Altera Announces Fourth Quarter Results Sales Up Strongly
Fourth quarter sales of $365.0 million, up 27 percent from the third quarter of 2009 and up 16 percent from the fourth quarter of 2008.
SAN JOSE, Calif. –(Business Wire)– Jan 26, 2010 Altera Corporation (NASDAQ:ALTR) today announced fourth quarter sales of $365.0 million, up 27 percent from the third quarter of 2009 and up 16 percent from the fourth quarter of 2008. New product sales increased 30 percent sequentially. Fourth quarter net income was $103.0 million, $0.34 per diluted share, compared with net income of $56.7 million, $0.19 per diluted share, in the third quarter of 2009 and $83.0 million, $0.28 per diluted share, in the fourth quarter of 2008.
Sales for 2009 were $1.20 billion, a decrease of 13 percent compared with $1.37 billion in 2008. Net income was $251.1 million, $0.84 per diluted share, versus net income of $359.7 million, $1.18 per diluted share, in 2008.
For the year, cash flow from operating activities was $372.7 million. Altera ended 2009 with $1.5 billion in cash and short-term investments, an increase from $1.2 billion at 2008 year end.
Altera’s board of directors has declared a quarterly cash dividend of $0.05 per share payable on March 1, 2010 to shareholders of record on February 10, 2010.
“The fourth quarter produced extraordinary growth driven by customer program ramps and better end demand across all of our markets,” said John Daane, president, chief executive officer, and chairman of the board. “Our new products were the growth leaders in a quarter that saw sequential improvements across all product and market segment categories. We believe that in 2010 our 40-nm product leadership will create an additional growth driver for the company as customers shift from the prototype stage to production-based demand.”
Several recent accomplishments mark the company’s continuing progress.
- Altera is now shipping production-qualified 40-nm Stratix® IV GT FPGAs, the industry’s first FPGAs to feature integrated 11.3-Gbps transceivers. Stratix IV GT FPGAs are the only single-chip devices available today that meet the high-speed bandwidth requirements for next-generation framer, MAC, bridging and switching applications for 100-Gigabit Ethernet and 100-Gigabit Optical Transport Networks. Five of the top seven advanced optical transport suppliers have now selected Stratix IV GT FPGAs for their 100G development. Altera’s 100G solutions include production silicon, 100G intellectual property, 100G reference designs and development boards supporting 100G applications.
- Altera’s Stratix IV GT FPGAs were recognized by EDN China with its prestigious “Best Product Award.” EDN China annually honors the products and people that shape the electronics industry. Finalists are nominated by a panel of judges that includes technical experts from industry, universities and institutes, as well as EDN China editors. The final award winners are selected by EDN China’s 40,000 readers and website users. Altera’s Stratix IV GT FPGAs received the most votes and won EDN China’s “Best Product Award” in the programmable logic devices category.
- Altera’s Arria® II GX FPGAs were awarded the “Embedded System Editor’s Choice Award” as the Best FPGA Product of the Year 2009 by China’s Electronic Engineering & Product World (EEPW) Magazine. The award was presented during the Electronic Forum held at China’s Tsinghua University in Beijing. The award is based on a combination of a judging committee made up of EEPW’s editorial team, experts and engineers from industry associations and online votes.
- Expanding on the success of the Cyclone® FPGA series and extending its transceiver leadership, the new Cyclone IV FPGA family has been announced. This new FPGA family responds to increased low-cost bandwidth needs driven by the demand for mobile video, voice, and data access, and the hunger for high-quality 3D images. With low power consumption and small packages, these devices address cost-sensitive, small form-factor applications in the wireless, wireline, broadcast, industrial and consumer markets. With a focus on low cost, the smallest Cyclone IV GX device is the industry’s smallest FPGA with transceivers. Production shipments of the first Cyclone IV devices will begin in the first quarter of 2010.
- Altera has released its Quartus® II software version 9.1, the industry’s number-one software in performance and productivity for CPLD, FPGA and HardCopy® ASIC designs. New features and enhancements within Quartus II software v9.1 reduce compile times 20 percent versus the previous software release, while continuing to deliver on average 2X to 3X faster compile times compared to competing high-density 40-nm and 65-nm designs. Quartus II software v9.1 builds upon the productivity advantage Altera consistently delivers with its design software. The software provides the industry’s fastest compile times for high-end FPGAs, averaging a 20 percent reduction annually over the past five years.
