Altera Announces Third Quarter Results

SAN JOSE, Calif., Oct. 23, 2012 /PRNewswire/ -- Altera Corporation (NASDAQ: ALTR) today announced third quarter sales of $495.0 million, up 6 percent from the second quarter of 2012 and down 5 percent from the third quarter of 2011. Third quarter net income was $157.5 million, $0.49 per diluted share, compared with net income of $162.7 million, $0.50 per diluted share, in the second quarter of 2012 and $185.4 million, $0.57 per diluted share, in the third quarter of 2011.

(Logo: http://photos.prnewswire.com/prnh/20101012/SF78952LOGO)

Year-to-date cash flow from operating activities was $460.5 million. Altera repurchased 1.6 million shares of its common stock during the quarter at a cost of $50.0 million. Altera ended the quarter with $3.7 billion in cash and investments.

Altera's board of directors has declared a quarterly cash dividend of $0.10 per share, to be paid on December 3, 2012 to stockholders of record on November 13, 2012.

"Despite uneven global economic conditions, Altera experienced relatively broad vertical market sequential growth with both our new and mainstream product categories performing well," said John Daane, president, chief executive officer, and chairman of the board. "Our 28 nm opportunity pipeline exceeds that of any prior process node as FPGAs continue to displace ASICs. Altera is the only 28 nm FPGA supplier to offer production-qualified devices across our entire range of product families, which gives us clear advantage as we compete for design wins. Altera is the design-win value leader at 28 nm."

Several recent accomplishments mark the company's continuing progress:

  • Production-qualified devices are now available across Altera's entire 28 nm portfolio of high-end, midrange, and low-cost FPGAs. As the first FPGA supplier to reach this 28 nm industry milestone, Altera's technology leadership, with its unique tailored architecture approach, is successfully delivering a range of products optimized for cost, performance and low power. At the high end, Stratix® V FPGAs are the industry's only production monolithic devices with 28 Gbps integrated transceivers. In the midrange, Arria® V FPGAs use the lowest power while providing optimized performance for a variety of applications including remote radio units, Long-Term Evolution (LTE) wireless communications equipment, in-studio mixers and 10G/40G line cards. Developed on TSMC's 28 nm Low Power (28LP) process, the Cyclone® V FPGA family provides customers the lowest power and lowest cost at optimal performance levels needed for today's high-volume, cost-sensitive applications.
  • Altera has unveiled several key innovations planned for its next generation of 20 nm products. Extending the promise of silicon convergence, Altera is offering customers the ultimate system-integration platform, combining the hardware programmability of FPGAs with the software flexibility of digital signal processors and microprocessors along with the efficiencies of application-specific hard intellectual property. The architectural, software and process innovations Altera is making at 20 nm enable the development of an enhanced mixed-system fabric that delivers new levels of performance, bandwidth, integration and power efficiency. Altera's 20 nm mixed-system fabric includes the integration of 40 Gbps transceiver technology, a next-generation variable-precision digital signal processing (DSP) block architecture that delivers over 5 TFLOPs of IEEE 754 floating-point performance, and heterogeneous 3D integrated circuits that integrate FPGAs with a user-customizable HardCopy® ASIC or a variety of other technologies, including memory, third-party ASICs and optical interfaces.
  • For the second consecutive year, Altera has been selected as one of the 100 most innovative companies in the world, according to a study just published by Forbes Magazine. The Forbes ranking is based on "Innovation Premium," an indication of the premium the stock market gives a company because investors expect it to launch new offerings and enter new markets. The algorithm was developed by Hal Gregersen, Jeff Dyer, and Clayton Christensen, and is described in their book, The Innovator's DNA (Harvard Business Press, 2011).

