ALTERA CORPORATION SAN JOSE, Calif., Oct. 23, 2014 /PRNewswire/ -- Altera Corporation (NASDAQ: ALTR) today announced third quarter sales of $499.6 million, up 2 percent from the second quarter of 2014 and up 12 percent from the third quarter of 2013. Third quarter net income was $118.0 million, $0.38 per diluted share, compared with net income of $127.0 million, $0.41 per diluted share, in the second quarter of 2014 and $119.4 million, $0.37 per diluted share, in the third quarter of 2013.
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Year-to-date cash flow from operating activities was $515.4 million. Altera repurchased approximately 4.2 million shares during the quarter at a cost of approximately $144.2 million.
Altera's board of directors has declared a quarterly cash dividend of $0.18 per share, to be paid on December 1, 2014 to shareholders of record on November 10, 2014.
"Sales were at the high end of expectations, on the back of solid new product growth, led by strong 28 nm gains," said John Daane, president, chief executive officer, and chairman of the board. "We continue to be encouraged by the positive feedback from early access customers of our first-ever FinFET-based FPGAs, the high-end Stratix 10 family. Utilizing a new proprietary HyperFlex architecture and manufactured with 14 nm Intel TriGate process technology, Stratix 10 devices will offer dramatic improvements in logic density, performance, and power consumption, significantly expanding the reach of Altera FPGA solutions."
Several recent accomplishments mark the company's continuing progress:
-- Altera has released early access design software for Stratix(®) 10
FPGAs and SoCs, the industry's first design software targeting 14 nm
FPGAs. Customers today can start their Stratix 10 designs and experience
firsthand the doubling, on average, in core performance they can achieve
as a result of the Stratix 10 HyperFlex(TM) architecture and the 14 nm
Intel Tri-Gate FinFET process. Stratix 10 FPGAs and SoCs are designed to
enable the most advanced, highest performance applications in the
communications, military, broadcast and computer and storage markets.
For high-performance systems that have strict power budgets, Stratix 10
devices will allow customers to achieve up to a 70 percent reduction in
power consumption compared with Stratix V FPGAs. Stratix 10 FPGAs and
SoCs will also provide the industry's highest levels of system
integration, including:
-- The highest density monolithic device with greater than four million
logic elements.
-- A high-performance, quad-core 64-bit ARM(®) Cortex-A53 processor
system.
-- Multi-die solutions capable of integrating DRAM, SRAM, ASIC,
processors and analog components in a single package.
-- Over 10 TeraFLOPs of single-precision, hardened floating point DSP
performance.
-- More than 4X serial transceiver bandwidth compared to previous
generation FPGAs, including 28-Gbps backplane-capable transceivers
and a path to 56-Gbps transceivers.
-- Altera and Baidu, China's largest online search engine, are
collaborating on the use of FPGAs and convolutional neural network (CNN)
algorithms for deep learning applications. These applications are set to
play a critical role in the development of more accurate and faster
online search. Altera demonstrated its work with Baidu at the recent
High Performance Computing for Wall Street conference. In key search
functions, such as image classification and recognition tasks, CNNs are
considered to be state-of-the-art and provide record-setting accuracy.
To dramatically simplify the implementation of parallel processing
applications, Baidu is leveraging Altera's Stratix V FPGAs and the
Altera SDK for OpenCL(TM), which achieved Khronos OpenCL conformance
testing certification in May 2013. Altera remains the only FPGA supplier
with such certification.
-- Altera has signed a three-year strategic agreement with China Mobile
Research Institute (CMRI) to research and prototype next-generation
green wireless network infrastructure solutions based on the Centralized
Radio Access Network (C-RAN) architecture that leverages network
function virtualization (NFV). Cooperation between Altera and CMRI will
center on joint research and development for centralized baseband
processing of wireless base stations, with a goal of delivering lower
power consumption, lower total operating costs and higher scalability
than conventional infrastructure. The new, jointly developed C-RAN
architecture will enable operators to increase the spectrum efficiency
and to add or upgrade processing capabilities with ease via NFV of the
baseband processing resources. This will allow operators to reduce their
operating expense and create new business models while leveraging
existing investments. FPGAs serve key roles in data processing
acceleration, component connectivity and front-haul data transportation.
-- Altera has announced the availability of non-volatile MAX(®) 10 FPGAs,
Altera's latest addition to its Generation 10 portfolio. Using TSMC's 55
nm embedded flash process technology, MAX 10 FPGAs revolutionize
non-volatile FPGAs by delivering dual-configuration flash, analog and
embedded processing capabilities in a small-form-factor, low-cost,
instant-on programmable logic device. The highly integrated FPGAs
provide up to 50 percent board area savings compared to other low-cost
FPGAs and provide several important system functions, such as an
instant-on configuration, fail-safe upgrades, and system monitoring and
control. MAX 10 FPGAs are shipping today and are supported by
Quartus(®) II software, evaluation kits, design services through the
Altera Design Services Network (DSN), documentation and training to
accelerate system development.
