ALTERA CORP - FORM 8-K - EX-99.1 - EXHIBIT - October 22, 2013

Attached files

file filename
8-K - PRESS RELEASE - ALTERA CORPa2013q38-ker.htm










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 22, 2013 — Altera Corporation (NASDAQ: ALTR) today announced third quarter sales of $445.9 million, up 6 percent from the second quarter of 2013 and down 10 percent from the third quarter of 2012. Third quarter net income was $119.4 million, $0.37 per diluted share, compared with net income of $101.5 million, $0.31 per diluted share, in the second quarter of 2013 and $157.5 million, $0.49 per diluted share, in the third quarter of 2012.

Year-to-date cash flow from operating activities was $459.4 million. Altera repurchased approximately 161 thousand shares of its common stock during the quarter at a cost of $5.3 million.

Altera's board of directors has declared a quarterly cash dividend of $0.15 per share, to be paid on December 2, 2013 to stockholders of record on November 12, 2013.

"Sales improved from second quarter levels, with our new products, led by our 28 nm FPGAs, as growth leaders. We expect this new product growth momentum to carry over into the December quarter," said John Daane, president, chief executive officer, and chairman of the board. "We have taped out our first Stratix 10 test chip, which will be manufactured on Intel's 14 nm FinFET process. Coupling this process with our next generation architectural innovations produces a substantial step up in performance and density from our current FPGAs and offers compelling benefits to our customers versus competitive offerings."


 



1



Several recent accomplishments mark the company's continuing progress:

•
Altera and Micron Technology, Inc. have jointly demonstrated successful interoperability between Altera Stratix® V FPGAs and Micron’s Hybrid Memory Cube (HMC). This new capability will be delivered with Altera’s Generation 10 portfolio, which includes both Stratix 10 and Arria® 10 FPGAs and SoCs. HMC addresses the limitations imposed by conventional memory technology, and provides ultra-high system performance with significantly lower power-per-bit. HMC delivers up to 15 times the bandwidth of a traditional DDR3 module and uses 70 percent less energy and 90 percent less space than existing technologies.

Arria 10 FPGAs and SoCs will be the first device families deployed in the Generation 10 portfolio and will be the first devices to support HMC technology in volume production. Leveraging an enhanced architecture optimized for TSMC’s 20 nm process, Arria 10 FPGAs and SoCs will use HMC to extend the device families' performance benefits of both 15 percent higher core performance than today’s highest performance Stratix V FPGAs and up to 40 percent lower power compared to the lowest power Arria V midrange FPGAs.

Stratix 10 FPGAs and SoCs will enable the most advanced, highest performance applications across communications, military, broadcast and compute and storage markets. These high-performance applications often require the highest memory bandwidth, which drives the need for an HMC-ready architecture. Leveraging Intel’s 14 nm Tri-Gate process and an enhanced high-performance architecture that integrates with HMC technology, Stratix 10 FPGAs and SoCs will enable system solutions with an operating frequency over one gigahertz, and two times the core performance of current high-end 28 nm FPGAs. Stratix 10 devices also will allow customers to achieve up to a 70 percent reduction in power consumption at performance levels equivalent to Altera's previous generation.

•
Altera is now shipping production-qualified Cyclone® V SoCs and engineering samples of its Arria V SoCs. These devices benefit from density, architectural, productivity and processor performance leadership, which enables Altera SoCs to target a very wide range of applications. In addition, Altera SoCs provide embedded developers with the highest productivity development tools. Featuring increased processor peak clock frequencies, these devices are the FPGA industry’s highest performing SoCs. Altera offers the industry’s broadest range of densities with its 28 nm SoCs, ranging from 25K logic elements (LE) up to 460K LE. This density range allows Altera SoCs to be integrated into a variety of embedded systems, ranging from cost-sensitive industrial automation and automotive driver assist systems to applications that require higher-performance, including remote radio units, 10G/40G line cards and broadcast studio equipment.