Business Outlook for the First Quarter 2010
| Sequential Sales Growth | Up 5 to 10% | |
| Gross Margin | 67.5% to 68.5% | |
| Research and Development | $66 to 68 million | |
| SG&A | $59 to 61 million | |
| Tax Rate | 14 to 16% |
Conference Call and Quarterly Update:
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 webcast 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.
Altera’s first quarter business update will be issued in a press release available after the market close on March 3, 2010.
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 any projection of revenue, gross margin, expense or other financial items discussed in the Business Outlook section of this press release, and the contribution from 40-nm FPGAs to 2010 growth. 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, vertical market mix, market acceptance of the company’s products, product introduction schedules, the rate of growth of the company’s new products including the Arria® GX, Arria II GX, Cyclone® II, Cyclone III, Stratix® II, Stratix II GX, Stratix III, Stratix IV, Stratix IV GX, Stratix IV GT, MAX® II and HardCopy® device families, changes in the mix of our business between prototyping and production-based demand, 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, The Programmable Solutions Company, the stylized Altera logo, specific device designations and all other words that are identified as trademarks and/or service marks are, unless noted otherwise, the trademarks and service marks of Altera Corporation in the U.S. and other countries. All other product or service names are the property of their respective holder.
| ALTERA CORPORATION | |||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| THREE MONTHS ENDED | YEARS ENDED | ||||||||||||||||||||
| December 31, | September 25, | December 31, | December 31, | December 31, | |||||||||||||||||
| 2009 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||
| Net sales | $ | 364,998 | $ | 286,612 | $ | 314,544 | $ | 1,195,413 | $ | 1,367,224 | |||||||||||
| Cost of sales(1) | 115,281 | 93,686 | 96,699 | 396,584 | 449,750 | ||||||||||||||||
| Gross margin | 249,717 | 192,926 | 217,845 | 798,829 | 917,474 | ||||||||||||||||
| Operating expenses | |||||||||||||||||||||
| Research and development(1) | 66,940 | 70,097 | 68,846 | 260,208 | 257,717 | ||||||||||||||||
| Selling, general, and administrative(1) | 63,404 | 56,332 | 62,757 | 234,074 | 255,391 | ||||||||||||||||
| Total operating expenses | 130,344 | 126,429 | 131,603 | 494,282 | 513,108 | ||||||||||||||||
| Operating margin(2) | 119,373 | 66,497 | 86,242 | 304,547 | 404,366 | ||||||||||||||||
| Compensation expense (benefit) – deferred compensation plan | 2,629 | 5,538 | (10,184 | ) | 11,776 | (18,106 | ) | ||||||||||||||
| (Gain) loss on deferred compensation plan securities | (2,629 | ) | (5,538 | ) | 10,184 | (11,776 | ) | 18,106 | |||||||||||||
| Interest income and other | (248 | ) | (740 | ) | (6,118 | ) | (6,083 | ) | (30,300 | ) | |||||||||||
| Interest expense | 1,208 | 1,225 | 4,456 | 5,092 | 15,492 | ||||||||||||||||
| Income before income taxes | 118,413 | 66,012 | 87,904 | 305,538 | 419,174 | ||||||||||||||||
| Income tax expense | 15,439 | 9,308 | 4,863 | 54,476 | 59,523 | ||||||||||||||||
| Net income | $ | 102,974 | $ | 56,704 | $ | 83,041 | $ | 251,062 | $ | 359,651 | |||||||||||
| Net income per share: | |||||||||||||||||||||
| Basic | $ | 0.35 | $ | 0.19 | $ | 0.28 | $ | 0.85 | $ | 1.20 | |||||||||||