SELECTED THIRD QUARTER REVENUE AND RELATED RESULTS
($ in
thousands) June 27, 2014
Key September 26,
Ratios 2014
&
Information
------------ --------------
Current
Ratio 6:1 6:1
Liabilities/
Equity 3:4 2:3
Quarterly
Operating
Cash
Flows $214,049 $170,958
TTM
Return
on
Equity 13% 13%
Quarterly
Depreciation
Expense $11,874 $12,222
Quarterly
Capital
Expenditures $13,691 $9,620
Inventory
MSOH
(1):
Altera 3.4 3.2
Inventory
MSOH
(1):
Distribution 0.6 0.6
Cash
Conversion
Cycle
(Days) 154 160
Turns 37% 42%
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 26, June 27, September 27, Sequential
Change Year-
2014 2014 2013
Over-Year
Change
------
Geography
---------
Americas 16% 16% 18% 7% 1%
Asia Pacific 42% 43% 39% 0% 20%
EMEA 29% 27% 28% 6% 15%
Japan 13% 14% 15% (7)% (1)%
--- --- ---
Net Sales 100% 100% 100% 2% 12%
=== === ===
Product Category
----------------
New 56% 53% 44% 9% 45%
Mainstream 21% 21% 26% (3)% (13)%
Mature and Other 23% 26% 30% (10)% (14)%
--- --- ---
Net Sales 100% 100% 100% 2% 12%
=== === ===
Vertical Market
---------------
Telecom &
Wireless 45% 46% 41% (1)% 23%
Industrial
Automation,
Military &
Automotive 21% 21% 23% - % 3%
Networking,
Computer &
Storage 16% 15% 19% 14% (5)%
Other 18% 18% 17% 1% 18%
--- --- ---
Net Sales 100% 100% 100% 2% 12%
=== === ===
FPGAs and CPLDs
---------------
FPGA 85% 84% 82% 3% 17%
CPLD 8% 8% 9% (6)% (10)%
Other Products 7% 8% 9% (6)% (7)%
--- --- ---
Net Sales 100% 100% 100% 2% 12%
=== === ===
Product Category Description
-- New Products include the Arria(®) 10, Stratix(®) V, Stratix IV, Arria
V, Arria II, Cyclone(® )V, Cyclone IV, MAX(® )10, MAX V, HardCopy(®)
IV devices and Enpirion PowerSoCs.
-- Mainstream Products include the Stratix III, Cyclone III, MAX II and
HardCopy III devices.
-- Mature and Other Products include the Stratix II, Stratix, Arria GX,
Cyclone II, Cyclone, MAX 3000A, MAX 7000, MAX 7000A, MAX 7000B, MAX
7000S, MAX 9000, HardCopy II, HardCopy, FLEX(®) series, APEX(TM)
series, Mercury(TM), Excalibur(TM) devices, configuration and other
devices, intellectual property cores, and software and other tools.
Business Outlook for the Fourth Quarter 2014
Sales and Income Statement
--------------------------
Sequential Sales -2% to -6%
Gross Margin 66.5% +/- 0.5%
Research and Development (1) $111 - $113 million
SG&A $78 - $80 million
Other Income/Expense, Net (2) Net expense of approximately $4 -
$5 million
Tax Rate 12% - 13%
Diluted Share Count Less than 310 million
Turns Low 40's
Inventory MSOH Mid 3's
Note (1): The business outlook for Research and Development
expense includes amortization of acquisition-related intangible
assets
Note (2): Other Income/Expense, Net includes Interest income and
other and Interest expense in our consolidated statements of
comprehensive income.
Vertical Market
---------------
Telecom & Wireless Down
Industrial Automation, Military
& Automotive Flat
Networking, Computer & Storage 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.
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 both absolute and relative product performance and features, product development schedules, potential FPGA market expansion, 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 materially from those currently anticipated, due to a number of factors, including without limitation, current global economic conditions, customer business environment, customer inventory levels, product availability, vertical market mix, market acceptance of the company's products, the performance of products once introduced, product introduction schedules, the rate of growth of the company's new products including Cyclone(®) V, Cyclone IV, Arria(®) 10, Arria V, Arria II, Stratix(®) V, Stratix IV, MAX(®) 10 FPGAs, MAX V CPLDs, HardCopy(® )IV device families and Enpirion PowerSoCs, as well as changes in economic conditions and other risk factors discussed in documents filed by the company with the Securities and Exchange Commission (SEC) from time to time. Copies of Altera's SEC filings are posted on the company's website and are available from the company without charge. Forward-looking statements are made as of the date of this release, and, except as required by law, the company does not undertake an obligation to update its forward-looking statements to reflect future events or circumstances.
