Fourth quarter sales were $323.2 million, up 2 percent from the fourth quarter of 2006 and up 2 percent from the third quarter of 2007. Fourth quarter net income was $65.5 million, $0.20 per diluted share, down from net income of $99.9 million, $0.27 per diluted share, in the fourth quarter of 2006. Fourth quarter 2007 results include a previously announced $5.2 million pretax restructuring charge.
Altera repurchased 58.0 million shares of its common stock during 2007 at a cost of $1.2 billion, with 26.0 million shares repurchased during the fourth quarter at a cost of $509.3 million. Altera ended the quarter with $1.0 billion in cash and short-term investments.
Altera's board of directors has declared a quarterly cash dividend of $0.04 per share payable on March 3, 2008 to shareholders of record on February 11, 2008.
"This was a challenging yet productive year for Altera. Although softer demand led to a disappointing sales year, we are very pleased to have our 65-nm FPGAs shipping and being well received by our customers. This newest generation of FPGAs, with industry-leading low-power and superior performance, extends the innovation advantages which are the basis of our strong competitive position," said John Daane, president, chief executive officer, and chairman of the board. "In addition to these and other new device introductions, our newest software and intellectual property offerings round out a substantial year of Altera innovation. We also took major steps to lower operating expense in 2007, and we will do so again in 2008. In 2007 we initiated our first quarterly dividend and a significant increase in our share repurchase plan to return additional value to shareholders."
Several recent accomplishments mark the company's continuing progress.
-- Altera is now shipping the industry's highest density FPGA, the Stratix(R) III EP3SL340 device which delivers power, performance, and compile-time benefits to Altera's customers. The EP3SL340 provides a 25 percent performance advantage over competing high-density FPGAs and leverages Altera's Programmable Power Technology to deliver 29 percent lower power consumption. Altera's Quartus(R) II software delivers significant productivity benefits for Stratix III customers compared to competing offerings, including superior system level design tools and faster compile times. The unmatched combination of low power, high performance, and high density make the Stratix III family an ideal solution for a broad range of applications in a variety of end markets, including communications, computer and storage, and military/aerospace.
-- Altera introduced the new, zero power MAX(R) IIZ CPLD family to address the increasing system complexity of high volume portable applications. Targeted towards ultra high volume, power-sensitive systems, the new CPLD leverages the architectural advantages of the MAX II family to offer a denser, higher IO count and lower power solution for portable applications markets.
-- All eight members of the low-cost Cyclone(R) III FPGA family, the industry's first and only low-cost 65-nm FPGAs, are now shipping in production quantities. Cyclone III devices are designed for the power-conscious and cost-conscious systems engineer. Consuming 75 percent less power than competing FPGAs, the Cyclone family offers an unprecedented combination of power, functionality, and low cost. First introduced in March 2007, Cyclone III devices have been quickly adopted into numerous systems in the wireless, military, display, automotive and industrial markets.
-- Altera's Nios(R) II processor core remains the FPGA industry's most widely used processor core based on design starts, as confirmed by a recent report from market research firm Gartner. Altera's Nios II processor core is a configurable 32-bit FPGA-based soft microprocessor. Since its introduction, Altera has shipped over 20,000 Nios II development kits. More than 5,000 customers worldwide, including the world's largest electronics OEMs, have adopted Nios II embedded processors into their products.
-- Altera's Quartus II software has received EDN China's 2007 Innovation Award, which honors the products and technologies that are widely accepted and used throughout the electronics industry. This leading award validates the high regard enjoyed by Altera's development software in the Chinese electronics industry. Altera's Quartus II software productivity leadership amplifies the value of Altera's device leadership. With the release of the newest Quartus II software version 7.2, Altera customers can enjoy a compile time advantage three times that of competing high-end 65-nm FPGAs.
Business Outlook for the First Quarter 2008
Sequential Sales Growth Flat to up 2%
Gross Margin 64% - 65%
Research and Development $65 million
SG&A $65 million
Other Income $7 million
Tax Rate 16% - 17%
Conference Call and Quarterly Update:
A conference call will be held today at 2:00 p.m. Pacific Time to discuss the quarter's results and management's outlook for the first quarter of 2008. The web cast and subsequent replay will be available in the investor relations section of the company's web site at http://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, 2008.
