Altera Announces Second Quarter Results

SAN JOSE, Calif., July 23, 2013 /PRNewswire/ -- Altera Corporation (NASDAQ: ALTR) today announced second quarter sales of $421.8 million, up 3 percent from the first quarter of 2013 and down 9 percent from the second quarter of 2012. Second quarter net income was $101.5 million, $0.31 per diluted share, compared with net income of $120.2 million, $0.37 per diluted share, in the first quarter of 2013 and $162.7 million, $0.50 per diluted share, in the second quarter of 2012.

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Year-to-date cash flow from operating activities was $214.0 million. Altera repurchased 1.7 million shares of its common stock during the quarter at a cost of $55.0 million. Altera ended the quarter with $3.6 billion in cash and investments.

As previously announced, Altera's board of directors has declared a quarterly cash dividend of $0.15 per share, to be paid on September 3, 2013 to stockholders of record on August 12, 2013.

"As anticipated, the pace of business picked up, and backlog has increased," said John Daane, president, chief executive officer, and chairman of the board. "We have announced our next generation of FPGAs sourced by TSMC for 20 nm devices and, for the first time, Intel, for 14 nm FinFET devices. This combination gives us an ideal blend of manufacturing processes to optimize performance across our next generation of FPGAs. As the only major FPGA company with access to the generation-ahead Intel FinFET technology for our high end devices, which typically are about half of the FPGA market, our competitive advantage is substantial."

Several recent accomplishments mark the company's continuing progress:

  • Altera has announced its Generation 10 FPGAs and SoCs, offering system developers breakthrough levels of performance and power efficiencies. Stratix® 10 FPGAs and SoCs leverage Intel's 14 nm Tri-Gate process and an enhanced architecture to deliver core performance two times higher than current high-end Altera FPGAs, while enabling an up to 70 percent power savings. Stratix 10 FPGAs and SoCs provide more than 4 million logic elements (LEs) on a single die, 56-Gbps transceivers, a third-generation ultra-high-performance processor system, and multi-die 3D solutions capable of integrating SRAM, DRAM and ASICs.

    Arria® 10 FPGAs and SoCs use TSMC's 20 nm process and reinvent the midrange by simultaneously surpassing Altera's current high-end FPGAs in performance while delivering 40 percent lower power than today's midrange devices. Reflecting the industry trend toward silicon convergence, Arria 10 FPGAs and SoCs offer the highest degree of system integration available in midrange devices, including 1.15 million LEs, integrated hard intellectual property and a second-generation processor system that features a 1.5 GHz dual-core ARM® Cortex™-A9 processor. Arria 10 FPGAs and SoCs also provide four times greater bandwidth compared to the current generation, including 28-Gbps transceivers, and three times higher system performance.

    Early access customers are using the Quartus® II software today for Arria 10 product development.

    Initial samples of Arria 10 devices will be available in early 2014 with 14 nm Stratix 10 FPGA test chips coming in 2013.

  • Altera acquired Enpirion, Inc., the industry's leading provider of high-efficiency, integrated power conversion products known as PowerSoCs (power system-on-chip). The combination of Altera's FPGAs with Enpirion's PowerSoCs offers customers higher performance, lower system power, higher reliability, smaller footprint and faster time-to-market. Enpirion's key enabling power technologies—high-frequency switching, magnetics and packaging—are engineered into complete power system-on-chip products. Enpirion's portfolio of DC-DC converter PowerSoCs with integrated inductors enable the industry's smallest solution footprints and are recognized for their high efficiency, low noise, exceptional thermal performance, high reliability and ease-of-use. Unlike discrete power products, Enpirion's turnkey solutions give designers complete power systems that are fully simulated, characterized, validated and production qualified. Enpirion's technology, when used with an Altera FPGA, increases Altera's share of the customer's bill of materials while, at the same time, reducing the customer's overall bill of materials cost.

