SAN JOSE, Calif., Oct. 23, 2012 -- Altera Corporation (NASDAQ: ALTR) today announced third quarter sales of $495.0 million, up 6 percent from the second quarter of 2012 and down 5 percent from the third quarter of 2011. Third quarter net income was $157.5 million, $0.49 per diluted share, compared with net income of $162.7 million, $0.50 per diluted share, in the second quarter of 2012 and $185.4 million, $0.57 per diluted share, in the third quarter of 2011.
Year-to-date cash flow from operating activities was $460.5 million. Altera repurchased 1.6 million shares of its common stock during the quarter at a cost of $50.0 million. Altera ended the quarter with $3.7 billion in cash and investments.
Altera's board of directors has declared a quarterly cash dividend of $0.10 per share, to be paid on December 3, 2012 to stockholders of record on November 13, 2012.
"Despite uneven global economic conditions, Altera experienced relatively broad vertical market sequential growth with both our new and mainstream product categories performing well," said John Daane, president, chief executive officer, and chairman of the board. "Our 28 nm opportunity pipeline exceeds that of any prior process node as FPGAs continue to displace ASICs. Altera is the only 28 nm FPGA supplier to offer production-qualified devices across our entire range of product families, which gives us clear advantage as we compete for design wins. Altera is the design-win value leader at 28 nm."
Several recent accomplishments mark the company's continuing progress:
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Production-qualified devices are now available across Altera's entire 28 nm portfolio of high-end, midrange, and low-cost FPGAs. As the first FPGA supplier to reach this 28 nm industry milestone, Altera's technology leadership, with its unique tailored architecture approach, is successfully delivering a range of products optimized for cost, performance and low power. At the high end, Stratix® V FPGAs are the industry's only production monolithic devices with 28 Gbps integrated transceivers. In the midrange, Arria® V FPGAs use the lowest power while providing optimized performance for a variety of applications including remote radio units, Long-Term Evolution (LTE) wireless communications equipment, in-studio mixers and 10G/40G line cards. Developed on TSMC's 28 nm Low Power (28LP) process, the Cyclone® V FPGA family provides customers the lowest power and lowest cost at optimal performance levels needed for today's high-volume, cost-sensitive applications.
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Altera has unveiled several key innovations planned for its next generation of 20 nm products. Extending the promise of silicon convergence, Altera is offering customers the ultimate system-integration platform, combining the hardware programmability of FPGAs with the software flexibility of digital signal processors and microprocessors along with the efficiencies of application-specific hard intellectual property. The architectural, software and process innovations Altera is making at 20 nm enable the development of an enhanced mixed-system fabric that delivers new levels of performance, bandwidth, integration and power efficiency. Altera's 20 nm mixed-system fabric includes the integration of 40 Gbps transceiver technology, a next-generation variable-precision digital signal processing (DSP) block architecture that delivers over 5 TFLOPs of IEEE 754 floating-point performance, and heterogeneous 3D integrated circuits that integrate FPGAs with a user-customizable HardCopy® ASIC or a variety of other technologies, including memory, third-party ASICs and optical interfaces.
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For the second consecutive year, Altera has been selected as one of the 100 most innovative companies in the world, according to a study just published by Forbes Magazine. The Forbes ranking is based on "Innovation Premium," an indication of the premium the stock market gives a company because investors expect it to launch new offerings and enter new markets. The algorithm was developed by Hal Gregersen, Jeff Dyer, and Clayton Christensen, and is described in their book, The Innovator's DNA (Harvard Business Press, 2011).
SELECTED THIRD QUARTER REVENUE AND RELATED RESULTS
| Key New Product Devices | Sequential Comparisons |
| Stratix V | 124% |
| Stratix IV | 1% |
| Arria II | (9)% |
| Cyclone IV | 27% |
| HardCopy IV | (10)% |
| Vertical Markets | Sequential Comparisons | Comments |
| Telecom & Wireless | 7% | Telecom and Wireless both up |
| Industrial Automation, Military & Automotive | 11% | Industrial, Military, and Automotive all up |
| Networking, Computer & Storage | 5% | Networking up and Computer and Storage slightly down |
| Other | 3% |
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($ in thousands)
Key Ratios & Information | September 28, 2012 | June 29, 2012 |
| Current Ratio | 6:1 | 6:1 |
| Liabilities/Equity | 1:2 | 1:2 |
| Quarterly Operating Cash Flows | $ 285,203 | $ 85,539 |
| TTM Return on Equity | 19% | 20% |
| Quarterly Depreciation Expense | $ 9,677 | $ 7,688 |
| Quarterly Capital Expenditures | $ 17,749 | $ 7,409 |
| Inventory MSOH (1): Altera | 3.1 | 3.1 |
| Inventory MSOH (1): Distribution | 0.6 | 0.6 |
| Cash Conversion Cycle (Days) | 140 | 130 |
| Turns | 37% | 38% |
| 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 |
| September 28, 2012 | June 29, 2012 | September 30, 2011 | Sequential Change | Year-Over-Year Change |
| Geography |
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| Americas | 19% | 17% | 16% | 15% | 6% |
| Asia Pacific | 43% | 46% | 44% | 1% | (6)% |
| EMEA | 25% | 23% | 25% | 18% | (5)% |
| Japan | 13% | 14%15% |
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| (16)% |
| Net Sales | 100% | 100% | 100% | 6% | (5)% |
| Product Category |
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| New | 31% | 31% | 27% | 8% | 8% |
| Mainstream | 32% | 30% | 32% | 13% | (8)% |
| Mature and Other | 37% | 39% | 41% | 1% | (12)% |
| Net Sales | 100% | 100% | 100% | 6% | (5)% |
| Vertical Market |
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| Telecom & Wireless | 45% | 45% | 42% | 7% | 2% |
| Industrial Automation, Military & Automotive | 20% | 19% | 22% | 11% | (11)% |
| Networking, Computer & Storage | 17% | 18% | 20% | 5% | (21)% |
| Other | 18% | 18% | 16% | 3% | 3% |
| Net Sales | 100% | 100% | 100% | 6% | (5)% |
| FPGAs and CPLDs |
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| FPGA | 82% | 85% | 82% | 4% | (5)% |
| CPLD | 9% | 9% | 9% | 4% | (9) |
| Other Products | 9% | 6% | 9% | 45% | (6)% |
| Net Sales | 100% | 100% | 100% | 6% | (5)% |
Product Category Description
New Products include the Stratix® V (including GS, GT and GX), Stratix IV (including E, GX and GT), Arria® V, Arria II (including GX and GZ), Cyclone® V, 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™, Excalibur™ devices, configuration and other devices, intellectual property cores, and software and other tools.
Business Outlook for the Fourth Quarter 2012
Sales and Income Statement
| Sequential Sales | Down 6% to 10% |
| Gross Margin | 69% - 70% |
| Research and Development | $93 to 95 million |
| SG&A | $74 to 75 million |
| Tax Rate | 13% +/- .5% |
| Diluted Share Count | Approximately 324 million |
| Turns | Low-40's |
| MSOH | High 3's |
Vertical Market
| Telecom & Wireless | Telecom and Wireless both down |
| Industrial Automation, Military & Automotive | Down slightly overall with all vertical markets weak |
| Networking, Computer & Storage | Networking, Computer and Storage all down |
| 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.
Fourth Quarter Update and 2013 Guidance
Altera's fourth quarter business update will be issued in a press release available after the market close on December 4, 2012. The release will also include Altera financial guidance for 2013. A conference call with the investment community will take place at 1:45 PM Pacific time on December 4, 2012, to review and comment on 2013 guidance.
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.
