Altera Announces First Quarter Results

SAN JOSE, Calif., April 23, 2015 /PRNewswire/ -- Altera Corporation (NASDAQ: ALTR) today announced first quarter sales of $435.5 million, down 9 percent from the fourth quarter of 2014 and down 6 percent from the first quarter of 2014. First quarter net income was $94.9 million, $0.31 per diluted share, compared with net income of $111.1 million, $0.36 per diluted share, in the fourth quarter of 2014 and $116.5 million, $0.37 per diluted share, in the first quarter of 2014.

Altera(R) 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.

Cash flow from operating activities was $136.6 million. Altera repurchased approximately 1.6 million shares during the quarter at a cost of approximately $57.5 million.

Altera's board of directors has declared a quarterly cash dividend of $0.18 per share, to be paid on June 1, 2015 to shareholders of record on May 11, 2015.

"While we had anticipated a weak start to the year, the first quarter was more challenging than expected," said John Daane, president, chief executive officer, and chairman of the board. "There continues to be solid market acceptance of our Generation 10 devices, with record opportunities for our high-end 14 nm FinFET Stratix 10 FPGAs. The combination of our HyperFlex architecture and the FinFET manufacturing process delivers substantial competitive advantages and market expansion potential."

Recent accomplishments mark Altera's continuing progress:


  • At this year's Mobile World Congress, Altera and China Mobile demonstrated jointly a Centralized/Coordinated/Cloud Radio Access Network (C-RAN) platform targeting the next generation of virtualized 5G wireless networks. This approach will dramatically improve the user experience, achieving much higher channel capacity and spectrum efficiency, reducing network power consumption, while supporting flexible and agile network deployments. C-RAN offers the potential for new network operator business models and support for numerous new end user 5G wireless network applications. This strategic collaboration, formally established between Altera and China Mobile Research Institute (CMRI) in 2014, has achieved a significant milestone with this innovative wireless network solution. To accelerate the development and deployment of such next-generation wireless networks, FPGA technologies play a key role in data processing acceleration, component connectivity, and front-haul data transportation in the C-RAN system.
  • Altera has strengthened its leadership position in SoC FPGA products by shipping initial devices of its second-generation SoC family. These Arria® 10 SoC devices are the industry's only programmable devices that combine ARM® processors with a 20 nm FPGA fabric. Arria 10 SoCs bring across-the-board improvements to enable higher performing, lower power, and more feature rich embedded systems compared to previous generation SoC FPGAs. Arria 10 SoCs provide up to 50 percent higher performance and up to 40 percent lower power than the previous generation. Arria 10 SoCs are optimized to deliver the performance, power, security and cost requirements for next-generation embedded applications within wireless infrastructure, wireline communications, computer and storage, and broadcast equipment. Altera's SoC portfolio will also include a 3rd-generation 14 nm Stratix® 10 SoC with a 64-bit quad-core ARM CortexTM-A53 processor for embedded developers that demand the highest performance and power efficiency.





SELECTED FIRST QUARTER RATIOS AND RELATED RESULTS






($ in thousands)

Key Ratios & Information


March 27, 2015


December 31, 2014

Current Ratio


5:1



6:1


Liabilities/Equity


3:4



3:4


Quarterly Operating Cash Flows


$

136,633



$

150,778


TTM Return on Equity


13

%


14

%

Quarterly Depreciation Expense


$

12,777



$

12,099


Quarterly Capital Expenditures


$

33,245



$

9,836


Inventory MSOH (1): Altera


3.0



2.7


Inventory MSOH (1): Distribution


0.7



0.5


Cash Conversion Cycle (Days)


149



144


Turns


41

%


41

%

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


March 27,
 2015


December 31,
 2014


March 28,
 2014


Sequential Change


Year-

Over-Year

Change

Geography










Americas

17

%


15

%


15

%


(1)

%


4

%

Asia Pacific

45

%


41

%


43

%


(2)

%


(1)

%

EMEA

27

%


30

%


26

%


(17)

%


(3)

%

Japan

11

%


14

%


16

%


(26)

%


(32)

%

Net Sales

100

%


100

%


100

%


(9)

%


(6)

%

Product Category










New

59

%


59

%


49

%


(9)

%


15

%

Mainstream

19

%


18

%


23

%


(5)

%


(20)

%

Mature and Other

22

%


23

%


28

%


(14)

%


(29)

%

Net Sales

100

%


100

%


100

%


(9)

%


(6)

%

Vertical Market










Telecom & Wireless

42

%


42

%


45

%


(8)

%


(12)

%

Industrial Automation, Military & Automotive

21

%


22

%


22

%


(13)

%


(7)

%

Networking, Computer & Storage

17

%


16

%


15

%


(8)