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. 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, 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(TM) GX, Cyclone II, Cyclone III, Stratix II, Stratix III, Stratix II GX, MAX II and HardCopy(R) 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 from time to time. Copies of Altera's SEC filings are posted on the company's web site 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's programmable solutions enable system and semiconductor companies to rapidly and cost-effectively innovate, differentiate and win in their markets. Find out more at www.altera.com.
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 YEAR ENDED
----------------------------- -----------------------
Dec. 28 Sept. 28 Dec. 29 Dec. 28 Dec. 29
2007 2007 2006 2007 2006
----------------------------- -----------------------
Net sales $323,167 $315,783 $317,392 $1,263,548 $1,285,535
Cost of sales 116,051 114,369 107,007 448,025 427,975
--------- --------- --------- ----------- -----------
Gross margin 207,116 201,414 210,385 815,523 857,560
--------- --------- --------- ----------- -----------
Operating
expenses (1):
Research and
development 72,705 71,350 58,355 265,581 248,720
Selling,
general, and
administrative 69,280 66,062 73,994 274,989 307,765
--------- --------- --------- ----------- -----------
Total operating
expenses 141,985 137,412 132,349 540,570 556,485
--------- --------- --------- ----------- -----------
Income from
operations 65,131 64,002 78,036 274,953 301,075
Interest and
other, net 11,397 16,180 18,842 62,675 58,595
--------- --------- --------- ----------- -----------
Income before
income taxes 76,528 80,182 96,878 337,628 359,670
Provision
(benefit) for
income taxes 11,051 11,225 (2,984) 47,605 36,434
--------- --------- --------- ----------- -----------
Net income $ 65,477 $ 68,957 $ 99,862 $ 290,023 $ 323,236
========= ========= ========= =========== ===========
Net income per
share:
Basic $ 0.20 $ 0.20 $ 0.28 $ 0.84 $ 0.90
========= ========= ========= =========== ===========
Diluted $ 0.20 $ 0.20 $ 0.27 $ 0.82 $ 0.88
========= ========= ========= =========== ===========
Shares used in
computing per
share amounts:
Basic 328,084 343,127 362,569 345,382 361,096
========= ========= ========= =========== ===========
Diluted 331,807 352,625 368,448 351,906 367,372
========= ========= ========= =========== ===========
Cash dividends
declared per
common share $ 0.04 $ 0.04 $ - $ 0.12 $ -
========= ========= ========= =========== ===========
Tax rate 14.4% 14.0% -3.1% 14.1% 10.1%
% of Net sales:
Gross margin 64.1% 63.8% 66.3% 64.5% 66.7%
Research and
development 22.5% 22.6% 18.4% 21.0% 19.3%
Selling,
general, and
administrative 21.4% 20.9% 23.3% 21.8% 23.9%
Income from
operations
(Operating
margin) 20.2% 20.3% 24.6% 21.8% 23.4%
Net income 20.3% 21.8% 31.5% 23.0% 25.1%
Note:
-----------------
(1) Includes
restructuring
expenses as
follows:
Research and
development $ 1,767 $ - $ - $ 1,767 $ -
Selling,
general, and
administrative $ 3,472 $ - $ - $ 3,472 $ -
--------- --------- --------- ----------- -----------
Total $ 5,239 $ - $ - $ 5,239 $ -
========= ========= ========= =========== ===========
ALTERA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Dec. 28 Sept. 28 Dec. 29
2007 2007 2006
---------- ---------- ----------
Assets
Current assets:
Cash and short-term investments $1,021,379 $1,109,027 $1,363,747
Accounts receivable, net 198,889 181,070 93,263
Inventories 74,110 84,983 78,477
Deferred compensation plan assets 74,768 73,794 69,378
Deferred income taxes and other