 

SELECTED SECOND QUARTER REVENUE AND RELATED RESULTS






Key New Product Devices


Sequential Comparisons

Stratix V


(22)

%

Stratix IV


11

%

Arria II


(13)

%

Arria V


113

%

Cyclone IV


17

%

Cyclone V


73

%

HardCopy IV


64

%











($ in thousands) Key Ratios & Information


June 28, 2013


March 29, 2013

Current Ratio


6:1



7:1


Liabilities/Equity


1:2



1:3


Quarterly Operating Cash Flows


$

64,565



$

149,478


TTM Return on Equity


15

%


17

%

Quarterly Depreciation Expense


$

10,285



$

10,175


Quarterly Capital Expenditures


$

7,221



$

5,984


Inventory MSOH (1): Altera


3.0



3.3


Inventory MSOH (1): Distribution


0.5



0.6


Cash Conversion Cycle (Days)


149



117


Turns


49

%


43

%

Book to Bill


>1.0



<1.0







Note (1): MSOH: Months Supply On Hand





 

 

ALTERA CORPORATION

NET SALES SUMMARY

(Unaudited)

















Three Months Ended


Quarterly Growth Rate


June 28,

2013


March 29,

2013


June 29,

2012


Sequential
Change


Year-

Over-Year

Change

Geography










Americas

17

%


20

%


17

%


(14)

%


(12)

%

Asia Pacific

39

%


38

%


46

%


4

%


(22)

%

EMEA

28

%


27

%


23

%


7

%


11

%

Japan

16

%


15

%


14

%


13

%


2

%

Net Sales

100

%


100

%


100

%


3

%


(9)

%

















Product Category










New

41

%


39

%


31

%


6

%


20

%

Mainstream

28

%


29

%


30

%


0

%


(14)

%

Mature and Other

31

%


32

%


39

%


1

%


(28)

%

Net Sales

100

%


100

%


100

%


3

%


(9)

%

















Vertical Market










Telecom & Wireless

42

%


41

%


45

%


4

%


(16)

%

Industrial Automation, Military & Automotive

22

%


22

%


19

%


3

%


2

%

Networking, Computer & Storage

18

%


18

%


18

%


0

%


(6)

%

Other

18

%


19

%


18

%


2

%


(8)

%

Net Sales

100

%


100

%


100

%


3

%


(9)

%

















FPGAs and CPLDs










FPGA

83

%


85

%


85

%


1

%


(11)

%

CPLD

9

%


8

%


9

%


9

%


(10)

%

Other Products

8

%


7

%


6

%


22

%


19

%

Net Sales

100

%


100

%


100

%


3

%


(9)

%

Product Category Description

  • New Products include the Stratix® V, Stratix IV, Arria® V, Arria II, Cyclone® V, Cyclone IV, MAX® V, HardCopy® IV devices and Enpirion PowerSoCs.
  • Mainstream Products include the Stratix III, Cyclone III, MAX II and HardCopy III devices.
  • Mature and Other Products include the Stratix II, Stratix, Arria GX, Cyclone II, Cyclone, Classic™, MAX 3000A, MAX 7000, MAX 7000A, MAX 7000B, MAX 7000S, MAX 9000, HardCopy II, HardCopy, FLEX® series, APEX™ series, Mercury™, Excalibur™ devices, configuration and other devices, intellectual property cores, and software and other tools.

 

Business Outlook for the Third Quarter 2013


Sales and Income Statement



Sequential Sales

5% to 9%

Gross Margin

Approximately 68%

Research and Development

$99 to 101 million

SG&A

$80 to 82 million

Tax Rate

12% to 13%

Diluted Share Count

Approximately 323 million

Turns

Low 40's

MSOH

Mid 3's


Vertical Market



Telecom & Wireless

Up

Industrial Automation, Military & Automotive

Up

Networking, Computer & Storage

Up

Other

Flat

 

Second Quarter Earnings Conference Call

A conference call will be held today at 1:45 p.m. Pacific time to discuss the quarter's results and management's current business outlook. The web cast and subsequent replay will be available in the Investor Relations section of the company's website at www.altera.com. A telephonic replay of the call may be accessed later in the day by calling (719) 457-0820 and referencing confirmation code 258712. The telephonic replay will be available for two weeks following the live call.

