Editor Contact
Lance M. Lissner
Vice President - Business Development & Investor Relations
Altera Corporation
San Jose, CA
(408) 544-7707
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Release Date: October 14, 1998
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Altera Corporation Reports Third Quarter '98 Results
Sales Increase 2% Sequentially,
Net Income Up 10% Sequentially
San Jose, Calif., October 14, 1998- Altera Corporation (Nasdaq: ALTR) today reported third quarter sales of $164.2 million, up 2% from the previous quarter and up 1% over the same period last year. Overall sales growth of 2% was achieved by sequential gains of 2% in North America and 11% in Europe. Offsetting growth in North America and Europe, third quarter sales in Asia/Pacific were flat and Japan experienced a 5% sequential decline. Under the new categorization of product revenues announced last quarter (see note below), new and mainstream products made up over 50% of total revenues for the quarter, and their growth fully offset declines in mature and other products. New product revenues grew 42% sequentially representing a tenfold increase year on year, and mainstream product revenues grew 10% sequentially, an increase of 80% year on year.
Net income for the third quarter was $40.1 million, an increase of 10% from the previous quarter, and up 3% from the third quarter of 1997. Both gross margins and operating expenses, as a percentage of sales, improved from the previous quarter to 61.9% and 25.8%, respectively. Third quarter earnings per share, on a diluted basis, were $0.40, an increase of $0.02 from the prior quarter, and equivalent to the same period last year. Third quarter earnings included an after-tax charge of $3.3 million, or $0.03 per share, representing the Company's share in the start-up losses of WaferTech (a joint venture with TSMC to manufacture wafers in a state-of-the-art facility in Camas, Washington). Excluding WaferTech results, diluted earnings per share were $0.43, up $0.03 from the same period last year.
Altera added $51.1 million of cash to its balance sheet during the quarter, after the repurchase of 260,000 shares of its common stock for $8.6 million and routine capital expenditures of $6.4 million.
During the third quarter, the Company announced APEXTM (formerly code-named Raphael), its newest family of devices, which utilizes a revolutionary, new architecture for programmable logic devices (PLDs). The APEX family of embedded PLDs, fabricated on a 0.25 micron SRAM process, marks an industry first with the introduction of an innovative embedded architecture. The MultiCoreTM architecture includes look-up tables, product terms and increased amounts of embedded memory including ROM, RAM and CAM. With initial gate counts ranging from 100,000 to 1 million gates and future process migrations enabling up to 2 million gates, the APEX device family will allow designers to integrate complex, high-performance systems on a single programmable chip.
APEX will be supported by Altera's fourth-generation design tool, QuartusTM. Quartus has been specifically designed to support million-plus gate designs with features such as workgroup-based computing, incremental compilation and seamless integration with leading third-party EDA tools.
Earlier this month, the roll out of the previously announced FLEX® 10KE family was initiated with first shipments of the FLEX10K50E. Manufactured on a 0.25 micron process and operating at a 2.5-V core voltage, the FLEX 10KE family offers higher performance and lower power consumption with logic densities ranging from 30K to 250K gates and up to 96K bits of on-chip, dual-port RAM. Version 9.0 of the MAX+PLUS® II design software, introduced during the third quarter, supports all FLEX 10KE devices, allowing customers to start designs in advance of silicon for the entire FLEX 10KE family.
Rodney Smith, President and CEO stated, "We are pleased with the financial and operational results achieved during the quarter. Record sales results were obtained in both Europe and total International, in what historically has been a seasonally weak quarter. Both new and mainstream products delivered double-digit sequential growth and achieved the important milestone of contributing more than half the quarter's revenues. We plan to continue on time execution of new product introductions, and believe we will demonstrate continued industry leadership with truly innovative products such as the APEX family and Quartus design tools."
Note on Product Category Changes
As announced last quarter, effective this
quarter Altera has changed the make up of the product categories as reported each quarter. Remaining in the "New" category are the FLEX 10KA/10KE, FLEX 6000/6000A, and MAX® 7000A devices. Added to the "New" category are the MAX 7000B and APEX devices. The FLEX 10K, MAX 7000S, and MAX 9000 products, previously categorized as "New", now make up the "Mainstream" category in its entirety. All the products previously reported in the "Mainstream" category are now classified as either Mature (FLEX 8000 and MAX 7000) or Other (FLASHlogic). For further details please refer to Altera's >Investor Relations web site at http://www.altera.com.
This press release contains "forward
looking statements" which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward looking statements are generally written in the future tense and/or are preceded by words such as "expects", "believes", "offers", "anticipates", "projects", or "intends". Investors are cautioned that all forward looking statements in this release involve risks and uncertainty, including without limitation the risk that future performance is dependent on FLEX 10KE and APEX product development, MAX+PLUS II and Quartus software development, market acceptance of the Company's new products, development of technology and manufacturing capabilities, and third-party wafer suppliers meeting the Company's wafer requirements. Please refer to the Company's Securities and Exchange Commission filings, copies of which are available from the Company without charge, for further information.