About Altera
Altera(®) programmable solutions enable designers of electronic systems to rapidly and cost effectively innovate, differentiate and win in their markets. Altera offers FPGAs, SoCs, CPLDs, ASICs and complementary technologies, such as power management, to provide high-value solutions to customers worldwide. Visit www.altera.com.
ALTERA, ARRIA, CYCLONE, ENPIRION, MAX, MEGACORE, NIOS, QUARTUS and STRATIX words and logos are trademarks of Altera Corporation and registered in the U.S. Patent and Trademark Office and in other countries. All other words and logos identified as trademarks or service marks are the property of their respective holders as described at www.altera.com/legal.
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
------------------ -----------------
(In thousands, except per share
amounts) September 26, June 27, September 27, September 26, September 27,
2014 2014 2013 2014 2013
--- ---- ---- ---- ---- ----
Net sales $499,606 $491,517 $445,945 $1,452,216 $1,278,205
Cost of sales 166,019 162,391 141,525 480,279 402,712
------- ------- ------- ------- -------
Gross margin 333,587 329,126 304,420 971,937 875,493
Operating expense
Research and development expense 112,078 101,121 95,336 310,856 278,542
Selling, general, and administrative
expense 77,724 78,974 78,907 231,205 235,376
Amortization of acquisition-related
intangible assets 2,465 2,464 1,846 7,394 2,974
----- ----- -----
Total operating expense 192,267 182,559 176,089 549,455 516,892
------- ------- ------- ------- -------
Operating margin (1) 141,320 146,567 128,331 422,482 358,601
Compensation (benefit)/expense -
deferred compensation plan (487) 3,126 3,462 4,093 6,724
Loss/(gain) on deferred compensation
plan securities 487 (3,126) (3,462) (4,093) (6,724)
Interest income and other (4,558) (7,819) (2,214) (18,362) (6,651)
Gain reclassified from other
comprehensive (loss)/income (59) (43) (33) (150) (129)
Interest expense 10,774 10,877 2,511 32,139 8,365
------ ------ -----
Income before income taxes 135,163 143,552 128,067 408,855 357,016
Income tax expense 17,154 16,548 8,635 47,328 15,885
------ -----
Net income 118,009 127,004 119,432 361,527 341,131
------- ------- ------- ------- -------
Other comprehensive (loss)/income:
Unrealized (loss)/gain on
investments:
Unrealized holding (loss)/gain on
investments arising during period,
net of tax of ($6), $23, $30, $41
and ($12) (4,929) 14,471 2,419 22,102 (6,613)
Less: Reclassification adjustments
for gain on investments included in
net income, net of tax of $11, $6,
$11, $21 and $21 (48) (37) (22) (129) (108)
--- --- --- ---- ----
Other comprehensive (loss)/income (4,977) 14,434 2,397 21,973 (6,721)
------ ------ ------ ------
Comprehensive income $113,032 $141,438 $121,829 $383,500 $334,410
======== ======== ======== ======== ========
Net income per share:
Basic $0.38 $0.41 $0.37 $1.16 $1.07
===== ===== ===== ===== =====
Diluted $0.38 $0.41 $0.37 $1.15 $1.05
===== ===== ===== ===== =====
Shares used in computing per share
amounts:
Basic 308,215 311,000 320,445 311,853 320,266
======= ======= ======= ======= =======
Diluted 310,184 313,513 323,505 314,130 323,355
======= ======= ======= ======= =======
Dividends per common share $0.18 $0.15 $0.15 $0.48 $0.35
===== ===== ===== ===== =====
Tax rate 12.7% 11.5% 6.7% 11.6% 4.4%
% of Net sales:
Gross margin 66.8% 67.0% 68.3% 66.9% 68.5%
Research and development (1) 22.9% 21.1% 21.8% 21.9% 22.0%
Selling, general, and administrative 15.6% 16.1% 17.7% 15.9% 18.4%
Operating margin(2) 28.3% 29.8% 28.8% 29.1% 28.1%
Net income 23.6% 25.8% 26.8% 24.9% 26.7%
Notes:
(1) Research and development expense as a percentage of Net sales includes amortization of acquisition-related intangible assets.
