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Altera CorporationCaliforniaNASDAQ-NMS:ALTRPR Newswire
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Altera Announces Third Quarter Results

Posted: October 23, 2015 12:15 am (UTC)

SAN JOSE, Calif., Oct. 22, 2015 /PRNewswire/ — Altera Corporation (NASDAQ: ALTR) today announced third quarter sales of $399.6 million, down 4 percent from the second quarter of 2015 and down 20 percent from the third quarter of 2014. Third quarter net income was $61.5 million, $0.20 per diluted share, compared with net income of $70.3 million, $0.23 per diluted share, in the second quarter of 2015 and $118.0 million, $0.38 per diluted share, in the third quarter of 2014.

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Year-to-date cash flow from operating activities was $392.9 million. Altera's board of directors has declared a quarterly cash dividend of $0.18 per share, to be paid on December 1, 2015 to shareholders of record on November 10, 2015.

"Market conditions globally were quite varied this quarter as some vertical markets produced good growth while others were weak. In spite of these headwinds we saw double-digit new product growth plus continued strength in data center demand," said John Daane, president, chief executive officer, and chairman of the board.

Third Quarter Business Summary

The quarter's sequential sales decline reflects choppy conditions across the company's vertical markets. Telecom and Wireless sales grew as wireless equipment demand rebounded from the prior quarter. Industrial market weakness was the major contributor to a decline in sales in the Industrial Automation, Military & Auto vertical market. Networking, Computer & Storage sales grew, led by gains in computer and storage, as data center customers increasingly leverage the performance and low power benefits of Altera FPGAs. Gross margin was 66.5 percent, down from the second quarter, due to unfavorable changes in vertical market mix. Reduced merger-related expenses led to a sequential decline in the quarter's operating expenses. The company's tax rate was 21.4 percent, up from the prior quarter, largely the result of continuing adverse geographic mix and reduced acquisition-related costs in the quarter.

                                            SELECTED THIRD QUARTER RATIOS AND RELATED RESULTS       ($ in thousands)                                                   September 25, 2015            June 26, 2015     Key Ratios & Information     ------------------------      Current Ratio                                                                     4:1                           5:1      Liabilities/Equity                                                                3:4                           3:4      Quarterly Operating Cash Flows                                                          $167,018                     $89,220      TTM Return on Equity                                                              10%                           12%      Quarterly Depreciation Expense                                                           $12,183                     $11,985      Quarterly Capital Expenditures                                                           $10,190                      $7,696      Inventory MSOH (1): Altera                                                        3.6                            4.2      Inventory MSOH (1): Distribution                                                  0.8                            0.7      Cash Conversion Cycle (Days)                                                      168                            162      Turns                                                                             48%                           46%      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 25,                    June 26,          September 26,               Sequential     Year-                               2015                          2015                   2014                  Change     Over-Year                                                                                                                  Change                                                                                                                    ------      Geography     ---------      Americas                   17%                                20%                                      16%                (14)% (15)%      Asia Pacific               43%                                41%                                      42%                 (1)% (19)%      EMEA                       29%                                27%                                      29%                   4% (19)%      Japan                      11%                                12%                                      13%                (13)% (33)%                                ---                                 ---                                       ---      Net Sales                 100%                               100%                                     100%                 (4)% (20)%                                ===                                 ===                                       ===      Product Category     ----------------      New                        62%                                53%                                      56%                  12% (12)%      Mainstream                 16%                                23%                                      21%                (31)% (37)%      Mature and Other           22%                                24%                                      23%                (11)% (23)%                                ---                                 ---                                       ---      Net Sales                 100%                               100%                                     100%                 (4)% (20)%                                ===                                 ===                                       ===      Vertical Market     ---------------      Telecom &      Wireless                  35%                                31%                                      45%                  11% (37)%      Industrial      Automation,      Military &      Automotive                24%                                27%                                      21%                (14)%  (6)%      Networking,      Computer &      Storage                   21%                                18%                                      16%                  11%    1%      Other                      20%                                24%                                      18%                (20)% (12)%                                ---                                 ---                                       ---      Net Sales                 100%                               100%                                     100%                 (4)% (20)%                                ===                                 ===                                       ===      FPGAs and CPLDs     ---------------      FPGA                       84%                                83%                                      85%                 (2)% (21)%      CPLD                        9%                                11%                                       8%                (20)%  (5)%      Other Products              7%                                 6%                                       7%                   7% (22)%                                ---                                 ---                                       ---      Net Sales                 100%                               100%                                     100%                 (4)% (20)%                                ===                                 ===                                       === 

