ALTERA CORP - FORM 8-K - EX-99.1 - PRESS RELEASE EXHIBIT - July 24, 2012

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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 ANNOUNCES SECOND QUARTER RESULTS
REVENUE UP 21 PERCENT SEQUENTIALLY


San Jose, Calif., July 24, 2012 — 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.

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.

 
 













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




ALTERA CORP Reports