(2) 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, except per share
amounts) September 26, June 27, September 27, September 26, September 27,
2014 2014 2013 2014 2013
---- ---- ---- ---- ----
Operating margin (non-GAAP) $141,320 $146,567 $128,331 $422,482 $358,601
Compensation (benefit)/expense -
deferred compensation plan (487) 3,126 3,462 4,093 6,724
----- -----
Income from operations (GAAP) $141,807 $143,441 $124,869 $418,389 $351,877
======== ======== ======== ======== ========
ALTERA CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except par value amount) September 26, December 31,
2014 2013
--- ---- ----
Assets
Current assets:
Cash and cash equivalents $2,680,085 $2,869,158
Short-term investments 134,059 141,487
------- -------
Total cash, cash equivalents, and
short-term investments 2,814,144 3,010,645
Accounts receivable, net 406,708 483,032
Inventories 186,338 163,880
Deferred income taxes - current 54,402 63,228
Deferred compensation plan -marketable
securities 65,492 66,455
Deferred compensation plan -restricted
cash equivalents 15,897 16,699
Other current assets 41,260 48,901
------ ------
Total current assets 3,584,241 3,852,840
Property and equipment, net 197,213 204,142
Long-term investments 1,744,830 1,695,066
Deferred income taxes - non-current 21,929 10,806
Goodwill 74,341 73,968
Acquisition-related intangible assets,
net 74,756 82,150
Other assets, net 83,720 76,676
------ ------
Total assets $5,781,030 $5,995,648
========== ==========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $47,910 $44,163
Accrued liabilities 41,403 41,218
Accrued compensation and related
liabilities 73,354 51,105
Deferred compensation plan obligations 81,389 83,154
Deferred income and allowances on sales
to distributors 397,002 487,746
Total current liabilities 641,058 707,386
Income taxes payable - non-current 310,199 276,326
Long-term debt 1,492,436 1,491,466
Other non-current liabilities 7,629 8,403
----- -----
Total liabilities 2,451,322 2,483,581
--------- ---------
Stockholders' equity:
Common stock: $.001 par value;
1,000,000 shares authorized;
outstanding -305,851 shares at
September 26, 2014 and 317,769 shares
at December 31, 2013 306 318
Capital in excess of par value 1,171,744 1,216,826
Retained earnings 2,163,647 2,322,885
Accumulated other comprehensive loss (5,989) (27,962)
------ -------
Total stockholders' equity 3,329,708 3,512,067
--------- ---------
Total liabilities and stockholders'
equity $5,781,030 $5,995,648
========== ==========
ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Nine Months Ended
-----------------
(In thousands) September 26, September 27,
2014 2013
--- ---- ----
Cash Flows from Operating Activities:
Net income $361,527 $341,131
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 42,426 34,256
Amortization of acquisition-related
intangible assets 7,394 2,974
Amortization of debt discount and debt
issuance costs 2,337 844
Stock-based compensation 70,518 73,011
Net gain on sale of available-for-sale
securities (150) (129)
Amortization of investment discount/
premium 1,900 2,575
Deferred income tax expense/(benefit) 11,509 (5,629)
Tax effect of employee stock plans 7,434 5,405
Excess tax benefit from employee stock
plans (4,719) (4,165)
Changes in assets and liabilities, net of
effects of acquisitions:
Accounts receivable, net 76,324 (111,231)
Inventories (22,458) (2,494)
Other assets 3,939 28,673
Accounts payable and other liabilities 32,581 12,509
Deferred income and allowances on sales to
distributors (90,744) 95,961
Income taxes payable 21,477 (8,753)
Deferred compensation plan obligations (5,858) (5,489)
Net cash provided by operating activities 515,437 459,449
------- -------
Cash Flows from Investing Activities:
Purchases of property and equipment (34,946) (31,216)
Sales of deferred compensation plan
securities, net 5,858 5,489
Purchases of available-for-sale securities (276,867) (258,809)
Proceeds from sale of available-for-sale
securities 79,424 84,900
Proceeds from maturity of available-for-
sale securities 175,280 143,392
Acquisitions, net of cash acquired - (145,321)
Purchases of intangible assets (1,269) -
Purchases of other investments (8,224) (2,101)
Net cash used in investing activities (60,744) (203,666)
------- --------
Cash Flows from Financing Activities:
Proceeds from issuance of common stock
through stock plans 29,871 38,748
Shares withheld for employee taxes (20,852) (24,787)
Payment of dividends to stockholders (149,844) (112,175)
Holdback payment for prior acquisition (3,353) -
Payment of debt assumed in acquisitions - (22,000)
Long-term debt and credit facility
issuance costs (1,321) -
Repurchases of common stock (502,986) (60,276)
Excess tax benefit from employee stock
plans 4,719 4,165
----- -----
Net cash used in financing activities (643,766) (176,325)
-------- --------
Net (decrease)/increase in cash and cash
equivalents (189,073) 79,458
Cash and cash equivalents at beginning of
period 2,869,158 2,876,627
--------- ---------
Cash and cash equivalents at end of period $2,680,085 $2,956,085
========== ==========
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SOURCE Altera Corporation
