ALTERA CORP - FORM 8-K - EX-99.1 - PRESS RELEASE EXHIBIT - October 23, 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 THIRD QUARTER RESULTS



San Jose, Calif., October 23, 2012 — Altera Corporation (NASDAQ: ALTR) today announced third quarter sales of $495.0 million, up 6 percent from the second quarter of 2012 and down 5 percent from the third quarter of 2011. Third quarter net income was $157.5 million, $0.49 per diluted share, compared with net income of $162.7 million, $0.50 per diluted share, in the second quarter of 2012 and $185.4 million, $0.57 per diluted share, in the third quarter of 2011.

Year-to-date cash flow from operating activities was $460.5 million. Altera repurchased 1.6 million shares of its common stock during the quarter at a cost of $50.0 million. Altera ended the quarter with
$3.7 billion in cash and investments.

Altera's board of directors has declared a quarterly cash dividend of $0.10 per share, to be paid on December 3, 2012 to stockholders of record on November 13, 2012.

"Despite uneven global economic conditions, Altera experienced relatively broad vertical market sequential growth with both our new and mainstream product categories performing well," said John Daane, president, chief executive officer, and chairman of the board. "Our 28 nm opportunity pipeline exceeds that of any prior process node as FPGAs continue to displace ASICs. Altera is the only 28 nm FPGA supplier to offer production-qualified devices across our entire range of product families, which gives us clear advantage as we compete for design wins. Altera is the design-win value leader at 28 nm."








Several recent accomplishments mark the company's continuing progress:

•
Production-qualified devices are now available across Altera's entire 28 nm portfolio of high-end, midrange, and low-cost FPGAs. As the first FPGA supplier to reach this 28 nm industry milestone, Altera's technology leadership, with its unique tailored architecture approach, is successfully delivering a range of products optimized for cost, performance and low power. At the high end, Stratix® V FPGAs are the industry's only production monolithic devices with 28 Gbps integrated transceivers. In the midrange, Arria® V FPGAs use the lowest power while providing optimized performance for a variety of applications including remote radio units, Long-Term Evolution (LTE) wireless communications equipment, in-studio mixers and 10G/40G line cards. Developed on TSMC's 28 nm Low Power (28LP) process, the Cyclone® V FPGA family provides customers the lowest power and lowest cost at optimal performance levels needed for today's high-volume, cost-sensitive applications.

•
Altera has unveiled several key innovations planned for its next generation of 20 nm products. Extending the promise of silicon convergence, Altera is offering customers the ultimate system-integration platform, combining the hardware programmability of FPGAs with the software flexibility of digital signal processors and microprocessors along with the efficiencies of application-specific hard intellectual property. The architectural, software and process innovations Altera is making at 20 nm enable the development of an enhanced mixed-system fabric that delivers new levels of performance, bandwidth, integration and power efficiency. Altera's 20 nm mixed-system fabric includes the integration of 40 Gbps transceiver technology, a next-generation variable-precision digital signal processing (DSP) block architecture that delivers over 5 TFLOPs of IEEE 754 floating-point performance, and heterogeneous 3D integrated circuits that integrate FPGAs with a user-customizable HardCopy® ASIC or a variety of other technologies, including memory, third-party ASICs and optical interfaces.

•
For the second consecutive year, Altera has been selected as one of the 100 most innovative companies in the world, according to a study just published by Forbes Magazine. The Forbes ranking is based on “Innovation Premium,” an indication of the premium the stock market gives a company because investors expect it to launch new offerings and enter new markets. The algorithm was developed by Hal Gregersen, Jeff Dyer, and Clayton Christensen, and is described in their book, The Innovator's DNA (Harvard Business Press, 2011).





SELECTED THIRD QUARTER REVENUE AND RELATED RESULTS

Key New Product Devices
 
Sequential Comparisons
Stratix V
 
124
 %
Stratix IV
 
1
 %
Arria II
 
(9
)%
Cyclone IV
 
27
 %
HardCopy IV
 
(10
)%

Vertical Markets
 
Sequential Comparisons
 
Comments
Telecom & Wireless
 
7%
 
Telecom and Wireless both up
Industrial Automation,
Military & Automotive
 
11%
 
Industrial, Military, and Automotive all up
Networking, Computer & Storage
 
5%
 
Networking up and Computer and Storage slightly down
Other
 
3%
 
 