Fax on Demand
Copies of Altera's announcement are available from its fax-on-demand service. In the U.S. and Canada to request a copy call 1-800-789-ALTR. International users can dial their local International Access Code followed by 1-408-894-0466. More information can be obtained on the worldwide web at http://www.altera.com.
Altera Corporation, The Programmable Solutions CompanySM, was founded in 1983 and is a worldwide leader in high-performance, high-density programmable logic devices and associated computer aided engineering (CAE) logic development tools. Programmable logic devices are semiconductor chips that offer on-site programmability to customers. The chips are programmed using tools that run on personal computers or engineering workstations. User benefits include ease of use, lower risk, and fast time-to-market. The company offers the broadest line of CMOS programmable logic devices that address high-speed, high-density, and low-power applications. Altera products serve a broad range of markets, including telecommunications, data communications, computer peripherals, and industrial applications. Altera common stock is traded on the Nasdaq Stock Market under the symbol ALTR.
ALTERA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
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|
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THREE MONTHS ENDED
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NINE MONTHS ENDED
|
|
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Sept.
30
1998 |
Sept.
30
1997 |
Jun.
30
1998 |
Sept.
30
1998 |
Sept. 30
1997* |
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Net sales |
$164,218 |
$162,126 |
$160,476 |
$481,910 |
$474,026 |
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Costs & expenses: |
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|
|
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Cost of sales |
62,511 |
60,749 |
61,691 |
184,292 |
177,991 |
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Research and development |
15,223 |
14,334 |
14,233 |
43,863 |
41,088 |
Selling, general
and
administrative |
27,142 |
29,163 |
28,572 |
83,852 |
83,423 |
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Total costs and expenses |
104,876 |
104,246 |
104,496 |
312,007 |
302,502 |
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Income from operations |
59,342 |
57,880 |
55,980 |
169,903 |
171,524 |
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Interest & other income, net |
5,065 |
925 |
1,665 |
6,882 |
2,516 |
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Income before taxes |
64,407 |
58,805 |
57,645 |
176,785 |
174,040 |
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Provision for income taxes |
20,931 |
19,994 |
18,733 |
57,451 |
59,173 |
Income before
accounting
change
and equity investment |
43,476 |
38,811 |
38,912 |
119,334 |
114,867 |
Equity in income
(loss) of
WaferTech |
(3,333) |
- |
(2,296) |
(7,440) |
- |
Income before
cumulative
effect
of accounting change |
40,143 |
38,811 |
36,616 |
111,894 |
114,867 |
Cumulative effect of
change in
accounting principle |
- |
- |
- |
- |
(18,064) |
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Net income |
$ 40,143
=======
|
$ 38,811
======= |
$ 36,616
======= |
$111,894
======= |
$ 96,803
======= |
Basic earnings per share:
Income before
accounting
change |
$ 0.41
======= |
$ 0.44
======= |
$ 0.41
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$ 1.21
======= |
$ 1.30
======= |
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Net income |
$ 0.41
======= |
$ 0.44
======= |
$ 0.41
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$ 1.21
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$ 1.10
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Diluted earnings per share:
Income before
accounting
change and
equity
investment
|
$ 0.43
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$ 0.40
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$ 0.40
======= |
$ 1.22
======= |
$ 1.17
======= |
Income
before accounting
change |
$ 0.40
======= |
$ 0.40
======= |
$ 0.38
======= |
$ 1.14
======= |
$ 1.17
======= |
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Net income |
$ 0.40
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$ 0.40
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$ 0.38
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$ 1.14
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$ 0.99
======= |
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Weighted average shares:
Basic |
97,235
======= |
88,782
======= |
90,311
======= |
92,173
======= |
88,332
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Diluted |
100,902
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103,068
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101,612
======= |
101,488
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102,610
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Tax rate |
32.5% |
34.0% |
32.5% |
32.5% |
34.0% |
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% of Sales: |
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|
|
|
|
|
Gross margin |
62% |
63% |
62% |
62% |
62% |
|
Research and development |
9% |
9% |
9% |
9% |
9% |
Selling, general &
administrative |
17% |
18% |
18% |
17% |
17% |
|
Income from operations |
36% |
36% |
35% |
36% |