•
Altera is collaborating with the China Mobile Research Institute (CMRI) to develop next-generation wireless networks based on the Centralized Radio Access Network (C-RAN) architecture. By centralizing the baseband processing of a large geographical area into the cloud, the cloud-based C-RAN architecture enables operators like China Mobile to reduce deployment and operating costs for their next-generation wireless infrastructure. Altera and CMRI are working together to debug and verify next-generation wireless systems based on the C-RAN architecture by leveraging Altera’s FPGA technology. Collaborating with the world’s largest cellular operator on C-RAN architecture development enables Altera to more effectively align its FPGAs, software and IP to meet next-generation wireless infrastructure requirements.

2


SELECTED THIRD QUARTER REVENUE AND RELATED RESULTS

Key New Product Devices
 
Sequential Comparisons
Stratix V
 
30
 %
Stratix IV
 
3
 %
Arria II
 
16
 %
Arria V
 
108
 %
Cyclone IV
 
13
 %
Cyclone V
 
73
 %
HardCopy IV
 
(25
)%
Enpirion PowerSoCs
 
100
 %


($ in thousands) Key Ratios & Information
 
September 27, 2013
 
June 28, 2013
Current Ratio
 
6:1

 
6:1

Liabilities/Equity
 
1:2

 
1:2

Quarterly Operating Cash Flows
 
$
245,406

 
$
64,565

TTM Return on Equity
 
14
%
 
15
%
Quarterly Depreciation Expense
 
$
10,772

 
$
10,285

Quarterly Capital Expenditures
 
$
8,633

 
$
7,221

Inventory MSOH (1): Altera
 
3.4

 
3.0

Inventory MSOH (1): Distribution
 
0.6

 
0.5

Cash Conversion Cycle (Days)
 
158

 
149

Turns
 
39
%
 
49
%
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
 
September 27,
2013
 
June 28,
2013
 
September 28,
2012
 
Sequential Change
 
Year-
Over-Year
Change
Geography
 
 
 
 
 
 
 
 
 
Americas
18
%
 
17
%
 
19
%
 
15
 %
 
(11
)%
Asia Pacific
39
%
 
39
%
 
43
%
 
6
 %
 
(18
)%
EMEA
28
%
 
28
%
 
25
%
 
5
 %
 
(1
)%
Japan
15
%
 
16
%
 
13
%
 
(3
)%
 
2
 %
Net Sales
100
%
 
100
%
 
100
%
 
6
 %
 
(10
)%
Product Category
 
 
 
 
 
 
 
 
 
New
44
%
 
41
%
 
31
%
 
16
 %
 
27
 %
Mainstream
26
%
 
28
%
 
32
%
 
0
 %
 
(25
)%
Mature and Other
30
%
 
31
%
 
37
%
 
(1
)%
 
(28
)%
Net Sales
100
%
 
100
%
 
100
%
 
6
 %
 
(10
)%
Vertical Market
 
 
 
 
 
 
 
 
 
Telecom & Wireless
41
%
 
42
%
 
45
%
 
3
 %
 
(18
)%
Industrial Automation, Military & Automotive
23
%
 
22
%
 
20
%
 
11
 %
 
1
 %
Networking, Computer & Storage
19
%
 
18
%
 
17
%
 
13
 %
 
0
 %
Other
17
%
 
18
%
 
18
%
 
(1
)%
 
(12
)%
Net Sales
100
%
 
100
%
 
100
%
 
6
 %
 
(10
)%
FPGAs and CPLDs
 
 
 
 
 
 
 
 
 
FPGA
82
%
 
83
%
 
82
%
 
4
%
 
(11
)%
CPLD
9
%
 
9
%
 
9
%
 
12
%
 
(3
)%
Other Products
9
%
 
8
%
 
9
%
 
13
%
 
(7
)%
Net Sales
100
%
 
100
%
 
100
%
 
6
%
 
(10
)%

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, 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.