($ in thousands) Key Ratios & Information
 
September 28, 2012
 
June 29, 2012
Current Ratio
 
6:1

 
6:1

Liabilities/Equity
 
1:2

 
1:2

Quarterly Operating Cash Flows
 
$
285,203

 
$
85,539

TTM Return on Equity
 
19
%
 
20
%
Quarterly Depreciation Expense
 
$
9,677

 
$
7,688

Quarterly Capital Expenditures
 
$
17,749

 
$
7,409

Inventory MSOH (1): Altera
 
3.1

 
3.1

Inventory MSOH (1): Distribution
 
0.6

 
0.6

Cash Conversion Cycle (Days)
 
140

 
130

Turns
 
37
%
 
38
%
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
 
September 28,
2012
 
June 29,
2012
 
September 30,
2011
 
Sequential Change
 
Year-
Over-Year
Change
Geography
 
 
 
 
 
 
 
 
 
Americas
19
%
 
17
%
 
16
%
 
15
 %
 
6
 %
Asia Pacific
43
%
 
46
%
 
44
%
 
1
 %
 
(6
)%
EMEA
25
%
 
23
%
 
25
%
 
18
 %
 
(5
)%
Japan
13
%
 
14
%
 
15
%
 
(4
)%
 
(16
)%
Net Sales
100
%
 
100
%
 
100
%
 
6
 %
 
(5
)%
Product Category
 
 
 
 
 
 
 
 
 
New
31
%
 
31
%
 
27
%
 
8
%
 
8
 %
Mainstream
32
%
 
30
%
 
32
%
 
13
%
 
(8
)%
Mature and Other
37
%
 
39
%
 
41
%
 
1
%
 
(12
)%
Net Sales
100
%
 
100
%
 
100
%
 
6
%
 
(5
)%
Vertical Market
 
 
 
 
 
 
 
 
 
Telecom & Wireless
45
%
 
45
%
 
42
%
 
7
%
 
2
 %
Industrial Automation, Military & Automotive
20
%
 
19
%
 
22
%
 
11
%
 
(11
)%
Networking, Computer & Storage
17
%
 
18
%
 
20
%
 
5
%
 
(21
)%
Other
18
%
 
18
%
 
16
%
 
3
%
 
3
 %
Net Sales
100
%
 
100
%
 
100
%
 
6
%
 
(5
)%
FPGAs and CPLDs
 
 
 
 
 
 
 
 
 
FPGA
82
%
 
85
%
 
82
%
 
4
%
 
(5
)%
CPLD
9
%
 
9
%
 
9
%
 
4
%
 
(9
)%
Other Products
9
%
 
6
%
 
9
%
 
45
%
 
(6
)%
Net Sales
100
%
 
100
%
 
100
%
 
6
%
 
(5
)%

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™, Excalibur™ devices, configuration and other devices, intellectual property cores, and software and other tools.






Business Outlook for the Fourth Quarter 2012

Sales and Income Statement
Sequential Sales
Down 6% to 10%
Gross Margin
69% - 70%
Research and Development
$93 to 95 million
SG&A
$74 to 75 million
Tax Rate
13% +/- .5%
Diluted Share Count
Approximately 324 million
Turns
Low-40's
MSOH
High 3's
        
Vertical Market                         
Telecom & Wireless
Telecom and Wireless both down
Industrial Automation, Military & Automotive
Down slightly overall with all vertical markets weak
Networking, Computer & Storage
Networking, Computer and Storage all down
Other
Down

Third 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.
 
Fourth Quarter Update and 2013 Guidance
 
Altera's fourth quarter business update will be issued in a press release available after the market close on December 4, 2012. The release will also include Altera financial guidance for 2013. A conference call with the investment community will take place at 1:45 PM Pacific time on December 4, 2012, to review and comment on 2013 guidance.

 






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 and our product developments at the 20 nm process node and their effect on the magnitude of our market opportunity, 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
 
Nine Months Ended
 
 
September 28,
2012
 
June 29,
2012
 
September 30,
2011
 
September 28,
2012
 
September 30,
2011
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
495,010

 
$
464,831

 
$
522,474

 
$
1,343,595

 
$
1,606,671

Cost of sales
 
152,007

 
141,315

 
166,938

 
408,156

 
473,565

Gross margin
 
343,003

 
323,516

 
355,536

 
935,439

 
1,133,106

Operating expense
 
 
 
 
 
 
 
 
 
 
Research and development expense
 
91,606

 
92,356

 
80,771

 
266,259

 
235,438

Selling, general, and administrative expense
 
74,243

 
71,796

 
69,345

 
215,824

 
208,550

Total operating expense
 
165,849

 
164,152

 
150,116

 
482,083

 
443,988

Operating margin (1)
 
