Altera Announces Third Quarter Results

                    Altera Announces Third Quarter Results

PR Newswire

SAN JOSE, Calif., Oct. 22, 2013

SAN JOSE, Calif., Oct.22, 2013 /PRNewswire/ -- Altera Corporation (NASDAQ:
ALTR) today announced third quarter sales of $445.9 million, up 6 percent from
the second quarter of 2013 and down 10 percent from the third quarter of 2012.
Third quarter net income was $119.4 million, $0.37 per diluted share, compared
with net income of $101.5 million, $0.31 per diluted share, in the second
quarter of 2013 and $157.5 million, $0.49 per diluted share, in the third
quarter of 2012.

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

Year-to-date cash flow from operating activities was $459.4 million. Altera
repurchased approximately 161 thousand shares of its common stock during the
quarter at a cost of $5.3 million.

Altera's board of directors has declared a quarterly cash dividend of $0.15
per share, to be paid on December2, 2013 to stockholders of record on
November12, 2013.

"Sales improved from second quarter levels, with our new products, led by our
28 nm FPGAs, as growth leaders. We expect this new product growth momentum to
carry over into the December quarter," said John Daane, president, chief
executive officer, and chairman of the board. "We have taped out our first
Stratix 10 test chip, which will be manufactured on Intel's 14 nm FinFET
process. Coupling this process with our next generation architectural
innovations produces a substantial step up in performance and density from our
current FPGAs and offers compelling benefits to our customers versus
competitive offerings."

Several recent accomplishments mark the company's continuing progress:

  oAltera and Micron Technology, Inc. have jointly demonstrated successful
    interoperability between Altera Stratix^® V FPGAs and Micron's Hybrid
    Memory Cube (HMC). This new capability will be delivered with Altera's
    Generation 10 portfolio, which includes both Stratix 10 and Arria^®10
    FPGAs and SoCs. HMC addresses the limitations imposed by conventional
    memory technology, and provides ultra-high system performance with
    significantly lower power-per-bit. HMC delivers up to 15 times the
    bandwidth of a traditional DDR3 module and uses 70 percent less energy and
    90 percent less space than existing technologies.

  Arria 10 FPGAs and SoCs will be the first device families deployed in the
  Generation 10 portfolio and will be the first devices to support HMC
  technology in volume production. Leveraging an enhanced architecture
  optimized for TSMC's 20 nm process, Arria 10 FPGAs and SoCs will use HMC to
  extend the device families' performance benefits of both 15 percent higher
  core performance than today's highest performance Stratix V FPGAs and up to
  40 percent lower power compared to the lowest power Arria V midrange FPGAs.

  Stratix 10 FPGAs and SoCs will enable the most advanced, highest performance
  applications across communications, military, broadcast and compute and
  storage markets. These high-performance applications often require the
  highest memory bandwidth, which drives the need for an HMC-ready
  architecture. Leveraging Intel's 14 nm Tri-Gate process and an enhanced
  high-performance architecture that integrates with HMC technology, Stratix
  10 FPGAs and SoCs will enable system solutions with an operating frequency
  over one gigahertz, and two times the core performance of current high-end
  28 nm FPGAs. Stratix 10 devices also will allow customers to achieve up to a
  70 percent reduction in power consumption at performance levels equivalent
  to Altera's previous generation.

  oAltera is now shipping production-qualified Cyclone^® V SoCs and
    engineering samples of its Arria V SoCs. These devices benefit from
    density, architectural, productivity and processor performance leadership,
    which enables Altera SoCs to target a very wide range of applications. In
    addition,  Altera SoCs provide embedded developers with the highest
    productivity development tools. Featuring increased processor peak clock
    frequencies, these devices are the FPGA industry's highest performing
    SoCs. Altera offers the industry's broadest range of densities with its 28
    nm SoCs, ranging from 25K logic elements (LE) up to 460K LE. This density
    range allows Altera SoCs to be integrated into a variety of embedded
    systems, ranging from cost-sensitive industrial automation and automotive
    driver assist systems to applications that require higher-performance,
    including remote radio units, 10G/40G line cards and broadcast studio
    equipment.

    
  oAltera is collaborating with the China Mobile Research Institute (CMRI) to
    develop next-generation wireless networks based on the Centralized Radio
    Access Network (C-RAN) architecture. By centralizing the baseband
    processing of a large geographical area into the cloud, the cloud-based
    C-RAN architecture enables operators like China Mobile to reduce
    deployment and operating costs for their next-generation wireless
    infrastructure. Altera and CMRI are working together to debug and verify
    next-generation wireless systems based on the C-RAN architecture by
    leveraging Altera's FPGA technology. Collaborating with the world's
    largest cellular operator on C-RAN architecture development enables Altera
    to more effectively align its FPGAs, software and IP to meet
    next-generation wireless infrastructure requirements.