4


Business Outlook for the Fourth Quarter 2013

Sales and Income Statement
Sequential Sales
Down 3% to Up 1%
Gross Margin
68.5% +/- .5%
Research and Development
$110 to $111 million
SG&A
$82 to $83 million
Tax Rate
11% to 12%
Diluted Share Count
Approximately 323 million (assumes no share repurchases)
Turns
Mid 40's
MSOH
Low 4's
        
Vertical Market                         
Telecom & Wireless
Flat
Industrial Automation, Military & Automotive
Flat
Networking, Computer & Storage
Up
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.


 

 



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, but are not limited to, statements regarding new product growth momentum, the competitive advantage related to the use of Intel's 14 nm process, product performance parameters, new product sales momentum, 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 from those currently anticipated, due to a number of factors, including without limitation, current global economic conditions, including uncertainty arising from United States budget and debt ceiling legislation, 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, 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.

Mobile Device Investor Information

Altera now provides highlights of its investor relations web page optimized for mobile users. Investors can equip their mobile devices with this new capability by linking to
http://phx.corporate-ir.net/Mobile.view?c=83265.

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. Follow Altera via Facebook, Twitter, LinkedIn, Google+ and RSS, and subscribe to product update emails and newsletters. Visit www.altera.com.

###

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 COMPREHENSIVE INCOME
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
(In thousands, except per share amounts)
 
September 27,
2013
 
June 28,
2013
 
September 28,
2012
 
September 27,
2013
 
September 28,
2012
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
445,945

 
$
421,759

 
$
495,010

 
$
1,278,205

 
$
1,343,595

Cost of sales
 
141,525

 
135,104

 
152,007

 
402,712

 
408,156

Gross margin
 
304,420

 
286,655

 
343,003

 
875,493

 
935,439

Operating expense
 
 
 
 
 
 
 
 
 
 
Research and development expense
 
95,336

 
95,489

 
91,393

 
278,542

 
265,619

Selling, general, and administrative expense
 
78,907

 
77,869

 
74,243

 
235,376

 
215,824

Amortization of acquisition-related intangible assets
 
1,846

 
915

 
213

 
2,974

 
640

Total operating expense
 
176,089

 
174,273

 
165,849

 
516,892

 
482,083

Operating margin (1)
 
128,331

 
112,382

 
177,154

 
358,601

 
453,356

Compensation expense/(benefit) — deferred compensation plan
 
3,462

 
(160
)
 
3,274

 
6,724

 
6,697

(Gain)/loss on deferred compensation plan securities
 
(3,462
)
 
160

 
(3,274
)
 
(6,724
)
 
(6,697
)
Interest income and other
 
(2,214
)
 
(2,778
)
 
(2,775
)
 
(6,651
)
 
(5,997
)
(Gain)/loss reclassified from other comprehensive income
 
(33
)
 
(42
)
 
108

 
(129
)
 
(63
)
Interest expense
 
2,511

 
3,389

 
2,333

 
8,365

 
5,386

Income before income taxes
 
128,067

 
111,813

 
177,488

 
357,016

 
454,030

Income tax expense
 
8,635

 
10,304

 
19,999

 
15,885

 
18,028

Net income
 
119,432

 
101,509

 
157,489

 
341,131

 
436,002

 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income/(loss):
 
 
 
 
 
 
 
 
 
 
Unrealized gain/(loss) on investments:
 
 
 
 
 
 
 
 
 
 
Unrealized holding gain/(loss) on investments arising during period, net of tax of $30, ($47), $43, ($12) and $108
 
2,419

 
(9,031
)
 
3,620

 
(6,613
)
 
6,723

Less: Reclassification adjustments for gain on investments included in net income, net of tax of $11, $5, $1, $21 and $6
 
(22
)
 
(37
)
 
(41
)
 
(108
)
 
(64
)
 
 
2,397

 
(9,068
)
 
3,579

 
(6,721
)
 
6,659

Unrealized (loss)/gain on derivatives:
 
 
 
 
 
 
 
 
 