| Diluted | $ | 0.34 | $ | 0.19 | $ | 0.28 | $ | 0.84 | $ | 1.18 | |||||||||||
| Shares used in computing per share amounts: | |||||||||||||||||||||
| Basic | 296,036 | 294,758 | 294,803 | 294,493 | 300,951 | ||||||||||||||||
| Diluted | 300,613 | 297,545 | 296,298 | 297,180 | 304,604 | ||||||||||||||||
| Cash dividends per common share | $ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.20 | $ | 0.19 | |||||||||||
| Tax rate | 13.0 | % | 14.1 | % | 5.5 | % | 17.8 | % | 14.2 | % | |||||||||||
| % of Net sales: | |||||||||||||||||||||
| Gross margin | 68.4 | % | 67.3 | % | 69.3 | % | 66.8 | % | 67.1 | % | |||||||||||
| Research and development(1) | 18.3 | % | 24.5 | % | 21.9 | % | 21.8 | % | 18.8 | % | |||||||||||
| Selling, general, and administrative(1) | 17.4 | % | 19.7 | % | 20.0 | % | 19.6 | % | 18.7 | % | |||||||||||
| Operating margin(2) | 32.7 | % | 23.2 | % | 27.4 | % | 25.5 | % | 29.6 | % | |||||||||||
| Net income | 28.2 | % | 19.8 | % | 26.4 | % | 21.0 | % | 26.3 | % | |||||||||||
| Notes: | |||||||||||||||||||||
| (1) | Includes restructuring expenses as follows: | ||||||||||||||||||||
| THREE MONTHS ENDED | YEARS ENDED | ||||||||||||||||||||
| December 31, | September 25, | December 31, | December 31, | December 31, | |||||||||||||||||
| 2009 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||
| Cost of sales | $ | - | $ | 137 | $ | - | $ | 137 | $ | - | |||||||||||
| Research and development | - | 3,878 | - | 4,104 | - | ||||||||||||||||
| Selling, general, and administrative | - | 738 | - | 5,728 | - | ||||||||||||||||
| $ | - | $ | 4,753 | $ | - | $ | 9,969 | $ | - | ||||||||||||
| (2) | 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 (”US 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 | YEARS ENDED | ||||||||||||||||||||
| December 31, | September 25, | December 31, | December 31, | December 31, | |||||||||||||||||
| 2009 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||
| Operating margin (non-GAAP) | $ | 119,373 | $ | 66,497 | $ | 86,242 | $ | 304,547 | $ | 404,366 | |||||||||||
| Compensation expense (benefit) – deferred compensation plan | 2,629 | 5,538 | (10,184 | ) | 11,776 | (18,106 | ) | ||||||||||||||
| Income from operations (GAAP) | $ | 116,744 | $ | 60,959 | $ | 96,426 | $ | 292,771 | $ | 422,472 | |||||||||||
| ALTERA CORPORATION | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (In thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| December 31, | September 25, | December 31, | ||||||||||
| 2009 | 2009 | 2008 | ||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 1,546,672 | $ | 1,363,939 | $ | 1,216,743 | ||||||
| Accounts receivable, net | 218,144 | 254,809 | 83,430 | |||||||||
| Inventories | 69,705 | 65,826 | 84,637 | |||||||||
| Deferred compensation plan assets | 69,891 | 66,801 | 55,990 | |||||||||
| Deferred income taxes and other current assets | 137,358 | 166,779 | 186,361 | |||||||||
| Total current assets | 2,041,770 | 1,918,154 | 1,627,161 | |||||||||
| Property and equipment, net | 174,516 | 179,531 | 192,262 | |||||||||
| Deferred income taxes and other assets, net | 76,945 | 49,284 | 60,484 | |||||||||
| $ | 2,293,231 | $ | 2,146,969 | $ | 1,879,907 | |||||||
| Liabilities and Stockholders’ Equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable and current liabilities | $ | 138,185 | $ | 117,642 | $ | 124,358 | ||||||
| Deferred compensation plan obligations | 69,891 | 66,801 | 55,990 | |||||||||