current assets 164,942 149,822 146,187
---------- ---------- ----------
Total current assets 1,534,088 1,598,696 1,751,052
Long-term investments - 102,914 256,563
Property and equipment, net 169,850 176,949 178,363
Deferred income taxes and other
assets, net 65,980 66,287 47,282
---------- ---------- ----------
$1,769,918 $1,944,846 $2,233,260
========== ========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and current
liabilities $ 134,450 $ 145,618 $ 243,727
Deferred compensation plan
obligations 74,768 73,794 69,378
Deferred income and allowances on
sales to distributors 280,440 269,513 298,078
---------- ---------- ----------
Total current liabilities 489,658 488,925 611,183
Income taxes payable non-current 152,010 149,512 -
Long-term credit facility 250,000 - -
Other non-current liabilities 16,800 13,790 13,916
Stockholders' equity 861,450 1,292,619 1,608,161
---------- ---------- ----------
$1,769,918 $1,944,846 $2,233,260
========== ========== ==========
Key Ratios & Information
Current Assets/Current Liabilities 3:1 3:1 3:1
Liabilities/Equity 1:1 1:2 1:3
Annualized YTD Return on Equity 21% 20% 23%
Quarterly Depreciation Expense $ 7,693 $ 8,093 $ 7,133
Quarterly Capital Expenditures $ 9,545 $ 2,723 $ 10,692
Annualized Net Sales per Employee $ 473 $ 468 $ 506
Number of Employees 2,651 2,717 2,654
Inventory MSOH (a): Altera 1.9 2.2 2.2
Inventory MSOH (a): Distribution 1.1 1.1 1.3
Days Sales Outstanding 56 52 27
(a) MSOH: Months Supply On Hand
ALTERA CORPORATION
REVENUE SUMMARY
(Unaudited)
Quarterly
Growth Year
Rates ending Annual
--------- Growth
Q4'07 Q3'07 Q4'06 Q-Q Y-Y 2007 2006 Rate
----- ----- ----- --- ---- ---- ---- -------
Geography
-----------------------
North America 24% 22% 22% 12% 10% 22% 24% -9%
----- ----- ----- ---- ----
Asia Pacific 34% 34% 31% 3% 14% 34% 27% 21%
Europe 23% 24% 26% -6% -12% 24% 26% -7%
Japan 19% 20% 21% 0% -7% 20% 23% -15%
----- ----- ----- ---- ----
International 76% 78% 78% 0% 0% 78% 76% 1%
----- ----- ----- ---- ----
Total 100% 100% 100% 2% 2% 100% 100% -2%
===== ===== ===== ==== ====
Product Category
-----------------------
New 37% 35% 24% 9% 56% 32% 19% 65%
Mainstream 27% 29% 32% -5% -14% 30% 35% -15%
Mature & Other 36% 36% 44% 2% -16% 38% 46% -19%
----- ----- ----- ---- ----
Total 100% 100% 100% 2% 2% 100% 100% -2%
===== ===== ===== ==== ====
Market Segment
-----------------------
Communications 41% 40% 39% 4% 5% 40% 42% -6%
Industrial 34% 33% 35% 6% 0% 35% 34% 1%
Consumer 16% 18% 15% -8% 7% 16% 14% 13%
Computer & Storage 9% 9% 11% 2% -11% 9% 10% -11%
----- ----- ----- ---- ----
Total 100% 100% 100% 2% 2% 100% 100% -2%
===== ===== ===== ==== ====
FPGAs and CPLDs
-----------------------
FPGA 71% 70% 71% 4% 3% 71% 71% -1%
CPLD 19% 19% 19% -1% -1% 19% 19% -5%
Other 10% 11% 10% -1% 1% 10% 10% 3%
----- ----- ----- ---- ----
Total 100% 100% 100% 2% 2% 100% 100% -2%
===== ===== ===== ==== ====
Product Category Description
-------------------------------
Category Products
New Stratix II, Stratix III, Stratix II GX, Arria GX,
Cyclone II, Cyclone III, MAX II, HardCopy and
HardCopy II
Mainstream Stratix, Stratix GX, Cyclone, and MAX 3000A
Mature & Other Classic, MAX 7000, MAX 7000A, MAX 7000B, MAX 7000S,
MAX 9000, FLEX 6000, FLEX 8000, FLEX 10K, FLEX 10KA,
FLEX 10KE, APEX 20K, APEX 20KE, APEX 20KC, APEX II,
ACEX 1K, Mercury, Excalibur, configuration and other
devices, intellectual property cores, and software
and other tools
Contact:
Altera Corporation
Scott Wylie ®�“ Vice
President, 408-544-6996
Investor Relations
Email Contact
Mark
Plungy ®�“ Senior Manager, 408-544-6397
Corporate
Communications
Email Contact