Altera Announces Second Quarter Results, Revenue Up 21 Percent Sequentially

News provided by

Altera Corporation

Jul 24, 2012, 04:15 ET

SAN JOSE, Calif., July 24, 2012 /PRNewswire/ -- Altera Corporation (NASDAQ: ALTR) today announced second quarter sales of $464.8 million, up 21 percent from the first quarter of 2012 and down 15 percent from the second quarter of 2011. Second quarter net income was $162.7 million, $0.50 per diluted share, compared with net income of $115.8 million, $0.35 per diluted share, in the first quarter of 2012 and $214.6 million, $0.65 per diluted share, in the second quarter of 2011.

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

Year-to-date cash flow from operating activities was $175.3 million. Altera repurchased 3.5 million shares of its common stock during the quarter at a cost of $121.0 million. Altera ended the quarter with $3.5 billion in cash and investments.

Altera's board of directors has increased the company's quarterly cash dividend to $0.10 per share, up from the previous dividend of $0.08 per share. The board of directors has declared that the next quarterly dividend will be paid on September 4, 2012 to stockholders of record on August 10, 2012.

Altera's board of directors has approved a 10.0 million share increase to the number of shares authorized for repurchase under the company's share repurchase program. There are now 14.6 million shares authorized by the board of directors for repurchase. Under the program, which was previously authorized by the board of directors, shares may be purchased in the open market from time to time at the discretion of the company's management.

"New product revenue surged this quarter, as sales of both 28-nm and 40-nm accelerated strongly, driving the sharp revenue improvement from the prior quarter. Though growth was quite broad, the results in our Telecom and Wireless vertical market were particularly notable," said John Daane, president, chief executive officer, and chairman of the board. "Leading edge 28-nm FPGAs are creating more opportunities for us as we displace more ASICs and ASSPs. Our 28-nm competitive position remains strong. We estimate that to date we have secured the majority of available 28-nm FPGA design win value."

Several recent accomplishments mark the company's continuing progress:

  • Altera released the latest version of its industry-proven Quartus® II development software, the industry's number one software in performance and productivity for FPGA design. Quartus II software version 12.0 provides customers additional productivity and performance advantages, such as up to 4X faster compile times for high-performance 28-nm designs. Additional upgrades include broadened 28-nm device support, including initial support for Altera's system-on-chip (SoC) FPGAs, enhanced Qsys system integration and DSP Builder tools, and improved intellectual property (IP) core offerings.
  • Altera has delivered significant reductions in development times and dramatic increases in system performance for early customers in Altera's OpenCL for FPGAs program. Altera launched its OpenCL for FPGAs program in November 2011. As part of the program, Altera initiated work with early customers, academia and standards groups to define and develop an OpenCL for FPGAs solution. OpenCL for FPGAs combines the industry-standard OpenCL parallel programming language with the parallel performance capabilities of FPGAs to deliver higher performance compared to multi-core CPUs and CPU/GPU-based systems. In addition, Open CL for FPGAs delivers a significant productivity advantage to designers who have traditionally modeled their algorithms in C and converted them to HDL.  An OpenCL solution for FPGAs further drives adoption of FPGAs in a variety of markets, including military, medical, computer and broadcast.  

SELECTED SECOND QUARTER REVENUE AND RELATED RESULTS

Key New Product Devices

Sequential  Comparisons

Stratix V

190%

Stratix IV

37%

Arria II

67%

Cyclone IV

59%

HardCopy IV

(55)%



Vertical Markets

Sequential Comparisons

Comments

Telecom & Wireless

33%

Telecom and Wireless both up





Industrial Automation,

Military & Automotive

4%

Industrial up, Military and
Automotive down





Networking, Computer & Storage

26%

Networking and Computer &
Storage up





Other

12%

Broadly up





($ in thousands)
Key Ratios & Information      


June 29, 2012

March 30, 2012

Current Ratio

6:1

4:1

Liabilities/Equity

1:2

1:2

Quarterly Operating Cash Flows

$

85,539

$

89,763

TTM Return on Equity

20%

23%

Quarterly Depreciation Expense

$

7,688

$

7,367

Quarterly Capital Expenditures

$

7,409

$

23,903

Inventory MSOH (1): Altera

3.1

2.9

Inventory MSOH (1): Distribution

0.6

0.7

Cash Conversion Cycle (Days)

130

91

Turns

38%

46%

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

June 29,
2012

March 30,
2012

July 1,
2011

Sequential
Change

Year-

Over-Year

Change

Geography








Americas

17

%

18

%

19

%

18

%

(22)

%

Asia Pacific

46

%

43

%

40

%

29

%

(4)

%

EMEA

23

%

23

%

27

%

18

%

(28)

%

Japan

14

%

16

%

14

%

8

%

(15)