SELECTED THIRD QUARTER REVENUE AND RELATED RESULTS
Key New Product Devices    Sequential Comparisons
Stratix V                  30            %
Stratix IV                 3             %
Arria II                   16            %
Arria V                    108           %
Cyclone IV                 13            %
Cyclone V                  73            %
HardCopy IV                (25)          %
Enpirion PowerSoCs         100           %



($ in thousands)
                                   September 27, 2013  June 28, 2013
Key Ratios & Information
Current Ratio                      6:1               6:1 
Liabilities/Equity                 1:2               1:2
Quarterly Operating Cash Flows     $    245,406        $   64,565
TTM Return on Equity               14%                 15%
Quarterly Depreciation Expense     $    10,772         $   10,285
Quarterly Capital Expenditures     $    8,633          $   7,221
Inventory MSOH ^(1): Altera        3.4                 3.0
Inventory MSOH ^(1): Distribution  0.6                 0.5
Cash Conversion Cycle (Days)       158                 149
Turns                              39%                 49%
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
                                                                     Year-
                 September27,  June28,  September28,  Sequential
                 2013           2013      2012           Change      Over-Year

                                                                     Change
Geography
Americas         18      %      17    %   19      %      15     %    (11)   %
Asia Pacific     39      %      39    %   43      %      6      %    (18)   %
EMEA             28      %      28    %   25      %      5      %    (1)    %
Japan            15      %      16    %   13      %      (3)    %    2      %
Net Sales        100     %      100   %   100     %      6      %    (10)   %
Product Category
New              44      %      41    %   31      %      16     %    27     %
Mainstream       26      %      28    %   32      %      0      %    (25)   %
Mature and Other 30      %      31    %   37      %      (1)    %    (28)   %
Net Sales        100     %      100   %   100     %      6      %    (10)   %
Vertical Market
Telecom &        41      %      42    %   45      %      3      %    (18)   %
Wireless
Industrial
Automation,      23      %      22    %   20      %      11     %    1      %
Military &
Automotive
Networking,
Computer &       19      %      18    %   17      %      13     %    0      %
Storage
Other            17      %      18    %   18      %      (1)    %    (12)   %
Net Sales        100     %      100   %   100     %      6      %    (10)   %
FPGAs and CPLDs
FPGA             82      %      83    %   82      %      4      %    (11)   %
CPLD             9       %      9     %   9       %      12     %    (3)    %
Other Products   9       %      8     %   9       %      13     %    (7)    %
Net Sales        100     %      100   %   100     %      6      %    (10)   %

Product Category Description

  oNew Products include the Stratix^® V, Stratix IV, Arria^® V, Arria II,
    Cyclone^® V, Cyclone IV, MAX^® V, HardCopy^® IV devices and Enpirion
    PowerSoCs.
  oMainstream Products include the Stratix III, Cyclone III, MAX II and
    HardCopy III devices.
  oMature 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™, Excalibur™ devices, configuration and other devices,
    intellectual property cores, and software and other tools.



Business Outlook for the Fourth Quarter 2013
Sales and Income Statement
Sequential Sales         Down 3% to Up 1%
Gross Margin             68.5% +/- .5%
Research and Development $110 to $111 million
SG&A                     $82 to $83 million
Tax Rate                 11% to 12%
Diluted Share Count      Approximately 323 million (assumes no share
                         repurchases)
Turns                    Mid 40's
MSOH                     Low 4's



Vertical Market
Telecom & Wireless                           Flat
Industrial Automation, Military & Automotive Flat
Networking, Computer & Storage               Up
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.

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 new product growth
momentum, the competitive advantage related to the use of Intel's 14 nm
process, product performance parameters, new product sales momentum, 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 from
those currently anticipated, due to a number of factors, including without
limitation, current global economic conditions, including uncertainty arising
from United States budget and debt ceiling legislation, 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, 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.



Mobile Device Investor Information

Altera now provides highlights of its investor relations web page optimized
for mobile users. Investors can equip their mobile devices with this new
capability by linking to http://phx.corporate-ir.net/Mobile.view?c=83265.

