments to reconcile net income to net cash provided by operating activities: EV/EBIT
Depreciation 1,375 1,479 EV/EBITDA
Stock based compensation 178 18 EV/Net Income
Amortization of capitalized software 127 119
Amortization of acquisition related costs 56 70
Purchased in.process research and development - - Assumptions:
(Gains)/losses on investments (2) 1
(Gains)/losses on sales of assets (26) -
Deferred income taxes (194) 68
(Increase)/decrease from changes in:
Accounts receivable (139) (238)
Inventories (25) (272)
Prepaid expenses and other current assets 117 148
Accounts payable and accrued expenses 264 (71)
Income taxes payable 35 59
Accrued profit sharing and retirement (145) 235
Decrease in noncurrent accrued retirement costs (166) (248)
Other (7) (83)
Net cash provided by operating activities 3,772 3,146

Cash flows from investing activities:

Additions to property, plant and equipment (1,330) (1,298)
Sales of assets 47 -
Purchases of cash investments (5,851) (3,674)
Sales and maturities of cash investments 5,430 3,809
Purchases of equity investments (17) (22) Briefly describe the following terms:
Sales of equity and debt investments 53 32
Acquisition of businesses, net of cash acquired (19) (8)
Net cash used in investing activities (1,687) (1,161) Amortization, Impairment & Depreciation

Cash flows from financing activities:

Proceeds from loans and long term debt 275 -
Payments on loans and long term debt (11) (435)
Dividends paid on common stock (173) (154)
Sales and other common stock transactions 461 192
Excess tax benefit from stock option exercises 59 -
Stock repurchases (4,151) (753)
Decrease in restricted cash - -
Net cash used in financing activities (3,540) (1,150)
Effect of exchange rate changes on cash 6 15
Net increase (decrease) in cash and cash equivalents (1,449) 850
Cash and cash equivalents at beginning of year 2,668 1,818
Cash and cash equivalents at end of year 1,219 2,668

Consolidated Balance Sheets

(Millions of dollars, except share amounts)
2005 2004
Assets Stock Split
Current assets:
Cash and cash equivalents 1,219 2,668
Short.term investments 4,116 3,690
Accounts receivable, net of allowances 1,812 1,696
Inventories 1,273 1,256
Deferred income taxes 619 554
Prepaid expenses and other current assets 146 272
Total current assets 9,185 10,136
Property, plant and equipment at cost 8,921 9,573
Less accumulated depreciation (5,022) (5,655)
Property, plant and equipment, net 3,899 3,918
Equity and debt investments 236 264 Weighted average cost of capital
Goodwill 713 701
Acquisition.related intangibles 64 111
Deferred income taxes 393 449
Capitalized software licenses, net 245 307
Prepaid retirement costs 210 277
Other assets 118 136
Total assets 15,063 16,299

Liabilities and Stockholders’ Equity

Current liabilities:
Loans payable and current portion of long.term debt 301 11
Accounts payable 750 552 Performance Analysis (Include DSCR, debt/equity, liquidity, revenue,
Accrued expenses and other liabilities 998 892 working capital and other significant items)
Income taxes payable 163 203
Accrued profit sharing and retirement 134 267
Total current liabilities 2,346 1,925
Long term debt 360 368
Accrued retirement costs 136 589
Deferred income taxes 23 40
Deferred credits and other liabilities 261 314
Total liabilities 3,126 3,236
Stockholders’ equity:
Preferred stock, $25 par value. Authorized – 10,000,000 shares.
Participating cumulative preferred. None issued - -
Common stock, $1 par value. Authorized – 2,400,000,000 shares.
Shares issued: 2005 – 1,738,780,512; 2004 – 1,738,156,615 1,739 1,738
Paid.in capital 742 750
Retained earnings 13,394 11,242
Less treasury common stock at cost.
Shares: 2005 – 142,190,707; 2004 – 20,041,497 (3,856) (480)
Accumulated other comprehensive income (loss), net of tax:
Minimum pension liability (65) (168)
Unrealized gains (losses) on available.for.sale investments (16) (15)
Unearned compensation (1) (4)
Total stockholders’ equity 11,937 13,063
Total liabilities and stockholders’ equity 15,063 16,299

Share price of Texas Instruments as on 4 April 2006 is USD 32.34