%

Net Sales

100

%

100

%

100

%

21

%

(15)

%










Product Category








New

31

%

26

%

18

%

44

%

43

%

Mainstream

30

%

32

%

36

%

14

%

(30)

%

Mature and Other

39

%

42

%

46

%

13

%

(27)

%

Net Sales

100

%

100

%

100

%

21

%

(15)

%










Vertical Market








Telecom & Wireless

45

%

41

%

46

%

33

%

(17)

%

Industrial Automation, Military & Automotive

19

%

22

%

22

%

4

%

(25)

%

Networking, Computer & Storage

18

%

17

%

15

%

26

%

(1)

%

Other

18

%

20

%

17

%

12

%

(11)

%

Net Sales

100

%

100

%

100

%

21

%

(15)

%










FPGAs and CPLDs








FPGA

85

%

83

%

80

%

24

%

(11)

%

CPLD

9

%

10

%

10

%

8

%

(27)

%

Other Products

6

%

7

%

10

%

9

%

(42)

%

Net Sales

100

%

100

%

100

%

21

%

(15)

%

Product Category Description

  • 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.
  • Mainstream Products include the Stratix III, Cyclone III, MAX II, and HardCopy III devices.
  • 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™, and Excalibur™ devices, configuration and other devices, intellectual property cores, and software and other tools.

Business Outlook for the Third Quarter 2012

Sales and Income Statement


Sequential Sales Growth

Up 2% to 6%

Gross Margin

70% +/- .5%

Research and Development

$95 to 97 million

SG&A

$72 to 74 million

Tax Rate

12 to 13%

Diluted Share Count

Approximately 324 million

Turns

Mid-30's

MSOH

Approximately 4.0




Vertical Market



Telecom & Wireless

Up slightly

Industrial Automation, Military & Automotive

Up, driven primarily by Military and Automotive

Networking, Computer & Storage

Both down

Other

Up

Second 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.

Third Quarter Update

Altera's third quarter business update will be issued in a press release available after the market close on September 4, 2012.

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, 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

[email protected]

[email protected]

ALTERA CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)








Three Months Ended

Six Months Ended

(In thousands, except per share amounts)

June 29,
2012

March 30,
2012

July 1,
2011

June 29,
2012

July 1,
2011











Net sales

$

464,831

$

383,754

$

548,383

$

848,585

$

1,084,196

Cost of sales

141,315

114,834

159,716

256,149

306,626

Gross margin

323,516

268,920

388,667

592,436

777,570

Operating expense









Research and development expense

92,356

82,297

80,260

174,653

154,668

Selling, general, and administrative expense

71,796

69,785

70,182

141,581

139,204

Total operating expense

164,152

152,082

150,442

316,234

293,872

Operating margin (1)

159,364

116,838

238,225

276,202

483,698

Compensation (gain) expense — deferred compensation plan

(2,313)

5,736

54

3,423

1,716

Loss/(gain) on deferred compensation plan securities

2,313

(5,736)

(54)

(3,423)

(1,716)

Interest income and other

(1,415)

(1,807)

(957)

(3,222)

(1,842)

Gain reclassified from other comprehensive income

(69)

(102)

—

(171)

—

Interest expense

2,116

937

870

3,053

1,911

Income before income taxes

158,732

117,810

238,312

276,542

483,629

Income tax expense

(3,947)

1,976

23,685

(1,971)

44,933

Net income

162,679

115,834

214,627

278,513

438,696











Other comprehensive income:









Unrealized gain on investments









Unrealized holding gain on investments arising during period, net of tax of $8, $58 and $66

2,799

304

—

3,103

—

Less: Reclassification adjustments for gain on investments included in net income, net of tax of $1, $5 and $6

(3)

(20)

—

(23)

—


2,796

284

—

3,080

—

Unrealized gain on derivatives









Unrealized gain on derivatives arising during period, net of tax of $34, $8 and $42

63

14

—

77

—

Less: Reclassification adjustments for gain on derivatives included in net income, net of tax of $23, $27 and $50

(42)

(50)

—

(92)

—


21

(36)

—

(15)

—

Other comprehensive income

2,817

248

—

3,065

—

Comprehensive income

$

165,496

$

116,082

$

214,627

$

281,578

$

438,696











Net income per share:









Basic

$

0.51

$

0.36

$

0.66

$

0.87

$

1.36

Diluted

$

0.50

$

0.35

$

0.65

$

0.85

$

1.33











Shares used in computing per share amounts:









Basic

321,218

322,586

323,271

321,898

322,145

Diluted

325,285

327,061

329,904

326,172

328,874











Cash dividends per common share

$

0.08

$

0.08

$

0.06

$

0.16

$

0.12











Tax rate

(2.5)

%

1.7

%

9.9

%

(0.7)

%

9.3

%

% of Net sales:









Gross margin

69.6

%

70.1

%

70.9

%

69.8

%

71.7

%

Research and development

19.9

%

21.4

%

14.6

%

20.6

%

14.3

%

Selling, general, and administrative

15.4

%

18.2

%

12.8

%

16.7

%

12.8

%

Operating margin(1)

34.3

%

30.4

%

43.4

%

32.5

%

44.6

%

Net income

35.0

%

30.2

%

39.1

%

32.8

%

40.5

%

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

Six Months Ended

(In thousands, except per share amounts)

June 29,
2012

March 30,
2012

July 1,
2011

June 29,
2012

July 1,
2011

Operating margin (non-GAAP)

$

159,364

$

116,838

$

238,225

$

276,202

$

483,698

Compensation (gain) expense — deferred compensation plan

(2,313)

5,736

54

3,423

1,716

Income from operations (GAAP)

$

157,051

$

122,574

$

238,279

$

279,625

$

485,414

ALTERA CORPORATION

 

CONSOLIDATED BALANCE SHEETS

 

(Unaudited)





(In thousands, except par value amount)

June 29,
2012

December 31,
2011





Assets



Current assets:



Cash and cash equivalents

$

2,884,063

$

3,371,933

Short-term investments

46,381

65,222

Total cash, cash equivalents, and short-term investments

2,930,444

3,437,155

Accounts receivable, net

425,267

232,273

Inventories

146,090

122,279

Deferred income taxes — current

71,171

58,415

Deferred compensation plan — marketable securities

57,770

54,041

Deferred compensation plan — restricted cash equivalents

15,707

17,938

Other current assets

40,106

52,710

Total current assets

3,686,555

3,974,811

Property and equipment, net

193,299

171,721

Long-term investments

579,924

74,033

Deferred income taxes — non-current

25,903

26,629

Other assets, net

45,227

35,074

Total assets

$

4,530,908

$

4,282,268





Liabilities and stockholders' equity



Current liabilities:



Accounts payable

$

68,779

$

52,154

Accrued liabilities

43,691

34,029

Accrued compensation and related liabilities

37,675

78,181

Deferred compensation plan obligations

73,477

71,979

Deferred income and allowances on sales to distributors

374,175

279,876

Credit facility

—

500,000

Total current liabilities

597,797

1,016,219

Income taxes payable — non-current

246,718

263,423

Long-term debt

500,000

—

Other non-current liabilities

9,268

8,730

Total liabilities

1,353,783

1,288,372

Stockholders' equity:



Common stock: $.001 par value; 1,000,000 shares authorized; outstanding -  319,945 shares at June 29, 2012 and 322,054 shares at December 31, 2011

320

322

Capital in excess of par value

1,096,654

1,050,752

Retained earnings

2,077,219

1,942,955

Accumulated other comprehensive income (loss)

2,932

(133)

Total stockholders' equity

3,177,125

2,993,896

Total liabilities and stockholders' equity

$

4,530,908

$

4,282,268





ALTERA CORPORATION

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited, in thousands)



Six Months Ended

June 29,
2012

July 1,
2011




Cash Flows from Operating Activities:


Net income

$

278,513

$

438,696

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


Depreciation and amortization

16,749

15,214

Stock-based compensation

46,200

37,432

Deferred income tax (benefit) expense

(12,090)

4,897

Tax effect of employee stock plans

16,500

17,048

Excess tax benefit from employee stock plans

(16,434)

(14,589)

Changes in assets and liabilities:


Accounts receivable, net

(192,994)

(19,896)

Inventories

(23,811)

23,212

Other assets

6,019

43,638

Accounts payable and other liabilities

(19,066)

(53,532)

Deferred income and allowances on sales to distributors

94,299

(47,923)

Income taxes payable

(16,658)

12,921

Deferred compensation plan obligations

(1,925)

(754)

Net cash provided by operating activities

175,302

456,364

Cash Flows from Investing Activities:


Purchases of property and equipment

(31,312)

(9,796)

Sales of deferred compensation plan securities, net

1,925

754

Purchases of available-for-sale securities

(576,568)

—

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

92,643

—

Net cash used in investing activities

(513,312)

(9,042)

Cash Flows from Financing Activities:


Proceeds from issuance of common stock through various stock plans

26,086

87,122

Shares withheld for employee taxes

(6,562)

(8,178)

Payment of dividends to stockholders

(51,558)

(38,681)

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

(129,016)

—

Excess tax benefit from employee stock plans

16,434

14,589

Net cash (used in) provided by financing activities

(149,860)

54,852

Net (decrease) increase in cash and cash equivalents

(487,870)

502,174

Cash and cash equivalents at beginning of period

3,371,933

2,765,196

Cash and cash equivalents at end of period

$

2,884,063

$

3,267,370

SOURCE Altera Corporation

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