Product Category Description

     --  New Products include the Arria(®) 10, Stratix(®) V, Stratix IV, Arria         V, Arria II, Cyclone(® )V, Cyclone IV, MAX(® )10, 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, MAX 3000A, MAX 7000, MAX 7000A, MAX 7000B, MAX         7000S, MAX 9000, HardCopy II, HardCopy, FLEX(®) series, APEX(TM)         series, Mercury(TM), Excalibur(TM) devices, configuration and other         devices, intellectual property cores, and software and other tools. 

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 data center application growth potential. Investors are cautioned that all forward-looking statements in this release involve risks and uncertainty that can cause actual results to differ materially from those currently anticipated due to a number of factors, including without limitation, changing global 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.

About Altera

Altera(®) programmable solutions enable designers of electronic systems to rapidly and cost effectively innovate, differentiate and win in their markets. Altera offers FPGA, SoC, CPLD products, and complementary technologies, such as power solutions, to provide high-value solutions to customers worldwide. Visit www.altera.com.

ALTERA, ARRIA, CYCLONE, ENPIRION, 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.

                                                                                                              ALTERA CORPORATION                                                                                                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                                                                                                                  (Unaudited)                                                                       Three Months Ended                                                         Nine Months Ended                                                                    ------------------                                                         -----------------      (In thousands, except per share      amounts)                               September 25,              June 26,               September 26,                   September 25,                    September 26,                                                      2015                    2015                        2014                                 2015                          2014     ---                                              ----                    ----                        ----                                 ----                          ----       Net sales                                             $399,567                                               $414,162                                               $499,606               $1,249,214 $1,452,216      Cost of sales                                 133,667                             126,590                                   166,019                                   416,520      480,279                                                   -------                             -------                                   -------                                   -------      -------      Gross margin                                  265,900                             287,572                                   333,587                                   832,694      971,937      Operating expense      Research and development expense              100,481                             105,345                                   112,078                                   309,057      310,856      Selling, general, and administrative      expense                                       74,745                              75,011                                    77,724                                   220,262      231,205      Amortization of acquisition-related      intangible assets                              2,491                               2,427                                     2,465                                     7,382        7,394      Merger expenses                                10,421                              18,458                                         -                                   28,879            -                                                    ------                              ------                                       ---                                   ------          ---      Total operating expense                       188,138                             201,241                                   192,267                                   565,580      549,455                                                   -------                             -------                                   -------                                   -------      -------      Operating margin (2)                           77,762                              86,331                                   141,320                                   267,114      422,482      Compensation (benefit)/expense -      deferred compensation plan                   (4,468)                              2,732                                     (487)                                  (1,709)       4,093      Loss/(gain) on deferred compensation      plan securities                                4,468                             (2,732)                                      487                                     1,709      (4,093)      Interest income and other                     (9,590)                            (8,495)                                  (4,558)                                 (24,681)    (18,362)      Gain reclassified from other      comprehensive income                         (1,644)                            (1,463)                                     (59)                                  (5,613)       (150)      Interest expense                               10,772                              10,859                                    10,774                                    32,039       32,139                                                    ------                              ------                                    ------                                    ------       ------      Income before income taxes                     78,224                              85,430                                   135,163                                   265,369      408,855      Income tax expense                             16,706                              15,091                                    17,154                                    38,660       47,328      Net income                                     61,518                              70,339                                   118,009                                   226,709      361,527                                                    ------                              ------                                   -------                                   -------      -------       Other comprehensive income/(loss):      Unrealized gain/(loss) on investments:      Unrealized holding gain/(loss) on      investments arising during period, net      of tax of $190, ($460), ($6), ($228)      and $41                                       13,058                            (24,805)                                  (4,929)                                    5,038       22,102      Less: Reclassification adjustments for      gain on investments included in net      income, net of tax of ($1), $9, $11,      $15 and $21                                  (1,644)                            (1,454)                                     (48)                                  (5,598)       (129)                                                    ------                              ------                                       ---                                    ------         ----      Other comprehensive income/(loss)              11,414                            (26,259)                                  (4,977)                                    (560)      21,973                                                    ------                             -------                                    ------                                      ----       ------      Comprehensive income                                   $72,932                                                $44,080                                               $113,032                 $226,149   $383,500                                                            =======                                                =======                                               ========                 ========   ========       Net income per share:      Basic                                                    $0.20                                                  $0.23                                                  $0.38                    $0.75      $1.16                                                              =====                                                  =====                                                  =====                    =====      =====      Diluted                                                  $0.20                                                  $0.23                                                  $0.38                    $0.74      $1.15                                                              =====                                                  =====                                                  =====                    =====      =====       Shares used in computing per share      amounts:      Basic                                         302,707                             301,799                                   308,215                                   301,950      311,853                                                   =======                             =======                                   =======                                   =======      =======      Diluted                                       305,337                             304,604                                   310,184                                   304,421      314,130                                                   =======                             =======                                   =======                                   =======      =======       Dividends per common share                               $0.18                                                  $0.18                                                  $0.18                    $0.54      $0.48                                                              =====                                                  =====                                                  =====                    =====      =====       Tax rate                                        21.4%                              17.7%                                    12.7%                                    14.6%       11.6%      % of Net sales:      Gross margin                                    66.5%                              69.4%                                    66.8%                                    66.7%       66.9%      Research and development (1)                    25.8%                              26.0%                                    22.9%                                    25.3%       21.9%      Selling, general, and administrative            18.7%                              18.1%                                    15.6%                                    17.6%       15.9%      Operating margin(2)                             19.5%                              20.8%                                    28.3%                                    21.4%       29.1%      Net income                                      15.4%                              17.0%                                    23.6%                                    18.1%       24.9% 