SELECTED THIRD QUARTER REVENUE AND RELATED RESULTS

Key New Product Devices


Sequential Comparisons

Stratix V


124

%

Stratix IV


1

%

Arria II


(9)

%

Cyclone IV


27

%

HardCopy IV


(10)

%



 

Vertical Markets


Sequential Comparisons


Comments

Telecom & Wireless


7%


Telecom and Wireless both up

Industrial Automation,

Military & Automotive


11%


Industrial, Military, and Automotive all up

Networking, Computer & Storage


5%


Networking up and Computer and Storage slightly down

Other


3%





 

($ in thousands)
Key Ratios & Information


September 28, 2012


June 29, 2012

Current Ratio


6:1


6:1

Liabilities/Equity


1:2


1:2

Quarterly Operating Cash Flows


$ 285,203


$ 85,539

TTM Return on Equity


19%


20%

Quarterly Depreciation Expense


$ 9,677


$ 7,688

Quarterly Capital Expenditures


$ 17,749


$ 7,409

Inventory MSOH (1): Altera


3.1


3.1

Inventory MSOH (1): Distribution


0.6


0.6

Cash Conversion Cycle (Days)


140


130

Turns


37%


38%

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


September 28,

2012


June 29,

2012


September 30,

2011


Sequential Change


Year-

Over-Year

Change

Geography










Americas

19

%


17

%


16

%


15

%


6

%

Asia Pacific

43

%


46

%


44

%


1

%


(6)

%

EMEA

25

%


23

%


25

%


18

%


(5)

%

Japan

13

%


14

%


15

%


(4)

%


(16)

%

Net Sales

100

%


100

%


100

%


6

%


(5)

%
















Product Category










New

31

%


31

%


27

%


8

%


8

%

Mainstream

32

%


30

%


32

%


13

%


(8)

%

Mature and Other

37

%


39

%


41

%


1

%


(12)

%

Net Sales

100

%


100

%


100

%


6

%


(5)

%
















Vertical Market










Telecom & Wireless

45

%


45

%


42

%


7

%


2

%

Industrial Automation, Military & Automotive

20

%


19

%


22

%


11

%


(11)

%

Networking, Computer & Storage

17

%


18

%


20

%


5

%


(21)

%

Other

18

%


18

%


16

%


3

%


3

%

Net Sales

100

%


100

%


100

%


6

%


(5)

%
















FPGAs and CPLDs










FPGA

82

%


85

%


82

%


4

%


(5)

%

CPLD

9

%


9

%


9

%


4

%


(9)

%

Other Products

9

%


6

%


9

%


45

%


(6)

%

Net Sales

100

%


100

%


100

%


6

%


(5)

%




Product Category Description

  • New Products include the Stratix® V (including GS, GT and GX), Stratix IV (including E, GX and GT), Arria® V, Arria II (including GX and GZ), Cyclone® V, Cyclone IV (including E and GX), MAX® V and HardCopy® IV devices.
  • Mainstream Products include the Stratix III, Cyclone III, MAX II and HardCopy III devices.
  • Mature and Other Products include the Stratix II (and GX), Stratix (and GX), 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 Fourth Quarter 2012

Sales and Income Statement



Sequential Sales

Down 6% to 10%

Gross Margin

69% - 70%

Research and Development

$93 to 95 million

SG&A

$74 to 75 million

Tax Rate

13% +/- .5%

Diluted Share Count

Approximately 324 million

Turns

Low-40's

MSOH

High 3's

Vertical Market



Telecom & Wireless

Telecom and Wireless both down

Industrial Automation, Military & Automotive

Down slightly overall with all vertical markets weak

Networking, Computer & Storage

Networking, Computer and Storage all down

Other

Down

Third 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.

Fourth Quarter Update and 2013 Guidance

Altera's fourth quarter business update will be issued in a press release available after the market close on December 4, 2012. The release will also include Altera financial guidance for 2013. A conference call with the investment community will take place at 1:45 PM Pacific time on December 4, 2012, to review and comment on 2013 guidance.

