ALTERA CORP - FORM 8-K - EX-99.1 - PRESS RELEASE EXHIBITION - January 24, 2012

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


ALTERA ANNOUNCES FOURTH QUARTER RESULTS


San Jose, Calif., January 24, 2012 — Altera Corporation (NASDAQ: ALTR) today announced fourth quarter sales of $457.8 million, down 12 percent from the third quarter of 2011 and down 18 percent from the fourth quarter of 2010. Fourth quarter net income was $146.6 million, $0.45 per diluted share, compared with net income of $185.4 million, $0.57 per diluted share, in the third quarter of 2011 and $231.6 million, $0.72 per diluted share, in the fourth quarter of 2010.

Cash flow from operating activities in 2011 was $959.6 million. Altera ended the quarter with $3.5 billion in cash and investments.

Altera's board of directors has declared a quarterly cash dividend of $0.08 per share payable on March 1, 2012 to stockholders of record on February 10, 2012.

"While industry conditions led to sequential sales declines in the fourth quarter, Altera grew 6 percent in 2011—well ahead of most of the semiconductor industry. Our FPGA market share once again improved," said John Daane, president, chief executive officer, and chairman of the board. "As we have seen over the last several years, there are long-term technology-based trends that favor FPGAs. We continue to believe that these factors, plus ongoing FPGA share gains, give us the potential over time for sales growth twice that of the semiconductor industry."


1






Several recent accomplishments mark the company's continuing progress:

•
Altera has begun shipping its first mid-range 28-nm Arria® V FPGAs. Arria V devices are the lowest power mid-range FPGAs available in the market today. Offering transceiver speeds up to 10.3125-Gbps, the Arria V family was developed on TSMC's 28-nm Low-Power (28LP) process. With 50 percent lower static power and 50 percent lower transceiver power than any FPGA in its class, the Arria V FPGA delivers the lowest total power of any mid-range FPGA family. Available in four family variants, designers can choose the device that meets their exact needs, including devices that embed a dual-core ARM® Cortex™ -A9 MPCore™ processor. The Arria V family's innovative features allow designers to tailor their low-power, high-bandwidth, and low-cost requirements for next-generation shipments in wireless, broadcast, and military markets.
 
•
Altera has announced the industry's first OpenCL™ program for FPGAs. The OpenCL standard is a C-based open standard for parallel programming. Altera's OpenCL program combines the parallel processing performance capability of FPGAs with the OpenCL standard to enable powerful system acceleration. This combination also offers a significant time-to-market advantage compared with traditional FPGA development. Altera has expanded its university program to support the OpenCL standard for FPGA development in academia, and is actively contributing to the evolution of the Open CL standard based on customer feedback. Early results of customer evaluations show a 35X performance increase compared with multi-core CPU solutions and a 50 percent reduction in development time compared with traditional HDL-developed FPGA solutions. OpenCL FPGA-targeted applications range from high-performance computing to advanced radar systems, medical imaging, and video encoding and processing—any system that requires fast computations that can be parallelized.

•
Altera has received further industry recognition for its 28-nm FPGA portfolio. Electronics Weekly selected Altera's 28-nm portfolio as the Semiconductor Product of the Year – Digital at its annual Elektra European Electronics Industry Awards. The Elektra European Electronics Industry Awards are the most prestigious product technology and business awards in Europe. The awards recognize the achievements of individuals and companies in the electronics industry. A panel of independent industry experts and a representative from Electronics Weekly selected Altera's 28-nm FPGA portfolio as the winner of the Semiconductor Product of the Year – Digital from a pool of six nominees based on Altera's 28-nm portfolio's performance, design flexibility and suitability for applications. EDN Magazine also selected Altera's 28-nm SoC FPGA family as one of its 100 Hot Products of 2011. The 2011 EDN Hot 100 highlights the electronics industry's most significant products of the year based on innovation, significance, usefulness, and popularity as determined by the magazine's editors and readers.








2

SELECTED FOURTH QUARTER REVENUE AND RELATED RESULTS

Key New Product Devices
 
Sequential Comparisons
Stratix V
 
49%
Stratix IV
 
(19)%
Arria II
 
(4)%
Cyclone IV
 
26%
HardCopy IV
 
(20)%

Vertical Markets
 
Sequential Comparisons
 
Comments
Telecom & Wireless
 
(11)%
 
Telecom flat and Wireless down
Industrial Automation,
Military & Automotive
 
(1)%
 
Military up, rest of vertical down
Networking, Computer & Storage
 
(30)%
 
Category decreased due to end of short-term earthquake-related ASIC replacement business
Other
 
