Altera Announces Third Quarter Results

Oct 22, 2013, 16:15 ET from Altera Corporation

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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