 
Unrealized (loss)/gain on derivatives arising during period, net of tax of ($6) and $36
 
—

 
—

 
(10
)
 
—

 
67

Less: Reclassification adjustments for loss on derivatives included in net income, net of tax of $53 and $2
 
—

 
—

 
97

 
—

 
5

 
 
—

 
—

 
87

 
—

 
72

Other comprehensive income/(loss)
 
2,397

 
(9,068
)
 
3,666

 
(6,721
)
 
6,731

Comprehensive income
 
$
121,829

 
$
92,441

 
$
161,155

 
$
334,410

 
$
442,733

 
 
 
 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.37

 
$
0.32

 
$
0.49

 
$
1.07

 
$
1.36

Diluted
 
$
0.37

 
$
0.31

 
$
0.49

 
$
1.05

 
$
1.34

 
 
 
 
 
 
 
 
 
 
 
Shares used in computing per share amounts:
 
 
 
 
 
 
 
 
 
 
Basic
 
320,445

 
320,472

 
319,870

 
320,266

 
321,200

Diluted
 
323,505

 
323,527

 
323,560

 
323,355

 
325,275

 
 
 
 
 
 
 
 
 
 
 
Dividends per common share
 
$
0.15

 
$
0.10

 
$
0.10

 
$
0.35

 
$
0.26

 
 
 
 
 
 
 
 
 
 
 
Tax rate
 
6.7
%
 
9.2
%
 
11.3
%
 
4.4
%
 
4.0
%
% of Net sales:
 
 
 
 
 
 
 
 
 
 
Gross margin
 
68.3
%
 
68.0
%
 
69.3
%
 
68.5
%
 
69.6
%
Research and development
 
21.4
%
 
22.6
%
 
18.5
%
 
21.8
%
 
19.8
%
Selling, general, and administrative
 
17.7
%
 
18.5
%
 
15.0
%
 
18.4
%
 
16.1
%
Operating margin(1)
 
28.8
%
 
26.6
%
 
35.8
%
 
28.1
%
 
33.7
%
Net income
 
26.8
%
 
24.1
%
 
31.8
%
 
26.7
%
 
32.5
%


7


Notes:
 
 
 
 
 
 
 
 
 
 
(1) 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
 
Nine Months Ended
(In thousands, except per share amounts)
 
September 27,
2013
 
June 28,
2013
 
September 28,
2012
 
September 27,
2013
 
September 28,
2012
Operating margin (non-GAAP)
 
$
128,331

 
$
112,382

 
$
177,154

 
$
358,601

 
$
453,356

Compensation expense/(benefit) — deferred compensation plan
 
3,462

 
(160
)
 
3,274

 
6,724

 
6,697

Income from operations (GAAP)
 
$
124,869

 
$
112,542

 
$
173,880

 
$
351,877

 
$
446,659



8


ALTERA CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except par value amount)
 
September 27,
2013
 
December 31,
2012
 
 
 
 
 
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
2,956,085

 
$
2,876,627

Short-term investments
 
151,159

 
140,958

Total cash, cash equivalents, and short-term investments
 
3,107,244

 
3,017,585

Accounts receivable, net
 
436,421

 
323,708

Inventories
 
158,441

 
152,721

Deferred income taxes — current
 
62,575

 
59,049

Deferred compensation plan — marketable securities
 
58,402

 
60,321

Deferred compensation plan — restricted cash equivalents
 
20,270

 
17,116

Other current assets
 
30,479

 
49,852

Total current assets
 
3,873,832

 
3,680,352

Property and equipment, net
 
198,642

 
206,148

Long-term investments
 
713,651

 
704,758

Deferred income taxes — non-current
 
13,548

 
17,082

Goodwill
 
93,073

 
2,329

Acquisition-related intangible assets, net
 
86,500

 
4,874

Other assets, net
 
40,518

 
42,285

Total assets
 
$
5,019,764

 
$
4,657,828

 
 
 
 
 
Liabilities and stockholders' equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
52,224