(9)%
 
Broadly down

($ in thousands) Key Ratios & Information
 
December 31, 2011
 
September 30, 2011
Current Ratio
 
4:1

 
3:1

Liabilities/Equity
 
1:2

 
1:2

Quarterly Operating Cash Flows
 
$
220,363

 
$
282,873

TTM Return on Equity
 
28
%
 
34
%
Quarterly Depreciation Expense
 
$
7,772

 
$
7,428

Quarterly Capital Expenditures
 
$
8,634

 
$
13,382

Inventory MSOH (1): Altera
 
2.7

 
2.4

Inventory MSOH (1): Distribution
 
0.6

 
0.6

Cash Conversion Cycle (Days)
 
90

 
78

Turns
 
42
%
 
33
%
Book to Bill
 
<1.0

 
<1.0

 
 
 
 
 
Note (1): MSOH: Months Supply On Hand
 
 
 
 

                



3

ALTERA CORPORATION
NET SALES SUMMARY
(Unaudited)

 
Three Months Ended
 
Quarterly Growth Rate
 
Years Ended
 
 
 
December 31, 2011
 
September 30, 2011
 
December 31, 2010
 
Sequential Change
 
Year-
Over-Year
Change
 
December 31, 2011
 
December 31, 2010
 
Annual Growth
Geography
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Americas
21
%
 
16
%
 
17
%
 
10
 %
 
4
 %
 
19
%
 
19
%
 
7
 %
Asia Pacific
40
%
 
44
%
 
43
%
 
(20
)%
 
(23
)%
 
41
%
 
42
%
 
2
 %
EMEA
22
%
 
25
%
 
22
%
 
(22
)%
 
(18
)%
 
25
%
 
23
%
 
17
 %
Japan
17
%
 
15
%
 
18
%
 
—
 %
 
(23
)%
 
15
%
 
16
%
 
(1
)%
Net Sales
100
%
 
100
%
 
100
%
 
(12
)%
 
(18
)%
 
100
%
 
100
%
 
6
 %
Product Category
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New
27
%
 
27
%
 
16
%
 
(13
)%
 
41
 %
 
22
%
 
11
%
 
107
 %
Mainstream
33
%
 
32
%
 
37
%
 
(10
)%
 
(26
)%
 
34
%
 
32
%
 
11
 %
Mature and Other
40
%
 
41
%
 
47
%
 
(13
)%
 
(30
)%
 
44
%
 
57
%
 
(18
)%
Net Sales
100
%
 
100
%
 
100
%
 
(12
)%
 
(18
)%
 
100
%
 
100
%
 
6
 %
Vertical Market
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Telecom & Wireless
43
%
 
42
%
 
47
%
 
(11
)%
 
(25
)%
 
43
%
 
44
%
 
4
 %
Industrial Automation, Military & Automotive
24
%
 
22
%
 
19
%
 
(1
)%
 
6
 %
 
23
%
 
21
%
 
12
 %
Networking, Computer & Storage
16
%
 
20
%
 
15
%
 
(30
)%
 
(9
)%
 
17
%
 
14
%
 
29
 %
Other
17
%
 
16
%
 
19
%
 
(9
)%
 
(29
)%
 
17
%
 
21
%
 
(13
)%
Net Sales
100
%
 
100
%
 
100
%
 
(12
)%
 
(18
)%
 
100
%
 
100
%
 
6
 %
FPGAs and CPLDs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FPGA
82
%
 
82
%
 
83
%
 
(12
)%
 
(18
)%
 
81
%
 
82
%
 
5
 %
CPLD
9
%
 
9
%
 
10
%
 
(10
)%
 
(27
)%
 
10
%
 
12
%
 
(11
)%
Other Products
9
%
 
9
%
 
7
%
 
(17
)%
 
6
 %
 
9
%
 
6
%
 
41
 %
Net Sales
100
%
 
100
%
 
100
%
 
(12
)%
 
(18
)%
 
100
%
 
100
%
 
6
 %

Product Category Description

•
New Products include the Stratix® V, Stratix IV, Arria® V, Arria II , Cyclone® IV , 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 , Stratix , 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.



4

Business Outlook for the First Quarter 2012

Sales and Income Statement
Sequential Sales Growth
Down 5% to 9%
Gross Margin
70% +/- .5%
Research and Development
$90 to 92 million
SG&A
$72 to 74 million
Tax Rate
10% to 11%
Diluted Share Count
326 million
Turns
Approximately 50%
MSOH
Low 3's
        
Vertical Market                         
Telecom & Wireless
Down slightly overall, with Telecom up and Wireless down
Industrial Automation, Military & Automotive
Down overall, with Automotive up, Industrial Automation flat, and Military significantly down
Networking, Computer & Storage
Flat overall, with Networking up and Computer & Storage down
Other
Down slightly

Fourth 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.
 
First Quarter Update
 
Altera's first quarter business update will be issued in a press release available after the market close on March 8, 2012.

 



5

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 forecasts of future growth relative to the semiconductor industry, 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® 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.