| Deferred income and allowances on sales to distributors | 281,885 | 291,732 | 205,674 | |||||||||
| Total current liabilities | 489,961 | 476,175 | 386,022 | |||||||||
| Income taxes payable, non-current | 210,967 | 205,384 | 173,880 | |||||||||
| Long-term credit facility | 500,000 | 500,000 | 500,000 | |||||||||
| Other non-current liabilities | 6,967 | 6,833 | 20,128 | |||||||||
| Stockholders’ equity | 1,085,336 | 958,577 | 799,877 | |||||||||
| $ | 2,293,231 | $ | 2,146,969 | $ | 1,879,907 | |||||||
| Key Ratios & Information | ||||||||||||
| Current Ratio | 4:1 | 4:1 | 4:1 | |||||||||
| Liabilities/Equity | 1:1 | 1:1 | 1:1 | |||||||||
| Quarterly Operating Cash Flows | $ | 176,352 | $ | 105,484 | $ | 107,830 | ||||||
| TTM Return on Equity | 27 | % | 26 | % | 45 | % | ||||||
| Quarterly Depreciation Expense | $ | 6,839 | $ | 7,361 | $ | 7,625 | ||||||
| Quarterly Capital Expenditures | $ | 1,824 | $ | 2,384 | $ | 11,354 | ||||||
| Annualized Net Sales per Employee | $ | 450 | $ | 412 | $ | 508 | ||||||
| Number of Employees | 2,551 | 2,581 | 2,760 | |||||||||
| Inventory MSOH (1): Altera | 1.8 | 2.1 | 2.6 | |||||||||
| Inventory MSOH (1): Distribution | 0.7 | 1.1 | 1.0 | |||||||||
| (1) MSOH: Months Supply On Hand | ||||||||||||
| ALTERA CORPORATION | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| YEARS ENDED | ||||||||
| December 31, | December 31, | |||||||
| 2009 | 2008 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | 251,062 | $ | 359,651 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 29,022 | 29,969 | ||||||
| Stock-based compensation | 64,446 | 48,630 | ||||||
| Deferred income tax (benefit) expense | (5,890 | ) | 737 | |||||
| Tax effect of employee stock plans | (3,648 | ) | 1,311 | |||||
| Excess tax benefit from employee stock plans | (990 | ) | (6,767 | ) | ||||
| Gain on sale of land | - | (112 | ) | |||||
| Gain on substantive termination of retiree medical plan | (6,488 | ) | - | |||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable, net | (136,115 | ) | 115,459 | |||||
| Inventories | 14,931 | (10,527 | ) | |||||
| Other assets | 38,862 | (26,173 | ) | |||||
| Accounts payable and other liabilities | 7,918 | 2,810 | ||||||
| Deferred income and allowances on sales to distributors | 77,611 | (74,766 | ) | |||||
| Income taxes payable | 39,860 | 9,717 | ||||||
| Deferred compensation plan obligations | 2,125 | (673 | ) | |||||
| Net cash provided by operating activities | 372,706 | 449,266 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Purchases of property and equipment | (11,060 | ) | (40,273 | ) | ||||
| Proceeds from the maturities and sales of available-for-sale investments | - | 131,060 | ||||||
| Proceeds from sale of land | - | 9,063 | ||||||
| (Purchases) sales of deferred compensation plan securities, net | (2,125 | ) | 673 | |||||
| Purchases of intangible assets | (690 | ) | - | |||||
| Net cash (used in) provided by investing activities | (13,875 | ) | 100,523 | |||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from issuance of common stock through various stock plans | 42,144 | 67,138 | ||||||
| Shares withheld for employee taxes | (10,738 | ) | (8,229 | ) | ||||
| Repurchases of common stock | - | (473,229 | ) | |||||
| Payment of dividends to stockholders | (58,925 | ) | (57,051 | ) | ||||
| Excess tax benefit from stock-based compensation | 990 | 6,767 | ||||||
| Decrease in book overdrafts | - | (320 | ) | |||||