177,154

 
159,364

 
205,420

 
453,356

 
689,118

Compensation expense (gain) — deferred compensation plan
 
3,274

 
(2,313
)
 
(6,642
)
 
6,697

 
(4,926
)
(Gain)/loss on deferred compensation plan securities
 
(3,274
)
 
2,313

 
6,642

 
(6,697
)
 
4,926

Interest income and other
 
(2,775
)
 
(1,415
)
 
(663
)
 
(5,997
)
 
(2,505
)
Loss/(gain) reclassified from other comprehensive income
 
108

 
(69
)
 
—

 
(63
)
 
—

Interest expense
 
2,333

 
2,116

 
806

 
5,386

 
2,717

Income before income taxes
 
177,488

 
158,732

 
205,277

 
454,030

 
688,906

Income tax expense (benefit)
 
19,999

 
(3,947
)
 
19,873

 
18,028

 
64,806

Net income
 
157,489

 
162,679

 
185,404

 
436,002

 
624,100

 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income:
 
 
 
 
 
 
 
 
 
 
Unrealized gain on investments
 
 
 
 
 
 
 
 
 
 
Unrealized holding gain on investments arising during period, net of tax of $43, $8 and $108
 
3,620

 
2,799

 
—

 
6,723

 
—

Less: Reclassification adjustments for gain on investments included in net income, net of tax of $1, $1 and $6
 
(41
)
 
(3
)
 
—

 
(64
)
 
—

 
 
3,579

 
2,796

 
—

 
6,659

 
—

Unrealized gain on derivatives
 
 
 
 
 
 
 
 
 
 
Unrealized (loss)/gain on derivatives arising during period, net of tax of $6, $34 and $36
 
(10
)
 
63

 
—

 
67

 
—

Less: Reclassification adjustments for loss/(gain) on derivatives included in net income, net of tax of $53, $23 and $2
 
97

 
(42
)
 
—

 
5

 
—

 
 
87

 
21

 
—

 
72

 
—

Other comprehensive income
 
3,666

 
2,817

 
—

 
6,731

 
—

Comprehensive income
 
$
161,155

 
$
165,496

 
$
185,404

 
$
442,733

 
$
624,100

 
 
 
 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
 

 
 
Basic
 
$
0.49

 
$
0.51

 
$
0.58

 
$
1.36

 
$
1.94

Diluted
 
$
0.49

 
$
0.50

 
$
0.57

 
$
1.34

 
$
1.90

 
 
 
 
 
 
 
 
 

 
 
Shares used in computing per share amounts:
 
 
 
 
 
 
 
 

 
 
Basic
 
319,870

 
321,218

 
321,745

 
321,200

 
322,012

Diluted
 
323,560

 
325,285

 
327,044

 
325,275

 
328,264

 
 
 
 
 
 
 
 
 

 
 
Cash dividends per common share
 
$
0.10

 
$
0.08

 
$
0.08

 
$
0.26

 
$
0.20

 
 
 
 
 
 
 
 
 
 
 
Tax rate
 
11.3
%
 
(2.5
)%
 
9.7
%
 
4.0
%
 
9.4
%
% of Net sales:
 
 
 
 
 
 
 
 
 
 
Gross margin
 
69.3
%
 
69.6
 %
 
68.0
%
 
69.6
%
 
70.5
%
Research and development
 
18.5
%
 
19.9
 %
 
15.5
%
 
19.8
%
 
14.7
%
Selling, general, and administrative
 
15.0
%
 
15.4
 %
 
13.3
%
 
16.1
%
 
13.0
%
Operating margin(1)
 
35.8
%
 
34.3
 %
 
39.3
%
 
33.7
%
 
42.9
%
Net income
 
31.8
%
 
35.0
 %
 
35.5
%
 
32.5
%
 
38.8
%





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 ("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
 
Nine Months Ended
(In thousands, except per share amounts)
 
September 28,
2012
 
June 29,
2012
 
September 30,
2011
 
September 28,
2012
 
September 30,
2011
Operating margin (non-GAAP)
 
$
177,154

 
$
159,364

 
$
205,420

 
$
453,355

 
$
689,118

Compensation (gain) expense — deferred compensation plan
 
3,274

 
(2,313
)
 
(6,642
)
 
6,697

 
(4,926
)
Income from operations (GAAP)
 
