Altera Announces Fourth Quarter Results

News provided by

Altera Corporation

Jan 22, 2015, 04:15 ET

SAN JOSE, Calif., Jan. 22, 2015 /PRNewswire/ -- Altera Corporation (NASDAQ: ALTR) today announced fourth quarter sales of $479.9 million, down 4 percent from the third quarter of 2014 and up 6 percent from the fourth quarter of 2013. Fourth quarter net income was $111.1 million, $0.36 per diluted share, compared with net income of $118.0 million, $0.38 per diluted share, in the third quarter of 2014 and $98.9 million, $0.31 per diluted share, in the fourth quarter of 2013.

Cash flow from operating activities in 2014 was $666.2 million. Altera repurchased approximately 4.3 million shares during the quarter at a cost of approximately $151.5 million.

Altera's board of directors has declared a quarterly cash dividend of $0.18 per share, to be paid on March 2, 2015 to stockholders of record on February 10, 2015.

"We grew 12 percent in 2014, outpacing the semiconductor industry," said John Daane, president, chief executive officer, and chairman of the board. "Our Arria 10 FPGAs, the first of our Generation 10 products, are proving to be competitively quite strong with good design-win momentum and record opportunities to pursue. We are entering the advanced stages of design for our high-end Stratix 10 FPGA, the industry's only 14 nanometer FinFET-based FPGA, with planned introduction later this year."

Several recent accomplishments mark the company's continuing progress:

  • Audi has selected Altera's SoC field-programmable gate arrays (FPGAs) for use in Audi's advanced driver assistance system (ADAS) targeted for mass production. Audi, a self-driving car technology leader, chose Altera's Cyclone® V SoC FPGAs for their ability to increase system performance and enable the differentiated features Audi requires for piloted driving and parking that are not available with application specific standard product solutions. Altera's Cyclone V SoC FPGAs combine programmable logic with dual-core ARM® Cortex™-A9 processors that allow ADAS platform designers to customize the hardware and software running in their products. This combination provides powerful building blocks to accelerate algorithms commonly used in ADAS designs. Audi's zFAS control unit is the industry's first fully centralized ADAS module that processes all self-driving functions in a single unit, unlike other architectures which have multiple modules distributed throughout the vehicle.
  • Altera and IBM have unveiled the industry's first FPGA-based acceleration platform that coherently connects an FPGA to a POWER8 CPU leveraging IBM's Coherent Accelerator Processor Interface (CAPI). The reconfigurable hardware accelerator significantly improves system performance, efficiency and flexibility in high-performance computing (HPC) and data center applications. FPGA-accelerated POWER8 systems are optimized to enable compute- and processing-intensive tasks required in next-generation HPC and data center applications, including data compression, encryption, image processing and search. Using CAPI to coherently attach FPGA accelerators to the fabric of a POWER8 processor and main system memory make the FPGA appear as simply another core on the POWER8 processor. This results in shortened development time by greatly reducing lines of software code and reduced processor cycles versus conventional IO attached accelerators.
  • Electronics Weekly magazine selected the Altera Software Development Kit (SDK) for OpenCL as its design tool of the year at the annual Elektra European Electronics Industry Awards ceremony in London. The Elektra Awards are presented to companies whose products demonstrate advanced technical capabilities and usefulness as determined by a panel of independent industry experts and representatives from Electronics Weekly. These accolades represent the latest in a series of awards and recognitions the Altera SDK for OpenCL has received since its release in 2012. The Altera SDK for OpenCL allows programmers to rapidly develop algorithms with the OpenCL language and harness the performance and power efficiencies of FPGAs. Today, Altera offers the industry's only OpenCL-conformant solution that allows software programmers to easily implement OpenCL applications on FPGA accelerators.