| Proceeds from long-term credit facility | - | 250,000 | ||||||
| Principal payments on capital lease obligations | (2,373 | ) | (8,217 | ) | ||||
| Net cash used for financing activities | (28,902 | ) | (223,141 | ) | ||||
| Net increase in cash and cash equivalents | 329,929 | 326,648 | ||||||
| Cash and cash equivalents at beginning of period | 1,216,743 | 890,095 | ||||||
| Cash and cash equivalents at end of period | $ | 1,546,672 | $ | 1,216,743 | ||||
| ALTERA CORPORATION | ||||||||||||||||||||||||
| NET SALES SUMMARY | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| THREE MONTHS ENDED | Quarterly Growth Rate | YEARS ENDED | ||||||||||||||||||||||
| Year- | Annual | |||||||||||||||||||||||
| December 31, | September 25, | December 31, | Sequential | Over-Year | December 31, | December 31, | Growth | |||||||||||||||||
| 2009 | 2009 | 2008 | Change | Change | 2009 | 2008 | Rate | |||||||||||||||||
| Geography | ||||||||||||||||||||||||
| North America | 21 | % | 23 | % | 23 | % | 17 | % | 4 | % | 20 | % | 23 | % | -23 | % | ||||||||
| Asia Pacific | 39 | % | 38 | % | 36 | % | 34 | % | 28 | % | 40 | % | 35 | % | 1 | % | ||||||||
| Europe | 21 | % | 21 | % | 23 | % | 24 | % | 6 | % | 22 | % | 23 | % | -18 | % | ||||||||
| Japan | 19 | % | 18 | % | 18 | % | 31 | % | 21 | % | 18 | % | 19 | % | -18 | % | ||||||||
| Total | 100 | % | 100 | % | 100 | % | 27 | % | 16 | % | 100 | % | 100 | % | -13 | % | ||||||||
| Product Category | ||||||||||||||||||||||||
| New | 62 | % | 60 | % | 48 | % | 30 | % | 49 | % | 58 | % | 44 | % | 16 | % | ||||||||
| Mainstream | 19 | % | 20 | % | 25 | % | 24 | % | -10 | % | 21 | % | 26 | % | -29 | % | ||||||||
| Mature & Other | 19 | % | 20 | % | 27 | % | 22 | % | -18 | % | 21 | % | 30 | % | -40 | % | ||||||||
| Total | 100 | % | 100 | % | 100 | % | 27 | % | 16 | % | 100 | % | 100 | % | -13 | % | ||||||||
| Market Segment | ||||||||||||||||||||||||
| Telecom & Wireless | 41 | % | 40 | % | 38 | % | 31 | % | 26 | % | 44 | % | 36 | % | 4 | % | ||||||||
| Industrial Automation, Military & Auto | 23 | % | 23 | % | 25 | % | 23 | % | 7 | % | 22 | % | 24 | % | -18 | % | ||||||||
| Networking, Computer & Storage | 14 | % | 16 | % | 14 | % | 14 | % | 13 | % | 14 | % | 16 | % | -20 | % | ||||||||
| Other | 22 | % | 21 | % | 23 | % | 35 | % | 12 | % | 20 | % | 24 | % | -28 | % | ||||||||
| Total | 100 | % | 100 | % | 100 | % | 27 | % | 16 | % | 100 | % | 100 | % | -13 | % | ||||||||
| FPGAs and CPLDs | ||||||||||||||||||||||||
| FPGA | 78 | % | 77 | % | 75 | % | 29 | % | 22 | % | 77 | % | 74 | % | -9 | % | ||||||||
| CPLD | 15 | % | 15 | % | 16 | % | 22 | % | 1 | % | 15 | % | 18 | % | -27 | % | ||||||||
| Other | 7 | % | 8 | % | 9 | % | 20 | % | -5 | % | 8 | % | 8 | % | -18 | % | ||||||||
| Total | 100 | % | 100 | % | 100 | % | 27 | % | 16 | % | 100 | % | 100 | % | -13 | % | ||||||||
| Product Category Description | ||||||||||||||||||||||||
| Category | Products | |||||||||||||||||||||||
| New | Stratix II (and GX), Stratix III, Stratix IV (including E, GX and GT), Arria GX, Arria II GX, Cyclone II, Cyclone III, MAX II, HardCopy, and Hardcopy II devices | |||||||||||||||||||||||
| Mainstream | Stratix (and GX), Cyclone, and MAX 3000A devices | |||||||||||||||||||||||
| Mature & Other | Classic™, MAX 7000, MAX 7000A, MAX 7000B, MAX 7000S, MAX 9000, FLEX® series, APEX™ series, Mercury™, Excalibur™, configuration and other devices, intellectual property cores, and software and other tools | |||||||||||||||||||||||