%


2

%

Other

20

%


20

%


18

%


(8)

%


7

%

Net Sales

100

%


100

%


100

%


(9)

%


(6)

%

FPGAs and CPLDs










FPGA

84

%


84

%


83

%


(9)

%


(4)

%

CPLD

8

%


8

%


9

%


(8)

%


(10)

%

Other Products

8

%


8

%


8

%


(15)

%


(14)

%

Net Sales

100

%


100

%


100

%


(9)

%


(6)

%

 

Product Category Description

  • New Products include the Arria® 10, Stratix® V, Stratix IV, Arria V, Arria II, Cyclone® V, Cyclone IV, MAX® 10, 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, 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 Second Quarter 2015


Sales and Income Statement



Sequential Sales

-4% to -8%

Gross Margin

66.5% - 67.5%

Research and Development (1)

$110 - $112 million

SG&A

$73 - $75 million

Other Income/Expense, Net (2)

Net expense of approximately $2 million

Tax Rate

12% - 14%

Diluted Share Count

Approximately 300 million

Turns

Mid 40's

Inventory MSOH

Approximately 4


Note (1): The business outlook for Research and Development expense includes amortization of acquisition-related intangible assets

Note (2): Other Income/Expense, Net includes Interest income and other and Interest expense in our consolidated statements of comprehensive income.

  



Vertical Market



Telecom & Wireless

Down

Industrial Automation, Military & Automotive

Up

Networking, Computer & Storage

Flat

Other

Down

First 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.


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 absolute and relative product performance and features, Stratix® 10 FPGA competitive advantages and market expansion potential, 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 materially from those currently anticipated, due to a number of factors, including without limitation, current global economic conditions, customer business environment, customer inventory levels, product availability, vertical market mix, market acceptance of the company's products, the performance of products once introduced, product introduction schedules, the rate of growth of the company's new products including Cyclone® V, Cyclone IV, Arria® 10, Arria V, Arria II, Stratix V, Stratix IV, MAX® 10 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.

About Altera

Altera® programmable solutions enable designers of electronic systems to rapidly and cost effectively innovate, differentiate and win in their markets. Altera offers FPGA, SoC, CPLD products, and complementary technologies, such as power solutions, to provide high-value solutions to customers worldwide. Visit www.altera.com.

ALTERA, ARRIA, CYCLONE, ENPIRION, 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.

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 CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

















Three Months Ended

(In thousands, except per share amounts)


March 27,
 2015


December 31,
 2014


March 28,
 2014








Net sales


$

435,485



$

479,873



$

461,092


Cost of sales


156,263



168,172



151,868


Gross margin


279,222



311,701



309,224


Operating expense







    Research and development expense


103,231



107,314



97,657


    Selling, general, and administrative expense


70,506



81,044



74,507


    Amortization of acquisition-related intangible assets


2,464



2,465



2,465


Total operating expense


176,201



190,823



174,629


Operating margin (2)


103,021



120,878



134,595


Compensation expense — deferred compensation plan


27



1,934



1,454


Gain on deferred compensation plan securities


(27)



(1,934)



(1,454)


Interest income and other


(6,596)



(5,714)



(5,985)


(Gain)/loss reclassified from other comprehensive income


(2,506)



10



(48)


Interest expense


10,408



11,410



10,488


Income before income taxes


101,715



115,172



130,140


Income tax expense


6,863



4,041



13,626


Net income


94,852



111,131



116,514









Other comprehensive income:







Unrealized gain on investments:







    Unrealized holding gain on investments arising during period, net of tax of $41, ($55), and $24


16,785



15,623



12,560


    Less: Reclassification adjustments for (gain)/loss on investments included in net income, net of tax of $6, $1 and $4


(2,500)



11



(44)


Other comprehensive income


14,285



15,634



12,516


Comprehensive income


$

109,137



$

126,765



$

129,030









Net income per share:







    Basic


$

0.31



$

0.37



$

0.37


    Diluted


$

0.31



$

0.36



$

0.37









Shares used in computing per share amounts:







    Basic


301,308



303,848



316,552


    Diluted


303,285



305,614



318,901









Dividends per common share


$

0.18



$

0.18



$

0.15









Tax rate


6.7

%


3.5

%


10.5

%

% of Net sales:







    Gross margin


64.1

%


65.0

%


67.1

%

    Research and development (1)


24.3

%


22.9

%


21.7

%

    Selling, general, and administrative


16.2

%


16.9

%


16.2

%

    Operating margin(2)


23.7

%


25.2

%


29.2

%

    Net income


21.8

%


23.2

%


25.3

%

 









Notes:







(1) Research and development expense as a percentage of Net sales includes amortization of acquisition-related intangible assets.

