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Altera Announces Record Second Quarter Results, Increases Quarterly Dividend

July 20, 2010

SAN JOSE, Calif., July 20 /PRNewswire-FirstCall/ — Altera Corporation (Nasdaq: ALTR) today announced second quarter sales of $469.3 million, up 17 percent from the first quarter of 2010 and up 68 percent from the second quarter of 2009. New product sales increased 36 percent sequentially. Second quarter net income was $180.6 million, $0.58 per diluted share, compared with net income of $153.2 million, $0.50 per diluted share, in the first quarter of 2010 and $47.4 million, $0.16 per diluted share, in the second quarter of 2009.

Year-to-date cash flow from operating activities was $378.6 million. Altera ended the quarter with $2.1 billion in cash and short-term investments.

Altera’s board of directors has increased the company’s quarterly cash dividend to $0.06 per share, up from the previous dividend of $0.05 per share. The board of directors has declared that the next quarterly dividend will be paid on September 1, 2010 to stockholders of record on August 10, 2010.

“In the second quarter, our 65-nm FPGA revenue was once again up sharply. Our newer 40-nm products grew even faster as they transition into the production-demand phase of their life,” said John Daane, president, chief executive officer, and chairman of the board. “Development work on our next-generation 28-nm FPGAs is reaching its final stages. The unique innovations in these FPGAs, including 28-Gbps transceivers, will extend the technology leadership that has benefited us so strongly at the 40-nm node.”

Several recent accomplishments mark the company’s continuing progress:

  • Altera’s Quartus® II v10.0 software, used in support of Altera’s 28-nm Stratix® V family, is now available. Altera is the only FPGA supplier with publicly available software for its 28-nm FPGAs. This version incorporates support for Stratix V GX and Stratix V GS FPGAs and offers several new productivity and performance features with high-density compile times two to three times faster than the nearest competitor.
  • With the arrival of production shipments of the Stratix IV E EP4SE820 device, the highest density member of the Stratix IV FPGA family, Altera’s entire Stratix IV FPGA family is shipping in production-qualified volume. Stratix IV FPGAs are the industry’s highest density, highest performance and lowest power FPGAs currently shipping in their class. This device family features proven transceiver and memory-interface technology, providing an ideal solution for customers in a variety of end markets. Altera’s high-end FPGAs feature three variants, a non-transceiver enhanced (E) version and two transceiver (GX and GT) versions. The Stratix IV E FPGAs are high in density and rich with embedded memory and DSP resources. Stratix IV GX and Stratix IV GT variants feature integrated transceivers that operate up to 8.5 Gbps and 11.3 Gbps, respectively, providing an unprecedented level of system bandwidth with superior signal integrity.
  • Altera has received the “Best 3G Communication FPGA Supplier Award” from China Electronic News (CEN). CEN‘s award is in recognition of Altera’s contribution to China’s telecommunication industry, especially China’s successful 3G deployment in the past few years. Each year, CEN selects companies that lead the industry in innovation or have outstanding market performance in various segments of the China telecommunication market. The awards are determined by a committee comprised of industry and university technology experts and members of CEN‘s senior editorial team. Members of the selection committee voted based on three criteria: technology innovation, market influence and product service. CEN, with a circulation of 200,000 in China, is the most authoritative publication covering China’s electronics information industry.
  • Altera has been presented with the TechAmerica Foundation’s American Technology Award. Winning in the electronics components category, the award recognizes the Stratix IV GT FPGA for enabling next-generation communications infrastructure to support growing bandwidth requirements. Altera’s Stratix IV GT FPGAs are optimized specifically for the latest generation of 40G and 100G applications used in communications systems, high-end test equipment and military communications systems. The FPGAs feature high-speed 11.3-Gbps transceivers to support high-throughput system requirements, as well as core performance and logic density to handle the complex processing needed in these systems.


    Business Outlook for the Third Quarter 2010

    Sequential Sales Growth                                     Up 4% to 8%
    Gross Margin                                                 70% to 71%
    Research and Development                              $69 to 70 million
    SG&A                                                  $64 to 65 million
    Tax Rate                                                     12% to 14%

Conference Call and Quarterly Update:

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 webcast 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.

Altera’s third quarter business update will be issued in a press release available after the market close on September 7, 2010.

