Altera Announces Record Fourth Quarter Results

News provided by

Altera Corporation

Jan 25, 2011, 04:15 ET

SAN JOSE, Calif., Jan. 25, 2011 /PRNewswire/ -- Altera Corporation (Nasdaq: ALTR) today announced fourth quarter sales of $555.4 million, up 5 percent from the third quarter of 2010 and up 52 percent from the fourth quarter of 2009. New product sales increased 26 percent sequentially. Fourth quarter net income was $231.6 million, $0.72 per diluted share, compared with net income of $217.5 million, $0.69 per diluted share, in the third quarter of 2010 and $103.0 million, $0.34 per diluted share, in the fourth quarter of 2009.  

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

Cash flow from operating activities in 2010 was $856.7 million. Altera ended the quarter with $2.8 billion in cash and short-term investments.  

Altera's board of directors has declared a quarterly cash dividend of $0.06 per share payable on March 1, 2011 to stockholders of record on February 10, 2011.  

"The fourth quarter delivered a positive note to end a remarkable sales growth year. Our sales were up 64 percent in 2010, significantly outpacing most companies in the semiconductor industry. In the fourth quarter, new products continued to be growth drivers as we saw substantial sales gains from our 65-nm and 40-nm FPGAs," said John Daane, president, chief executive officer, and chairman of the board. "During the fourth quarter we taped out our first 28-nm FPGAs. We believe Altera's unique features and performance will extend our technology leadership into this next FPGA generation adding to the momentum we have established at the 40-nm node."

Several recent accomplishments mark the company's continuing progress:

  • Altera announced its portfolio of 28-nm devices that will deliver the industry's most diverse product offering designed to effectively address the different needs of customers across the varied markets Altera serves. With this 28-nm portfolio, Altera leverages advantages in transceiver technology, product architecture, intellectual property (IP) integration, and process technology. Included in this announcement are the recently expanded Stratix® V and the new Cyclone® V and Arria® V FPGAs as well as the previously announced HardCopy® V ASIC family. Stratix V FPGAs address a broad range of high-bandwidth applications such as advanced LTE basestations, high-end RF cards and military radar. Arria V FPGAs target applications that require a balance of cost, low power and high performance, such as remote radio units, in-studio mixers and 10G/40G line cards. Cyclone V FPGAs are designed for applications where low power and board space are concerns, such as motor controls, displays and software-defined radios.
  • Altera acquired Avalon Microelectronics during the fourth quarter. Avalon's strong system expertise in transmission applications and detailed FPGA knowledge adds to Altera's portfolio of customizable IP solutions for an optical transport network (OTN). Avalon has established itself as an industry leader in flexible OTN IP used in FPGA and ASIC products. Avalon is a key provider to numerous top-tier communications infrastructure OEMs. Combining the two companies' IP capabilities offers the potential for customers to accelerate their time to market for next-generation optical networks and broadens Altera's attractiveness in this high-growth market.
  • Altera also announced the availability of the MAX® V CPLD family, expanding the company's market-leading MAX CPLD series of devices. The MAX V family uses half the total power of competitive CPLDs while maintaining the instant-on, single chip, non-volatile characteristics of earlier MAX series devices. The combination of low power and high performance make MAX V CPLDs ideal for general-purpose and portable designs in a wide variety of the vertical markets served by Altera. Altera has long been the market leader in CPLDs. The first MAX V family members are available now with the entire family shipping in full production during the second quarter of this year.
  • The Global Semiconductor Alliance (GSA) has named Altera the "Best Financially Managed Semiconductor Company." With member companies in 25 countries across the world, the GSA's mission is to accelerate the growth and increase the return on invested capital of the semiconductor industry by fostering a more effective fabless ecosystem. Altera received this award based on a number of financial metrics such as revenue, net income, return on investment, return on equity, inventory turns, days sales outstanding, cash per share, cash burn, gross profit margin, operating margin and current ratio.

Business Outlook for the First Quarter 2011


Sequential Sales Growth

Down 1% to 5%

Gross Margin

71% to 72%

Research and Development

$76 to 77 million

SG&A

$69 to 70 million

Tax Rate

10% to 12%

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.

