Third quarter 2007 net income was $69.0 million, $0.20 per diluted share, compared with net income of $87.4 million, $0.24 per diluted share, in the third quarter of 2006.
Altera repurchased 10.8 million shares of its common stock during the quarter at a cost of $255 million. As of the end of the third quarter, Altera has, year to date, repurchased 32 million shares at a cost of $717 million. Repurchases in 2007 are part of a previously announced plan to repurchase up to $1.5 billion of the company's common stock through 2007 and the first half of 2008. Altera ended the quarter with $1.2 billion in cash and investments.
Altera's board of directors has declared a quarterly cash dividend of $0.04 per share payable on December 3, 2007 to shareholders of record on November 12, 2007.
"The September quarter proved more challenging than anticipated. Sales to the communications and industrial markets were below expectations, although consumer market segment sales were up strongly. The resulting end market mix reduced gross margin this quarter. Reflecting continued cost control efforts across the company, operating expenses came in lower than forecast, more than offsetting the lower than planned gross margin," said John Daane, president, chief executive officer, and chairman of the board. "New product sales once again generated good double digit sequential growth and are now 35 percent of sales. With the Stratix(R) III FPGA family now shipping, we are the only programmable logic company with 65-nm devices optimized for low power, which gives us a unique competitive position at the leading edge of FPGA deployment. The Stratix III introduction is going smoothly, and we anticipate rapid customer adoption."
Several recent accomplishments mark the company's continuing progress:
-- The first member of the 65-nm Stratix III family shipped in August, a month ahead of schedule. Available in software since November 2006, customers have been actively designing the Stratix III family into a broad range of applications including high performance computing, next generation wireless base stations, communications network infrastructure, and advanced imaging equipment. The Stratix III family delivers the lowest power consumption and highest performance of any high-end programmable logic device, with 45 percent lower power consumption and a 25 percent performance advantage over competing solutions. To dramatically lower power while delivering high performance, Stratix III FPGAs feature Altera's innovative Programmable Power Technology. This power management technology enables every programmable logic array, digital signal processing and memory block to operate independently at high-speed or low-power mode.
-- With the release of Quartus(R) II software version 7.2, Altera continues to extend its advantage in compile times, a key productivity metric. This new Quartus development software enables Stratix III FPGAs to achieve 300 percent faster compile times compared to competing high-end 65-nm devices. Electronic system designers, faced with aggressive time-to-market goals and increasingly concerned about designer productivity, can immediately benefit from the many other new features built into this latest Quartus version that further reduce development time. Beyond ease of use, performance remains critical. The enhanced Quartus version 7.2 place-and-route algorithms enable Stratix III FPGAs to produce a two speed grade Altera advantage versus competitors, giving customers yet another reason to choose Altera.
Business Outlook for the Fourth Quarter 2007 Sequential Sales Growth Flat to down 4% Gross Margin 63% to 64% Research and Development approximately $73 million SG&A approximately $67 million Other Income approximately $12 million Tax Rate 13% to 15%
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 fourth quarter of 2007. A 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 fourth quarter business update will be issued in a press release available after the market close on December 5, 2007.
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 as well as comments relating to new products and share repurchase plans. 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, 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(R) II, Cyclone III, Stratix II, Stratix III, Stratix II GX, MAX(R) II and HardCopy(R) device families, changes in the mix of our business between prototyping and production-based demand, the continuance of suitable financial market conditions, 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 NINE MONTHS ENDED
----------------------------- -------------------
September June September September September
28 29 29 28 29
2007 2007 2006 2007 2006
--------- --------- --------- --------- ---------
Net sales $315,783 $319,682 $341,213 $940,381 $968,143
Cost of sales (1) 114,369 113,093 110,527 331,974 320,968
--------- --------- --------- --------- ---------
Gross margin 201,414 206,589 230,686 608,407 647,175
--------- --------- --------- --------- ---------
Operating expenses:
Research and
development (1) 71,350 63,071 63,604 192,876 190,365
