Altera Announces Third Quarter Results

SAN JOSE, Calif., Oct. 22, 2013 /PRNewswire/ -- Altera Corporation (NASDAQ: ALTR) today announced third quarter sales of $445.9 million, up 6 percent from the second quarter of 2013 and down 10 percent from the third quarter of 2012. Third quarter net income was $119.4 million, $0.37 per diluted share, compared with net income of $101.5 million, $0.31 per diluted share, in the second quarter of 2013 and $157.5 million, $0.49 per diluted share, in the third quarter of 2012.

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

Year-to-date cash flow from operating activities was $459.4 million. Altera repurchased approximately 161 thousand shares of its common stock during the quarter at a cost of $5.3 million.

Altera's board of directors has declared a quarterly cash dividend of $0.15 per share, to be paid on December 2, 2013 to stockholders of record on November 12, 2013.

"Sales improved from second quarter levels, with our new products, led by our 28 nm FPGAs, as growth leaders. We expect this new product growth momentum to carry over into the December quarter," said John Daane, president, chief executive officer, and chairman of the board. "We have taped out our first Stratix 10 test chip, which will be manufactured on Intel's 14 nm FinFET process. Coupling this process with our next generation architectural innovations produces a substantial step up in performance and density from our current FPGAs and offers compelling benefits to our customers versus competitive offerings."

Several recent accomplishments mark the company's continuing progress:


  • Altera and Micron Technology, Inc. have jointly demonstrated successful interoperability between Altera Stratix® V FPGAs and Micron's Hybrid Memory Cube (HMC). This new capability will be delivered with Altera's Generation 10 portfolio, which includes both Stratix 10 and Arria®10 FPGAs and SoCs. HMC addresses the limitations imposed by conventional memory technology, and provides ultra-high system performance with significantly lower power-per-bit. HMC delivers up to 15 times the bandwidth of a traditional DDR3 module and uses 70 percent less energy and 90 percent less space than existing technologies.

Arria 10 FPGAs and SoCs will be the first device families deployed in the Generation 10 portfolio and will be the first devices to support HMC technology in volume production. Leveraging an enhanced architecture optimized for TSMC's 20 nm process, Arria 10 FPGAs and SoCs will use HMC to extend the device families' performance benefits of both 15 percent higher core performance than today's highest performance Stratix V FPGAs and up to 40 percent lower power compared to the lowest power Arria V midrange FPGAs.

Stratix 10 FPGAs and SoCs will enable the most advanced, highest performance applications across communications, military, broadcast and compute and storage markets. These high-performance applications often require the highest memory bandwidth, which drives the need for an HMC-ready architecture. Leveraging Intel's 14 nm Tri-Gate process and an enhanced high-performance architecture that integrates with HMC technology, Stratix 10 FPGAs and SoCs will enable system solutions with an operating frequency over one gigahertz, and two times the core performance of current high-end 28 nm FPGAs. Stratix 10 devices also will allow customers to achieve up to a 70 percent reduction in power consumption at performance levels equivalent to Altera's previous generation.

  • Altera is now shipping production-qualified Cyclone® V SoCs and engineering samples of its Arria V SoCs. These devices benefit from density, architectural, productivity and processor performance leadership, which enables Altera SoCs to target a very wide range of applications. In addition, Altera SoCs provide embedded developers with the highest productivity development tools. Featuring increased processor peak clock frequencies, these devices are the FPGA industry's highest performing SoCs. Altera offers the industry's broadest range of densities with its 28 nm SoCs, ranging from 25K logic elements (LE) up to 460K LE. This density range allows Altera SoCs to be integrated into a variety of embedded systems, ranging from cost-sensitive industrial automation and automotive driver assist systems to applications that require higher-performance, including remote radio units, 10G/40G line cards and broadcast studio equipment.

