Market Overview

Altera Announces Fourth Quarter Results

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SAN JOSE, Calif., Jan. 23, 2013 /PRNewswire/ -- Altera Corporation (NASDAQ: ALTR) today announced fourth quarter sales of $439.4 million, down 11 percent from the third quarter of 2012 and down 4 percent from the fourth quarter of 2011. Fourth quarter net income was $120.8 million, $0.37 per diluted share, compared with net income of $157.5 million, $0.49 per diluted share, in the third quarter of 2012 and $146.6 million, $0.45 per diluted share, in the fourth quarter of 2011.

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

Cash flow from operating activities in 2012 was $587.2 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 payable on March 1, 2013 to stockholders of record on February 11, 2013.

"While our new products had a double-digit sequential growth quarter, sales of our older products were soft—the result of a sluggish global economy," said John Daane, president, chief executive officer, and chairman of the board. "Sales of 40 nm devices, our largest selling process node, and where we are the market leader, are likely to strengthen further as we progress through 2013. At the most advanced process node, 28 nm, Altera remains the design-win value leader, giving us a substantial growth opportunity as these customer designs transition into production."

Several recent accomplishments mark the company's continuing progress:

  • Huawei Technologies, a leading global information and communications technology solutions provider, has presented Altera with its 2012 Excellent Core Partner Award. In making this award, Huawei specifically recognized Altera for its excellence in terms of quality, delivery of leading-edge technologies and services. The Excellent Core Partner Award is the highest recognition Huawei gives to its suppliers. Altera is among an elite set of suppliers to earn this award for outstanding contribution toward Huawei's business success throughout 2012. In 2012, Huawei realized the performance advantage offered by Altera's 28 nm Stratix® V FPGAs and selected the high-end product family for use in the company's 400G high-capacity OTN system. By using the industry's first high-end 28 nm production FPGAs, Huawei enabled the evolution of communications infrastructure such as 400G systems and other high-performance systems in a variety of markets throughout the world.
  • Altera also received the 2012 Global Excellent Partnership Award from ZTE Corporation, a leading provider of telecommunications equipment and network solutions. The award recognizes Altera for overall performance in delivering best-in-class products and services to ZTE during the past year. According to ZTE, innovative programmable solutions and technical support from Altera played a critical role in supporting product development for the company's existing and next-generation communication products. ZTE presents its Global Excellent Partnership Award each year to suppliers meeting rigorous performance criteria. Winners are chosen based on partner satisfaction surveys among company staff, including development and material engineers and purchasing employees. Suppliers are evaluated on cost efficiencies, on-time delivery, quality standards and service records. Altera scored the highest marks in all categories.
  • Altera is now shipping the first of its 28 nm SoC devices, which combine a dual-core ARM® Cortex™-A9 processor system with FPGA logic on a single device. The initial devices to ship are the low-power, low-cost Cyclone® V SoCs. Altera SoCs include several distinctive features that enable developers in the wireless communications, industrial, video surveillance, automotive and medical equipment markets to create custom SoC variants optimized for system power, board space, performance and cost requirements. In addition, Altera is the only FPGA vendor today shipping SoCs that offer 32-bit error correction code (ECC) support which helps ensure data integrity throughout the embedded system. ECC support is a requirement for customers who must have high-performance and reliable systems. With silicon now available, customers who used Altera's SoC Virtual Target to develop their application software can now quickly port their application software into the SoC, saving months of development time. Further strengthening the SoC device tools ecosystem support, Altera and ARM have jointly developed the ARM Development Studio 5™ Altera Edition (DS-5™) toolkit with FPGA-adaptive debugging, which exclusively supports Altera SoC devices. The DS-5 toolkit is designed to remove the debugging barrier between the integrated dual-core CPU subsystem and the FPGA fabric in Altera SoC devices, providing embedded software developers an unprecedented level of full-chip visibility and control.
  • Altera has developed the FPGA industry's first Software Development Kit (SDK) for OpenCL™ (Open Computing Language) which combines the massively parallel architecture of an FPGA with the OpenCL parallel programming model. OpenCL is an open, royalty-free standard for cross-platform, parallel programming of hardware accelerators, including CPUs, GPGPUs and FPGAs. The semiconductor industry's approach for boosting system performance has evolved from increasing frequency in single-core CPUs, to using multi-core CPUs, to using parallel processor arrays. Today, system designers are turning to FPGAs, which are fine-grained, massively parallel digital logic arrays architected to execute computations in parallel to create higher performance levels at a fraction of the power compared to other hardware alternatives. By allowing system developers and programmers familiar with C to quickly and easily develop high-performance, power-efficient FPGA-based applications in a high-level language, Altera's SDK for OpenCL enables customers to easily adopt FPGAs and leverage the performance and power benefits the devices provide. This unified, high-level design flow for hardware and software development automates the time-consuming tasks required in typical hardware-design language flows, and the resulting FPGA-based solution can deliver more than 5X performance/watt compared to alternative hardware implementations.