$
173,880

 
$
161,677

 
$
212,062

 
$
446,658

 
$
694,044






ALTERA CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except par value amount)
 
September 28,
2012
 
December 31,
2011
 
 
 
 
 
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
2,849,829

 
$
3,371,933

Short-term investments
 
144,195

 
65,222

Total cash, cash equivalents, and short-term investments
 
2,994,024

 
3,437,155

Accounts receivable, net
 
348,273

 
232,273

Inventories
 
157,848

 
122,279

Deferred income taxes — current
 
65,223

 
58,415

Deferred compensation plan — marketable securities
 
58,151

 
54,041

Deferred compensation plan — restricted cash equivalents
 
18,524

 
17,938

Other current assets
 
42,134

 
52,710

Total current assets
 
3,684,177

 
3,974,811

Property and equipment, net
 
200,172

 
171,721

Long-term investments
 
685,945

 
74,033

Deferred income taxes — non-current
 
23,047

 
26,629

Other assets, net
 
49,519

 
35,074

Total assets
 
$
4,642,860

 
$
4,282,268

 
 
 
 
 
Liabilities and stockholders' equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
45,589

 
$
52,154

Accrued liabilities
 
39,183

 
34,029

Accrued compensation and related liabilities
 
43,563

 
78,181

Deferred compensation plan obligations
 
76,675

 
71,979

Deferred income and allowances on sales to distributors
 
400,351

 
279,876

Credit facility
 
—

 
500,000

   Total current liabilities
 
605,361

 
1,016,219

Income taxes payable — non-current
 
261,843

 
263,423

Long-term debt
 
500,000

 
—

Other non-current liabilities
 
9,496

 
8,730

 Total liabilities
 
1,376,700

 
1,288,372

Stockholders' equity:
 
 
 
 
Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 320,563 shares at September 28, 2012 and 322,054 shares at December 31, 2011
 
321

 
322

Capital in excess of par value
 
1,107,614

 
1,050,752

Retained earnings
 
2,151,627

 
1,942,955

Accumulated other comprehensive income (loss)
 
6,598

 
(133
)
Total stockholders' equity
 
3,266,160

 
2,993,896

Total liabilities and stockholders' equity
 
$
4,642,860

 
$
4,282,268

 
 
 
 
 





ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
Nine Months Ended
 
September 28,
2012
 
September 30,
2011
 
 
 
 
Cash Flows from Operating Activities:
 
 
 
Net income
$
436,002

 
$
624,100

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
26,426

 
23,443

Stock-based compensation
70,790

 
59,983

Deferred income tax benefit
(3,367
)
 
(9,549
)
Tax effect of employee stock plans
14,381

 
26,077

Excess tax benefit from employee stock plans
(20,790
)
 
(22,959
)
Changes in assets and liabilities:
 
 
 
Accounts receivable, net
(116,000
)
 
(23,228
)
Inventories
(35,569
)
 
12,496

Other assets
5,478

 
47,986

Accounts payable and other liabilities
(34,670
)
 
(40,004
)
Deferred income and allowances on sales to distributors
120,475

 
11,115

Income taxes payable
(650
)
 
30,122

Deferred compensation plan obligations
(2,001
)
 
(345
)
Net cash provided by operating activities
460,505

 
739,237

Cash Flows from Investing Activities:
 
 
 
          Purchases of property and equipment
(53,712
)
 
(23,178
)
          Sales of deferred compensation plan securities, net
2,001

 
345

          Purchases of available-for-sale securities
(819,662
)
 
(130,146
)
          Proceeds from sale and maturity of available-for-sale securities
135,650

 
1,750

          Purchases of intangible assets
(2,280
)
 
—

          Purchases of other investments
(4,510
)
 
—

Net cash used in investing activities
(742,513
)
 
(151,229
)
Cash Flows from Financing Activities:
 
 
 
          Proceeds from issuance of common stock through various stock plans
37,514

 
93,619

          Shares withheld for employee taxes
(30,529
)
 
(31,122
)
          Payment of dividends to stockholders
(83,570
)
 
(64,328
)
          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
(179,057
)
 
(197,018
)
          Excess tax benefit from employee stock plans
20,790

 
22,959

Net cash used in financing activities
(240,096
)
 
(175,890
)
Net (decrease) increase in cash and cash equivalents
(522,104
)
 
412,118

Cash and cash equivalents at beginning of period
3,371,933

 
2,765,196

Cash and cash equivalents at end of period
$
2,849,829

 
$
3,177,314




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