Altera Announces Third Quarter Results

                    Altera Announces Third Quarter Results

PR Newswire

SAN JOSE, Calif., Oct. 23, 2012

SAN JOSE, Calif., Oct. 23, 2012 /PRNewswire/ -- Altera Corporation (NASDAQ:
ALTR) today announced third quarter sales of $495.0 million, up 6 percent from
the second quarter of 2012 and down 5 percent from the third quarter of 2011.
Third quarter net income was $157.5 million, $0.49 per diluted share, compared
with net income of $162.7 million, $0.50 per diluted share, in the second
quarter of 2012 and $185.4 million, $0.57 per diluted share, in the third
quarter of 2011.

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

Year-to-date cash flow from operating activities was $460.5 million. Altera
repurchased 1.6 million shares of its common stock during the quarter at a
cost of $50.0 million. Altera ended the quarter with $3.7 billion in cash and
investments.

Altera's board of directors has declared a quarterly cash dividend of $0.10
per share, to be paid on December 3, 2012 to stockholders of record on
November 13, 2012.

"Despite uneven global economic conditions, Altera experienced relatively
broad vertical market sequential growth with both our new and mainstream
product categories performing well," said John Daane, president, chief
executive officer, and chairman of the board. "Our 28 nm opportunity pipeline
exceeds that of any prior process node as FPGAs continue to displace ASICs.
Altera is the only 28 nm FPGA supplier to offer production-qualified devices
across our entire range of product families, which gives us clear advantage as
we compete for design wins. Altera is the design-win value leader at 28 nm."

Several recent accomplishments mark the company's continuing progress:

  o Production-qualified devices are now available across Altera's entire 28
    nm portfolio of high-end, midrange, and low-cost FPGAs. As the first FPGA
    supplier to reach this 28 nm industry milestone, Altera's technology
    leadership, with its unique tailored architecture approach, is
    successfully delivering a range of products optimized for cost,
    performance and low power. At the high end, Stratix^® V FPGAs are the
    industry's only production monolithic devices with 28 Gbps integrated
    transceivers. In the midrange, Arria^® V FPGAs use the lowest power while
    providing optimized performance for a variety of applications including
    remote radio units, Long-Term Evolution (LTE) wireless communications
    equipment, in-studio mixers and 10G/40G line cards. Developed on TSMC's 28
    nm Low Power (28LP) process, the Cyclone^® V FPGA family provides
    customers the lowest power and lowest cost at optimal performance levels
    needed for today's high-volume, cost-sensitive applications.
  o Altera has unveiled several key innovations planned for its next
    generation of 20 nm products. Extending the promise of silicon
    convergence, Altera is offering customers the ultimate system-integration
    platform, combining the hardware programmability of FPGAs with the
    software flexibility of digital signal processors and microprocessors
    along with the efficiencies of application-specific hard intellectual
    property. The architectural, software and process innovations Altera is
    making at 20 nm enable the development of an enhanced mixed-system fabric
    that delivers new levels of performance, bandwidth, integration and power
    efficiency. Altera's 20 nm mixed-system fabric includes the integration of
    40 Gbps transceiver technology, a next-generation variable-precision
    digital signal processing (DSP) block architecture that delivers over 5
    TFLOPs of IEEE 754 floating-point performance, and heterogeneous 3D
    integrated circuits that integrate FPGAs with a user-customizable
    HardCopy^® ASIC or a variety of other technologies, including memory,
    third-party ASICs and optical interfaces.
  o For the second consecutive year, Altera has been selected as one of the
    100 most innovative companies in the world, according to a study just
    published by Forbes Magazine. The Forbes ranking is based on "Innovation
    Premium," an indication of the premium the stock market gives a company
    because investors expect it to launch new offerings and enter new markets.
    The algorithm was developed by Hal Gregersen, Jeff Dyer, and Clayton
    Christensen, and is described in their book, The Innovator's DNA (Harvard
    Business Press, 2011).

