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Altera Announces First Quarter Results

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SOURCE Altera Corporation

SAN JOSE, Calif., April 24, 2014 /PRNewswire/ -- Altera Corporation (NASDAQ: ALTR) today announced first quarter sales of $461.1 million, up 1 percent from the fourth quarter of 2013 and up 12 percent from the first quarter of 2013. First quarter net income was $116.5 million, $0.37 per diluted share, compared with net income of $98.9 million, $0.31 per diluted share, in the fourth quarter of 2013 and $120.2 million, $0.37 per diluted share, in the first quarter of 2013.

Altera(R) 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.

Cash flow from operating activities was $130.4 million. Altera repurchased approximately 4.6 million shares during the quarter at a cost of $161.8 million.

Altera's board of directors has declared a quarterly cash dividend of $0.15 per share, to be paid on June 2, 2014 to stockholders of record on May 12, 2014.

"The quarter exceeded our expectations as stronger than anticipated Chinese LTE deployments drove wireless sales," said John Daane, president, chief executive officer, and chairman of the board. "We are now shipping Arria 10 FPGAs that offer more logic capacity than any other 20 nm FPGA and speeds that exceed the prior generation high end. Simultaneously, we are making solid progress in the development of our Stratix 10 devices, which use Intel's 14 nm Tri-gate process plus a new FPGA logic architecture to deliver performance twice that of our current high-end FPGA, with vastly more logic resources, lower power and cost."

Several recent accomplishments mark the company's continuing progress:

  • Altera and Intel have extended their manufacturing partnership to include development of multi-die devices. This collaboration is an extension of the foundry relationship between Altera and Intel, in which Intel is manufacturing Altera's Stratix® 10 FPGAs and SoCs using Intel's 14 nm Tri-Gate process. Altera's work with Intel will enable the development of multi-die devices that efficiently integrate monolithic 14 nm Stratix 10 FPGAs and SoCs with other advanced components, which may include DRAM, SRAM, ASICs, processors and analog components, in a single package. Intel's 14 nm Tri-Gate process density advantage and Altera's patented FPGA redundancy technology enable Altera to deliver the industry's highest density monolithic FPGA die, offering greater integration of system components on a single die. Altera is leveraging this leadership and Intel's packaging technology to integrate even more capabilities into a single system-in-a-package solution. Intel's manufacturing process is co-optimized to offer manufacturing simplicity consisting of turnkey foundry services that include the manufacturing, assembly and testing of heterogeneous multi-die devices. Intel and Altera are currently developing test vehicles aimed at streamlining manufacturing and integration flows to support this expanded collaboration.

 

  • In recognition of the technological innovations the company has brought to market in the past year, Altera took top honors for Design Team of the Year and Ultimate Product - Software at this year's EE Times and EDN Annual Creativity in Electronics (ACE) Awards competition. The Design Team of the Year award honors the company with a design team whose collaborative efforts made a significant contribution to furthering technology innovation and whose project management abilities were creative, efficient and inspiring. The Altera and Micron Technology design teams were jointly recognized for their work in achieving interoperability between Altera's Stratix V FPGAs with Micron's Hybrid Memory Cube, which enables the development of advanced communications and computing designs. The Ultimate Product - Software award recognizes the company with the most innovative software product of the year. Altera's software development kit (SDK) for OpenCL was recognized for this prestigious award for its ability to allow software programmers to access the performance and low-power advantages of FPGAs. Altera is the industry's first company to offer an SDK for OpenCL that targets FPGAs.

 

  • Altera received two DesignVision Awards at DesignCon 2014 for its innovations in FPGA and SoC technology. Altera's next-generation, 14 nm Stratix 10 FPGAs and SoCs won for best semiconductor and IP, and the ARM® Development Studio 5 (DS-5™) Altera Edition toolkit won for best design verification tool. The DesignVision Award recognizes technologies, applications, products and services judged to be the most unique and beneficial to the industry. Altera's next-generation high-performance Stratix 10 FPGAs and SoCs were recognized by the judges for offering breakthrough advantages in performance, power savings and system integration. Altera's ARM DS-5 Altera Edition toolkit was recognized by judges for its ability to remove the debugging barrier between the integrated dual-core CPU subsystem and FPGA fabric in Altera SoC devices. The DS-5 Altera Edition toolkit combines the most advanced multi-core debugger for the ARM architecture with the ability to adapt to the logic contained in the FPGA. The toolkit provides embedded software developers an unprecedented level of full-chip visibility and control through the standard DS-5 user interface.