        
  • Altera is collaborating with the China Mobile Research Institute (CMRI) to develop next-generation wireless networks based on the Centralized Radio Access Network (C-RAN) architecture. By centralizing the baseband processing of a large geographical area into the cloud, the cloud-based C-RAN architecture enables operators like China Mobile to reduce deployment  and operating costs for their next-generation wireless infrastructure. Altera and CMRI are working together to debug and verify next-generation wireless systems based on the C-RAN architecture by leveraging Altera's FPGA technology. Collaborating with the world's largest cellular operator on C-RAN architecture development enables Altera to more effectively align its FPGAs, software and IP to meet next-generation wireless infrastructure requirements.

 

SELECTED THIRD QUARTER REVENUE AND RELATED RESULTS




Key New Product Devices


Sequential  Comparisons

Stratix V


30

%

Stratix IV


3

%

Arria II


16

%

Arria V


108

%

Cyclone IV


13

%

Cyclone V


73

%

HardCopy IV


(25)

%

Enpirion PowerSoCs


100

%

 

($ in thousands)  

 Key Ratios & Information      


September 27, 2013


June 28, 2013

Current Ratio


6:1   


6:1   

Liabilities/Equity


1:2  


1:2   

Quarterly Operating Cash Flows


$

245,406


$

64,565

TTM Return on Equity


14%


15%

Quarterly Depreciation Expense


$

10,772


$

10,285

Quarterly Capital Expenditures


$

8,633


$

7,221

Inventory MSOH (1): Altera


3.4


3.0

Inventory MSOH (1): Distribution


0.6


0.5

Cash Conversion Cycle (Days)


158


149

Turns


39%


49%

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 27,
2013


June 28,
2013


September 28,
2012


Sequential Change


Year-

Over-Year

Change

Geography










Americas

18

%


17

%


19

%


15

%


(11)

%

Asia Pacific

39

%


39

%


43

%


6

%


(18)

%

EMEA

28

%


28

%


25

%


5

%


(1)

%

Japan

15

%


16

%


13

%


(3)

%


2

%

Net Sales

100

%


100

%


100

%


6

%


(10)

%
















Product Category










New

44

%


41

%


31

%


16

%


27

%

Mainstream

26

%


28

%


32

%


0

%


(25)

%

Mature and Other

30

%


31

%


37

%


(1)

%


(28)

%

Net Sales

100

%


100

%


100

%


6

%


(10)

%











Vertical Market










Telecom & Wireless

41

%


42

%


45

%


3

%


(18)

%

Industrial Automation, Military & Automotive

23

%


22

%


20

%


11

%


1

%

Networking, Computer & Storage

19

%


18

%


17

%


13

%


0

%

Other

17

%


18

%


18

%


(1)

%


(12)

%

Net Sales

100

%


100

%


100

%


6

%


(10)

%











FPGAs and CPLDs










FPGA

82

%


83

%


82

%


4

%


(11)

%

CPLD

9

%


9

%


9

%


12

%


(3)

%

Other Products

9

%


8

%


9

%


13

%


(7)

%

Net Sales

100

%


100

%


100

%


6

%


(10)

%

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 Fourth Quarter 2013


Sales and Income Statement



Sequential Sales

Down 3% to Up 1%

Gross Margin

68.5% +/- .5%

Research and Development

$110 to $111 million

SG&A

$82 to $83 million

Tax Rate

11% to 12%

Diluted Share Count

Approximately 323 million (assumes no share repurchases)

Turns

Mid 40's

MSOH

Low 4's

 

Vertical Market



Telecom & Wireless

Flat

Industrial Automation, Military & Automotive

Flat

Networking, Computer & Storage

Up

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.


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 new product growth momentum, the competitive advantage related to the use of Intel's 14 nm process, product performance parameters, new product sales momentum, 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, including uncertainty arising from United States budget and debt ceiling legislation, 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.