 

SELECTED FOURTH QUARTER REVENUE AND RELATED RESULTS



Key New Product Devices



Sequential  Comparisons

Stratix V



(9)%

Arria V



152%

Stratix IV



19%

Arria II



(6)%

Cyclone IV



21%

HardCopy IV



(15)%

 



 



Vertical Markets



Sequential Comparisons



Comments

Telecom & Wireless



(12)%



Both Telecom and Wireless down

Industrial Automation,

Military & Automotive



(9)%



Broadly down

Networking, Computer & Storage



(12)%



Networking down and Computer and Storage up

Other



(10)%



 



 

($ in thousands)

Key Ratios & Information      



December 31, 2012



September 30, 2012

Current Ratio



7:1 





6:1 



Liabilities/Equity



1:3 





1:2 



Quarterly Operating Cash Flows



$

126,709





$

285,203



TTM Return on Equity



18%





19%



Quarterly Depreciation Expense



$

9,170





$

9,677



Quarterly Capital Expenditures



$

7,201





$

17,749



Inventory MSOH (1): Altera



3.4





3.1



Inventory MSOH (1): Distribution



0.6





0.6



TTM Cash Conversion Cycle (Days)



117





140



Turns



40%





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, 2012



September 28, 2012



December 31, 2011



Sequential Change



Year-

Over-Year

Change



December 31, 2012



December 31, 2011



Annual Growth

Geography































Americas

19

%



19

%



21

%



(8)

%



(12)

%



18

%



19

%



(18)

%

Asia Pacific

39

%



43

%



40

%



(21)

%



(7)

%



43

%



41

%



(9)

%

EMEA

28

%



25

%



22

%



(2)

%



20

%



25

%



25

%



(15)

%

Japan

14

%



13

%



17

%



(4)

%



(19)

%



14

%



15

%



(18)

%

Net Sales

100

%



100

%



100

%



(11)

%



(4)

%



100

%



100

%



(14)

%

Product Category















































New

39

%



31

%



27

%



11

%



39

%



32

%



22

%



22

%

Mainstream

28

%



32

%



33

%



(20)

%



(18)

%



30

%



34

%



(22)

%

Mature and Other

33

%



37

%



40

%



(22)

%



(21)

%



38

%



44

%



(26)

%

Net Sales

100

%



100

%



100

%



(11)

%



(4)

%



100

%



100

%



(14)

%

Vertical Market















































Telecom & Wireless

44

%



45

%



43

%



(12)

%



0

%



44

%



43

%



(12)

%

Industrial Automation, Military & Automotive

21

%



20

%



24

%



(9)

%



(17)

%



21

%



23

%



(22)

%

Networking, Computer & Storage

17

%



17

%



16

%



(12)

%



0

%



17

%



17

%



(11)

%

Other

18

%



18

%



17

%



(10)

%



1

%



18

%



17

%



(10)

%

Net Sales

100

%



100

%



100

%



(11)

%



(4)

%



100

%



100

%



(14)

%

FPGAs and CPLDs















































FPGA

84

%



82

%



82

%



(9)

%



(2)

%



84

%



81

%



(11)

%

CPLD

9

%



9

%



9

%



(12)

%



(12)

%



9

%



10

%



(22)

%

Other Products

7

%



9

%



9

%



(29)

%



(19)

%



7

%



9

%



(27)

%

Net Sales

100

%



100

%



100

%



(11)

%



(4)

%



100

%



100

%



(14)

%

 

Product Category Description

  • New Products include the Stratix® V, Stratix IV, Arria® V, Arria II, Cyclone® V, Cyclone IV, MAX® V and HardCopy® IV devices.
  • 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, 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 First Quarter 2013

Sales and Income Statement





Sequential Sales Growth

Down 4% to 8%

Gross Margin

69% to 70%

Research and Development

$99 to 101 million

SG&A

$77 to 78 million

Tax Rate

4% to 5%

Diluted Share Count

Approximately 323 million

Turns

Mid-40's

Inventory MSOH

Approximately 4.0

                                                                              