 
 










6

ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
 
Three Months Ended
 
Years Ended
(In thousands, except per share amounts)
 
December 31, 2011
 
September 30, 2011
 
December 31, 2010
 
December 31, 2011
 
December 31, 2010
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
457,804

 
$
522,474

 
$
555,378

 
$
2,064,475

 
$
1,954,426

Cost of sales
 
136,764

 
166,938

 
161,296

 
610,329

 
566,942

Gross margin
 
321,040

 
355,536

 
394,082

 
1,454,146

 
1,387,484

Operating expense
 
 
 
 
 
 
 
 
 
 
Research and development expense
 
90,295

 
80,771

 
66,788

 
325,733

 
264,649

Selling, general, and administrative expense
 
70,667

 
69,345

 
64,074

 
279,217

 
254,495

Total operating expense
 
160,962

 
150,116

 
130,862

 
604,950

 
519,144

Operating margin (1)
 
160,078

 
205,420

 
263,220

 
849,196

 
868,340

Compensation expense (benefit) — deferred compensation plan
 
2,962

 
(6,642
)
 
3,554

 
(1,964
)
 
6,839

(Gain) loss on deferred compensation plan securities
 
(2,962
)
 
6,642

 
(3,554
)
 
1,964

 
(6,839
)
Interest income and other
 
(1,021
)
 
(663
)
 
(936
)
 
(3,526
)
 
(3,330
)
Interest expense
 
1,013

 
806

 
351

 
3,730

 
3,843

Income before income taxes
 
160,086

 
205,277

 
263,805

 
848,992

 
867,827

Income tax expense
 
13,475

 
19,873

 
32,192

 
78,281

 
84,943

Net income
 
$
146,611

 
$
185,404

 
$
231,613

 
$
770,711

 
$
782,884

 
 
 
 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
 

 
 
Basic
 
$
0.46

 
$
0.58

 
$
0.73

 
$
2.39

 
$
2.55

Diluted
 
$
0.45

 
$
0.57

 
$
0.72

 
$
2.35

 
$
2.49

 
 
 
 
 
 
 
 
 

 
 
Shares used in computing per share amounts:
 
 
 
 
 
 
 
 

 
 
Basic
 
321,553

 
321,745

 
316,440

 
321,892

 
307,302

Diluted
 
325,653

 
327,044

 
323,592

 
327,606

 
313,912

 
 
 
 
 
 
 
 
 

 
 
Cash dividends per common share
 
$
0.08

 
$
0.08

 
$
0.06

 
$
0.28

 
$
0.22

 
 
 
 
 
 
 
 
 
 
 
Tax rate
 
8.4
%
 
9.7
%
 
12.2
%
 
9.2
%
 
9.8
%
% of Net sales:
 
 
 
 
 
 
 
 
 
 
Gross margin
 
70.1
%
 
68.0
%
 
71.0
%
 
70.4
%
 
71.0
%
Research and development
 
19.7
%
 
15.5
%
 
12.0
%
 
15.8
%
 
13.5
%
Selling, general, and administrative
 
15.4
%
 
13.3
%
 
11.5
%
 
13.5
%
 
13.0
%
Operating margin(1)
 
35.0
%
 
39.3
%
 
47.4
%
 
41.1
%
 
44.4
%
Net income
 
32.0
%
 
35.5
%
 
41.7
%
 
37.3
%
 
40.1
%
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 gains and losses 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
 
Years Ended
(In thousands)
 
December 31, 2011
 
September 30, 2011
 
December 31, 2010
 
December 31, 2011
 
December 31, 2010
Operating margin (non-GAAP)
 
$
160,078

 
$
205,420

 
$
263,220

 
$
849,196

 
$
868,340

Compensation expense (benefit) — deferred compensation plan
 
2,962

 
(6,642
)
 
3,554

 
(1,964
)
 
6,839

Income from operations (GAAP)
 
$
157,116

 
$
212,062

 
$
259,666

 
$
851,160

 
$
861,501



7

ALTERA CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except par value amount)
 
December 31,
2011
 
December 31,
2010
 
 
 
 
 
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
3,371,933

 
$
2,765,196

Short-term investments
 
65,222

 
—

Total cash, cash equivalents, and short-term investments
 
3,437,155

 
2,765,196

Accounts receivable, net
 
232,273

 
363,614

Inventories
 
122,279

 
146,524

Deferred income taxes — current
 
58,415

 
66,839

Deferred compensation plan — marketable securities
 
54,041

 
54,419

Deferred compensation plan — restricted cash equivalents
 
17,938

 
19,817

Other current assets
 
52,710

 
114,601

Total current assets
 
3,974,811

 
3,531,010

Property and equipment, net
 
171,721

 
164,155

Long term investments
 
74,033

 
—

Deferred income taxes — non-current
 
26,629

 
37,319

Other assets, net
 
35,074

 
27,353

Total assets
 
$
4,282,268

 
$
3,759,837

 
 