SELECTED THIRD QUARTER REVENUE AND RELATED RESULTS

Key New Product Devices  Sequential Comparisons
Stratix V                124          %
Stratix IV               1            %
Arria II                 (9)          %
Cyclone IV               27           %
HardCopy IV              (10)         %

 

Vertical Markets        Sequential   Comments
                        Comparisons
Telecom & Wireless      7%           Telecom and Wireless both up
Industrial Automation,               Industrial, Military, and Automotive all
                        11%          up
Military & Automotive
Networking, Computer &  5%           Networking up and Computer and Storage
Storage                              slightly down
Other                   3%

 

($ in thousands)                   September 28, 2012  June 29, 2012
Key Ratios & Information
Current Ratio                      6:1                 6:1
Liabilities/Equity                 1:2                 1:2
Quarterly Operating Cash Flows     $ 285,203           $ 85,539
TTM Return on Equity               19%                 20%
Quarterly Depreciation Expense     $ 9,677             $ 7,688
Quarterly Capital Expenditures     $ 17,749            $ 7,409
Inventory MSOH ^(1): Altera        3.1                 3.1
Inventory MSOH ^(1): Distribution  0.6                 0.6
Cash Conversion Cycle (Days)       140                 130
Turns                              37%                 38%
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              Year-
                     September 28,  June 29,  30,        Sequential
                                                         Change      Over-Year
                     2012           2012      2011
                                                                     Change
Geography
Americas             19      %      17    %   16    %    15     %    6      %
Asia Pacific         43      %      46    %   44    %    1      %    (6)    %
EMEA                 25      %      23    %   25    %    18     %    (5)    %
Japan                13      %      14    %   15    %    (4)    %    (16)   %
Net Sales            100     %      100   %   100   %    6      %    (5)    %
Product Category
New                  31      %      31    %   27    %    8      %    8      %
Mainstream           32      %      30    %   32    %    13     %    (8)    %
Mature and Other     37      %      39    %   41    %    1      %    (12)   %
Net Sales            100     %      100   %   100   %    6      %    (5)    %
Vertical Market
Telecom & Wireless   45      %      45    %   42    %    7      %    2      %
Industrial
Automation, Military 20      %      19    %   22    %    11     %    (11)   %
& Automotive
Networking, Computer 17      %      18    %   20    %    5      %    (21)   %
& Storage
Other                18      %      18    %   16    %    3      %    3      %
Net Sales            100     %      100   %   100   %    6      %    (5)    %
FPGAs and CPLDs
FPGA                 82      %      85    %   82    %    4      %    (5)    %
CPLD                 9       %      9     %   9     %    4      %    (9)    %
Other Products       9       %      6     %   9     %    45     %    (6)    %
Net Sales            100     %      100   %   100   %    6      %    (5)    %

Product Category Description

  o New Products include the Stratix^® V (including GS, GT and GX), Stratix IV
    (including E, GX and GT), Arria^® V, Arria II (including GX and GZ),
    Cyclone^® V, Cyclone IV (including E and GX), MAX^® V and HardCopy^® IV
    devices.
  o Mainstream Products include the Stratix III, Cyclone III, MAX II and
    HardCopy III devices.
  o Mature and Other Products include the Stratix II (and GX), Stratix (and
    GX), 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 2012

Sales and Income Statement
Sequential Sales         Down 6% to 10%
Gross Margin             69% - 70%
Research and Development $93 to 95 million
SG&A                     $74 to 75 million
Tax Rate                 13% +/- .5%
Diluted Share Count      Approximately 324 million
Turns                    Low-40's
MSOH                     High 3's

Vertical Market
Telecom & Wireless                Telecom and Wireless both down
Industrial Automation, Military & Down slightly overall with all vertical
Automotive                        markets weak
Networking, Computer & Storage    Networking, Computer and Storage all down
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.

Fourth Quarter Update and 2013 Guidance

Altera's fourth quarter business update will be issued in a press release
available after the market close on December 4, 2012. The release will also
include Altera financial guidance for 2013. A conference call with the
investment community will take place at 1:45 PM Pacific time on December 4,
2012, to review and comment on 2013 guidance.

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, our expectation of expansion in 28 nm FPGA
opportunities, our ability to displace ASICs and ASSPs and our competitive
position at 28 nm and our product developments at the 20 nm process node and
their effect on the magnitude of our market opportunity, as well as 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^® V, 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.

