ALTERA CORP - FORM 8-K - EX-99.1 - PRESS RELEASE EXHIBIT - July 19, 2011

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INVESTOR CONTACT
 
MEDIA CONTACT
Scott Wylie - Vice President
 
Yoko Okamura - Senior Manager
Investor Relations
 
Public Relations
(408) 544-6996
 
(408) 544-6397
swylie@altera.com
 
newsroom@altera.com


ALTERA ANNOUNCES SECOND QUARTER RESULTS
INCREASES QUARTERLY DIVIDEND


San Jose, Calif., July 19, 2011 — Altera Corporation (NASDAQ: ALTR) today announced second quarter sales of $548.4 million, up 2 percent from the first quarter of 2011 and up 17 percent from the second quarter of 2010. Second quarter net income was $214.6 million, $0.65 per diluted share, compared with net income of $224.1 million, $0.68 per diluted share, in the first quarter of 2011 and $180.6 million, $0.58 per diluted share, in the second quarter of 2010.

Year-to-date cash flow from operating activities was $456.4 million. Altera ended the quarter with $3.3 billion in cash and short-term investments.

Altera's board of directors has increased the company's quarterly cash dividend to $0.08 per share, up from the previous dividend of $0.06 per share. The board of directors has declared that the next quarterly dividend will be paid on September 1, 2011 to stockholders of record on August 10, 2011.
 
"This quarter marks a return to sequential growth following the mild correction we experienced in the first quarter. We expect more sales gains in the third quarter," said John Daane, president, chief executive officer, and chairman of the board. "Early in the quarter we began shipping our Stratix V FPGA family, the industry's first high-end 28-nm FPGA. Our 28-nm FPGA families combine a tailored architecture, an optimal manufacturing process, and specific product features to give us continuing technology leadership that builds on the technology leadership and strong competitive position we established at 40 nm."

1



Several recent accomplishments mark the company's continuing progress:

•
Altera was selected by EE Times as the 2010 Company of the Year. The Annual Creativity in Engineering (ACE) Company of the Year Award honors the company that exhibits the highest degree of professionalism, staff development and retention, customer focus, technical excellence and growth. Altera recently achieved several technological milestones that were significant innovations in the industry. In its next-generation 28-nm Stratix® V FPGA family, Altera included Embedded HardCopy® Blocks, variable-precision digital signal processing, and embedded 28-Gbps transceivers. The company also announced Qsys, the system-integration tool that delivers the industry's first FPGA-optimized network-on-chip-based interconnect. EE Times ACE Award finalists are nominated by an editorial panel. Award winners are determined by a panel of judges consisting of leading voices in academia, industry and Wall Street executives. Winning the EE Times ACE Company of the Year Award comes on the heels of Altera being named the best financially managed semiconductor company by the Global Semiconductor Alliance (GSA) in December 2010.

•
Altera's Stratix V FPGAs received Application of Electronic Technique China magazine's (AET China) “2010 Top Product Award” in the programmable logic category. The Top Product Award recognizes technologies that have demonstrated the greatest innovations targeting the system design community. Winners of the Top Product Award were selected by AET China readers and industry experts who recognized Stratix V FPGAs for innovations in performance and power as well as the product's wide market application. This is the second consecutive year Altera has been honored by AET China with product awards. For more than 30 years, AET China has been a highly respected and trusted resource in the industry, providing unbiased opinions and informative news on electronics and computing industries. Stratix V FPGAs, the company's first 28-nm device family, began shipping in April, 2011. With 3.9 billion transistors, more than any other commercially available integrated circuit, Stratix V FPGAs have set a new semiconductor industry milestone. They are the only FPGAs to leverage TSMC's HP process which, when combined with optimizations in the FPGA, delivers better performance with lower power consumption than competing FPGAs.


 
















2



Business Outlook for the Third Quarter 2011
 
Sequential Sales Growth
Up 2% to 6%
 
Gross Margin
69% to 70%
 
Research and Development
$87 to 89 million
 
SG&A
$71 to 73 million
 
Tax Rate
10% to 11%
 
 


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 6, 2011.


 
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 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, supply chain or demand impacts from the recent Japanese earthquake, 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® IV, Arria® II, Stratix® V, Stratix IV FPGAs, MAX® V CPLDs and HardCopy® IV 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.



3



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, NIOS, QUARTUS, 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.
 