Altera's first quarter business update will be issued in a press release available after the market close on March 1, 2011.

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 any projection of revenue, gross margin, expense or other financial items discussed in the Business Outlook section of this press release, the timing of MAX V shipments and the potential for continued technology leadership at 28 nm. 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 Arria® II, Cyclone® III, Cyclone IV, Stratix® III,  Stratix IV FPGAs, MAX® II and MAX V CPLDs and HardCopy® device families, changes in the mix of our business between prototyping and production-based demand, 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,  

2010

October 1, 2010

December 31,  

2009

December 31,  

2010

December 31,  

2009











Net sales

$

555,378

$

527,453

$

364,998

$

1,954,426

$

1,195,413

Cost of sales

161,296

157,899

115,281

566,942

396,584

Gross margin

394,082

369,554

249,717

1,387,484

798,829

Operating expense









Research and development expense

66,788

67,896

66,940

264,649

260,208

Selling, general, and administrative expense

64,074

63,473

63,404

254,495

234,074

Total operating expense

130,862

131,369

130,344

519,144

494,282

Operating margin (1)

263,220

238,185

119,373

868,340

304,547

Compensation expense — deferred compensation plan

3,554

4,699

2,629

6,839

11,776

Gain on deferred compensation plan securities

(3,554)

(4,699)

(2,629)

(6,839)

(11,776)

Interest income and other

(936)

(1,092)

(248)

(3,330)

(6,083)

Interest expense

351

1,098

1,208

3,843

5,092

Income before income taxes

263,805

238,179

118,413

867,827

305,538

Income tax expense

32,192

20,688

15,439

84,943

54,476

Net income

$

231,613

$

217,491

$

102,974

$

782,884

$

251,062











Net income per share:









Basic

$

0.73

$

0.70

$

0.35

$

2.55

$

0.85

Diluted

$

0.72

$

0.69

$

0.34

$

2.49

$

0.84











Shares used in computing per share amounts:









Basic

316,440

309,766

296,036

307,302

294,493

Diluted

323,592

317,069

300,613

313,912

297,180











Cash dividends per common share

$

0.06

$

0.06

$

0.05

$

0.22

$

0.20











Tax rate

12.2

%

8.7

%

13.0

%

9.8

%

17.8

%

% of Net sales:









Gross margin

71.0

%

70.1

%

68.4

%

71.0

%

66.8

%

Research and development

12.0

%

12.9

%

18.3

%

13.5

%

21.8

%

Selling, general, and administrative

11.5

%

12.0

%

17.4

%

13.0

%

19.6

%

Operating margin(1)

47.4

%

45.2

%

32.7

%

44.4

%

25.5

%

Net income

41.7

%

41.2

%

28.2

%

40.1

%

21.0

%

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, 2010

October 1, 2010

December 31, 2009

December 31, 2010

December 31, 2009

Operating margin (non-GAAP)

$

263,220

$

238,185

$

119,373

$

868,340

$

304,547

Compensation expense - deferred compensation plan

3,554

4,699

2,629

6,839

11,776

Income from operations (GAAP)

$

259,666

$

233,486

$

116,744

$

861,501

$

292,771

ALTERA CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except par value amount)

December 31,  

2010

December 31,  

2009





Assets



Current assets:



Cash and cash equivalents

$

2,765,196

$

1,546,672

Accounts receivable, net

363,614

218,144

Inventories

146,524

69,705

Deferred income taxes — current

66,839

79,164

Deferred compensation plan — marketable securities

54,419

50,905

Deferred compensation plan — restricted cash equivalents

19,817

18,986

Other current assets

114,601

58,194

Total current assets

3,531,010

2,041,770

Property and equipment, net

164,155

174,516

Deferred income taxes — non-current

37,319

59,249

Other assets, net

27,353

17,696

Total assets

$

3,759,837

$

2,293,231





Liabilities and stockholders' equity



Current liabilities:



Accounts payable

$

86,061

$

50,520

Accrued liabilities

23,278

32,256

Accrued compensation and related liabilities

83,773

49,862

Deferred compensation plan obligations

74,236

69,891

Deferred income and allowances on sales to distributors

428,711

281,885

Income taxes payable

428

5,547

Total current liabilities

696,487

489,961

Income taxes payable — non-current

231,833

210,967

Long-term credit facility

500,000

500,000

Other non-current liabilities

7,865

6,967

Total liabilities

1,436,185

1,207,895

Commitments and contingencies



Stockholders' equity:



Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 319,494 at December 31, 2010 and 296,817 shares at December 31, 2009

319

297

Capital in excess of par value

908,989

372,098

Retained earnings

1,414,344

712,941

Total stockholders' equity

2,323,652

1,085,336

Total liabilities and stockholders' equity

$

3,759,837

$

2,293,231





Key Ratios & Information



Current Ratio

5:1


4:1

Liabilities/Equity

1:2


1:1

Quarterly Operating Cash Flows

$

210,151

$

176,352

TTM Return on Equity

48

%

27

%

Quarterly Depreciation Expense

$

6,815

$

6,839

Quarterly Capital Expenditures

$

6,117

$

1,824

Inventory MSOH (1): Altera

2.7

1.8

Inventory MSOH (1): Distribution

0.8

0.7

Cash Conversion Cycle

85

77

Note (1): MSOH: Months Supply On Hand




ALTERA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


YEARS ENDED

(In thousands)

December 31,  

2010

December 31,  

2009

December 31,  

2008

Cash Flows from Operating Activities:





Net income

$

782,884

$

251,062

$

359,651

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





Depreciation and amortization

27,535

29,022

29,969

Stock-based compensation

62,118

64,446

48,630

Deferred income tax (benefit) expense

(23,483)

(5,890)

737

Tax effect of employee stock plans

27,444

(3,648)

1,311

Excess tax benefit from employee stock plans

(21,866)

(990)

(6,767)

Gain on sale of land

—

—

(112)

Gain on substantive termination of retiree medical plan

—

(6,488)

—

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





Accounts receivable, net

(145,330)

(136,115)

115,459

Inventories

(76,819)

14,931

(10,527)

Other assets

(52,805)

38,862

(26,173)

Accounts payable and other liabilities

59,200

7,918

2,810

Deferred income and allowances on sales to distributors

146,826

77,611

(74,766)

Income taxes payable

73,485

39,860

9,717

Deferred compensation plan obligations

(2,494)

2,125

(673)

Net cash provided by operating activities

856,695

372,706

449,266

Cash Flows from Investing Activities:





Purchases of property and equipment

(12,442)

(11,060)

(40,273)

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

—

—

131,060

Proceeds from sale of land

—

—

9,063

Acquisition related payments, net of cash acquired

(8,004)

—

—

Sales (purchases) of deferred compensation plan securities, net

2,494

(2,125)

673

Purchases of intangible assets

(5,000)

(690)

—

Net cash (used in) provided by investing activities

(22,952)

(13,875)

100,523

Cash Flows from Financing Activities:





Proceeds from issuance of common stock through various stock plans

453,719

42,144

67,138

Shares withheld for employee taxes

(20,164)

(10,738)

(8,229)

Repurchases of common stock

—

—

(473,229)

Payment of dividends to stockholders

(67,774)

(58,925)

(57,051)

Excess tax benefit from stock-based compensation

21,866

990

6,767

Decrease in book overdrafts

—

—

(320)

Proceeds from long-term credit facility

—

—

250,000

Principal payments on capital lease obligations

(2,866)

(2,373)

(8,217)

Net cash provided by (used in) financing activities

384,781

(28,902)

(223,141)

Net increase in cash and cash equivalents

1,218,524

329,929

326,648

Cash and cash equivalents at beginning of period

1,546,672

1,216,743

890,095

Cash and cash equivalents at end of period

$

2,765,196

$

1,546,672

$

1,216,743

Supplemental cash flow information:





Income taxes paid, net

$

29,887

$

7,310

$

66,503

Interest paid

$

3,395

$

4,503

$

15,666

Noncash Investing and Financing Activities:





Assets acquired under capital leases

$

—

$

—

$

11,871

ALTERA CORPORATION

NET SALES SUMMARY

(Unaudited)

Three Months Ended

Quarterly Growth Rate

Years Ended


December 31,  

2010

October 1,  

2010

December 31,  

2009

Sequential Change

Year-

Over-Year

Change

December 31, 2010

December 31, 2009

Annual Growth

Geography














Americas

17

%

20

%

21

%

(14)

%

21

%

19

%

20

%

50

%

Asia Pacific

43

%

44

%

39

%

3

%

66

%

42

%

40

%

74

%

EMEA

22

%

21

%

21

%

12

%

64

%

23

%

22

%

71

%

Japan

18

%

15

%

19

%

29

%

45

%

16

%

18

%

47

%

Net Sales

100

%

100

%

100

%

5

%

52

%

100

%

100

%

64

%


Three Months Ended

Quarterly Growth Rate

Years Ended


December 31,

2010

October 1,

2010

December 31,

2009

Sequential Change

Year-

Over-Year

Change

December 31, 2010

December 31, 2009

Annual Growth

Product Category














New

53

%

44

%

29

%

26

%

175

%

43

%

24

%

196

%

Mainstream

23

%

29

%

32

%

(14)

%

12

%

28

%

33

%

36

%

Mature and Other

24

%

27

%

39

%

(8)

%

(7)

%

29

%

43

%

11

%

Net Sales

100

%

100

%

100

%

5

%

52

%

100

%

100

%

64

%



Three Months Ended

Quarterly Growth Rate

Years Ended


December 31,

2010

October 1,

2010

December 31,

2009

Sequential Change

Year-

Over-Year

Change

December 31, 2010

December 31, 2009

Annual Growth

Vertical Market














Telecom & Wireless

47

%

45

%

41

%

10

%

73

%

44

%

44

%

64

%

Industrial Automation, Military & Automotive

19

%

22

%

23

%

(9)

%

25

%

21

%

22

%

61

%

Networking, Computer & Storage

15

%

13

%

14

%

17

%

59

%

14

%

14

%

55

%

Other

19

%

20

%

22

%

2

%

36

%

21

%

20

%

73

%

Net Sales

100

%

100

%

100

%

5

%

52

%

100

%

100

%

64

%



Three Months Ended

Quarterly Growth Rate

Years Ended


December 31,

2010

October 1,

2010

December 31,

2009

Sequential Change

Year-

Over-Year

Change

December 31, 2010

December 31, 2009

Annual Growth

FPGAs and CPLDs














FPGA

83

%

82

%

78

%

6

%

61

%

82

%

77

%

73

%

CPLD

10

%

11

%

15

%

(1)

%

10

%

12

%

15

%

29

%

Other Products

7

%

7

%

7

%

6

%

39

%

6

%

8

%

36

%

Net Sales

100

%

100

%

100

%

5

%

52

%

100

%

100

%

64

%

Product Category Description

  • New Products include the Stratix® III, Stratix IV (including E, GX and GT), Arria® II GX, Cyclone® III, Cyclone IV (including E and GX), MAX® II, HardCopy® III, and HardCopy IV devices.
  • Mainstream Products include the Stratix II (and GX), Arria GX, Cyclone II, and HardCopy II devices.
  • Mature and Other Products include the Stratix (and GX), Cyclone, Classic™, MAX 3000A, MAX 7000, MAX 7000A, MAX 7000B, MAX 7000S, MAX 9000, HardCopy, FLEX® series, APEX™ series, Mercury™, and Excalibur™ devices, configuration and other devices, intellectual property cores, and software and other tools.

INVESTOR CONTACT

MEDIA CONTACT

Scott Wylie - Vice President

Mark Plungy - Senior Manager

Investor Relations

Public Relations

(408) 544-6996

(408) 544-6397

[email protected]

[email protected]

SOURCE Altera Corporation

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