Forward-Looking Statements

Statements in this press release that are not historical are "forward-looking statements" as the term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally written in the future tense and/or preceded by words such as "will," "expects," "anticipates," or other words that imply or predict a future state. Forward-looking statements include, but are not limited to, statements regarding the competitive advantage related to the use of Intel's 14 nm process, product performance parameters, the availability of Arria 10 samples in 2014, and any projection of revenue, gross margin, expense or other financial items discussed in the Business Outlook section or elsewhere in this press release. Investors are cautioned that all forward-looking statements in this release involve risks and uncertainty that can cause actual results to differ from those currently anticipated, due to a number of factors, including without limitation, current global economic conditions, customer business environment, customer inventory levels, vertical market mix, market acceptance of the company's products, product introduction schedules, the rate of growth of the company's new products including Cyclone® V, Cyclone IV, Arria® V, Arria II, Stratix® V, Stratix IV FPGAs, MAX® V CPLDs, HardCopy® IV device families and Enpirion PowerSoCs, as well as changes in economic conditions and other risk factors discussed in documents filed by the company with the Securities and Exchange Commission (SEC) from time to time. Copies of Altera's SEC filings are posted on the company's website and are available from the company without charge. Forward-looking statements are made as of the date of this release, and, except as required by law, the company does not undertake an obligation to update its forward-looking statements to reflect future events or circumstances.

Mobile Device Investor Information

Altera now provides highlights of its investor relations web page optimized for mobile users. Investors can equip their mobile devices with this new capability by linking to http://phx.corporate-ir.net/Mobile.view?c=83265.

About Altera

Altera® programmable solutions enable designers of electronic systems to rapidly and cost effectively innovate, differentiate and win in their markets. Altera offers FPGAs, SoCs, CPLDs, ASICs and complementary technologies, such as power management, to provide high-value solutions to customers worldwide. Follow Altera via Facebook, Twitter, LinkedIn, Google+ and RSS, and subscribe to product update emails and newsletters. Visit www.altera.com.

ALTERA, ARRIA, CYCLONE, HARDCOPY, MAX, MEGACORE, NIOS, QUARTUS and STRATIX words and logos are trademarks of Altera Corporation and registered in the U.S. Patent and Trademark Office and in other countries. All other words and logos identified as trademarks or service marks are the property of their respective holders as described at www.altera.com/legal.





INVESTOR CONTACT


MEDIA CONTACT

Scott Wylie - Vice President


Sue Martenson - Senior Manager

Investor Relations


Public Relations

(408) 544-6996


(408) 544-8158

swylie@altera.com


newsroom@altera.com

 

ALTERA CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



































Three Months Ended


Six Months Ended

(In thousands, except per share amounts)


June 28,

2013


March 29,

2013


June 29,

2012


June 28,

2013


June 29,

2012












Net sales


$

421,759



$

410,501



$

464,831



$

832,260



$

848,585


Cost of sales


135,104



126,083



141,315



261,187



256,149


Gross margin


286,655



284,418



323,516



571,073



592,436


Operating expense











Research and development expense


95,489



87,717



92,143



183,206



174,227


Selling, general, and administrative expense


77,869



78,600



71,796



156,469



141,581


Amortization of acquisition-related intangible assets


915



213



213



1,128



426


Total operating expense


174,273



166,530



164,152



340,803



316,234


Operating margin (1)


112,382



117,888



159,364



230,270



276,202


Compensation (benefit)/expense — deferred compensation plan


(160)



3,422



(2,313)



3,262



3,423


Loss/(gain) on deferred compensation plan securities


160



(3,422)



2,313



(3,262)