4


ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 
 
Three Months Ended
 
Six Months Ended
(In thousands, except per share amounts)
 
July 1,
2011
 
April 1, 2011
 
July 2,
2010
 
July 1,
2011
 
July 2,
2010
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
548,383

 
$
535,813

 
$
469,300

 
$
1,084,196

 
$
871,595

Cost of sales
 
159,716

 
146,910

 
132,811

 
306,626

 
247,747

Gross margin
 
388,667

 
388,903

 
336,489

 
777,570

 
623,848

Operating expense
 
 
 
 
 
 
 
 
 
 
Research and development expense
 
80,260

 
74,408

 
65,625

 
154,668

 
129,965

Selling, general, and administrative expense
 
70,182

 
69,022

 
64,767

 
139,204

 
126,948

Total operating expense
 
150,442

 
143,430

 
130,392

 
293,872

 
256,913

Operating margin (1)
 
238,225

 
245,473

 
206,097

 
483,698

 
366,935

Compensation expense/(benefit) — deferred compensation plan
 
54

 
1,662

 
(3,642
)
 
1,716

 
(1,414
)
(Gain)/loss on deferred compensation plan securities
 
(54
)
 
(1,662
)
 
3,642

 
(1,716
)
 
1,414

Interest income and other
 
(957
)
 
(885
)
 
(710
)
 
(1,842
)
 
(1,302
)
Interest expense
 
870

 
1,041

 
1,103

 
1,911

 
2,394

Income before income taxes
 
238,312

 
245,317

 
205,704

 
483,629

 
365,843

Income tax expense
 
23,685

 
21,248

 
25,097

 
44,933

 
32,063

Net income
 
$
214,627

 
$
224,069

 
$
180,607

 
$
438,696

 
$
333,780

 
 
 
 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
 

 
 
Basic
 
$
0.66

 
$
0.70

 
$
0.59

 
$
1.36

 
$
1.11

Diluted
 
$
0.65

 
$
0.68

 
$
0.58

 
$
1.33

 
$
1.09

 
 
 
 
 
 
 
 
 

 
 
Shares used in computing per share amounts:
 
 
 
 
 
 
 
 

 
 
Basic
 
323,271

 
321,020

 
304,531

 
322,145

 
301,532

Diluted
 
329,904

 
327,843

 
310,757

 
328,874

 
307,526

 
 
 
 
 
 
 
 
 

 
 
Cash dividends per common share
 
$
0.06

 
$
0.06

 
$
0.05

 
$
0.12

 
$
0.10

 
 
 
 
 
 
 
 
 
 
 
Tax rate
 
9.9
%
 
8.7
%
 
12.2
%
 
9.3
%
 
8.8
%
% of Net sales:
 
 
 
 
 
 
 
 
 
 
Gross margin
 
70.9
%
 
72.6
%
 
71.7
%
 
71.7
%
 
71.6
%
Research and development
 
14.6
%
 
13.9
%
 
14.0
%
 
14.3
%
 
14.9
%
Selling, general, and administrative
 
12.8
%
 
12.9
%
 
13.8
%
 
12.8
%
 
14.6
%
Operating margin(1)
 
43.4
%
 
45.8
%
 
43.9
%
 
44.6
%
 
42.1
%
Net income
 
39.1
%
 
41.8
%
 
38.5
%
 
40.5
%
 
38.3
%
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 (gains)/losses 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)
 
July 1, 2011
 
April 1, 2011
 
July 2, 2010
 
July 1, 2011
 
July 2, 2010
Operating margin (non-GAAP)
 
$
238,225

 
$
245,473

 
$
206,097

 
$
483,698

 
$
366,935

Compensation expense/(benefit) - deferred compensation plan
 
54

 
1,662

 
(3,642
)
 
1,716

 
(1,414
)
Income from operations (GAAP)
 
$
238,171

 
$
243,811

 
$
209,739

 
$
481,982

 
$
368,349



5


ALTERA CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except par value amount)
 
July 1,
2011
 
December 31,
2010
 
 
 
 
 
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
3,267,370

 
$
2,765,196

Accounts receivable, net
 
383,510

 
363,614

Inventories
 
123,312

 
146,524

Deferred income taxes — current
 
67,859

 
66,839

Deferred compensation plan — marketable securities
 
57,300

 
54,419

Deferred compensation plan — restricted cash equivalents
 
17,899

 
19,817

Other current assets
 
71,607

 
114,601

Total current assets
 
3,988,857

 
3,531,010

Property and equipment, net
 
162,295

 
164,155

Deferred income taxes — non-current
 
27,928

 
37,319

Other assets, net
 
28,669

 
27,353

Total assets
 
$
4,207,749

 
$
3,759,837

 
 
 
 
 
Liabilities and stockholders' equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
52,688

 
$
86,061

Accrued liabilities
 
25,888

 
23,278

Accrued compensation and related liabilities
 
62,021

 
83,773

Deferred compensation plan obligations
 
75,199

 
74,236

Deferred income and allowances on sales to distributors
 
380,788

 
428,711

Income taxes payable
 
—

 
428

Total current liabilities
 
596,584

 
696,487

Income taxes payable — non-current
 
245,182

 
231,833

Long-term credit facility
 
500,000

 
500,000

Other non-current liabilities
 
8,892

 
7,865

Total liabilities
 
1,350,658

 
1,436,185

Stockholders' equity:
 
 
 
 
Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 323,966 at July 1, 2011 and 319,494 shares at December 31, 2010
 
324

 
319

Capital in excess of par value
 
1,047,694

 
908,989

Retained earnings
 
1,809,073

 
1,414,344

Total stockholders' equity
 
2,857,091

 
2,323,652

Total liabilities and stockholders' equity
 
$
4,207,749

 
$
3,759,837

 
 