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 any projection of revenue, gross margin, expense or other financial items discussed in the Business Outlook section of this press release, and the potential for continued technology leadership at 28 nm. 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, vertical market mix, market acceptance of the company’s products, product introduction schedules, the rate of growth of the company’s new products including Arria® II, Cyclone® III, Stratix® III, Stratix IV, and Stratix V FPGAs, MAX® II CPLDs and HardCopy® device families, changes in the mix of our business between prototyping and production-based demand, 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, The Programmable Solutions Company, the stylized Altera logo, specific device designations and all other words that are identified as trademarks and/or service marks are, unless noted otherwise, the trademarks and service marks of Altera Corporation in the U.S. and other countries. All other product or service names are the property of their respective holder.


    INVESTOR CONTACT                          MEDIA CONTACT
    ----------------                          -------------
    Scott Wylie - Vice President              Mark Plungy - Senior Manager
    Investor Relations                        Public Relations
    (408) 544-6996                            (408) 544-6397
    swylie@altera.com                         newsroom@altera.com

                                            ALTERA CORPORATION
                                    CONSOLIDATED STATEMENTS OF INCOME
                                  (In thousands, except per share data)
                                               (Unaudited)
                          THREE MONTHS ENDED             SIX MONTHS ENDED
                          ------------------             ----------------
                        July 2,   April 2,  June 26,   July 2,   June 26,
                            2010       2010      2009      2010       2009
                            ----       ----      ----      ----       ----
    Net sales           $469,300   $402,295  $279,201  $871,595   $543,803
    Cost of sales        132,811    114,936    93,588   247,747    187,617
                         -------    -------    ------   -------    -------
    Gross margin         336,489    287,359   185,613   623,848    356,186

    Operating expenses
      Research and
       development        65,625     64,340    64,981   129,965    123,171
      Selling, general,
       and
       administrative     64,767     62,181    53,679   126,948    114,338
    Total operating
     expenses            130,392    126,521   118,660   256,913    237,509
                         -------    -------   -------   -------    -------

    Operating
     margin(1)           206,097    160,838    66,953   366,935    118,677
    Compensation
     (benefit)/expense
     -deferred
     compensation plan    (3,642)     2,228     3,586    (1,414)     3,609
    Loss/(gain) on
     deferred
     compensation plan
     securities            3,642     (2,228)   (3,586)    1,414     (3,609)
    Interest income
     and other              (710)      (592)   (1,717)   (1,302)    (5,095)
    Interest expense       1,103      1,291     1,321     2,394      2,659
                           -----      -----     -----     -----      -----

    Income before
     income taxes        205,704    160,139    67,349   365,843    121,113
    Income tax expense    25,097      6,966    19,926    32,063     29,729
                          ------      -----    ------    ------     ------

    Net income          $180,607   $153,173   $47,423  $333,780    $91,384
                        ========   ========   =======  ========    =======

    Net income per
     share:
       Basic               $0.59      $0.51     $0.16     $1.11      $0.31
                           =====      =====     =====     =====      =====
       Diluted             $0.58      $0.50     $0.16     $1.09      $0.31
                           =====      =====     =====     =====      =====

    Shares used in
     computing per
     share amounts:
       Basic             304,531    298,566   293,895   301,532    293,511
                         =======    =======   =======   =======    =======
       Diluted           310,757    304,327   295,503   307,526    295,157
                         =======    =======   =======   =======    =======

    Cash dividends per
     common share          $0.05      $0.05     $0.05     $0.10      $0.10
                           =====      =====     =====     =====      =====

    Tax rate                12.2%       4.3%     29.6%      8.8%      24.5%
    % of Net sales:
      Gross margin          71.7%      71.4%     66.5%     71.6%      65.5%
      Research and
       development          14.0%      16.0%     23.3%     14.9%      22.6%
      Selling, general,
       and
       administrative       13.8%      15.5%     19.2%     14.6%      21.0%
      Operating
       margin(1)            43.9%      40.0%     24.0%     42.1%      21.8%
      Net income            38.5%      38.1%     17.0%     38.3%      16.8%
    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 ("US 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
                                               ------------------
                                     July 2,      April 2,       June 26,
                                         2010          2010           2009
                                         ----          ----           ----