 


ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)




Three Months Ended


Nine Months Ended

(In thousands, except per share amounts)


September 27,
2013


June 28,
2013


September 28,
2012


September 27,
2013


September 28,
2012












Net sales


$

445,945



$

421,759



$

495,010



$

1,278,205



$

1,343,595


Cost of sales


141,525



135,104



152,007



402,712



408,156


Gross margin


304,420



286,655



343,003



875,493



935,439


Operating expense











Research and development expense


95,336



95,489



91,393



278,542



265,619


Selling, general, and administrative expense


78,907



77,869



74,243



235,376



215,824


Amortization of acquisition-related intangible assets


1,846



915



213



2,974



640


Total operating expense


176,089



174,273



165,849



516,892



482,083


Operating margin (1)


128,331



112,382



177,154



358,601



453,356


Compensation expense/(benefit) — deferred compensation plan


3,462



(160)



3,274



6,724



6,697


(Gain)/loss on deferred compensation plan securities


(3,462)



160



(3,274)



(6,724)



(6,697)


Interest income and other


(2,214)



(2,778)



(2,775)



(6,651)



(5,997)


(Gain)/loss reclassified from other comprehensive income


(33)



(42)



108



(129)



(63)


Interest expense


2,511



3,389



2,333



8,365



5,386


Income before income taxes


128,067



111,813



177,488



357,016



454,030


Income tax expense


8,635



10,304



19,999



15,885



18,028


Net income


119,432



101,509



157,489



341,131



436,002













Other comprehensive income/(loss):











Unrealized gain/(loss) on investments:











Unrealized holding gain/(loss) on investments arising during period, net of tax of $30, ($47), $43, ($12) and $108


2,419



(9,031)



3,620



(6,613)



6,723


Less: Reclassification adjustments for gain on investments included in net income, net of tax of $11, $5, $1, $21 and $6


(22)



(37)



(41)



(108)



(64)




2,397



(9,068)



3,579



(6,721)



6,659


Unrealized (loss)/gain on derivatives:











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






(10)





67


Less: Reclassification adjustments for loss on derivatives included in net income, net of tax of $53 and $2






97





5








87





72


Other comprehensive income/(loss)


2,397



(9,068)



3,666



(6,721)



6,731


Comprehensive income


$

121,829



$

92,441



$

161,155



$

334,410



$

442,733













Net income per share:











Basic


$

0.37



$

0.32



$

0.49



$

1.07



$

1.36


Diluted


$

0.37



$

0.31



$

0.49



$

1.05



$

1.34













Shares used in computing per share amounts:











Basic


320,445



320,472



319,870



320,266



321,200


Diluted


323,505



323,527



323,560



323,355



325,275













Dividends per common share


$

0.15



$

0.10



$

0.10



$

0.35



$

0.26













Tax rate


6.7

%


9.2

%


11.3

%


4.4

%


4.0

%

% of Net sales:











Gross margin


68.3

%


68.0

%


69.3

%


68.5

%


69.6

%

Research and development


21.4

%


22.6

%


18.5

%


21.8

%


19.8

%

Selling, general, and administrative


17.7

%


18.5

%


15.0

%


18.4

%


16.1

%

Operating margin(1)


28.8

%


26.6

%


35.8

%


28.1

%


33.7

%

Net income


26.8

%


24.1

%


31.8

%


26.7

%


32.5

%

















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


Nine Months Ended

(In thousands, except per share amounts)


September 27,
2013


June 28,
2013


September 28,
2012


September 27,
2013


September 28,
2012

Operating margin (non-GAAP)


$

128,331



$

112,382



$

177,154



$

358,601



$

453,356


Compensation expense/(benefit) — deferred compensation plan


3,462



(160)



3,274




6,724



6,697


Income from operations (GAAP)


$

124,869



$

112,542



$

173,880



$

351,877



$

446,659
























 


 


ALTERA CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)






(In thousands, except par value amount)


September 27,
2013


December 31,
2012






Assets





Current assets:





Cash and cash equivalents


$

2,956,085



$

2,876,627


Short-term investments


151,159



140,958


Total cash, cash equivalents, and short-term investments


3,107,244



3,017,585


Accounts receivable, net


436,421



323,708


Inventories


158,441



152,721


Deferred income taxes — current


62,575



59,049


Deferred compensation plan — marketable securities


58,402



60,321


Deferred compensation plan — restricted cash equivalents


20,270



17,116


Other current assets


30,479



49,852


Total current assets


3,873,832



3,680,352


Property and equipment, net


198,642



206,148


Long-term investments


713,651



704,758


Deferred income taxes — non-current


13,548



17,082


Goodwill


93,073



2,329


Acquisition-related intangible assets, net


86,500



4,874


Other assets, net


40,518



42,285


Total assets


$

5,019,764



$

4,657,828







Liabilities and stockholders' equity





Current liabilities:





Accounts payable


$

52,224



$

50,036


Accrued liabilities


37,525



29,005


Accrued compensation and related liabilities


43,544



40,606


Deferred compensation plan obligations


78,672



77,437


Deferred income and allowances on sales to distributors


444,705



345,993


Total current liabilities


656,670



543,077


Income taxes payable — non-current


266,395



272,000


Long-term debt


500,000



500,000


Other non-current liabilities


8,916



9,304


Total liabilities


1,431,981



1,324,381


Stockholders' equity:





Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 321,105 shares at September 27, 2013 and 319,564 shares at December 31, 2012


321



320


Capital in excess of par value


1,214,586



1,122,555


Retained earnings


2,374,005



2,204,980


Accumulated other comprehensive (loss)/ income


(1,129)



5,592


Total stockholders' equity


3,587,783



3,333,447


Total liabilities and stockholders' equity


$

5,019,764



$

4,657,828







 

 

ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)






Nine Months Ended

 (In thousands)


September 27,
2013


September 28,
2012






Cash Flows from Operating Activities:





Net income


$

341,131



$

436,002


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





Depreciation and amortization


34,256



25,786


Amortization of acquisition-related intangible assets


2,974



640


Stock-based compensation


73,011



70,790


Net gain on sale of available-for-sale securities


(129)




Amortization of investments, net


2,575




Deferred income tax benefit


(5,629)



(3,367)


Tax effect of employee stock plans


5,405



14,381


Excess tax benefit from employee stock plans


(4,165)



(20,790)


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





Accounts receivable, net


(111,231)



(116,000)


Inventories


(2,494)



(35,569)


Other assets


29,517



5,478


Accounts payable and other liabilities


12,509



(34,670)


Deferred income and allowances on sales to distributors


95,961



120,475


Income taxes payable


(8,753)



(650)


Deferred compensation plan obligations


(5,489)



(2,001)


Net cash provided by operating activities


459,449



460,505


Cash Flows from Investing Activities:





Purchases of property and equipment


(31,216)



(53,712)


Proceeds from sales of deferred compensation plan securities, net


5,489



2,001


Purchases of available-for-sale securities


(258,809)



(819,662)


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


228,292



135,650


Acquisitions, net of cash acquired


(145,321)




Purchases of intangible assets




(2,280)


Purchases of other investments


(2,101)



(4,510)


Net cash used in investing activities


(203,666)



(742,513)


Cash Flows from Financing Activities:





Proceeds from issuance of common stock through various stock plans


38,748



37,514


Shares withheld for employee taxes


(24,787)



(30,529)


Payment of dividends to stockholders


(112,175)



(83,570)


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


(60,276)



(179,057)


Excess tax benefit from employee stock plans


4,165



20,790


Net cash used in financing activities


(176,325)



(240,096)


Net increase (decrease) in cash and cash equivalents


79,458



(522,104)


Cash and cash equivalents at beginning of period


2,876,627



3,371,933


Cash and cash equivalents at end of period


$

2,956,085



$

2,849,829


 

 

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

 

SOURCE Altera Corporation



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