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
aspower management, to provide high-value solutions to customers worldwide.
Follow Altera via Facebook, Twitter, LinkedIn, Google+ and RSS, and subscribe
to product update emails and newsletters. Visit www.altera.com.

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 COMPREHENSIVE INCOME
(Unaudited)
                     Three Months Ended                         Nine Months Ended
(In thousands,       September27,  June28,     September28,  September27,  September28,
except per share     2013           2013         2012           2013           2012
amounts)
Net sales            $  445,945     $ 421,759    $  495,010     $ 1,278,205    $ 1,343,595
Cost of sales        141,525        135,104      152,007        402,712        408,156
Gross margin         304,420        286,655      343,003        875,493        935,439
Operating expense
Research and         95,336         95,489       91,393         278,542        265,619
development expense
Selling, general,
and administrative   78,907         77,869       74,243         235,376        215,824
expense
Amortization of
acquisition-related  1,846          915          213            2,974          640
intangible assets
Total operating      176,089        174,273      165,849        516,892        482,083
expense
Operating margin     128,331        112,382      177,154        358,601        453,356
^(1)
Compensation
expense/(benefit) —  3,462          (160)        3,274          6,724          6,697
deferred
compensation plan
(Gain)/loss on
deferred             (3,462)        160          (3,274)        (6,724)        (6,697)
compensation plan
securities
Interest income and  (2,214)        (2,778)      (2,775)        (6,651)        (5,997)
other
(Gain)/loss
reclassified from    (33)           (42)         108            (129)          (63)
other comprehensive
income
Interest expense     2,511          3,389        2,333          8,365          5,386
Income before        128,067        111,813      177,488        357,016        454,030
income taxes
Income tax expense   8,635          10,304       19,999         15,885         18,028
Net income           119,432        101,509      157,489        341,131        436,002
Other comprehensive
income/(loss):
Unrealized
gain/(loss) on
investments:
Unrealized holding
gain/(loss) on
investments arising
during period, net   2,419          (9,031)      3,620          (6,613)        6,723
of tax of $30,
($47), $43, ($12)
and $108
Less:
Reclassification
adjustments for
gain on investments  (22)           (37)         (41)           (108)          (64)
included in net
income, net of tax
of $11, $5, $1, $21
and $6
                     2,397          (9,068)      3,579          (6,721)        6,659
Unrealized
(loss)/gain on
derivatives:
Unrealized
(loss)/gain on
derivatives arising  —              —            (10)           —              67
during period, net
of tax of ($6) and
$36
Less:
Reclassification
adjustments for
loss on derivatives  —              —            97             —              5
included in net
income, net of tax
of $53 and $2
                     —              —            87             —              72
Other comprehensive  2,397          (9,068)      3,666          (6,721)        6,731
income/(loss)
Comprehensive        $  121,829     $ 92,441     $  161,155     $ 334,410      $ 442,733
income
Net income per
share:
Basic                $  0.37        $ 0.32       $  0.49        $ 1.07         $ 1.36
Diluted              $  0.37        $ 0.31       $  0.49        $ 1.05         $ 1.34
Shares used in
computing per share
amounts:
Basic                320,445        320,472      319,870        320,266        321,200
Diluted              323,505        323,527      323,560        323,355        325,275
Dividends per        $  0.15        $ 0.10       $  0.10        $ 0.35         $ 0.26
common share
Tax rate             6.7         %  9.2       %  11.3        %  4.4         %  4.0         %
% of Net sales:
Gross margin         68.3        %  68.0      %  69.3        %  68.5        %  69.6        %
Research and         21.4        %  22.6      %  18.5        %  21.8        %  19.8        %
development
Selling, general,    17.7        %  18.5      %  15.0        %  18.4        %  16.1        %
and administrative
Operating            28.8        %  26.6      %  35.8        %  28.1        %  33.7        %
margin^(1)
Net income           26.8        %  24.1      %  31.8        %  26.7        %  32.5        %

Notes:
(1) We define operating margin as gross margin less research and development
expense, selling, general and administrative expense 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 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 thousands,     September27,  June28,    September28,  September27,  September28,
except per share   2013           2013        2012           2013           2012
amounts)
Operating margin   $   128,331    $ 112,382   $  177,154     $  358,601     $  453,356
(non-GAAP)
Compensation
expense/(benefit)    3,462        (160)       3,274             6,724       6,697
— deferred
compensation plan
Income from        $   124,869    $ 112,542   $  173,880     $  351,877     $  446,659
operations (GAAP)





