EX-99.1 2 a2013q28-kerexhibit.htm PRESS RELEASE EXHIBIT 2013 Q2 8-K(ER) Exhibit










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 SECOND QUARTER RESULTS



San Jose, Calif., July 23, 2013 — Altera Corporation (NASDAQ: ALTR) today announced second quarter sales of $421.8 million, up 3 percent from the first quarter of 2013 and down 9 percent from the second quarter of 2012. Second quarter net income was $101.5 million, $0.31 per diluted share, compared with net income of $120.2 million, $0.37 per diluted share, in the first quarter of 2013 and $162.7 million, $0.50 per diluted share, in the second quarter of 2012.

Year-to-date cash flow from operating activities was $214.0 million. Altera repurchased 1.7 million shares of its common stock during the quarter at a cost of $55.0 million. Altera ended the quarter with $3.6 billion in cash and investments.

As previously announced, Altera's board of directors has declared a quarterly cash dividend of $0.15 per share, to be paid on September 3, 2013 to stockholders of record on August 12, 2013.

"As anticipated, the pace of business picked up, and backlog has increased," said John Daane, president, chief executive officer, and chairman of the board. "We have announced our next generation of FPGAs sourced by TSMC for 20 nm devices and, for the first time, Intel, for 14 nm FinFET devices. This combination gives us an ideal blend of manufacturing processes to optimize performance across our next generation of FPGAs. As the only major FPGA company with access to the generation-ahead Intel FinFET technology for our high end devices, which typically are about half of the FPGA market, our competitive advantage is substantial."

 



1



Several recent accomplishments mark the company's continuing progress:

•
Altera has announced its Generation 10 FPGAs and SoCs, offering system developers breakthrough levels of performance and power efficiencies. Stratix® 10 FPGAs and SoCs leverage Intel's 14 nm Tri-Gate process and an enhanced architecture to deliver core performance two times higher than current high-end Altera FPGAs, while enabling an up to 70 percent power savings. Stratix 10 FPGAs and SoCs provide more than 4 million logic elements (LEs) on a single die, 56-Gbps transceivers, a third-generation ultra-high-performance processor system, and multi-die 3D solutions capable of integrating SRAM, DRAM and ASICs.

Arria® 10 FPGAs and SoCs use TSMC's 20 nm process and reinvent the midrange by simultaneously surpassing Altera's current high-end FPGAs in performance while delivering 40 percent lower power than today's midrange devices. Reflecting the industry trend toward silicon convergence, Arria 10 FPGAs and SoCs offer the highest degree of system integration available in midrange devices, including 1.15 million LEs, integrated hard intellectual property and a second-generation processor system that features a 1.5 GHz dual-core ARM® Cortex™-A9 processor. Arria 10 FPGAs and SoCs also provide four times greater bandwidth compared to the current generation, including 28-Gbps transceivers, and three times higher system performance.

Early access customers are using the Quartus® II software today for Arria 10 product development.

Initial samples of Arria 10 devices will be available in early 2014 with 14 nm Stratix 10 FPGA test chips coming in 2013.

•
Altera acquired Enpirion, Inc., the industry's leading provider of high-efficiency, integrated power conversion products known as PowerSoCs (power system-on-chip). The combination of Altera's FPGAs with Enpirion's PowerSoCs offers customers higher performance, lower system power, higher reliability, smaller footprint and faster time-to-market. Enpirion's key enabling power technologies—high-frequency switching, magnetics and packaging—are engineered into complete power system-on-chip products. Enpirion's portfolio of DC-DC converter PowerSoCs with integrated inductors enable the industry's smallest solution footprints and are recognized for their high efficiency, low noise, exceptional thermal performance, high reliability and ease-of-use. Unlike discrete power products, Enpirion's turnkey solutions give designers complete power systems that are fully simulated, characterized, validated and production qualified. Enpirion's technology, when used with an Altera FPGA, increases Altera's share of the customer's bill of materials while, at the same time, reducing the customer's overall bill of materials cost.