(3,423)


Interest income and other


(2,778)



(1,659)



(1,415)



(4,437)



(3,222)


Gain reclassified from other comprehensive income


(42)



(54)



(69)



(96)



(171)


Interest expense


3,389



2,465



2,116



5,854



3,053


Income before income taxes


111,813



117,136



158,732



228,949



276,542


Income tax expense/(benefit)


10,304



(3,053)



(3,947)



7,251



(1,971)


Net income


101,509



120,189



162,679



221,698



278,513













Other comprehensive (loss)/income:











Unrealized (loss)/gain on investments:











Unrealized holding (loss)/gain on investments arising during period, net of tax of ($47), ($5), $8 ($41) and $66


(9,031)



(1)



2,799



(9,032)



3,103


Less: Reclassification adjustments for gain on investments included in net income, net of tax of $5, $5, $1, $10 and $6


(37)



(49)



(3)



(86)



(23)




(9,068)



(50)



2,796



(9,118)



3,080


Unrealized gain on derivatives:











Unrealized gain on derivatives arising during period, net of tax of $34 and $42






63





77


Less: Reclassification adjustments for gain on derivatives included in net income, net of tax of $23 and $50






(42)





(92)








21





(15)


Other comprehensive (loss)/income


(9,068)



(50)



2,817



(9,118)



3,065


Comprehensive income


$

92,441



$

 

120,139



$

165,496



$

212,580



$

281,578













Net income per share:











Basic


$

0.32



$

0.38



$

0.51



$

0.69



$

0.87


Diluted


$

0.31



$

0.37



$

0.50



$

0.69



$

0.85













Shares used in computing per share amounts:











Basic


320,472



319,867



321,218



320,175



321,898


Diluted


323,527



323,021



325,285



323,279



326,172













Cash dividends paid per common share


$

0.10



$

0.10



$

0.08



$

0.20



$

0.16













Tax rate


9.2

%


(2.6)

%


(2.5)

%


3.2

%


(0.7)

%

% of Net sales:











Gross margin


68.0

%


69.3

%


69.6

%


68.6

%


69.8

%

Research and development


22.6

%


21.4

%


19.8

%


22.0

%


20.5

%

Selling, general, and administrative


18.5

%


19.1

%


15.4

%


18.8

%


16.7

%

Operating margin(1)


26.6

%


28.7

%


34.3

%


27.7

%


32.5

%

Net income


24.1

%


29.3

%


35.0

%


26.6

%


32.8

%

 

 























Notes:











(1) We define operating margin as gross margin less research and development expense, selling, general and administrative expense and amortization of acquisition-related intangible assets, as presented above. This presentation differs from income from operations as defined by U.S. Generally Accepted Accounting Principles ("GAAP"), as it excludes the effect of compensation associated with the deferred compensation plan obligations. Since the effect of compensation associated with our deferred compensation plan obligations is offset by losses/(gains) from related securities, we believe this presentation provides a more meaningful representation of our ongoing operating performance. A reconciliation of operating margin to income from operations follows:










Three Months Ended


Six Months Ended

(In thousands, except per share amounts)


June 28,

2013


March 29,

2013


June 29,

2012


June 28,

2013


June 29,

2012

Operating margin (non-GAAP)


$

112,382



$

117,888



$

159,364



$

230,270



$

276,202


Compensation (benefit) expense — deferred compensation plan


(160)



3,422



(2,313)



3,262



3,423


Income from operations (GAAP)


$

112,542



$

114,466



$

161,677



$

227,008



$

272,779


 

 

ALTERA CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)










(In thousands, except par value amount)


June 28,

2013


December 31,

2012






Assets





Current assets:





Cash and cash equivalents


$

2,788,844



$

2,876,627


Short-term investments


164,835



140,958


Total cash, cash equivalents, and short-term investments


2,953,679



3,017,585


Accounts receivable, net


472,597



323,708


Inventories


134,298



152,721


Deferred income taxes — current


87,270



59,049


Deferred compensation plan — marketable securities


55,753



60,321


Deferred compensation plan — restricted cash equivalents


18,984



17,116


Other current assets


40,095



49,852


Total current assets


3,762,676



3,680,352


Property and equipment, net


200,823



206,148


Long-term investments


689,301



704,758


Deferred income taxes — non-current


5,009



17,082


Other assets, net


221,594



49,488


Total assets


$

4,879,403



$

4,657,828







Liabilities and stockholders' equity





Current liabilities:





Accounts payable


$

39,571



$

50,036


Accrued liabilities


31,072



29,005


Accrued compensation and related liabilities


37,654



40,606


Dividends payable


47,937




Deferred compensation plan obligations


74,737



77,437


Deferred income and allowances on sales to distributors


399,630



345,993


Total current liabilities


630,601



543,077


Income taxes payable — non-current


291,656



272,000


Long-term debt


500,000



500,000


Other non-current liabilities


8,948



9,304


Total liabilities


1,431,205



1,324,381


Stockholders' equity:





Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 319,580 shares at June 28, 2013 and 319,564 shares at December 31, 2012


320



320


Capital in excess of par value


1,180,183



1,122,555


Retained earnings


2,271,221



2,204,980


Accumulated other comprehensive (loss) income


(3,526)



5,592


Total stockholders' equity


3,448,198



3,333,447


Total liabilities and stockholders' equity


$

4,879,403



$

4,657,828







 

ALTERA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)












Six Months Ended

(In thousands)


June 28,

2013


June 29,

2012






Cash Flows from Operating Activities:





Net income


$

221,698



$

278,513


Adjustments to reconcile net income to net cash provided by operating activities:





Depreciation and amortization


22,449



16,323


Amortization of acquisition-related intangible assets


1,128



426


Stock-based compensation


47,274



46,200


Deferred income tax benefit


(21,767)



(12,090)


Tax effect of employee stock plans


1,280



16,500


Excess tax benefit from employee stock plans


(1,148)



(16,434)


Changes in assets and liabilities, net of effects of acquisitions:





  Accounts receivable, net


(147,407)



(192,994)


  Inventories


21,649



(23,811)


  Other assets


29,351



6,019


  Accounts payable and other liabilities


(19,585)



(19,066)


  Deferred income and allowances on sales to distributors


50,886



94,299


  Income taxes payable


14,196



(16,658)


  Deferred compensation plan obligations


(5,961)



(1,925)


Net cash provided by operating activities


214,043



175,302


Cash Flows from Investing Activities:





  Purchases of property and equipment


(23,337)



(31,312)


  Proceeds from sales of deferred compensation plan securities, net


5,961



1,925


  Purchases of available-for-sale securities


(175,642)



(576,568)


  Proceeds from sale and maturity of available-for-sale securities


155,981



92,643


  Acquisitions, net of cash acquired


(145,313)




  Purchases of other investments


(176)




Net cash used in investing activities


(182,526)



(513,312)


Cash Flows from Financing Activities:





  Proceeds from issuance of common stock through various stock plans


27,296



26,086


  Shares withheld for employee taxes


(6,722)



(6,562)


  Payment of dividends to stockholders


(64,048)



(51,558)


  Payment of debt assumed in acquisitions


(22,000)




  Proceeds from issuance of long term debt




500,000


  Repayment of credit facility




(500,000)


  Long-term debt and credit facility issuance costs




(5,244)


  Repurchases of common stock


(54,974)



(129,016)


  Excess tax benefit from employee stock plans


1,148



16,434


Net cash used in financing activities


(119,300)



(149,860)


Net decrease in cash and cash equivalents


(87,783)



(487,870)


Cash and cash equivalents at beginning of period


2,876,627



3,371,933


Cash and cash equivalents at end of period


$

2,788,844



$

2,884,063


 

SOURCE Altera Corporation



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