Selling, general,
and administrative
(1) 66,062 67,863 80,773 205,709 233,771
--------- --------- --------- --------- ---------
Total operating
expenses 137,412 130,934 144,377 398,585 424,136
--------- --------- --------- --------- ---------
Income from
operations 64,002 75,655 86,309 209,822 223,039
Interest and other
income, net 16,180 17,985 16,539 51,278 39,753
--------- --------- --------- --------- ---------
Income before income
taxes 80,182 93,640 102,848 261,100 262,792
Provision for income
taxes 11,225 13,110 15,427 36,554 39,418
--------- --------- --------- --------- ---------
Net income $ 68,957 $ 80,530 $ 87,421 $224,546 $223,374
========= ========= ========= ========= =========
Net income per share:
Basic $ 0.20 $ 0.23 $ 0.24 $ 0.64 $ 0.62
========= ========= ========= ========= =========
Diluted $ 0.20 $ 0.22 $ 0.24 $ 0.63 $ 0.61
========= ========= ========= ========= =========
Shares used in
computing per share
amounts:
Basic 343,127 352,721 361,840 351,147 360,607
========= ========= ========= ========= =========
Diluted 352,625 359,542 367,313 358,605 367,151
========= ========= ========= ========= =========
Cash dividend
declared per common
share $ 0.04 $ - $ - $ 0.08 $ -
========= ========= ========= ========= =========
Tax rate 14.0% 14.0% 15.0% 14.0% 15.0%
% of Net sales:
Gross margin 63.8% 64.6% 67.6% 64.7% 66.8%
Research and
development 22.6% 19.7% 18.6% 20.5% 19.7%
Selling, general,
and
administrative 20.9% 21.2% 23.7% 21.9% 24.1%
Income from
operations 20.3% 23.7% 25.3% 22.3% 23.0%
Net income 21.8% 25.2% 25.6% 23.9% 23.1%
Note:
---------------------
(1)Includes stock-based compensation expenses as follows:
Cost of sales $ 325 $ 321 $ 422 $ 979 $ 1,499
Research and
development $ 5,027 $ 4,918 $ 6,116 $ 15,458 $ 22,017
Selling, general, and
administrative $ 6,608 $ 7,404 $ 8,483 $ 21,269 $ 29,107
ALTERA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 28 June 29 December 29
2007 2007 2006
------------ ----------- -----------
Assets
Current assets:
Cash and short-term investments $ 1,109,027 $1,169,813 $1,363,747
Accounts receivable, net 181,070 188,486 93,263
Inventories 84,983 73,532 78,477
Deferred compensation plan
assets 73,794 70,951 69,378
Deferred income taxes and other
current assets 149,822 142,930 146,187
------------ ----------- -----------
Total current assets 1,598,696 1,645,712 1,751,052
Long-term investments 102,914 134,921 256,563
Property and equipment, net 176,949 182,319 178,363
Deferred income taxes and other
assets, net 66,287 65,034 47,282
------------ ----------- -----------
$ 1,944,846 $2,027,986 $2,233,260
============ =========== ===========
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable and current
liabilities $ 145,618 $ 97,762 $ 243,727
Deferred compensation plan
obligations 73,794 70,951 69,378
Deferred income and allowances
on sales to distributors 269,513 273,799 298,078
------------ ----------- -----------
Total current liabilities 488,925 442,512 611,183
Income taxes payable non-current 149,512 142,430 -
Other non-current liabilities 13,790 14,433 13,916
Stockholders' equity 1,292,619 1,428,611 1,608,161
------------ ----------- -----------
$ 1,944,846 $2,027,986 $2,233,260
============ =========== ===========
Key Ratios & Information
Current Assets/Current
Liabilities 3:1 4:1 3:1
Liabilities/Equity 1:2 1:2 1:3
Annualized YTD Return on Equity 20% 20% 23%
Quarterly Depreciation Expense $ 8,093 $ 7,468 $ 7,133
Quarterly Capital Expenditures $ 2,723 $ 5,013 $ 10,692
Annualized Net Sales per Employee $ 468 $ 469 $ 506
Number of Employees 2,717 2,696 2,654
Inventory MSOH (a): Altera 2.2 2.0 2.2
Inventory MSOH (a): Distribution 1.1 1.2 1.3
Days Sales Outstanding 52 54 27
(a) MSOH: Months Supply On Hand
ALTERA CORPORATION
REVENUE SUMMARY
(Unaudited)
Q-Q Y-Y
Q3'07 Q2'07 Q3'06 Growth Growth
--------- -------- ------ ------ ------
Geography
------------------------------
North America 22% 21% 23% 1% -13%
--------- -------- ------
Asia Pacific 34% 33% 28% 0% 13%
Europe 24% 25% 27% -2% -16%
Japan 20% 21% 22% -5% -17%
--------- -------- ------
International 78% 79% 77% -2% -6%
--------- -------- ------
Total 100% 100% 100% -1% -7%
========= ======== ======
Product Category
------------------------------
New 35% 30% 21% 13% 52%
Mainstream 29% 32% 36% -9% -24%
Mature & Other 36% 38% 43% -6% -23%
--------- -------- ------
Total 100% 100% 100% -1% -7%
========= ======== ======
Market Segment
------------------------------
Communications 40% 40% 41% -1% -10%
Industrial 33% 35% 33% -8% -7%
Consumer 18% 16% 15% 14% 14%
Computer & Storage 9% 9% 11% -3% -24%
--------- -------- ------
Total 100% 100% 100% -1% -7%
========= ======== ======
FPGAs and CPLDs
------------------------------
FPGA 70% 70% 71% -1% -9%
CPLD 19% 19% 19% 1% -4%
Other 11% 11% 10% -4% -3%
--------- -------- ------
Total 100% 100% 100% -1% -7%
========= ======== ======
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, 408-544-6996 (Investors)
Vice
President – Investor Relations
Email Contact
Anna
Del Rosario, 408-544-6397 (Media)
Director –
Corporate Communications
Email Contact