2


SELECTED SECOND QUARTER REVENUE AND RELATED RESULTS

Key New Product Devices
 
Sequential Comparisons
Stratix V
 
(22
)%
Stratix IV
 
11
 %
Arria II
 
(13
)%
Arria V
 
113
 %
Cyclone IV
 
17
 %
Cyclone V
 
73
 %
HardCopy IV
 
64
 %


($ in thousands) Key Ratios & Information
 
June 28, 2013
 
March 29, 2013
Current Ratio
 
6:1

 
7:1

Liabilities/Equity
 
1:2

 
1:3

Quarterly Operating Cash Flows
 
$
64,565

 
$
149,478

TTM Return on Equity
 
15
%
 
17
%
Quarterly Depreciation Expense
 
$
10,285

 
$
10,175

Quarterly Capital Expenditures
 
$
7,221

 
$
5,984

Inventory MSOH (1): Altera
 
3.0

 
3.3

Inventory MSOH (1): Distribution
 
0.5

 
0.6

Cash Conversion Cycle (Days)
 
149

 
117

Turns
 
49
%
 
43
%
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
 
June 28,
2013
 
March 29,
2013
 
June 29,
2012
 
Sequential Change
 
Year-
Over-Year
Change
Geography
 
 
 
 
 
 
 
 
 
Americas
17
%
 
20
%
 
17
%
 
(14
)%
 
(12
)%
Asia Pacific
39
%
 
38
%
 
46
%
 
4
 %
 
(22
)%
EMEA
28
%
 
27
%
 
23
%
 
7
 %
 
11
 %
Japan
16
%
 
15
%
 
14
%
 
13
 %
 
2
 %
Net Sales
100
%
 
100
%
 
100
%
 
3
 %
 
(9
)%
Product Category
 
 
 
 
 
 
 
 
 
New
41
%
 
39
%
 
31
%
 
6
%
 
20
 %
Mainstream
28
%
 
29
%
 
30
%
 
0
%
 
(14
)%
Mature and Other
31
%
 
32
%
 
39
%
 
1
%
 
(28
)%
Net Sales
100
%
 
100
%
 
100
%
 
3
%
 
(9
)%
Vertical Market
 
 
 
 
 
 
 
 
 
Telecom & Wireless
42
%
 
41
%
 
45
%
 
4
%
 
(16
)%
Industrial Automation, Military & Automotive
22
%
 
22
%
 
19
%
 
3
%
 
2
 %
Networking, Computer & Storage
18
%
 
18
%
 
18
%
 
0
%
 
(6
)%
Other
18
%
 
19
%
 
18
%
 
2
%
 
(8
)%
Net Sales
100
%
 
100
%
 
100
%
 
3
%
 
(9
)%
FPGAs and CPLDs
 
 
 
 
 
 
 
 
 
FPGA
83
%
 
85
%
 
85
%
 
1
%
 
(11
)%
CPLD
9
%
 
8
%
 
9
%
 
9
%
 
(10
)%
Other Products
8
%
 
7
%
 
6
%
 
22
%
 
19
 %
Net Sales
100
%
 
100
%
 
100
%
 
3
%
 
(9
)%

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 Third Quarter 2013

Sales and Income Statement
Sequential Sales
5% to 9%
Gross Margin
Approximately 68%
Research and Development
$99 to 101 million
SG&A
$80 to 82 million
Tax Rate
12% to 13%
Diluted Share Count
Approximately 323 million
Turns
Low 40's
MSOH
Mid 3's
        
Vertical Market                         
Telecom & Wireless
Up
Industrial Automation, Military & Automotive
Up
Networking, Computer & Storage
Up
Other
Flat

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.
 

 



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 the competitive advantage related to the use of Intel's 14 nm process, product performance parameters, the availability of Arria 10 samples in 2014, 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, 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
 
Six Months Ended
(In thousands, except per share amounts)
 
June 28,
2013
 
March 29,
2013
 
June 29,
2012
 
June 28,
2013
 
June 29,
2012
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
421,759

 
$
410,501

 
$
464,831

 
$
832,260

 
$
848,585

Cost of sales
 
135,104

 
126,083

 
141,315

 
261,187

 
256,149

Gross margin
 
286,655

 
284,418

 
323,516

 
571,073

 
592,436

Operating expense
 
 
 
 
 
 
 
 
 
 
Research and development expense
 
95,489

 
87,717

 
92,143

 
183,206

 
174,227

Selling, general, and administrative expense
 
77,869

 
78,600

 
71,796

 
156,469

 
141,581

Amortization of acquisition-related intangible assets
 
915

 
213

 
213

 
1,128

 
426

Total operating expense
 
174,273

 
166,530

 
164,152

 
340,803

 
316,234

Operating margin (1)
 
112,382

 
117,888

 
159,364

 
230,270

 
276,202

Compensation (benefit)/expense — deferred compensation plan
 
(160
)
 
3,422

 
(2,313
)
 
3,262

 
3,423

Loss/(gain) on deferred compensation plan securities
 
160

 
(3,422
)
 