Vertical Market





Telecom & Wireless

Wireless down

Industrial Automation, Military & Automotive

Up slightly

Networking, Computer & Storage

Down slightly

Other

Up slightly

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, statements regarding our competitive position at 40 nm, our expectation of stronger sales at 40 nm in 2013, our expectation of expansion in 28 nm FPGA opportunities, and our competitive position at 28 nm, 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



Years Ended

(In thousands, except per share amounts)



December 31, 2012



September 28, 2012



December 31, 2011



December 31,
2012



December 31,
2011























Net sales



$

439,440





$

495,010





$

457,804





$

1,783,035





$

2,064,475



Cost of sales



133,367





152,007





136,764





541,523





610,329



Gross margin



306,073





343,003





321,040





1,241,512





1,454,146



Operating expense





















Research and development expense



94,162





91,606





90,295





360,421





325,733



Selling, general, and administrative expense



74,030





74,243





70,667





289,854





279,217



Total operating expense



168,192





165,849





160,962





650,275





604,950



Operating margin (1)



137,881





177,154





160,078





591,237





849,196



Compensation expense (benefit) - deferred compensation plan



358





3,274





2,962





7,055





(1,964)



(Gain) loss on deferred compensation plan securities



(358)





(3,274)





(2,962)





(7,055)





1,964



Interest income and other



(2,390)





(2,775)





(1,039)





(8,388)





(3,544)



(Gain)/loss reclassified from other comprehensive income



(205)





108





18





(268)





18



Interest expense



2,589





2,333





1,013





7,976





3,730



Income before income taxes



137,887





177,488





160,086





591,917





848,992



Income tax expense



17,082





19,999





13,475





35,110





78,281



Net income



$

120,805





$

157,489





$

146,611





$

556,807





$

770,711

























Other comprehensive (loss) income:





















Unrealized (loss)/gain on investments:





















Unrealized holding (loss)/gain on investments arising during period, net of tax of ($11), $43, $8, $114 and ($17)



(889)





3,620





41





5,839





(149)



Less: Reclassification adjustments for (gain)/loss on investments included in net income, net of tax of $24, $1, ($2), $25 and ($2)



(44)





(41)





16





(114)





16







(933)





3,579





57





5,725





(133)



Unrealized (loss)/gain on derivatives:





















Unrealized gain/(loss) on derivatives arising during period, net of tax of $9, ($6) and $45



17





(10)









84







Less: Reclassification adjustments for (gain)/loss on derivatives included in net income, net of tax of $48, ($53) and $45



(89)





97









(84)











(72)





87















Other comprehensive (loss) income:



(1,005)





3,666





57





5,725





(133)



Comprehensive income



$

119,800





$

161,155





$

146,668





$

562,532





$

770,578

























Net income per share:





















Basic



$

0.38





$

0.49





$

0.46





$

1.74





$

2.39



Diluted



$

0.37





$

0.49





$

0.45





$

1.72





$

2.35

























Shares used in computing per share amounts:





















Basic



319,765





319,870





321,553





320,830





321,892



Diluted



322,209





323,560





325,653





324,497





327,606

























Cash dividends per common share



$

0.10





$

0.10





$

0.08





$

0.36





$

0.28

























Tax rate



12.4

%



11.3

%



8.4

%



5.9

%



9.2

%

% of Net sales:





















Gross margin



69.7

%



69.3

%



70.1

%



69.6

%



70.4

%

Research and development



21.4

%



18.5

%



19.7

%



20.2

%



15.8

%

Selling, general, and administrative



16.8

%



15.0

%



15.4

%



16.3

%



13.5

%

Operating margin(1)



31.4

%



35.8

%



35.0

%



33.2

%



41.1

%

Net income



27.5

%



31.8

%



32.0

%



31.2

%



37.3

%























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, 2012



September 30, 2012



December 31, 2011



December 31,

2012



December 31,

2011

Operating margin (non-GAAP)



$

137,881





$

177,154





$

160,078





$

591,237





$

849,196



Compensation expense (benefit) — deferred compensation plan



358





3,274





2,962





7,055





(1,964)



Income from operations (GAAP)



$

137,523





$

173,880





$

157,116





$

584,182





$

851,160



 

 

 

ALTERA CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)











(In thousands, except par value amount)



December 31,

2012



December 31,

2011











Assets









Current assets:









Cash and cash equivalents



$

2,876,627





$

3,371,933



Short-term investments



140,958





65,222



Total cash, cash equivalents, and short-term investments



3,017,585





3,437,155



Accounts receivable, net



323,708





232,273



Inventories



152,721





122,279



Deferred income taxes - current



59,049





58,415



Deferred compensation plan - marketable securities



60,321





54,041



Deferred compensation plan - restricted cash equivalents



17,116





17,938



Other current assets



49,852





52,710



Total current assets



3,680,352





3,974,811



Property and equipment, net



206,148





171,721



Long-term investments



704,758





74,033



Deferred income taxes - non-current



17,082





26,629



Other assets, net



49,488





35,074



Total assets



$

4,657,828





$

4,282,268













Liabilities and stockholders' equity









Current liabilities:









Accounts payable



$

50,036





$

52,154



Accrued liabilities



29,005





34,029



Accrued compensation and related liabilities



40,606





78,181



Deferred compensation plan obligations



77,437





71,979



Deferred income and allowances on sales to distributors



345,993





279,876



Credit facility







500,000



Total current liabilities



543,077





1,016,219



Income taxes payable - non-current



272,000





263,423



Long-term debt



500,000







Other non-current liabilities



9,304





8,730



Total liabilities



1,324,381





1,288,372



Commitments and contingencies









Stockholders' equity:









Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 319,564 at December 31, 2012 and 322,054 shares at December 31, 2011



320





322



Capital in excess of par value



1,122,555





1,050,752



Accumulated other comprehensive income (loss)



5,592





(133)



Retained earnings



2,204,980





1,942,955



Total stockholders' equity



3,333,447





2,993,896



Total liabilities and stockholders' equity



$

4,657,828





$

4,282,268













 

 

 

ALTERA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)











YEARS ENDED

(In thousands)



December 31,

2012



December 31,

2011



December 31,

2010

Cash Flows from Operating Activities:













Net income



$

556,807





$

770,711





$

782,884



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













Depreciation and amortization



36,862





31,927





27,535



Stock-based compensation



93,586





82,750





62,118



Deferred income tax expense



8,824





15,657





34,256



Tax effect of employee stock plans



9,811





16,162





27,444



Excess tax benefit from employee stock plans



(16,278)





(17,307)





(21,866)



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













Accounts receivable, net



(91,435)





131,341





(145,330)



Inventories



(30,442)





24,245





(76,819)



Other assets



(3,050)





54,661





(52,805)



Accounts payable and other liabilities



(50,566)





(32,534)





59,200



Deferred income and allowances on sales to distributors



66,117





(148,836)





146,826



Income taxes payable



8,576





31,116





15,746



Deferred compensation plan obligations



(1,598)





(293)





(2,494)



Net cash provided by operating activities



587,214





959,600





856,695



Cash Flows from Investing Activities:













Purchases of property and equipment



(60,913)





(31,812)





(12,442)



Proceeds from sales of deferred compensation plan securities, net



1,598





293





2,494



Purchases of available-for-sale securities



(921,430)





(164,408)







Proceeds from sale and maturity of available-for-sale securities



220,784





25,003







Acquisition related payments, net of cash acquired











(8,004)



Purchases of intangible assets



(2,280)









(5,000)



Purchase of other investments



(4,935)











Net cash used in investing activities



(767,176)





(170,924)





(22,952)



Cash Flows from Financing Activities:













Proceeds from issuance of common stock through various stock plans



49,665





119,989





453,719



Shares withheld for employee taxes



(31,472)





(32,152)





(20,164)



Payment of dividends to stockholders



(115,514)





(90,060)





(67,774)



Proceeds from issuance of long-term debt



500,000











Repayment of credit facility



(500,000)











Long-term debt and credit facility issuance costs



(5,244)











Repurchases of common stock



(229,057)





(197,023)







Excess tax benefit from employee stock plans



16,278





17,307





21,866



Principal payments on capital lease obligation











(2,866)



Net cash (used in) provided by financing activities



(315,344)





(181,939)





384,781



Net (decrease) increase in cash and cash equivalents



(495,306)





606,737





1,218,524



Cash and cash equivalents at beginning of period



3,371,933





2,765,196





1,546,672



Cash and cash equivalents at end of period



$

2,876,627





$

3,371,933





$

2,765,196



Supplemental cash flow information:













Income taxes paid, net



$

9,797





$

9,856





$

29,887



Interest paid



$

6,898





$

3,704





$

3,395



 

SOURCE Altera Corporation

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