SELECTED FOURTH QUARTER REVENUE AND RELATED RESULTS


($ in thousands)                                         

 Key Ratios & Information

December 31, 2014

September 26, 2014

Current Ratio

6:1

6:1

Liabilities/Equity

3:4

3:4

Quarterly Operating Cash Flows

$

150,778

$

214,049

TTM Return on Equity

14

%

13

%

Quarterly Depreciation Expense

$

12,099

$

11,874

Quarterly Capital Expenditures

$

9,836

$

13,691

Inventory MSOH (1): Altera

2.7

3.4

Inventory MSOH (1): Distribution

0.5

0.6

TTM Cash Conversion Cycle (Days)

144

154

Turns

41

%

37

%

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, 2014

September 26, 2014

December 31, 2013

Sequential Change

Year-

Over-Year

Change

December 31, 2014

December 31, 2013

Annual Growth

Geography






















Americas

15

%

16

%

19

%

(10)

%

(13)

%

16

%

18

%

(5)

%

Asia Pacific

41

%

42

%

41

%

(6)

%

7

%

42

%

40

%

19

%

EMEA

30

%

29

%

24

%

0

%

29

%

28

%

26

%

17

%

Japan

14

%

13

%

16

%

0

%

(12)

%

14

%

16

%

1

%

Net Sales

100

%

100

%

100

%

(4)

%

6

%

100

%

100

%

12

%

Product Category






















New

59

%

56

%

47

%

1

%

32

%

54

%

43

%

42

%

Mainstream

18

%

21

%

24

%

(15)

%

(20)

%

21

%

27

%

(14)

%

Mature and Other

23

%

23

%

29

%

(5)

%

(17)

%

25

%

30

%

(9)

%

Net Sales

100

%

100

%

100

%

(4)

%

6

%

100

%

100

%

12

%

Vertical Market






















Telecom & Wireless

42

%

45

%

40

%

(11)

%

10

%

44

%

41

%

21

%

Industrial Automation, Military & Automotive

22

%

21

%

22

%

2

%

7

%

22

%

22

%

9

%

Networking, Computer & Storage

16

%

16

%

19

%

(3)

%

(11)

%

16

%

19

%

(8)

%

Other

20

%

18

%

19

%

5

%

13

%

18

%

18

%

14

%

Net Sales

100

%

100

%

100

%

(4)

%

6

%

100

%

100

%

12

%

FPGAs and CPLDs






















FPGA

84

%

85

%

83

%

(5)

%

7

%

84

%

83

%

13

%

CPLD

8

%

8

%

9

%

5

%

(3)

%

8

%

9

%

2

%

Other Products

8

%

7

%

8

%

5

%

1

%

8

%

8

%

8

%

Net Sales

100

%

100

%

100

%

(4)

%

6

%

100

%

100

%

12

%

Product Category Description


  • New Products include the Arria® 10, Stratix® V, Stratix IV, Arria V, Arria II, Cyclone® V, Cyclone IV, MAX® 10, 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, 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 First Quarter 2015

Sales and Income Statement

Sequential Sales

Flat to - 4%

Gross Margin

65% +/- .5%

Research and Development (1)

$112 - $116 million

SG&A

$76 - $80 million

Other Income/Expense, Net (2)

Net expense of approximately $3 million

Tax Rate

13% - 14%

Diluted Share Count

Approximately 300 million

Turns

Mid 40's

Inventory MSOH

Mid 3's

Note (1): The Business Outlook for Research and Development expense includes amortization of acquisition-related intangible assets.

Note (2): Other Income/ Expense, Net includes Interest income and other and Interest expense in our consolidated statements of comprehensive income.

Vertical Market



Telecom & Wireless

Flat

Industrial Automation, Military & Automotive

Down

Networking, Computer & Storage

Up

Other

Down

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.

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, the Stratix 10 first shipment timing, potential FPGA market expansion, 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 materially from those currently anticipated, due to a number of factors, including without limitation, current global economic conditions, customer business environment, customer inventory levels, product availability, vertical market mix, market acceptance of the company's products, the performance of products once introduced, product introduction schedules, the rate of growth of the company's new products including Cyclone® V, Cyclone IV, Arria® 10, Arria V, Arria II, Stratix® V, Stratix IV, MAX® 10 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.

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. Visit www.altera.com.

