Altera Announces Fourth Quarter Results

News provided by

Altera Corporation

Jan 24, 2012, 04:15 ET

SAN JOSE, Calif., Jan. 24, 2012 /PRNewswire/ -- Altera Corporation (NASDAQ: ALTR) today announced fourth quarter sales of $457.8 million, down 12 percent from the third quarter of 2011 and down 18 percent from the fourth quarter of 2010. Fourth quarter net income was $146.6 million, $0.45 per diluted share, compared with net income of $185.4 million, $0.57 per diluted share, in the third quarter of 2011 and $231.6 million, $0.72 per diluted share, in the fourth quarter of 2010.

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

Cash flow from operating activities in 2011 was $959.6 million. Altera ended the quarter with $3.5 billion in cash and investments.

Altera's board of directors has declared a quarterly cash dividend of $0.08 per share payable on March 1, 2012 to stockholders of record on February 10, 2012.

"While industry conditions led to sequential sales declines in the fourth quarter, Altera grew 6 percent in 2011—well ahead of most of the semiconductor industry. Our FPGA market share once again improved," said John Daane, president, chief executive officer, and chairman of the board. "As we have seen over the last several years, there are long-term technology-based trends that favor FPGAs. We continue to believe that these factors, plus ongoing FPGA share gains, give us the potential over time for sales growth twice that of the semiconductor industry."

Several recent accomplishments mark the company's continuing progress:

  • Altera has begun shipping its first mid-range 28-nm Arria® V FPGAs. Arria V devices are the lowest power mid-range FPGAs available in the market today. Offering transceiver speeds up to 10.3125-Gbps, the Arria V family was developed on TSMC's 28-nm Low-Power (28LP) process. With 50 percent lower static power and 50 percent lower transceiver power than any FPGA in its class, the Arria V FPGA delivers the lowest total power of any mid-range FPGA family. Available in four family variants, designers can choose the device that meets their exact needs, including devices that embed a dual-core ARM® Cortex™ -A9 MPCore™ processor. The Arria V family's innovative features allow designers to tailor their low-power, high-bandwidth, and low-cost requirements for next-generation shipments in wireless, broadcast, and military markets.

  • Altera has announced the industry's first OpenCL™ program for FPGAs. The OpenCL standard is a C-based open standard for parallel programming. Altera's OpenCL program combines the parallel processing performance capability of FPGAs with the OpenCL standard to enable powerful system acceleration. This combination also offers a significant time-to-market advantage compared with traditional FPGA development. Altera has expanded its university program to support the OpenCL standard for FPGA development in academia, and is actively contributing to the evolution of the Open CL standard based on customer feedback. Early results of customer evaluations show a 35X performance increase compared with multi-core CPU solutions and a 50 percent reduction in development time compared with traditional HDL-developed FPGA solutions. OpenCL FPGA-targeted applications range from high-performance computing to advanced radar systems, medical imaging, and video encoding and processing—any system that requires fast computations that can be parallelized.

  • Altera has received further industry recognition for its 28-nm FPGA portfolio. Electronics Weekly selected Altera's 28-nm portfolio as the Semiconductor Product of the Year – Digital at its annual Elektra European Electronics Industry Awards. The Elektra European Electronics Industry Awards are the most prestigious product technology and business awards in Europe. The awards recognize the achievements of individuals and companies in the electronics industry. A panel of independent industry experts and a representative from Electronics Weekly selected Altera's 28-nm FPGA portfolio as the winner of the Semiconductor Product of the Year – Digital from a pool of six nominees based on Altera's 28-nm portfolio's performance, design flexibility and suitability for applications. EDN Magazine also selected Altera's 28-nm SoC FPGA family as one of its 100 Hot Products of 2011. The 2011 EDN Hot 100 highlights the electronics industry's most significant products of the year based on innovation, significance, usefulness, and popularity as determined by the magazine's editors and readers.