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

ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
                  Three Months Ended                     Nine Months Ended
                  September    June 29,     September    September 28,  September 30,
                  28,                       30,
                               2012                      2012           2011
                  2012                      2011
Net sales         $ 495,010    $ 464,831    $ 522,474    $ 1,343,595    $ 1,606,671
Cost of sales     152,007      141,315      166,938      408,156        473,565
Gross margin      343,003      323,516      355,536      935,439        1,133,106
Operating
expense
Research and
development       91,606       92,356       80,771       266,259        235,438
expense
Selling,
general, and      74,243       71,796       69,345       215,824        208,550
administrative
expense
Total operating   165,849      164,152      150,116      482,083        443,988
expense
Operating margin  177,154      159,364      205,420      453,356        689,118
^(1)
Compensation
expense (gain) —
deferred          3,274        (2,313)      (6,642)      6,697          (4,926)
compensation
plan
(Gain)/loss on
deferred          (3,274)      2,313        6,642        (6,697)        4,926
compensation
plan securities
Interest income   (2,775)      (1,415)      (663)        (5,997)        (2,505)
and other
Loss/(gain)
reclassified
from other        108          (69)         —            (63)           —
comprehensive
income
Interest expense  2,333        2,116        806          5,386          2,717
Income before     177,488      158,732      205,277      454,030        688,906
income taxes
Income tax
expense           19,999       (3,947)      19,873       18,028         64,806
(benefit)
Net income        157,489      162,679      185,404      436,002        624,100
Other
comprehensive
income:
Unrealized gain
on investments
Unrealized
holding gain on
investments
arising during    3,620        2,799        —            6,723          —
period, net of
tax of $43, $8
and $108
Less:
Reclassification
adjustments for
gain on
investments       (41)         (3)          —            (64)           —
included in net
income, net of
tax of $1, $1
and $6
                  3,579        2,796        —            6,659          —
Unrealized gain
on derivatives
Unrealized
(loss)/gain on
derivatives
arising during    (10)         63           —            67             —
period, net of
tax of $6, $34
and $36
Less:
Reclassification
adjustments for
loss/(gain) on
derivatives       97           (42)         —            5              —
included in net
income, net of
tax of $53, $23
and $2
                  87           21           —            72             —
Other
comprehensive     3,666        2,817        —            6,731          —
income
Comprehensive     $ 161,155    $ 165,496    $ 185,404    $ 442,733      $ 624,100
income
Net income per
share:
Basic             $ 0.49       $ 0.51       $ 0.58       $ 1.36         $ 1.94
Diluted           $ 0.49       $ 0.50       $ 0.57       $ 1.34         $ 1.90
Shares used in
computing per
share amounts:
Basic             319,870      321,218      321,745      321,200        322,012
Diluted           323,560      325,285      327,044      325,275        328,264
Cash dividends    $ 0.10       $ 0.08       $ 0.08       $ 0.26         $ 0.20
per common share
Tax rate          11.3      %  (2.5)     %  9.7       %  4.0         %  9.4         %
% of Net sales:
Gross margin      69.3      %  69.6      %  68.0      %  69.6        %  70.5        %
Research and      18.5      %  19.9      %  15.5      %  19.8        %  14.7        %
development
Selling,
general, and      15.0      %  15.4      %  13.3      %  16.1        %  13.0        %
administrative
Operating         35.8      %  34.3      %  39.3      %  33.7        %  42.9        %
margin^(1)
Net income        31.8      %  35.0      %  35.5      %  32.5        %  38.8        %

 

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 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                                         September   September   September
thousands,      September 28,   June 29,    30,         28,         30,
except per
share           2012            2012        2011        2012        2011
amounts)
Operating
margin          $   177,154     $ 159,364   $ 205,420   $ 453,355   $ 689,118
(non-GAAP)
Compensation
(gain)
expense —       3,274           (2,313)     (6,642)     6,697       (4,926)
deferred
compensation
plan
Income from
operations      $   173,880     $ 161,677   $ 212,062   $ 446,658   $ 694,044
(GAAP)

