Altera Announces Second Quarter Results

SAN JOSE, Calif., July 23, 2015 /PRNewswire/ -- Altera Corporation (NASDAQ: ALTR) today announced second quarter sales of $414.2 million, down 5 percent from the first quarter of 2015 and down 16 percent from the second quarter of 2014. Second quarter net income was $70.3 million, $0.23 per diluted share, compared with net income of $94.9 million, $0.31 per diluted share, in the first quarter of 2015 and $127.0 million, $0.41 per diluted share, in the second quarter of 2014.

Year-to-date cash flow from operating activities was $225.9 million. Altera's board of directors has declared a quarterly cash dividend of $0.18 per share, to be paid on September 1, 2015 to shareholders of record on August 10, 2015.

"Our wireless customers reduced demand on us this quarter, as expected, in reaction to continuing adverse market conditions. This pause in wireless spend more than offset growth across many of our vertical markets," said John Daane, president, chief executive officer, and chairman of the board. "The most important news for the second quarter was the June 1st announcement of an agreement for Intel to acquire Altera. Over the past several years we have worked closely with Intel, the world's largest semiconductor company and a proven technology leader. Through that interaction, we understand well the benefits this transaction will bring to our customers through development of innovative market-leading FPGAs and SoCs that will be enabled by Intel and Altera joining forces."

Second Quarter Business Summary

As previously forecasted, Altera's sales declined sequentially with Telecom and Wireless sales down sharply, attributable in large measure to the company's wireless business. With a few exceptions, there was broad growth across the remainder of the company. Gross margin was 69.4%, significantly improved from first quarter levels, as a result of favorable vertical market mix. Operating expense increased sequentially, largely the result of $18.5 million in merger-related expenses. The company's tax rate was 17.7%, higher than anticipated, largely due to adverse geographic mix of earnings. Altera did not repurchase any of its shares during the quarter.

In light of the company's pending acquisition by Intel, Altera will no longer provide forward-looking guidance.

Recent accomplishments mark Altera's continuing progress:

• Altera has revealed architectural and product details of its Stratix^® 10 FPGAs and SoCs, the next generation of high-end programmable logic devices, delivering breakthrough levels of performance, integration, density and security.
  • Stratix 10 FPGAs and SoCs leverage Altera's revolutionary HyperFlex™ FPGA fabric architecture, the FPGA industry's most significant fabric architecture innovation in over a decade. The HyperFlex fabric and Altera's use of Intel's^® 14 nm Tri-Gate process, with its full process node advantage, provides 2X higher core performance over Altera's previous high-end family.
  • All members of the Stratix 10 FPGA and SoC family leverage heterogeneous 3D SiP (System in Package) integration to efficiently and economically integrate a high-density monolithic FPGA core fabric (up to 5.5M logic elements) with other advanced components, thereby increasing the scalability and flexibility of Stratix 10 FPGAs and SoCs. Altera's heterogeneous SiP integration is enabled through the use of Intel's proprietary EMIB (Embedded Multi-die Interconnect Bridge) technology, which provides higher performance, reduced complexity, lower cost and enhanced signal integrity compared with interposer-based approaches.
  • All densities in the Stratix 10 family will also be available with an integrated 64-bit ARM^® quad-core Cortex^TM-A53 hard processor system. With these Stratix10 SoCs, Altera will extend its industry leadership position as the only vendor to offer high-end SoC FPGAs.

• Altera has announced its Spectra-Q™ engine, a new technology at the heart of the company's proven Quartus^® II software, to improve design productivity and time-to-market for next-generation programmable devices. As FPGAs and SoCs deliver dramatically increased capabilities with multi-million logic element devices, the Spectra-Q engine is a combination of software technologies that dramatically accelerate the design process by reducing design iterations, while continuing to deliver the industry's fastest compile times. The Spectra-Q engine features faster algorithms and allows for incremental design changes without needing to perform a full design compile. Built on top of the Spectra-Q engine is an industry-first platform design tool called BluePrint that allows designers to assign interfaces with greater efficiency. This tool reduces design iterations by 10X compared to the number of design iterations without the use of this tool by allowing designers to explore and create legal IO placements up-front with real-time fitter-checking. The Spectra-Q engine is available today to early access customers.
• Altera has joined the Industrial Internet Consortium, a collaborative industry organization facilitating development of a global ecosystem for the Internet of Things (IoT). Founded by AT&T, Cisco, General Electric, IBM and Intel in March 2014, the Industrial Internet Consortium catalyzes and coordinates the priorities and enabling technologies of the Industrial Internet. Altera FPGA, SoC and power products already play a significant role in enabling connectivity in RF wireless systems and machine-to-machine communication networks. Programmable logic is applied extensively in factory automation and smart grid applications, supporting high-performance control and analytics that enhance the efficiency, safety and security in advanced manufacturing and power systems. FPGAs are also being deployed in next-generation automotive and medical IoT systems, and in smart city applications, such as intelligent lighting and traffic management systems that incorporate high-performance embedded vision and video analytics capabilities.

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.

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 absolute and relative product performance and features, Stratix^® 10 FPGA competitive advantages and market expansion potential, future product availability, and the potential benefits that may be delivered through the pending acquisition of Altera by Intel. 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, the risk that the acquisition of Altera by Intel will not be completed, 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 FPGA, SoC, CPLD products, and complementary technologies, such as power solutions, 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.

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