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, our expectation of expansion in 28 nm FPGA opportunities, our ability to displace ASICs and ASSPs and our competitive position at 28 nm and our product developments at the 20 nm process node and their effect on the magnitude of our market opportunity, as well as 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 and HardCopy® IV device families, 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.

About Altera

Altera programmable solutions enable system and semiconductor companies to rapidly and cost-effectively innovate, differentiate and win in their markets. Find out more about Altera's FPGA, CPLD and ASIC devices at www.altera.com. Follow Altera via Facebook, RSS and Twitter.

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


Nine Months Ended



September 28,

2012


June 29,

2012


September 30,

2011


September 28,

2012


September 30,

2011












Net sales


$

495,010



$

464,831



$

522,474



$

1,343,595



$

1,606,671


Cost of sales


152,007



141,315



166,938



408,156



473,565


Gross margin


343,003



323,516



355,536



935,439



1,133,106


Operating expense











Research and development expense


91,606



92,356



80,771



266,259



235,438


Selling, general, and administrative expense


74,243



71,796



69,345



215,824



208,550


Total operating expense


165,849



164,152



150,116



482,083



443,988


Operating margin (1)


177,154



159,364



205,420



453,356



689,118


Compensation expense (gain) — deferred compensation plan


3,274



(2,313)



(6,642)



6,697



(4,926)


(Gain)/loss on deferred compensation plan securities


(3,274)



2,313



6,642



(6,697)



4,926


Interest income and other


(2,775)



(1,415)



(663)



(5,997)



(2,505)


Loss/(gain) reclassified from other comprehensive income


108



(69)





(63)




Interest expense


2,333



2,116



806



5,386



2,717


Income before income taxes


177,488



158,732



205,277



454,030



688,906


Income tax expense (benefit)


19,999



(3,947)



19,873



18,028



64,806


Net income


157,489



162,679



185,404



436,002



624,100













Other comprehensive income:











Unrealized gain on investments











Unrealized holding gain on investments arising during period, net of tax of $43, $8 and $108


3,620



2,799





6,723




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


(41)



(3)





(64)






3,579



2,796





6,659




Unrealized gain on derivatives











Unrealized (loss)/gain on derivatives arising during period, net of tax of $6, $34 and $36


(10)



63





67




Less: Reclassification adjustments for loss/(gain) on derivatives included in net income, net of tax of $53, $23 and $2


97



(42)





5






87



21





72




Other comprehensive income


3,666



2,817





6,731




Comprehensive income


$

161,155



$

165,496



$

185,404



$

442,733



$

624,100













Net income per share:











Basic


$

0.49



$

0.51



$

0.58



$

1.36



$

1.94


Diluted


$

0.49



$

0.50



$

0.57



$

1.34



$

1.90













Shares used in computing per share amounts:











Basic


319,870



321,218



321,745



321,200



322,012


Diluted


323,560



325,285



327,044



325,275



328,264













Cash dividends per common share


$

0.10



$

0.08



$

0.08



$

0.26



$

0.20













Tax rate


11.3

%


(2.5)

%


9.7

%


4.0

%


9.4

%

% of Net sales:











Gross margin


69.3

%


69.6

%


68.0

%


69.6

%


70.5

%

Research and development


18.5

%


19.9

%


15.5

%


19.8

%


14.7

%

Selling, general, and administrative


15.0

%


15.4

%


13.3

%


16.1

%


13.0

%

Operating margin(1)


35.8

%


34.3

%


39.3

%


33.7

%


42.9

%

Net income


31.8

%


35.0

%


35.5

%


32.5

%


38.8

%



 

Notes:











(1) We define operating margin as gross margin less research and development and selling, general and administrative expenses, 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


Nine Months Ended

(In thousands, except per share amounts)


September 28,

2012


June 29,

2012


September 30,

2011


September 28,

2012


September 30,

2011

Operating margin (non-GAAP)


$

177,154



$

159,364



$

205,420



$

453,355



$

689,118


Compensation (gain) expense — deferred compensation plan


3,274



(2,313)