      Notes:      (1) Research and development expense as a percentage of Net sales includes amortization of acquisition-related intangible assets.        (2) We define operating margin as gross margin less research and development expense, selling, general and administrative expense, amortization of acquisition-related intangible assets, and merger 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 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                                                        Nine Months Ended                                                                                 ------------------                                                        -----------------      (In thousands, except per share      amounts)                                          September 25,               June 26,               September 26,               September 25,               September 26,                                                                 2015                     2015                        2014                         2015                         2014                                                                 ----                     ----                        ----                         ----                         ----      Operating margin (non-GAAP)                                          $77,762                                             $86,331                                                  $141,320                                           $267,114                                           $422,482      Compensation (benefit)/expense      -deferred compensation plan                             (4,468)                              2,732                                        (487)                                  (1,709)                                4,093                                                                                                   -----                                         ----      Income from operations (GAAP)                                        $82,230                                             $83,599                                                  $141,807                                           $268,823                                           $418,389                                                                          =======                                             =======                                                  ========                                           ========                                           ======== 

                                                   ALTERA CORPORATION                                              CONSOLIDATED BALANCE SHEETS                                                      (Unaudited)       (In thousands, except par value amount)           September 25,               December 31,                                                                2015                         2014     ---                                                        ----                         ----       Assets      Current assets:      Cash and cash equivalents                                          $1,934,850                  $2,426,367      Short-term investments                                  185,762                        151,519                                                             -------                        -------      Total cash, cash equivalents, and      short-term investments                               2,120,612                      2,577,886      Accounts receivable, net                                444,107                        377,964      Inventories                                             159,310                        153,387      Deferred income taxes - current                          60,210                         56,048      Deferred compensation plan -marketable      securities                                              57,781                         69,367      Deferred compensation plan -restricted      cash equivalents                                        17,166                         14,412      Other current assets                                     50,718                         39,479                                                              ------                         ------      Total current assets                                  2,909,904                      3,288,543      Property and equipment, net                             208,897                        194,840      Long-term investments                                 2,504,693                      1,942,343      Deferred income taxes - non-current                      20,725                         20,077      Goodwill                                                 81,331                         74,341      Acquisition-related intangible assets,      net                                                     66,989                         72,291      Other assets, net                                        92,646                         81,791                                                              ------                         ------      Total assets                                                       $5,885,185                  $5,674,226                                                                        ==========                  ==========       Liabilities and stockholders' equity      Current liabilities:      Accounts payable                                                      $41,520                     $49,140      Accrued liabilities                                      47,523                         28,384      Accrued compensation and related      liabilities                                             74,113                         69,837      Deferred compensation plan obligations                   74,947                         83,779      Deferred income and allowances on sales      to distributors                                        439,504                        344,168      Total current liabilities                               677,607                        575,308      Income taxes payable - non-current                      352,433                        313,447      Long-term debt                                        1,493,729                      1,492,759      Other non-current liabilities                             8,955                          6,886                                                               -----                          -----      Total liabilities                                     2,532,724                      2,388,400                                                           ---------                      ---------      Stockholders' equity:      Common stock: $.001 par value;      1,000,000 shares authorized;      outstanding -302,857 shares at      September 25, 2015 and 302,430 shares      at December 31, 2014                                       303                            302      Capital in excess of par value                        1,227,586                      1,165,259      Retained earnings                                     2,115,487                      2,110,620      Accumulated other comprehensive income                    9,085                          9,645                                                               -----                          -----      Total stockholders' equity                            3,352,461                      3,285,826                                                           ---------                      ---------      Total liabilities and stockholders'      equity                                                            $5,885,185                  $5,674,226                                                                        ==========                  ========== 