 
 
 
Key Ratios & Information
 
 
 
 
Current Ratio
 
7:1

 
5:1

Liabilities/Equity
 
1:2

 
1:2

Quarterly Operating Cash Flows
 
$
159,354

 
$
210,151

TTM Return on Equity
 
39
%
 
48
%
Quarterly Depreciation Expense
 
$
6,893

 
$
6,815

Quarterly Capital Expenditures
 
$
4,890

 
$
6,117

Inventory MSOH (1): Altera
 
2.3

 
2.7

Inventory MSOH (1): Distribution
 
0.7

 
0.8

Cash Conversion Cycle
 
82

 
85

Note (1): MSOH: Months Supply On Hand
 
 
 
 


6


ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
Six Months Ended
 
July 1,
2011
 
July 2,
2010
 
 
 
 
Cash Flows from Operating Activities:
 
 
 
Net income
$
438,696

 
$
333,780

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
15,214

 
13,504

Stock-based compensation
37,432

 
29,749

Deferred income tax expense/(benefit)
4,897

 
(11,296
)
Tax effect of employee stock plans
17,048

 
6,996

Excess tax benefit from employee stock plans
(14,589
)
 
(6,465
)
Changes in assets and liabilities:
 
 
 
Accounts receivable, net
(19,896
)
 
(139,862
)
Inventories
23,212

 
(30,250
)
Other assets
43,638

 
(15,637
)
Accounts payable and other liabilities
(53,532
)
 
63,756

Deferred income and allowances on sales to distributors
(47,923
)
 
113,544

Income taxes payable
12,921

 
24,146

Deferred compensation plan obligations
(754
)
 
(3,374
)
Net cash provided by operating activities
456,364

 
378,591

Cash Flows from Investing Activities:
 
 
 
Purchases of property and equipment
(9,796
)
 
(4,350
)
Sales of deferred compensation plan securities, net
754

 
3,374

Net cash used in investing activities
(9,042
)
 
(976
)
Cash Flows from Financing Activities:
 
 
 
Proceeds from issuance of common stock through various stock plans
87,122

 
175,386

Shares withheld for employee taxes
(8,178
)
 
(6,159
)
Payment of dividends to stockholders
(38,681
)
 
(30,137
)
Excess tax benefit from stock-based compensation
14,589

 
6,465

Principal payments on capital lease obligations
—

 
(2,627
)
Net cash provided by financing activities
54,852

 
142,928

Net increase in cash and cash equivalents
502,174

 
520,543

Cash and cash equivalents at beginning of period
2,765,196

 
1,546,672

Cash and cash equivalents at end of period
$
3,267,370

 
$
2,067,215



7


ALTERA CORPORATION
NET SALES SUMMARY
(Unaudited)

 
Three Months Ended
 
Quarterly Growth Rate
 
July 1,
2011
 
April 1,
2011
 
July 2,
2010
 
Sequential Change
 
Year-
Over-Year
Change
Geography
 
 

 

 
 
 
 
Americas
19
%
 
21
%
 
20
%
 
(7
)%
 
11
%
Asia Pacific
40
%
 
38
%
 
41
%
 
8
 %
 
13
%
EMEA
27
%
 
26
%
 
24
%
 
4
 %
 
32
%
Japan
14
%
 
15
%
 
15
%
 
(1
)%
 
11
%
Net Sales
100
%
 
100
%
 
100
%
 
2
 %
 
17
%
Product Category
 
 
 
 
 
 
 
 
 
New
18
%
 
18
%
 
9
%
 
1
 %
 
131
 %
Mainstream
36
%
 
33
%
 
31
%
 
14
 %
 
39
 %
Mature and Other
46
%
 
49
%
 
60
%
 
(5
)%
 
(12
)%
Net Sales
100
%
 
100
%
 
100
%
 
2
 %
 
17
 %
Vertical Market
 
 
 
 
 
 
 
 
 
Telecom & Wireless
42
%
 
42
%
 
42
%
 
13
 %
 
30
 %
Industrial Automation, Military & Automotive
24
%
 
24
%
 
23
%
 
(7
)%
 
11
 %
Networking, Computer & Storage
15
%
 
15
%
 
13
%
 
3
 %
 
30
 %
Other
19
%
 
19
%
 
22
%
 
(9
)%
 
(9
)%
Net Sales
100
%
 
100
%
 
100
%
 
2
 %
 
17
 %
FPGAs and CPLDs
 
 
 
 
 
 
 
 
 
FPGA
80
%
 
81
%
 
82
%
 
2
 %
 
15
%
CPLD
10
%
 
11
%
 
12
%
 
(4
)%
 
1
%
Other Products
10
%
 
8
%
 
6
%
 
14
 %
 
68
%
Net Sales
100
%
 
100
%
 
100
%
 
2
 %
 
17
%
Product Category Description

•
New Products include the Stratix V®, Stratix® IV (including E, GX and GT), Arria® II (including GX and GZ), 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.



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ALTERA CORP Reports