 

SELECTED FIRST QUARTER REVENUE AND RELATED RESULTS


($ in thousands)

Key Ratios & Information


March 28, 2014


December 31, 2013

Current Ratio


6:1


6:1

Liabilities/Equity


2:3


2:3

Quarterly Operating Cash Flows


$

130,430


$

130,759

TTM Return on Equity


13%


13%

Quarterly Depreciation Expense


$

12,996


$

11,321

Quarterly Capital Expenditures


$

7,116


$

14,253

Inventory MSOH (1): Altera


3.1


3.4

Inventory MSOH (1): Distribution


0.6


0.7

Cash Conversion Cycle (Days)


157


160

Turns


48%


45%

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


March 28,

 2014


December 31,

 2013


March 29,

 2013


Sequential
Change


Year-

Over-Year

Change

Geography










Americas

15%


19%


20%


(17)%


(13)%

Asia Pacific

43%


41%


38%


6%


24%

EMEA

26%


24%


27%


11%


11%

Japan

16%


16%


15%


(4)%


18%

Net Sales

100%


100%


100%


1%


12%

Product Category










New

49%


47%


39%


4%


39%

Mainstream

23%


24%


29%


(4)%


(12)%

Mature and Other

28%


29%


32%


1%


2%

Net Sales

100%


100%


100%


1%


12%

Vertical Market










Telecom & Wireless

45%


40%


41%


14%


23%

Industrial Automation, Military & Automotive

22%


22%


22%


1%


13%

Networking, Computer & Storage

15%


19%


18%


(20)%


(7)%

Other

18%


19%


19%


(3)%


7%

Net Sales

100%


100%


100%


1%


12%

FPGAs and CPLDs










FPGA

83%


83%


85%


2%


10%

CPLD

9%


9%


8%


(2)%


17%

Other Products

8%


8%


7%


0%


32%

Net Sales

100%


100%


100%


1%


12%

Product Category Description

  • New Products include the Stratix® V, Stratix IV, Arria® V, Arria II, Cyclone® V, Cyclone IV, 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™ series, Mercury™, Excalibur™ devices, configuration and other devices, intellectual property cores, and software and other tools.

 


Business Outlook for the Second Quarter 2014


Sales and Income Statement


Sequential Sales Growth

+ 2% to + 6%

Gross Margin

67% +/- .5%

Research and Development (1)

$104 - $106 million

SG&A

$78 - $80 million

Other Income/Expense, Net (2)

Net expense of approximately $4 million

Tax Rate

12% - 13%

Diluted Share Count

Approximately 315 million

Turns

Low 40's

Inventory MSOH

High 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

Up

Industrial Automation, Military & Automotive

Down

Networking, Computer & Storage

Up

Other

Flat

First 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 product development, the effect of Altera's agreement with Intel Corporation, product performance parameters, 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, 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, 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

(In thousands, except per share amounts)


March 28,

 2014


December 31,

 2013


 

March 29,

 2013








Net sales


$

461,092


$

454,367


$

410,501

Cost of sales


151,868


144,024


126,083

Gross margin


309,224


310,343


284,418

Operating expense






   Research and development expense


97,657


106,643


87,717

   Selling, general, and administrative expense


74,507


84,692


78,600

   Amortization of acquisition-related intangible assets


2,465


1,850


213

Total operating expense


174,629


193,185


166,530

Operating margin (1)


134,595


117,158


117,888

Compensation expense - deferred compensation plan


1,454


3,881


3,422

Gain on deferred compensation plan securities


(1,454)


(3,881)


(3,422)

Interest income and other


(5,985)


(4,902)


(1,659)

Gain reclassified from other comprehensive income


(48)


(24)


(54)

Interest expense


10,488


8,272


2,465

Income before income taxes


130,140


113,812


117,136

Income tax expense/(benefit)


13,626


14,878


(3,053)

Net income


116,514


98,934


120,189








Other comprehensive income/(loss):







Unrealized gain/(loss) on investments:







   Unrealized holding gain/(loss) on investments arising during period, net of tax of $24, ($11) and ($5)


12,560


(26,811)


(1)

   Less: Reclassification adjustments for gain on investments included in net income, net of tax of $4, $2 and $5


(44)


(22)


(49)

Other comprehensive income/(loss)


12,516


(26,833)


(50)

Comprehensive income


$

129,030


$

72,101


$

120,139




Net income per share:



   Basic


$

0.37


$

0.31


$

0.38

   Diluted


$

0.37


$

0.31


$

0.37








Shares used in computing per share amounts:







   Basic


316,552


319,993


319,867

   Diluted


318,901


322,018


323,021








Dividends per common share


$

0.15


$

0.15


$

0.10




Tax rate


10.5%


13.1%


(2.6)%

% of Net sales:







   Gross margin


67.1%


68.3%


69.3%

   Research and development (1)


21.7%


23.9%


21.4%

   Selling, general, and administrative


16.2%


18.6%


19.1%

   Operating margin(2)