(6,642)



6,697



(4,926)


Income from operations (GAAP)


$

173,880



$

161,677



$

212,062



$

446,658



$

694,044


ALTERA CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)






(In thousands, except par value amount)


September 28,

2012


December 31,

2011






Assets





Current assets:





Cash and cash equivalents


$

2,849,829



$

3,371,933

Short-term investments


144,195



65,222

Total cash, cash equivalents, and short-term investments


2,994,024



3,437,155

Accounts receivable, net


348,273



232,273

Inventories


157,848



122,279

Deferred income taxes — current


65,223



58,415

Deferred compensation plan — marketable securities


58,151



54,041

Deferred compensation plan — restricted cash equivalents


18,524



17,938

Other current assets


42,134



52,710

Total current assets


3,684,177



3,974,811

Property and equipment, net


200,172



171,721

Long-term investments


685,945



74,033

Deferred income taxes — non-current


23,047



26,629

Other assets, net


49,519



35,074

Total assets


$

4,642,860



$

4,282,268






Liabilities and stockholders' equity





Current liabilities:





Accounts payable


$

45,589



$

52,154

Accrued liabilities


39,183



34,029

Accrued compensation and related liabilities


43,563



78,181

Deferred compensation plan obligations


76,675



71,979

Deferred income and allowances on sales to distributors


400,351



279,876

Credit facility




500,000

Total current liabilities


605,361



1,016,219

Income taxes payable — non-current


261,843



263,423

Long-term debt


500,000



Other non-current liabilities


9,496



8,730

Total liabilities


1,376,700



1,288,372

Stockholders' equity:





Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 320,563 shares at September 28, 2012 and 322,054 shares at December 31, 2011


321



322

Capital in excess of par value


1,107,614



1,050,752

Retained earnings


2,151,627



1,942,955

Accumulated other comprehensive income (loss)


6,598



(133)

Total stockholders' equity


3,266,160



2,993,896

Total liabilities and stockholders' equity


$

4,642,860



$

4,282,268






ALTERA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)



Nine Months Ended


September 28,

2012


September 30,

2011





Cash Flows from Operating Activities:




Net income

$

436,002



$

624,100

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




Depreciation and amortization

26,426



23,443

Stock-based compensation

70,790



59,983

Deferred income tax benefit

(3,367)



(9,549)

Tax effect of employee stock plans

14,381



26,077

Excess tax benefit from employee stock plans

(20,790)



(22,959)

Changes in assets and liabilities:




Accounts receivable, net

(116,000)



(23,228)

Inventories

(35,569)



12,496

Other assets

5,478



47,986

Accounts payable and other liabilities

(34,670)



(40,004)

Deferred income and allowances on sales to distributors

120,475



11,115

Income taxes payable

(650)



30,122

Deferred compensation plan obligations

(2,001)



(345)

Net cash provided by operating activities

460,505



739,237

Cash Flows from Investing Activities:




Purchases of property and equipment

(53,712)



(23,178)

Sales of deferred compensation plan securities, net

2,001



345

Purchases of available-for-sale securities

(819,662)



(130,146)

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

135,650



1,750

Purchases of intangible assets

(2,280)



Purchases of other investments

(4,510)



Net cash used in investing activities

(742,513)



(151,229)

Cash Flows from Financing Activities:




Proceeds from issuance of common stock through various stock plans

37,514



93,619

Shares withheld for employee taxes

(30,529)



(31,122)

Payment of dividends to stockholders

(83,570)



(64,328)

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

(179,057)



(197,018)

Excess tax benefit from employee stock plans

20,790



22,959

Net cash used in financing activities

(240,096)



(175,890)

Net (decrease) increase in cash and cash equivalents

(522,104)



412,118

Cash and cash equivalents at beginning of period

3,371,933



2,765,196

Cash and cash equivalents at end of period

$

2,849,829



$

3,177,314

 

SOURCE Altera Corporation



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