    Operating margin (non-GAAP)      $206,097      $160,838        $66,953
    Compensation (benefit)/expense -
     deferred compensation plan        (3,642)        2,228          3,586
                                       ------         -----          -----

    Income from operations (GAAP)    $209,739      $158,610        $63,367
                                     ========      ========        =======


                                                  SIX MONTHS ENDED
                                                  ----------------
                                              July 2,       June 26,
                                                  2010           2009
                                                  ----           ----

    Operating margin (non-GAAP)               $366,935       $118,677
    Compensation (benefit)/expense -
     deferred compensation plan                 (1,414)         3,609
                                                ------          -----

    Income from operations (GAAP)             $368,349       $115,068
                                              ========       ========

                                ALTERA CORPORATION
                            CONSOLIDATED BALANCE SHEETS
                     (In thousands, except par value amounts)
                                    (Unaudited)
                                                                December
                                                    July 2,        31,
                                                         2010        2009
                                                         ----        ----

    Assets
    Current assets:
      Cash and cash equivalents                    $2,067,215  $1,546,672
      Accounts receivable, net                        358,006     218,144
      Inventories                                      99,955      69,705
      Deferred income taxes - current                  88,438      79,164
      Deferred compensation plan -
       marketable securities                           47,050      50,905
      Deferred compensation plan -
       restricted cash equivalents                     18,053      18,986
      Other current assets                             72,656      58,194
                                                       ------      ------
         Total current assets                       2,751,373   2,041,770
      Property and equipment, net                     165,432     174,516
      Deferred income taxes - non-current              47,384      59,249
      Other assets, net                                18,801      17,696
         Total assets                              $2,982,990  $2,293,231
                                                   ==========  ==========

    Liabilities and stockholders' equity
    Current liabilities:
      Accounts payable                               $110,088     $50,520
      Accrued liabilities                              19,857      32,256
      Accrued compensation and related
       liabilities                                     63,656      49,862
      Deferred compensation plan obligations           65,103      69,891
      Deferred income and allowances on
       sales to distributors                          395,429     281,885
      Income taxes payable                              6,569       5,547
                                                        -----       -----
         Total current liabilities                    660,702     489,961
      Income taxes payable - non-current              220,204     210,967
      Long-term credit facility                       500,000     500,000
      Other non-current liabilities                     7,133       6,967
         Total liabilities                          1,388,039   1,207,895
                                                    ---------   ---------

    Stockholders' equity:
      Common stock: $.001 par value;
       1,000,000 shares authorized;
       outstanding--
            305,857 at July 2, 2010 and 296,817 at
             December 31, 2009                            306         297
      Capital in excess of par value                  582,348     372,098
      Retained earnings                             1,012,297     712,941
         Total stockholders' equity                 1,594,951   1,085,336
                                                    ---------   ---------
         Total liabilities and stockholders'
          equity                                   $2,982,990  $2,293,231
                                                   ==========  ==========

    Key Ratios & Information

    Current Ratio                                         4:1         4:1
    Liabilities/Equity                                    1:1         1:1
    Quarterly Operating Cash Flows                   $245,921    $176,352
    TTM Return on Equity                                   42%         27%
    Quarterly Depreciation Expense                     $6,403      $6,839
    Quarterly Capital Expenditures                     $2,812      $1,824
    Annualized Net Sales per Employee                    $680        $450
    Number of Employees                                 2,579       2,551
    Inventory MSOH (1): Altera                            2.3         1.8
    Inventory MSOH (1): Distribution                      0.9         0.7
    Cash Conversion Cycle                                  80          77
    (1) MSOH: Months Supply On Hand

                                ALTERA CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (In thousands)
                                   (Unaudited)
                                                Six Months Ended
                                                ----------------
                                                 July 2,       June 26,
                                                      2010           2009
                                                      ----           ----