                                                             ALTERA CORPORATION                                                   CONSOLIDATED STATEMENTS OF CASH FLOWS                                                         (Unaudited, in thousands)                                                                                  Nine Months Ended                                                                                -----------------       (In thousands)                                             September 25,                    September 26,                                                                          2015                                 2014     ---                                                                  ----                                 ----       Cash Flows from Operating Activities:      Net income                                                                     $226,709                            $361,527      Adjustments to reconcile net income to net      cash provided by operating activities:      Depreciation and amortization                                      42,804                                 42,426      Amortization of acquisition-related      intangible assets                                                  7,382                                  7,394      Amortization of debt discount and debt      issuance costs                                                     2,337                                  2,337      Stock-based compensation                                           63,560                                 70,518      Net gain on sale of available-for-sale      securities                                                       (5,613)                                 (150)      Amortization of investment discount/premium                         9,025                                  1,900      Deferred income tax expense                                         1,065                                  3,582      Tax effect of employee stock plans                                  3,352                                  7,434      Excess tax benefit from employee stock plans                      (3,704)                               (4,719)      Changes in assets and liabilities, net of      the effects of acquisition:      Accounts receivable, net                                         (66,143)                                76,324      Inventories                                                       (5,923)                              (22,458)      Other assets                                                      (5,796)                               (3,002)      Accounts payable and other liabilities                              9,401                                 32,581      Deferred income and allowances on sales to      distributors                                                      95,336                               (90,744)      Income taxes payable and receivable, net                           26,202                                 36,345      Deferred compensation plan obligations                            (7,123)                               (5,858)      Net cash provided by operating activities                         392,871                                515,437                                                                       -------                                -------      Cash Flows from Investing Activities:      Purchases of property and equipment                              (52,243)                              (34,946)      Sales of deferred compensation plan      securities, net                                                    7,123                                  5,858      Purchases of available-for-sale securities                    (1,520,789)                             (276,867)      Proceeds from sale of available-for-sale      securities                                                       804,163                                 79,424      Proceeds from maturity of available-for-      sale securities                                                  111,439                                175,280      Acquisition, net of cash acquired                                 (4,000)                                     -      Purchases of intangible assets                                    (5,359)                               (1,269)      Purchases of other investments                                    (2,000)                               (8,224)      Net cash used in investing activities                           (661,666)                              (60,744)                                                                      --------                                -------      Cash Flows from Financing Activities:      Proceeds from issuance of common stock      through stock plans                                               19,080                                 29,871      Shares withheld for employee taxes                               (25,052)                              (20,852)      Payment of dividends to stockholders                            (162,947)                             (149,844)      Holdback payment for prior acquisition                                  -                               (3,353)      Long-term debt and credit facility issuance      costs                                                                  -                               (1,321)      Repurchases of common stock                                      (57,507)                             (502,986)      Excess tax benefit from employee stock plans                        3,704                                  4,719                                                                         -----                                  -----      Net cash used in financing activities                           (222,722)                             (643,766)                                                                      --------                               --------      Net decrease in cash and cash equivalents                       (491,517)                             (189,073)      Cash and cash equivalents at beginning of      period                                                         2,426,367                              2,869,158                                                                     ---------                              ---------      Cash and cash equivalents at end of period                                   $1,934,850                          $2,680,085                                                                                  ==========                          ========== 

      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     -----------------            ------------------- 

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SOURCE Altera Corporation

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STOCK SYMBOL: – NASDAQ-NMS:ALTR
Company – Altera Corporation
Location: California (GeographyCode)
GEOTAG: California

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