Zeev's Turnips Patch-No Politics (ZEEV)

[marketmaven]

Q4 EPS Aided by 7% Lower Tax Rate, 2% for Whole FY

"In the fourth quarter, OI&E of $86 million increased $24 million sequentially primarily due to the resolution of an open sales-tax item associated with the company's previously divested defense electronics business and, to a lesser extent, higher interest income generated from higher cash balances and higher interest rates. Compared with the year-ago period, OI&E decreased by $45 million due to lower investment gains that were offset in part by the partial settlement of matters related to grants from the Italian government regarding TI's former memory business operations, higher interest income and the resolution of an open sales-tax item for the divested defense electronics business. In the fourth quarter of 2003, the company sold its remaining shares of Micron Technologies, Inc. (Micron) common stock for a pre- tax investment gain of $97 million.

For the year, OI&E of $235 million decreased by $89 million for the same reason cited in the year-ago quarterly comparison. In 2003, OI&E included pre-tax investment gains of $203 million from the sale of Micron stock.

In the fourth quarter, interest expense of $2 million decreased $2 million sequentially and $6 million from the year-ago quarter. For the year, interest expense of $21 million decreased $18 million due to the company's lower debt level, which primarily resulted from TI's redemption of $400 million of notes that matured in the third quarter of 2004.

Net Income

In the fourth quarter, net income was $490 million, or $0.28 per share. For the year, net income was $1861 million, or $1.05 per share.

The effective tax rate for the fourth quarter was 14 percent, lower than the previously anticipated tax rate of 21 percent due to a cumulative reduction in tax expense that primarily resulted from the resolution of several foreign tax items.

The effective annual tax rate for 2004 was 23 percent, lower than the previously anticipated annual tax rate of 25 percent. As expected, the revised rate reflects the reinstatement of the federal research tax credit that was signed into law on October 4, 2004."