 

(2) 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

(In thousands, except per share amounts)


March 27,
 2015


December 31,
 2014


March 28,
 2014

Operating margin (non-GAAP)


$

103,021



$

120,878



$

134,595


Compensation expense — deferred compensation plan


27



1,934



1,454


Income from operations (GAAP)


$

102,994



$

118,944



$

133,141















 














ALTERA CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)






(In thousands, except par value amount)


March 27,
 2015


December 31,
 2014






Assets





Current assets:





Cash and cash equivalents


$

2,207,101



$

2,426,367


Short-term investments


168,849



151,519


        Total cash, cash equivalents, and short-term investments


2,375,950



2,577,886


Accounts receivable, net


433,690



377,964


Inventories


155,353



153,387


Deferred income taxes — current


62,144



56,048


Deferred compensation plan — marketable securities


65,075



69,367


Deferred compensation plan — restricted cash equivalents


20,226



14,412


Other current assets


42,336



39,479


        Total current assets


3,154,774



3,288,543


Property and equipment, net


215,309



194,840


Long-term investments


2,139,810



1,942,343


Deferred income taxes — non-current


20,258



20,077


Goodwill


74,341



74,341


Acquisition-related intangible assets, net


69,827



72,291


Other assets, net


92,746



81,791


        Total assets


$

5,767,065



$

5,674,226







Liabilities and stockholders' equity





Current liabilities:





Accounts payable


$

46,918



$

49,140


Accrued liabilities


33,727



28,384


Accrued compensation and related liabilities


60,234



69,837


Deferred compensation plan obligations


85,301



83,779


Deferred income and allowances on sales to distributors


411,558



344,168


        Total current liabilities


637,738



575,308


Income taxes payable — non-current


326,700



313,447


Long-term debt


1,493,082



1,492,759


Other non-current liabilities


6,798



6,886


        Total liabilities


2,464,318



2,388,400


Stockholders' equity:





Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 301,025 shares at March 27, 2015 and 302,430 shares at December 31, 2014


301



302


Capital in excess of par value


1,170,315



1,165,259


Retained earnings


2,108,201



2,110,620


Accumulated other comprehensive income


23,930



9,645


        Total stockholders' equity


3,302,747



3,285,826


        Total liabilities and stockholders' equity


$

5,767,065



$

5,674,226













ALTERA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)






Three Months Ended

 (In thousands)


March 27,
 2015


March 28,
 2014






Cash Flows from Operating Activities:





Net income


$

94,852



$

116,514


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





    Depreciation and amortization


14,453



14,628


    Amortization of acquisition-related intangible assets


2,464



2,465


    Amortization of debt discount and debt issuance costs


779



779


    Stock-based compensation


20,325



23,347


    Net gain on sale of available-for-sale securities


(2,506)



(48)


    Amortization of investment discount/premium


2,129



685


    Deferred income tax benefit


(651)



(1,711)


    Tax effect of employee stock plans




(217)


    Excess tax benefit from employee stock plans


(203)



(326)


    Changes in assets and liabilities:





      Accounts receivable, net


(55,726)



39,623


      Inventories


(1,966)



5,743


      Other assets


(9,098)



(5,185)


      Accounts payable and other liabilities


(2,998)



(3,425)


      Deferred income and allowances on sales to distributors 


67,390



(73,227)


      Income taxes payable and receivable, net


5,894



10,111


      Deferred compensation plan obligations


1,495



674


    Net cash provided by operating activities


136,633



130,430


Cash Flows from Investing Activities:





      Purchases of property and equipment


(38,593)



(12,622)


      Purchases of deferred compensation plan securities, net


(1,495)



(674)


      Purchases of available-for-sale securities


(625,960)



(103,982)


      Proceeds from sale of available-for-sale securities


387,985



35,562


      Proceeds from maturity of available-for-sale securities


37,472



41,548


      Purchases of intangible assets


(257)




      Purchases of other investments


(2,000)




    Net cash used in investing activities


(242,848)



(40,168)


Cash Flows from Financing Activities:





      Proceeds from issuance of common stock through stock plans


1,408



6,082


      Shares withheld for employee taxes


(2,994)



(3,048)


      Payment of dividends to stockholders


(54,161)



(47,554)


      Long-term debt and credit facility issuance costs




(1,321)


      Repurchases of common stock


(57,507)



(161,794)


      Excess tax benefit from employee stock plans


203



326


    Net cash used in financing activities


(113,051)



(207,309)


Net decrease in cash and cash equivalents


(219,266)



(117,047)


Cash and cash equivalents at beginning of period


2,426,367



2,869,158


Cash and cash equivalents at end of period


$

2,207,101



$

2,752,111


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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/altera-announces-first-quarter-results-300071296.html

SOURCE Altera Corporation

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