2,313

 
(3,262
)
 
(3,423
)
Interest income and other
 
(2,778
)
 
(1,659
)
 
(1,415
)
 
(4,437
)
 
(3,222
)
Gain reclassified from other comprehensive income
 
(42
)
 
(54
)
 
(69
)
 
(96
)
 
(171
)
Interest expense
 
3,389

 
2,465

 
2,116

 
5,854

 
3,053

Income before income taxes
 
111,813

 
117,136

 
158,732

 
228,949

 
276,542

Income tax expense/(benefit)
 
10,304

 
(3,053
)
 
(3,947
)
 
7,251

 
(1,971
)
Net income
 
101,509

 
120,189

 
162,679

 
221,698

 
278,513

 
 
 
 
 
 
 
 
 
 
 
Other comprehensive (loss)/income:
 
 
 
 
 
 
 
 
 
 
Unrealized (loss)/gain on investments:
 
 
 
 
 
 
 
 
 
 
Unrealized holding (loss)/gain on investments arising during period, net of tax of ($47), ($5), $8 ($41) and $66
 
(9,031
)
 
(1
)
 
2,799

 
(9,032
)
 
3,103

Less: Reclassification adjustments for gain on investments included in net income, net of tax of $5, $5, $1, $10 and $6
 
(37
)
 
(49
)
 
(3
)
 
(86
)
 
(23
)
 
 
(9,068
)
 
(50
)
 
2,796

 
(9,118
)
 
3,080

Unrealized gain on derivatives:
 
 
 
 
 
 
 
 
 
 
Unrealized gain on derivatives arising during period, net of tax of $34 and $42
 
—

 
—

 
63

 
—

 
77

Less: Reclassification adjustments for gain on derivatives included in net income, net of tax of $23 and $50
 
—

 
—

 
(42
)
 
—

 
(92
)
 
 
—

 
—

 
21

 
—

 
(15
)
Other comprehensive (loss)/income
 
(9,068
)
 
(50
)
 
2,817

 
(9,118
)
 
3,065

Comprehensive income
 
$
92,441

 
$
120,139

 
$
165,496

 
$
212,580

 
$
281,578

 
 
 
 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.32

 
$
0.38

 
$
0.51

 
$
0.69

 
$
0.87

Diluted
 
$
0.31

 
$
0.37

 
$
0.50

 
$
0.69

 
$
0.85

 
 
 
 
 
 
 
 
 
 
 
Shares used in computing per share amounts:
 
 
 
 
 
 
 
 
 
 
Basic
 
320,472

 
319,867

 
321,218

 
320,175

 
321,898

Diluted
 
323,527

 
323,021

 
325,285

 
323,279

 
326,172

 
 
 
 
 
 
 
 
 
 
 
Cash dividends paid per common share
 
$
0.10

 
$
0.10

 
$
0.08

 
$
0.20

 
$
0.16

 
 
 
 
 
 
 
 
 
 
 
Tax rate
 
9.2
%
 
(2.6
)%
 
(2.5
)%
 
3.2
%
 
(0.7
)%
% of Net sales:
 
 
 
 
 
 
 
 
 
 
Gross margin
 
68.0
%
 
69.3
 %
 
69.6
 %
 
68.6
%
 
69.8
 %
Research and development
 
22.6
%
 
21.4
 %
 
19.8
 %
 
22.0
%
 
20.5
 %
Selling, general, and administrative
 
18.5
%
 
19.1
 %
 
15.4
 %
 
18.8
%
 
16.7
 %
Operating margin(1)
 
26.6
%
 
28.7
 %
 
34.3
 %
 
27.7
%
 
32.5
 %
Net income
 
24.1
%
 
29.3
 %
 
35.0
 %
 
26.6
%
 
32.8
 %


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
 
Six Months Ended
(In thousands, except per share amounts)
 
June 28,
2013
 
March 29,
2013
 
June 29,
2012
 
June 28,
2013
 
June 29,
2012
Operating margin (non-GAAP)
 
$
112,382

 
$
117,888

 
$
159,364

 
$
230,270

 
$
276,202

Compensation (benefit) expense — deferred compensation plan
 
(160
)
 
3,422

 
(2,313
)
 
3,262

 
3,423

Income from operations (GAAP)
 
$
112,542

 
$
114,466

 
$
161,677

 
$
227,008

 
$
272,779



8


ALTERA CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except par value amount)
 
June 28,
2013
 
December 31,
2012
 
 
 
 
 