ALTERA CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except par value amount)            September27,  December31,
                                                   2013           2012
Assets
Current assets:
Cash and cash equivalents                          $  2,956,085   $ 2,876,627
Short-term investments                             151,159        140,958
Total cash, cash equivalents, and short-term       3,107,244      3,017,585
investments
Accounts receivable, net                           436,421        323,708
Inventories                                        158,441        152,721
Deferred income taxes — current                    62,575         59,049
Deferred compensation plan — marketable            58,402         60,321
securities
Deferred compensation plan — restricted cash       20,270         17,116
equivalents
Other current assets                               30,479         49,852
Total current assets                               3,873,832      3,680,352
Property and equipment, net                        198,642        206,148
Long-term investments                              713,651        704,758
Deferred income taxes — non-current                13,548         17,082
Goodwill                                           93,073         2,329
Acquisition-related intangible assets, net         86,500         4,874
Other assets, net                                  40,518         42,285
Total assets                                       $  5,019,764   $ 4,657,828
Liabilities and stockholders' equity
Current liabilities:
Accounts payable                                   $  52,224      $ 50,036
Accrued liabilities                                37,525         29,005
Accrued compensation and related liabilities       43,544         40,606
Deferred compensation plan obligations             78,672         77,437
Deferred income and allowances on sales to         444,705        345,993
distributors
Total current liabilities                          656,670        543,077
Income taxes payable — non-current                 266,395        272,000
Long-term debt                                     500,000        500,000
Other non-current liabilities                      8,916          9,304
Total liabilities                                  1,431,981      1,324,381
Stockholders' equity:
Common stock: $.001 par value; 1,000,000 shares
authorized; outstanding - 321,105 shares at        321            320
September 27, 2013 and 319,564 shares at
December31, 2012
Capital in excess of par value                     1,214,586      1,122,555
Retained earnings                                  2,374,005      2,204,980
Accumulated other comprehensive (loss)/ income     (1,129)        5,592
Total stockholders' equity                         3,587,783      3,333,447
Total liabilities and stockholders' equity         $  5,019,764   $ 4,657,828





ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
                                                  Nine Months Ended
(In thousands)                                   September27,  September28,
                                                  2013           2012
Cash Flows from Operating Activities:
Net income                                        $  341,131     $  436,002
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization                     34,256         25,786
Amortization of acquisition-related intangible    2,974          640
assets
Stock-based compensation                          73,011         70,790
Net gain on sale of available-for-sale            (129)          —
securities
Amortization of investments, net                  2,575          —
Deferred income tax benefit                       (5,629)        (3,367)
Tax effect of employee stock plans                5,405          14,381
Excess tax benefit from employee stock plans      (4,165)        (20,790)
Changes in assets and liabilities, net of
effects of acquisitions:
Accounts receivable, net                          (111,231)      (116,000)
Inventories                                       (2,494)        (35,569)
Other assets                                      29,517         5,478
Accounts payable and other liabilities            12,509         (34,670)
Deferred income and allowances on sales to        95,961         120,475
distributors
Income taxes payable                              (8,753)        (650)
Deferred compensation plan obligations            (5,489)        (2,001)
Net cash provided by operating activities         459,449        460,505
Cash Flows from Investing Activities:
Purchases of property and equipment               (31,216)       (53,712)
Proceeds from sales of deferred compensation      5,489          2,001
plan securities, net
Purchases of available-for-sale securities        (258,809)      (819,662)
Proceeds from sale and maturity of                228,292        135,650
available-for-sale securities
Acquisitions, net of cash acquired                (145,321)      —
Purchases of intangible assets                    —              (2,280)
Purchases of other investments                    (2,101)        (4,510)
Net cash used in investing activities             (203,666)      (742,513)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock through    38,748         37,514
various stock plans
Shares withheld for employee taxes                (24,787)       (30,529)
Payment of dividends to stockholders              (112,175)      (83,570)
Payment of debt assumed in acquisitions           (22,000)       —
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                       (60,276)       (179,057)
Excess tax benefit from employee stock plans      4,165          20,790
Net cash used in financing activities             (176,325)      (240,096)
Net increase (decrease) in cash and cash          79,458         (522,104)
equivalents
Cash and cash equivalents at beginning of period  2,876,627      3,371,933
Cash and cash equivalents at end of period        $  2,956,085   $  2,849,829





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



SOURCE Altera Corporation

Website: http://www.altera.com