 
$
50,036

Accrued liabilities
 
37,525

 
29,005

Accrued compensation and related liabilities
 
43,544

 
40,606

Deferred compensation plan obligations
 
78,672

 
77,437

Deferred income and allowances on sales to distributors
 
444,705

 
345,993

Total current liabilities
 
656,670

 
543,077

Income taxes payable — non-current
 
266,395

 
272,000

Long-term debt
 
500,000

 
500,000

Other non-current liabilities
 
8,916

 
9,304

Total liabilities
 
1,431,981

 
1,324,381

Stockholders' equity:
 
 
 
 
Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 321,105 shares at September 27, 2013 and 319,564 shares at December 31, 2012
 
321

 
320

Capital in excess of par value
 
1,214,586

 
1,122,555

Retained earnings
 
2,374,005

 
2,204,980

Accumulated other comprehensive (loss)/ income
 
(1,129
)
 
5,592

Total stockholders' equity
 
3,587,783

 
3,333,447

Total liabilities and stockholders' equity
 
$
5,019,764

 
$
4,657,828

 
 
 
 
 

9


ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
 
Nine Months Ended
 (In thousands)
 
September 27,
2013
 
September 28,
2012
 
 
 
 
 
Cash Flows from Operating Activities:
 
 
 
 
Net income
 
$
341,131

 
$
436,002

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
34,256

 
25,786

Amortization of acquisition-related intangible assets
 
2,974

 
640

Stock-based compensation
 
73,011

 
70,790

Net gain on sale of available-for-sale securities
 
(129
)
 
—

Amortization of investments, net
 
2,575

 
—

Deferred income tax benefit
 
(5,629
)
 
(3,367
)
Tax effect of employee stock plans
 
5,405

 
14,381

Excess tax benefit from employee stock plans
 
(4,165
)
 
(20,790
)
Changes in assets and liabilities, net of effects of acquisitions:
 
 
 
 
Accounts receivable, net
 
(111,231
)
 
(116,000
)
Inventories
 
(2,494
)
 
(35,569
)
Other assets
 
29,517

 
5,478

Accounts payable and other liabilities
 
12,509

 
(34,670
)
Deferred income and allowances on sales to distributors
 
95,961

 
120,475

Income taxes payable
 
(8,753
)
 
(650
)
Deferred compensation plan obligations
 
(5,489
)
 
(2,001
)
Net cash provided by operating activities
 
459,449

 
460,505

Cash Flows from Investing Activities:
 
 
 
 
Purchases of property and equipment
 
(31,216
)
 
(53,712
)
Proceeds from sales of deferred compensation plan securities, net
 
5,489

 
2,001

Purchases of available-for-sale securities
 
(258,809
)
 
(819,662
)
Proceeds from sale and maturity of available-for-sale securities
 
228,292

 
135,650

Acquisitions, net of cash acquired
 
(145,321
)
 
—

Purchases of intangible assets
 
—

 
(2,280
)
Purchases of other investments
 
(2,101
)
 
(4,510
)
Net cash used in investing activities
 
(203,666
)
 
(742,513
)
Cash Flows from Financing Activities:
 
 
 
 
Proceeds from issuance of common stock through various stock plans
 
38,748

 
37,514

Shares withheld for employee taxes
 
(24,787
)
 
(30,529
)
Payment of dividends to stockholders
 
(112,175
)
 
(83,570
)
Payment of debt assumed in acquisitions
 
(22,000
)
 
—

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
 
(60,276
)
 
(179,057
)
Excess tax benefit from employee stock plans
 
4,165

 
20,790

Net cash used in financing activities
 
(176,325
)
 
(240,096
)
Net increase (decrease) in cash and cash equivalents
 
79,458

 
(522,104
)
Cash and cash equivalents at beginning of period
 
2,876,627

 
3,371,933

Cash and cash equivalents at end of period
 
$
2,956,085

 
$
2,849,829


10

ALTERA CORP Reports