ALTERA, ARRIA, CYCLONE, ENPIRION, 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

[email protected]

[email protected]



ALTERA CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)






Three Months Ended

Years Ended

(In thousands, except per share amounts)

December 31, 2014

September 26, 2014

December 31, 2013

December 31, 2014

December 31, 2013

















Net sales

$

479,873

$

499,606

$

454,367

$

1,932,089

$

1,732,572

Cost of sales

168,172

166,019

144,024

648,451

546,736

Gross margin

311,701

333,587

310,343

1,283,638

1,185,836

Operating expense















Research and development expense

107,314

112,078

106,643

418,170

385,185

Selling, general, and administrative expense

81,044

77,724

84,692

312,249

320,068

Amortization of acquisition-related intangible assets

2,465

2,465

1,850

9,859

4,824

Total operating expense

190,823

192,267

193,185

740,278

710,077

Operating margin (2)

120,878

141,320

117,158

543,360

475,759

Compensation expense/(benefit) - deferred compensation plan

1,934

(487)

3,881

6,027

10,605

(Gain)/loss on deferred compensation plan securities

(1,934)

487

(3,881)

(6,027)

(10,605)

Interest income and other

(5,714)

(4,558)

(4,902)

(24,076)

(11,553)

Loss/(gain) reclassified from other comprehensive income

10

(59)

(24)

(140)

(153)

Interest expense

11,410

10,774

8,272

43,549

16,637

Income before income taxes

115,172

135,163

113,812

524,027

470,828

Income tax expense

4,041

17,154

14,878

51,369

30,763

Net income

$

111,131

$

118,009

$

98,934

$

472,658

$

440,065


















Other comprehensive income/(loss):















Unrealized gain/(loss) on investments:















   Unrealized holding gain/(loss) on investments arising during period, net of tax of ($55), ($6), ($11), ($14) and ($1)

15,623

(4,929)

(26,811)

37,725

(33,424)

   Less: Reclassification adjustments for loss/(gain) on investments included in net income, net of tax of $1, $11, $2, $22 and $23

11

(48)

(22)

(118)

(130)

Other comprehensive income/(loss):

15,634

(4,977)

(26,833)

37,607

(33,554)

Comprehensive income

$

126,765

$

113,032

$

72,101

$

510,265

$

406,511


















Net income per share:















Basic

$

0.37

$

0.38

$

0.31

$

1.53

$

1.37

Diluted

$

0.36

$

0.38

$

0.31

$

1.52

$

1.36


















Shares used in computing per share amounts:















Basic

303,848

308,215

319,993

309,748

320,195

Diluted

305,614

310,184

322,018

311,897

323,018


















Dividends per common share

$

0.18

$

0.18

$

0.15

$

0.66

$

0.50


















Tax rate

3.5

%

12.7

%

13.1

%

9.8

%

6.5

%

% of Net sales:















Gross margin

65.0

%

66.8

%

68.3

%

66.4

%

68.4

%

Research and development (1)

22.9

%

22.9

%

23.9

%

22.2

%

22.5

%

Selling, general, and administrative

16.9

%

15.6

%

18.6

%

16.2

%

18.5

%

Operating margin(2)

25.2

%

28.3

%

25.8

%

28.1

%

27.5

%

Net income

23.2

%

23.6

%

21.8

%

24.5

%

25.4

%

















Notes:















(1) Research and development expense as a percentage of Net sales includes amortization of acquisition-related intangible assets.

 

(2)We define operating margin as gross margin less research and development and selling, general and administrative expenses 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 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, 2014

September 26, 2014

December 31, 2013

December 31, 2014

December 31, 2013

Operating margin (non-GAAP)

$

120,878

$

141,320

$

117,158

$

543,360

$

475,759

Compensation expense/(benefit) - deferred compensation plan

1,934

(487)

3,881

6,027

10,605

Income from operations (GAAP)

$

118,944

$

141,807

$

113,277

$

537,333

$

465,154

ALTERA CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)



(In thousands, except par value amount)

December 31, 2014

December 31, 2013





Assets





Current assets:





Cash and cash equivalents

$

2,426,367

$

2,869,158

Short-term investments

151,519

141,487

Total cash, cash equivalents, and short-term investments

2,577,886

3,010,645

Accounts receivable, net

377,964

483,032

Inventories

153,387

163,880

Deferred income taxes - current

56,048

63,228

Deferred compensation plan - marketable securities

69,367

66,455

Deferred compensation plan - restricted cash equivalents

14,412

16,699

Other current assets

39,479

48,901

Total current assets

3,288,543

3,852,840

Property and equipment, net

194,840

204,142

Long-term investments

1,942,343

1,695,066

Deferred income taxes - non-current

20,077

10,806

Goodwill

74,341

73,968

Acquisition-related intangible assets, net

72,291

82,150

Other assets, net

81,791

76,676

Total assets

$

5,674,226

$

5,995,648







Liabilities and stockholders' equity





Current liabilities:





Accounts payable

$

49,140

$

44,163

Accrued liabilities

28,384

41,218

Accrued compensation and related liabilities

69,837

51,105

Deferred compensation plan obligations

83,779

83,154

Deferred income and allowances on sales to distributors

344,168

487,746

Total current liabilities

575,308

707,386

Income taxes payable - non-current

313,447

276,326

Long-term debt

1,492,759

1,491,466

Other non-current liabilities

6,886

8,403

Total liabilities

2,388,400

2,483,581







Stockholders' equity:





Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 302,430 at December 31, 2014 and 317,769 shares at December 31, 2013

302

318

Capital in excess of par value

1,165,259

1,216,826

Retained earnings

2,110,620

2,322,885

Accumulated other comprehensive income/(loss)

9,645

(27,962)

Total stockholders' equity

3,285,826

3,512,067

Total liabilities and stockholders' equity

$

5,674,226

$

5,995,648







ALTERA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

YEARS ENDED


(In thousands)

December 31, 2014

December 31, 2013

December 31, 2012

Cash Flows from Operating Activities:








Net income

$

472,658

$

440,065

$

556,807

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








Depreciation and amortization

56,181

47,225

36,009

Amortization of  acquisition-related intangible assets

9,859

4,824

853

Amortization of debt discount and debt issuance costs

3,116

1,457

648

Stock-based compensation

93,432

96,624

93,586

Net gain on sale of available-for-sale securities

(140)

(153)

—

Amortization of investment discount/premium

2,746

3,407

—

Deferred income tax (benefit) expense

(3,329)

3,581

8,824

Tax effect of employee stock plans

4,946

7,009

9,811

Excess tax benefit from employee stock plans

(1,945)

(4,716)

(16,278)

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








Accounts receivable, net

105,068

(157,842)

(91,435)

Inventories

10,493

(7,933)

(30,442)

Other assets

10,085

(1,309)

(3,698)

Accounts payable and other liabilities

14,756

9,414

(50,566)

Deferred income and allowances on sales to distributors

(143,578)

139,002

66,117

Income taxes payable

37,269

14,440

8,576

Deferred compensation plan obligations

(5,402)

(4,887)

(1,598)

Net cash provided by operating activities

666,215

590,208

587,214

Cash Flows from Investing Activities:








Purchases of property and equipment

(40,237)

(42,558)

(60,913)

Sales of deferred compensation plan securities, net

5,402

4,887

1,598

Purchases of available-for-sale securities

(905,283)

(1,347,626)

(921,430)

Proceeds from sale of available-for-sale securities

489,200

136,791

105,411

Proceeds from maturity of available-for-sale securities

191,498

178,221

115,373

Acquisitions, net of cash acquired

—

(145,321)

—

Purchases of intangible assets

(1,749)

(13,465)

(2,280)

Purchase of other investments

(10,224)

(7,441)

(4,935)

Net cash used in investing activities

(271,393)

(1,236,512)

(767,176)

Cash Flows from Financing Activities:








Proceeds from issuance of common stock through stock plans

47,123

58,220

49,665

Shares withheld for employee taxes

(22,890)

(28,272)

(31,472)

Payment of dividends to stockholders

(204,609)

(160,377)

(115,514)

Holdback payment for prior acquisition

(3,353)

—

—

Payment of debt assumed in acquisitions

—

(22,000)

—

Proceeds from issuance of long-term debt

—

991,786

500,000

Repayment of credit facility

—

—

(500,000)

Long-term debt and credit facility issuance costs

(1,321)

(4,143)

(5,244)

Repurchases of common stock

(654,508)

(201,095)

(229,057)

Excess tax benefit from employee stock plans

1,945

4,716

16,278

Net cash (used in) provided by financing activities

(837,613)

638,835

(315,344)

Net decrease in cash and cash equivalents

(442,791)

(7,469)

(495,306)

Cash and cash equivalents at beginning of period

2,869,158

2,876,627

3,371,933

Cash and cash equivalents at end of period

$

2,426,367

$

2,869,158

$

2,876,627

Supplemental cash flow information:








Income taxes (refunded)/paid, net

$

(3,305)

$

16,299

$

9,797

Interest paid

$

41,637

$

10,865

$

6,898

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SOURCE Altera Corporation