29.2%


25.8%


28.7%

   Net income


25.3%


21.8%


29.3%


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

(In thousands, except per share amounts)


March 28,

 2014


December 31,

 2013


March 29,

 2013

Operating margin (non-GAAP)


$

134,595


$

117,158


$

117,888

Compensation expense - deferred compensation plan


1,454


3,881


3,422

Income from operations (GAAP)


$

133,141


$

113,277


$

114,466

 

 

ALTERA CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In thousands, except par value amount)


March 28,

 2014


December 31,

 2013






Assets





Current assets:





Cash and cash equivalents


$

2,752,111


$

2,869,158

Short-term investments


157,136


141,487

   Total cash, cash equivalents, and short-term investments


2,909,247


3,010,645

Accounts receivable, net


443,409


483,032

Inventories


158,137


163,880

Deferred income taxes - current


60,209


63,228

Deferred compensation plan - marketable securities


65,646


66,455

Deferred compensation plan - restricted cash equivalents


19,636


16,699

Other current assets


50,535


48,901

   Total current assets


3,706,819


3,852,840

Property and equipment, net


198,266


204,142

Long-term investments


1,718,237


1,695,066

Deferred income taxes - non-current


18,422


10,806

Goodwill


74,341


73,968

Acquisition-related intangible assets, net


79,685


82,150

Other assets, net


77,280


76,676

   Total assets


$

5,873,050


$

5,995,648






Liabilities and stockholders' equity





Current liabilities:





Accounts payable


$

35,997


$

44,163

Accrued liabilities


42,814


41,218

Accrued compensation and related liabilities


49,838


51,105

Deferred compensation plan obligations


85,282


83,154

Deferred income and allowances on sales to distributors


414,519


487,746

   Total current liabilities


628,450


707,386

Income taxes payable - non-current


286,603


276,326

Long-term debt


1,491,789


1,491,466

Other non-current liabilities


8,295


8,403

   Total liabilities


2,415,137


2,483,581

Stockholders' equity:





Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 313,609 shares at March 28, 2014 and 317,769 shares at December 31, 2013


314


318

Capital in excess of par value


1,197,456


1,216,826

Retained earnings


2,275,589


2,322,885

Accumulated other comprehensive loss


(15,446)


(27,962)

   Total stockholders' equity


3,457,913


3,512,067

   Total liabilities and stockholders' equity


$

5,873,050


$

5,995,648






 

 

ALTERA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)




Three Months Ended

 (In thousands)


March 28,

 2014


March 29,

 2013






Cash Flows from Operating Activities:





Net income


$

116,514


$

120,189

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





   Depreciation and amortization


14,628


11,161

   Amortization of acquisition-related intangible assets


2,465


213

   Amortization of debt discount and debt issuance costs


779


281

   Stock-based compensation


23,347


22,242

   Net gain on sale of available-for-sale securities


(48)


-

   Amortization of investment discount/premium


685


-

   Deferred income tax expense/(benefit)


9,211


(15,606)

   Tax effect of employee stock plans


(217)


861

   Excess tax benefit from employee stock plans


(326)


(741)

   Changes in assets and liabilities, net of effects of  acquisitions:





   Accounts receivable, net


39,623


(42,709)

   Inventories


5,743


13,439

   Other assets


(3,992)


13,036

   Accounts payable and other liabilities


(3,425)


(9,660)

   Deferred income and allowances on sales to distributors


(73,227)


36,649

   Income taxes payable


(2,004)


6,239

   Deferred compensation plan obligations


674


(6,116)

   Net cash provided by operating activities


130,430


149,478

Cash Flows from Investing Activities:





   Purchases of property and equipment


(12,622)


(14,586)

   (Purchases)/sales of deferred compensation plan securities, net


(674)


6,116

   Purchases of available-for-sale securities


(103,982)


(121,111)

   Proceeds from sale of available-for-sale securities


35,562


48,978

   Proceeds from maturity of available-for-sale securities


41,548


34,416

   Purchase of other investments


-


(176)

   Net cash used in investing activities


(40,168)


(46,363)

Cash Flows from Financing Activities:





   Proceeds from issuance of common stock through stock plans


6,082


8,442

   Shares withheld for employee taxes


(3,048)


(3,360)

   Payment of dividends to stockholders


(47,554)


(31,978)

   Long-term debt and credit facility issuance costs


(1,321)


-

   Repurchases of common stock


(161,794)


-

   Excess tax benefit from employee stock plans


326


741

   Net cash used in financing activities


(207,309)


(26,155)

Net (decrease)/increase in cash and cash equivalents


(117,047)


76,960

Cash and cash equivalents at beginning of period


2,869,158


2,876,627

Cash and cash equivalents at end of period


$

2,752,111


$

2,953,587

 

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