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Altera Announces Second Quarter Results, Revenue Up 21 Percent Sequentially

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

swylie@altera.com


newsroom@altera.com

 

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