36% |
Income
before accounting
change |
24% |
24% |
23% |
23% |
24% |
* As restated to reflect the effect of change in accounting principle
ALTERA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
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Sept. 30 1998 |
Jun. 30 1998 |
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Assets |
|
|
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Current assets: |
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|
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Cash and short-term investments |
$ 494,853
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$ 443,756
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Accounts receivable, net |
64,667
|
60,791
|
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Inventories |
70,039
|
77,236
|
|
Other assets |
94,695
|
91,634
|
|
Total current assets |
724,254
|
673,417
|
|
Property & equipment, net |
152,981
|
152,588
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|
Investments & intangibles |
154,309
|
165,879
|
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$ 1,031,544
==========
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$ 991,884
==========
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|
Liabilities and Stockholders' Equity |
|
|
|
Accounts payable and current liabilities |
$ 52,233
|
$ 53,269
|
|
Deferred income on sales to distributors |
150,307
|
144,001
|
|
Total current liabilities |
202,540
|
197,270
|
|
Stockholders' equity |
829,004
|
794,614
|
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$ 1,031,544
==========
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$ 991,884
==========
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Key Ratios & Information |
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|
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Current Assets/Current Liabilities |
4:1
|
3:1
|
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Liabilities/Equity |
1:4
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1:4
|
|
Annualized Quarterly Return on Equity |
20%
|
22%
|
|
Quarterly Depreciation Expense |
5,971
|
5,943
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Quarterly Capital Expenditures |
6,364
|
6,771
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|
Annualized Sales per Employee |
587
|
583
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Altera Corporate Profile
Revenue by Market Segment
| |
Q1’98 |
Q2’98 |
Q3’98 |
|
|
|
Communications |
61%
|
63%
|
65%
|
|
Serve over 13,000 customers |
|
EDP |
20%
|
19%
|
16%
|
|
Three distributors in North America
- |
|
Industrial |
13%
|
12%
|
12%
|
|
85 branch locations |
|
Consumer |
3%
|
3%
|
3%
|
|
45% of sales in export markets |
|
Other |
3%
|
3%
|
4%
|
|
Distributors in all European
countries and
major Asian
markets
|
|
Revenue: Product Family
|
Channel
|
| |
Q1’98 |
Q2’98 |
Q3’98 |
|
Q1’98 |
Q2’98 |
Q3’98 |
|
New |
6%
|
10%
|
15%
|
|
North America |
55% |
55% |
55% |
|
Mainstream |
28%
|
33%
|
36%
|
|
Europe |
23%
|
22%
|
23%
|
|
Mature |
57%
|
47%
|
41%
|
|
Japan |
18%
|
19%
|
18%
|
|
Other |
6% |
7% |
5% |
|
Asia/Pacific |
4% |
4% |
4% |
|
Components |
97%
|
97%
|
97%
|
|
International |
45% |
45% |
45% |
|
Tools |
3% |
3% |
3% |
|
Total |
100%
===== |
100%
===== |
100%
===== |
|
Total |
100%
===== |
100%
===== |
100%
===== |
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Financial Highlights: (In thousands)
|
|
1994 |
1995 |
1996 |
1997 |
Q3 1998 |
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Net sales |
$198,796
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$401,598
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$497,306
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$631,114
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$164,218
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Income before effect
of
accounting change |
14,608
|
86,871
|
109,135
|
151,517
|
40,143
|
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Cash and investments |
92,594
|
365,219
|
280,850
|
377,569
|
494,853
|
|
Total assets |
213,882
|
715,554
|
778,212
|
952,518
|
1,031,544
|
|
Stockholders’ equity |
158,019
|
255,189
|
370,245
|
536,687
|
829,004
|
|
Annualized ROE |
23%
|
42%
|
35%
|
28%
|
20%
|
Ownership:
- Management/Directors/Employees: 5%
- Institutional Holdings: 85%
- Retail/Other: 10%
Corporate Office: San Jose, CA
Employees: 1,130
Research Coverage by 15 Most Active Market Makers
| Morgan Stanley | Mark Edelstone | (415) 576-2381 |
| Credit Suisse First Boston | Scott Nirenberski | (415) 836-7764 |
| Donaldson, Lufkin & Jenrette | Charles Boucher | (415) 249-2277 |
| NationsBanc Montgomery Securities Inc. | Clark Westmont | (415) 627-3160 |
| Lehman Brothers | James Barlage | (212) 526-6093 |
| Goldman Sachs | Joe Moore | (212) 902-6834 |
| Merrill Lynch | Tom Kurlak | (212) 449-2308 |
| Soundview | Scott Randall | (203) 462-7246 |
| Prudential | Hans Mosesmann | (415) 395-2636 |
| Paine Webber Inc. | John Lazlo | (415) 576-2980 |
| BancBoston Robertson Stephens | Dan Niles | (415) 693-3241 |
| J. P. Morgan | Terry Ragsdale | (212) 648-9047 |
| Warburg Dillon Read | Greg Mischou | (415) 296-6333 |
| Needham & Company | A.A. LaFountain III | (212) 705-0317 |
| CIBC Oppenheimer & Co. | Ken Pearlman | (415) 438-3016 |
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