ALTERA CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                  September 28,  December 31,
(In thousands, except par value amount)
                                                  2012           2011
Assets
Current assets:
Cash and cash equivalents                         $  2,849,829   $  3,371,933
Short-term investments                            144,195        65,222
Total cash, cash equivalents, and short-term      2,994,024      3,437,155
investments
Accounts receivable, net                          348,273        232,273
Inventories                                       157,848        122,279
Deferred income taxes — current                   65,223         58,415
Deferred compensation plan — marketable           58,151         54,041
securities
Deferred compensation plan — restricted cash      18,524         17,938
equivalents
Other current assets                              42,134         52,710
Total current assets                              3,684,177      3,974,811
Property and equipment, net                       200,172        171,721
Long-term investments                             685,945        74,033
Deferred income taxes — non-current               23,047         26,629
Other assets, net                                 49,519         35,074
Total assets                                      $  4,642,860   $  4,282,268
Liabilities and stockholders' equity
Current liabilities:
Accounts payable                                  $  45,589      $  52,154
Accrued liabilities                               39,183         34,029
Accrued compensation and related liabilities      43,563         78,181
Deferred compensation plan obligations            76,675         71,979
Deferred income and allowances on sales to        400,351        279,876
distributors
Credit facility                                   —              500,000
Total current liabilities                         605,361        1,016,219
Income taxes payable — non-current                261,843        263,423
Long-term debt                                    500,000        —
Other non-current liabilities                     9,496          8,730
Total liabilities                                 1,376,700      1,288,372
Stockholders' equity:
Common stock: $.001 par value; 1,000,000 shares
authorized; outstanding - 320,563 shares at       321            322
September 28, 2012 and 322,054 shares at
December 31, 2011
Capital in excess of par value                    1,107,614      1,050,752
Retained earnings                                 2,151,627      1,942,955
Accumulated other comprehensive income (loss)     6,598          (133)
Total stockholders' equity                        3,266,160      2,993,896
Total liabilities and stockholders' equity        $  4,642,860   $  4,282,268

ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
                                                 Nine Months Ended
                                                 September 28,  September 30,

                                                 2012           2011
Cash Flows from Operating Activities:
Net income                                       $  436,002     $  624,100
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization                    26,426         23,443
Stock-based compensation                         70,790         59,983
Deferred income tax benefit                      (3,367)        (9,549)
Tax effect of employee stock plans               14,381         26,077
Excess tax benefit from employee stock plans     (20,790)       (22,959)
Changes in assets and liabilities:
Accounts receivable, net                         (116,000)      (23,228)
Inventories                                      (35,569)       12,496
Other assets                                     5,478          47,986
Accounts payable and other liabilities           (34,670)       (40,004)
Deferred income and allowances on sales to       120,475        11,115
distributors
Income taxes payable                             (650)          30,122
Deferred compensation plan obligations           (2,001)        (345)
Net cash provided by operating activities        460,505        739,237
Cash Flows from Investing Activities:
Purchases of property and equipment              (53,712)       (23,178)
Sales of deferred compensation plan securities,  2,001          345
net
Purchases of available-for-sale securities       (819,662)      (130,146)
Proceeds from sale and maturity of               135,650        1,750
available-for-sale securities
Purchases of intangible assets                   (2,280)        —
Purchases of other investments                   (4,510)        —
Net cash used in investing activities            (742,513)      (151,229)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock through   37,514         93,619
various stock plans
Shares withheld for employee taxes               (30,529)       (31,122)
Payment of dividends to stockholders             (83,570)       (64,328)
Proceeds from issuance of long-term debt         500,000        —
Repayment of credit facility                     (500,000)      —
Long-term debt and credit facility issuance      (5,244)        —
costs
Repurchases of common stock                      (179,057)      (197,018)
Excess tax benefit from employee stock plans     20,790         22,959
Net cash used in financing activities            (240,096)      (175,890)
Net (decrease) increase in cash and cash         (522,104)      412,118
equivalents
Cash and cash equivalents at beginning of period 3,371,933      2,765,196
Cash and cash equivalents at end of period       $  2,849,829   $  3,177,314

 

SOURCE Altera Corporation

Website: http://www.altera.com