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
2,788,844

 
$
2,876,627

Short-term investments
 
164,835

 
140,958

Total cash, cash equivalents, and short-term investments
 
2,953,679

 
3,017,585

Accounts receivable, net
 
472,597

 
323,708

Inventories
 
134,298

 
152,721

Deferred income taxes — current
 
87,270

 
59,049

Deferred compensation plan — marketable securities
 
55,753

 
60,321

Deferred compensation plan — restricted cash equivalents
 
18,984

 
17,116

Other current assets
 
40,095

 
49,852

Total current assets
 
3,762,676

 
3,680,352

Property and equipment, net
 
200,823

 
206,148

Long-term investments
 
689,301

 
704,758

Deferred income taxes — non-current
 
5,009

 
17,082

Other assets, net
 
221,594

 
49,488

Total assets
 
$
4,879,403

 
$
4,657,828

 
 
 
 
 
Liabilities and stockholders' equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
39,571

 
$
50,036

Accrued liabilities
 
31,072

 
29,005

Accrued compensation and related liabilities
 
37,654

 
40,606

Dividends payable
 
47,937

 
—

Deferred compensation plan obligations
 
74,737

 
77,437

Deferred income and allowances on sales to distributors
 
399,630

 
345,993

   Total current liabilities
 
630,601

 
543,077

Income taxes payable — non-current
 
291,656

 
272,000

Long-term debt
 
500,000

 
500,000

Other non-current liabilities
 
8,948

 
9,304

 Total liabilities
 
1,431,205

 
1,324,381

Stockholders' equity:
 
 
 
 
Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 319,580 shares at June 28, 2013 and 319,564 shares at December 31, 2012
 
320

 
320

Capital in excess of par value
 
1,180,183

 
1,122,555

Retained earnings
 
2,271,221

 
2,204,980

Accumulated other comprehensive (loss) income
 
(3,526
)
 
5,592

Total stockholders' equity
 
3,448,198

 
3,333,447

Total liabilities and stockholders' equity
 
$
4,879,403

 
$
4,657,828

 
 
 
 
 

9



ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
 
Six Months Ended
 (In thousands)
 
June 28,
2013
 
June 29,
2012

 
 
 
 
Cash Flows from Operating Activities:
 
 
 
 
Net income
 
$
221,698

 
$
278,513

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
22,449

 
16,323

Amortization of acquisition-related intangible assets
 
1,128

 
426

Stock-based compensation
 
47,274

 
46,200

Deferred income tax benefit
 
(21,767
)
 
(12,090
)
Tax effect of employee stock plans
 
1,280

 
16,500

Excess tax benefit from employee stock plans
 
(1,148
)
 
(16,434
)
Changes in assets and liabilities, net of effects of acquisitions:
 
 
 
 
Accounts receivable, net
 
(147,407
)
 
(192,994
)
Inventories
 
21,649

 
(23,811
)
Other assets
 
29,351

 
6,019

Accounts payable and other liabilities
 
(19,585
)
 
(19,066
)
Deferred income and allowances on sales to distributors
 
50,886

 
94,299

Income taxes payable
 
14,196

 
(16,658
)
Deferred compensation plan obligations
 
(5,961
)
 
(1,925
)
Net cash provided by operating activities
 
214,043

 
175,302

Cash Flows from Investing Activities:
 
 
 
 
Purchases of property and equipment
 
(23,337
)
 
(31,312
)
Proceeds from sales of deferred compensation plan securities, net
 
5,961

 
1,925

Purchases of available-for-sale securities
 
(175,642
)
 
(576,568
)
Proceeds from sale and maturity of available-for-sale securities
 
155,981

 
92,643

Acquisitions, net of cash acquired
 
(145,313
)
 
—

Purchases of other investments
 
(176
)
 
—

Net cash used in investing activities
 
(182,526
)
 
(513,312
)
Cash Flows from Financing Activities:
 
 
 
 
Proceeds from issuance of common stock through various stock plans
 
27,296

 
26,086

Shares withheld for employee taxes
 
(6,722
)
 
(6,562
)
Payment of dividends to stockholders
 
(64,048
)
 
(51,558
)
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
 
(54,974
)
 
(129,016
)
Excess tax benefit from employee stock plans
 
1,148

 
16,434

Net cash used in financing activities
 
(119,300
)
 
(149,860
)
Net decrease in cash and cash equivalents
 
(87,783
)
 
(487,870
)
Cash and cash equivalents at beginning of period
 
2,876,627

 
3,371,933

Cash and cash equivalents at end of period
 
$
2,788,844

 
$
2,884,063



10