 
 
 
Liabilities and stockholders' equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
52,154

 
$
86,061

Accrued liabilities
 
34,029

 
23,278

Accrued compensation and related liabilities
 
78,181

 
83,773

Deferred compensation plan obligations
 
71,979

 
74,236

Deferred income and allowances on sales to distributors
 
279,876

 
428,711

Income taxes payable
 
—

 
428

Credit facility
 
500,000

 
—

Total current liabilities
 
1,016,219

 
696,487

Income taxes payable — non-current
 
263,423

 
231,833

Credit facility
 
—

 
500,000

Other non-current liabilities
 
8,730

 
7,865

Total liabilities
 
1,288,372

 
1,436,185

Commitments and contingencies
 
 
 
 
Stockholders' equity:
 
 
 
 
Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 322,054 at December 31, 2011 and 319,494 shares at December 31, 2010
 
322

 
319

Capital in excess of par value
 
1,050,752

 
908,989

Accumulated other comprehensive loss
 
(133
)
 
—

Retained earnings
 
1,942,955

 
1,414,344

Total stockholders' equity
 
2,993,896

 
2,323,652

Total liabilities and stockholders' equity
 
$
4,282,268

 
$
3,759,837

 
 
 
 
 


8


ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
YEARS ENDED
(In thousands)
 
December 31,
2011
 
December 31,
2010
 
December 31,
2009
Cash Flows from Operating Activities:
 
 
 
 
 
 
Net income
 
$
770,711

 
$
782,884

 
$
251,062

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

Depreciation and amortization
 
31,927

 
27,535

 
29,022

Stock-based compensation
 
82,750

 
62,118

 
64,446

Deferred income tax expense (benefit)
 
15,657

 
34,256

 
(5,890
)
Tax effect of employee stock plans
 
16,162

 
27,444

 
(3,648
)
Excess tax benefit from employee stock plans
 
(17,307
)
 
(21,866
)
 
(990
)
Gain on substantive termination of retiree medical plan
 
—

 
—

 
(6,488
)
Changes in assets and liabilities, net of the effects of acquisition:
 
 
 
 
 

Accounts receivable, net
 
131,341

 
(145,330
)
 
(136,115
)
Inventories
 
24,245

 
(76,819
)
 
14,931

Other assets
 
54,661

 
(52,805
)
 
38,862

Accounts payable and other liabilities
 
(32,534
)
 
59,200

 
7,918

Deferred income and allowances on sales to distributors
 
(148,836
)
 
146,826

 
77,611

Income taxes payable
 
31,116

 
15,746

 
39,860

Deferred compensation plan obligations
 
(293
)
 
(2,494
)
 
2,125

Net cash provided by operating activities
 
959,600

 
856,695

 
372,706

Cash Flows from Investing Activities:
 
 
 
 
 
 
Purchases of property and equipment
 
(31,812
)
 
(12,442
)
 
(11,060
)
Purchases of available-for-sale securities
 
(164,408
)
 
—

 
—

Proceeds from the maturities and sales of available-for-sale investments
 
25,003

 
—

 
—

Acquisition related payments, net of cash acquired
 
—

 
(8,004
)
 
—

Sales (purchases) of deferred compensation plan securities, net
 
293

 
2,494

 
(2,125
)
Purchases of intangible assets
 
—

 
(5,000
)
 
(690
)
Net cash used in investing activities
 
(170,924
)
 
(22,952
)
 
(13,875
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
Proceeds from issuance of common stock through various stock plans
 
119,989

 
453,719

 
42,144

Shares withheld for employee taxes
 
(32,152
)
 
(20,164
)
 
(10,738
)
Repurchases of common stock
 
(197,023
)
 
—

 
—

Payment of dividends to stockholders
 
(90,060
)
 
(67,774
)
 
(58,925
)
Excess tax benefit from stock-based compensation
 
17,307

 
21,866

 
990

Principal payments on capital lease obligations
 
—

 
(2,866
)
 
(2,373
)
Net cash (used in) provided by financing activities
 
(181,939
)
 
384,781

 
(28,902
)
Net increase in cash and cash equivalents
 
606,737

 
1,218,524

 
329,929

Cash and cash equivalents at beginning of period
 
2,765,196

 
1,546,672

 
1,216,743

Cash and cash equivalents at end of period
 
$
3,371,933

 
$
2,765,196

 
$
1,546,672

Supplemental cash flow information:
 
 
 
 
 
 
Income taxes paid, net
 
$
9,856

 
$
29,887

 
$
7,310

Interest paid
 
$
3,704

 
$
3,395

 
$
4,503


9

ALTERA CORP Reports