    Cash Flows from Operating Activities:
    Net income                                    $333,780        $91,384
    Adjustments to reconcile net income to
     net cash provided by operating
     activities:
      Depreciation and amortization                 13,504         14,714
      Stock-based compensation                      29,749         30,435
      Deferred income tax benefit                  (11,296)        (6,286)
      Tax effect of employee stock plans             6,996         (1,897)
      Excess tax benefit from employee stock
       plans                                        (6,465)          (231)
      Gain on substantive termination of
       retiree medical plan                              -         (6,488)
      Changes in assets and liabilities:
        Accounts receivable, net                  (139,862)      (112,640)
        Inventories                                (30,250)        18,418
        Other assets                               (15,637)        30,018
        Accounts payable and other liabilities      63,756        (21,019)
        Deferred income and allowances on sales
         to distributors                           113,544         27,160
        Income taxes payable                        24,146         26,037
        Deferred compensation plan obligations      (3,374)         1,266
                                                    ------          -----
      Net cash provided by operating
       activities                                  378,591         90,871
                                                   -------         ------

    Cash Flows from Investing Activities:
    Purchases of property and equipment             (4,350)        (6,852)
    Sales (purchases) of deferred
     compensation plan securities, net               3,374         (1,266)
    Purchases of intangible assets                       -           (510)
                                                       ---           ----
      Net cash used in investing activities           (976)        (8,628)
                                                      ----         ------

    Cash Flows from Financing Activities:
    Proceeds from issuance of common stock
     through various stock plans                   175,386         11,933
    Shares withheld for employee taxes              (6,159)        (4,655)
    Payment of dividends to stockholders           (30,137)       (29,370)
    Excess tax benefit from stock-based
     compensation                                    6,465            231
    Principal payments on capital lease
     obligations                                    (2,627)        (2,150)
                                                    ------         ------
      Net cash provided by (used in) financing
       activities                                  142,928        (24,011)
                                                   -------        -------
    Net increase in cash and cash
     equivalents                                   520,543         58,232
    Cash and cash equivalents at beginning
     of period                                   1,546,672      1,216,743
    Cash and cash equivalents at end of
     period                                     $2,067,215     $1,274,975
                                                ==========     ==========

                               ALTERA CORPORATION
                                NET SALES SUMMARY
                                   (Unaudited)
                                                    Quarterly Growth
                           THREE MONTHS ENDED                           Rate
                           ------------------          ----------------
                                                                Year-
                           July   April    June
                             2,     2,        26, Sequential  Over-Year
                            2010    2010      2009  Change      Change
                            ----    ----      ----  ------      ------
    Geography
    ---------
    Americas                  20%     19%       20%       18%        66%
    Asia Pacific              41%     40%       43%       22%        61%
    EMEA                      24%     24%       21%       14%        86%
    Japan                     15%     17%       16%        6%        65%
                             ---     ---       ---
    Total                    100%    100%      100%       17%        68%
                             ===     ===       ===

    Product Category
    ----------------
    New                       40%     34%       22%       36%       199%
    Mainstream                29%     30%       34%       13%        46%
    Mature & Other            31%     36%       44%        1%        18%
    Total                    100%    100%      100%       17%        68%
                             ===     ===       ===

    Vertical Market
    ---------------
    Telecom & Wireless        42%     40%       48%       21%        45%
    Industrial Automation,
     Military & Auto          23%     24%       21%       14%        87%
    Networking, Computer &
     Storage                  13%     13%       13%       21%        74%
    Other                     22%     23%       18%       11%       103%
    Total                    100%    100%      100%       17%        68%
                             ===     ===       ===

    FPGAs and CPLDs
    ---------------
    FPGA                      82%     79%       76%       20%        81%
    CPLD                      12%     14%       16%       -1%        28%
    Other                      6%      7%        8%       11%        30%
    Total                    100%    100%      100%       17%        68%
                             ===     ===       ===

    Product Category Description
    ----------------------------
      Category          Products
                         Stratix III, Stratix IV (including E, GX and GT),
                         Arria II GX,  Cyclone III, Cyclone IV GX, MAX II,
      New                and HardCopy III devices
                         Stratix II (and GX), Arria GX,  Cyclone II, and
      Mainstream         HardCopy II devices
                         Stratix (and GX), Cyclone, Classic(TM), MAX 3000A,
                         MAX 7000, MAX 7000A, MAX 7000B, MAX 7000S, MAX
                         9000, HardCopy, FLEX(R) series, APEX(TM) series,
                         Mercury(TM), Excalibur(TM), configuration and other
                         devices, intellectual property cores, and
      Mature & Other     software and other tools

SOURCE Altera Corporation


Source: newswire