INVESTOR CONTACT


MEDIA CONTACT

Scott Wylie - Vice President


Yoko Okamura - Senior Manager

Investor Relations


Public Relations

(408) 544-6996


(408) 544-6397

[email protected]


[email protected]




SELECTED FOURTH QUARTER REVENUE AND RELATED RESULTS




Key New Product Devices


Sequential Comparisons


Stratix V


49%


Stratix IV


(19)%


Arria II


(4)%


Cyclone IV


26%


HardCopy IV


(20)%




Vertical Markets


Sequential Comparisons


Comments

Telecom & Wireless


(11)%



Telecom flat and Wireless down







Industrial Automation,
Military & Automotive


(1)%



Military up, rest of vertical down







Networking, Computer & Storage


(30)%



Category decreased due to end of short-term earthquake-related ASIC replacement business







Other


(9)%



Broadly down





($ in thousands)

Key Ratios & Information      


December 31, 2011


September 30, 2011

Current Ratio


4:1


3:1

Liabilities/Equity


1:2


1:2

Quarterly Operating Cash Flows


$

220,363



$

282,873


TTM Return on Equity


28

%


34

%

Quarterly Depreciation Expense


$

7,772



$

7,428


Quarterly Capital Expenditures


$

8,634



$

13,382


Inventory MSOH (1): Altera


2.7



2.4


Inventory MSOH (1): Distribution


0.6



0.6


Cash Conversion Cycle (Days)


90



78


Turns


42

%


33

%

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


Years Ended




December 31, 2011


September 30, 2011


December 31, 2010


Sequential Change


Year-

Over-Year

Change


December 31, 2011


December 31, 2010


Annual Growth

Geography
















Americas

21

%


16

%


17

%


10

%


4

%


19

%


19

%


7

%

Asia Pacific

40

%


44

%


43

%


(20)

%


(23)

%


41

%


42

%


2

%

EMEA

22

%


25

%


22

%


(22)

%


(18)

%


25

%


23

%


17

%

Japan

17

%


15

%


18

%


—

%


(23)

%


15

%


16

%


(1)

%

Net Sales

100

%


100

%


100

%


(12)

%


(18)

%


100

%


100

%


6

%



Product Category
















New

27

%


27

%


16

%


(13)

%


41

%


22

%


11

%


107

%

Mainstream

33

%


32

%


37

%


(10)

%


(26)

%


34

%


32

%


11

%

Mature and Other

40

%


41

%


47

%


(13)

%


(30)

%


44

%


57

%


(18)

%

Net Sales

100

%


100

%


100

%


(12)

%


(18)

%


100

%


100

%


6

%



Vertical Market
















Telecom & Wireless

43

%


42

%


47

%


(11)

%


(25)

%


43

%


44

%


4

%

Industrial Automation, Military & Automotive

24

%


22

%


19

%


(1)

%


6

%


23

%


21

%


12

%

Networking, Computer & Storage

16

%


20

%


15

%


(30)

%


(9)

%


17

%


14

%


29

%

Other

17

%


16

%


19

%


(9)

%


(29)

%


17

%


21

%


(13)

%

Net Sales

100

%


100

%


100

%


(12)

%


(18)

%


100

%


100

%


6

%



FPGAs and CPLDs
















FPGA

82

%


82

%


83

%


(12)

%


(18)

%


81

%


82

%


5

%

CPLD

9

%


9

%


10

%


(10)

%


(27)

%


10

%


12

%


(11)

%

Other Products

9

%


9

%


7

%


(17)

%


6

%


9

%


6

%


41

%

Net Sales

100

%


100

%


100

%


(12)

%


(18)

%


100

%


100

%


6

%




Product Category Description

  • New Products include the Stratix® V, Stratix IV, Arria® V, Arria II , Cyclone® IV , 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 , 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™, and Excalibur™ devices, configuration and other devices, intellectual property cores, and software and other tools.

Business Outlook for the First Quarter 2012


Sales and Income Statement

Sequential Sales Growth

Down 5% to 9%

Gross Margin

70% +/- .5%

Research and Development

$90 to 92 million

SG&A

$72 to 74 million

Tax Rate

10% to 11%

Diluted Share Count

326 million

Turns

Approximately 50%

MSOH

Low 3's


Vertical Market

Telecom & Wireless

Down slightly overall, with Telecom up and Wireless down



Industrial Automation,
Military & Automotive

Down overall, with Automotive up, Industrial Automation flat, and Military significantly down



Networking, Computer & Storage

Flat overall, with Networking up and Computer & Storage down



Other

Down slightly




Fourth 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.

First Quarter Update

 Altera's first quarter business update will be issued in a press release available after the market close on March 8, 2012.

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 forecasts of future growth relative to the semiconductor industry, 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® 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.

ALTERA CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)




Three Months Ended


Years Ended

(In thousands, except per share amounts)


December 31, 2011


September 30, 2011


December 31, 2010


December 31, 2011


December 31, 2010

Net sales


$

457,804



$

522,474



$

555,378



$

2,064,475



$

1,954,426


Cost of sales


136,764



166,938



161,296



610,329



566,942


Gross margin


321,040



355,536



394,082



1,454,146



1,387,484


Operating expense











Research and development expense


90,295



80,771



66,788



325,733



264,649


Selling, general, and administrative expense


70,667



69,345



64,074



279,217



254,495


Total operating expense


160,962



150,116



130,862



604,950



519,144


Operating margin (1)


160,078



205,420



263,220



849,196



868,340


Compensation expense (benefit) — deferred compensation plan


2,962



(6,642)



3,554



(1,964)



6,839


(Gain) loss on deferred compensation plan securities


(2,962)



6,642



(3,554)



1,964



(6,839)


Interest income and other


(1,021)



(663)



(936)



(3,526)



(3,330)


Interest expense


1,013



806



351



3,730



3,843


Income before income taxes


160,086



205,277



263,805



848,992



867,827


Income tax expense


13,475



19,873



32,192



78,281



84,943


Net income


$

146,611



$

185,404



$

231,613



$

770,711



$

782,884













Net income per share:











Basic


$

0.46



$

0.58



$

0.73



$

2.39



$

2.55


Diluted


$

0.45



$

0.57



$

0.72



$

2.35



$

2.49













Shares used in computing per share amounts:











Basic


321,553



321,745



316,440



321,892



307,302


Diluted


325,653



327,044



323,592



327,606



313,912













Cash dividends per common share


$

0.08



$

0.08



$

0.06



$

0.28



$

0.22













Tax rate


8.4

%


9.7

%


12.2

%


9.2

%


9.8

%

% of Net sales:











Gross margin


70.1

%


68.0

%


71.0

%


70.4

%


71.0

%

Research and development


19.7

%


15.5

%


12.0

%


15.8

%


13.5

%

Selling, general, and administrative


15.4

%


13.3

%


11.5

%


13.5

%


13.0

%

Operating margin(1)


35.0

%


39.3

%


47.4

%


41.1

%


44.4

%

Net income


32.0

%


35.5

%


41.7

%


37.3

%


40.1

%


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 gains and losses 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


Years Ended

(In thousands)


December 31, 2011


September 30, 2011


December 31, 2010


December 31, 2011


December 31, 2010

Operating margin (non-GAAP)


$

160,078



$

205,420



$

263,220



$

849,196



$

868,340


Compensation expense (benefit) — deferred compensation plan


2,962



(6,642)



3,554



(1,964)



6,839


Income from operations (GAAP)


$

157,116



$

212,062



$

259,666



$

851,160



$

861,501





ALTERA CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In thousands, except par value amount)


December 31,
2011


December 31,
2010






Assets





Current assets:





Cash and cash equivalents


$

3,371,933



$

2,765,196


Short-term investments


65,222



—


Total cash, cash equivalents, and short-term investments


3,437,155



2,765,196


Accounts receivable, net


232,273



363,614


Inventories


122,279



146,524


Deferred income taxes — current


58,415



66,839


Deferred compensation plan — marketable securities


54,041



54,419


Deferred compensation plan — restricted cash equivalents


17,938



19,817


Other current assets


52,710



114,601


Total current assets


3,974,811



3,531,010


Property and equipment, net


171,721



164,155


Long term investments


74,033



—


Deferred income taxes — non-current


26,629



37,319


Other assets, net


35,074



27,353


Total assets


$

4,282,268



$

3,759,837







Liabilities and stockholders' equity





Current liabilities:





Accounts payable


$

52,154



$

86,061


Accrued liabilities


34,029



23,278


Accrued compensation and related liabilities


78,181



83,773


Deferred compensation plan obligations


71,979



74,236


Deferred income and allowances on sales to distributors


279,876



428,711


Income taxes payable


—



428


Credit facility


500,000



—


Total current liabilities


1,016,219



696,487


Income taxes payable — non-current


263,423



231,833


Credit facility


—



500,000


Other non-current liabilities


8,730



7,865


Total liabilities


1,288,372



1,436,185


Commitments and contingencies





Stockholders' equity:





Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 322,054 at December 31, 2011 and 319,494 shares at December 31, 2010


322



319


Capital in excess of par value


1,050,752



908,989


Accumulated other comprehensive loss


(133)



—


Retained earnings


1,942,955



1,414,344


Total stockholders' equity


2,993,896



2,323,652


Total liabilities and stockholders' equity


$

4,282,268



$

3,759,837










ALTERA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)




YEARS ENDED

(In thousands)


December 31,
2011


December 31,
2010


December 31,
2009

Cash Flows from Operating Activities:







Net income


$

770,711



$

782,884



$

251,062


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







Depreciation and amortization


31,927



27,535



29,022


Stock-based compensation


82,750



62,118



64,446


Deferred income tax expense (benefit)


15,657



34,256



(5,890)


Tax effect of employee stock plans


16,162



27,444



(3,648)


Excess tax benefit from employee stock plans


(17,307)



(21,866)



(990)


Gain on substantive termination of retiree medical plan


—



—



(6,488)


Changes in assets and liabilities, net of the effects of acquisition:







Accounts receivable, net


131,341



(145,330)



(136,115)


Inventories


24,245



(76,819)



14,931


Other assets


54,661



(52,805)



38,862


Accounts payable and other liabilities


(32,534)



59,200



7,918


Deferred income and allowances on sales to distributors


(148,836)



146,826



77,611


Income taxes payable


31,116



15,746



39,860


Deferred compensation plan obligations


(293)



(2,494)



2,125


Net cash provided by operating activities


959,600



856,695



372,706


Cash Flows from Investing Activities:







Purchases of property and equipment


(31,812)



(12,442)



(11,060)


Purchases of available-for-sale securities


(164,408)



—



—


Proceeds from the maturities and sales of available-for-sale investments


25,003



—



—


Acquisition related payments, net of cash acquired


—



(8,004)



—


Sales (purchases) of deferred compensation plan securities, net


293



2,494



(2,125)


Purchases of intangible assets


—



(5,000)



(690)


Net cash used in investing activities


(170,924)



(22,952)



(13,875)


Cash Flows from Financing Activities:







Proceeds from issuance of common stock through various stock plans


119,989



453,719



42,144


Shares withheld for employee taxes


(32,152)



(20,164)



(10,738)


Repurchases of common stock


(197,023)



—



—


Payment of dividends to stockholders


(90,060)



(67,774)



(58,925)


Excess tax benefit from stock-based compensation


17,307



21,866



990


Principal payments on capital lease obligations


—



(2,866)



(2,373)


Net cash (used in) provided by financing activities


(181,939)



384,781



(28,902)


Net increase in cash and cash equivalents


606,737



1,218,524



329,929


Cash and cash equivalents at beginning of period


2,765,196



1,546,672



1,216,743


Cash and cash equivalents at end of period


$

3,371,933



$

2,765,196



$

1,546,672


Supplemental cash flow information:







Income taxes paid, net


$

9,856



$

29,887



$

7,310


Interest paid


$

3,704



$

3,395



$

4,503





SOURCE Altera Corporation