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: January 20, 1999
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Altera Reports Record Fourth Quarter & Annual Results
Sequential Results for the Fourth Quarter -
Sales Increase 5% with Net Income up 6%
San Jose, Calif., January 20, 1999 - Altera Corporation (Nasdaq: ALTR) today reported record fourth quarter sales of $172.4 million, up 5% from the previous quarter and up 10% over the same period last year. Total sales for the year, also a record, were $654.3 million, an increase of 4% over 1997. Fourth quarter sales growth of 5% was achieved by sequential gains in all channels with North America up 3% and International up 8% as a result of 4% growth in Europe, 10% in Japan and 22% in Asia/Pacific. New and mainstream products made up 57% of sales for the quarter with new product revenues growing 28% sequentially, representing a seven fold increase over the same period last year, and mainstream product revenues growing 15% sequentially, an increase of 70% over the fourth quarter of last year.
Net income and diluted earnings per share were at record levels both for the quarter and for the year. Net income for the fourth quarter was $42.5 million, an increase of 6% from the previous quarter and up 16% from the fourth quarter of 1997. Net income for the year was $154.4 million, up 2% from 1997 excluding the cumulative effect of a change in accounting principle. Fourth quarter earnings per share, on a diluted basis, were $0.42, an increase of $0.02 from the prior quarter and up $0.04 over the same period last year. Diluted earnings per share for the year were $1.56, an increase of $0.01 over 1997 excluding the cumulative effect of a change in accounting principle. Fourth quarter earnings included after-tax charges of $3.0 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 the WaferTech results, diluted earnings per share were $0.45 for the fourth quarter and $1.66 for the year, up $0.07 or 18% and $0.11 or 7%, respectively from the same periods last year.
Altera added $84.3 million of cash to its balance sheet during the quarter after routine capital expenditures of $5.6 million.
Fourth quarter highlights included:
- New FLEX® 10K family
products achieved significant sales growth and market
acceptance. Sales to customers of the 3.3-Volt FLEX 10KA devices
grew 25% sequentially, an increase of seven fold over the same
period last year. The 2.5-Volt FLEX 10KE devices achieved
significant market endorsement, with 115 customers taking the
initial deliveries of the new family members introduced during
the quarter, the FLEX 10K50E and FLEX 10K200E.
- Altera continued to see excellent growth in its product lines that support In-System Programmability (ISP) - MAX® 7000S, MAX
7000A, and MAX 9000. ISP product revenues grew 16% sequentially
to $39.5 million, positioning the Company as the leading
supplier in this market segment. Also in the quarter, the
performance of the 3.3-Volt MAX 7000A devices was enhanced with
the introduction of the first two of five new MAX 7000AE
devices, the EPM7512AE and EPM7064AE. The MAX 7000AE devices
offer pin-to-pin performance as fast as 4.5 nanoseconds for peak
on-chip speeds of up to 196.5 MHz. Additionally, new on-chip
features enable MAX 7000AE in-system programming times to be up
to ten times faster than comparable ISP devices.
- The Company announced its agreement to
invest $37.5 million during the first quarter of 1999 to
increase its ownership in WaferTech by five percentage points,
bringing Altera's total equity position to 23%. After a
successful start-up earlier this year, WaferTech is now
manufacturing four FLEX 10KA and two FLEX 6000 products in
volume and with excellent quality and yield.
- Altera further expanded its R&D
capabilities during the quarter with the formal dedication of
its newest R&D facility, the Asian Design Center in Penang,
Malaysia. Earlier in the year, the Company opened its European
Design Center in High Wycombe, United Kingdom. These two new
facilities along with the San Jose Design Center have enabled
Altera to implement "round-the-clock" development
activities and to grow development personnel resources by 18%
over the year.
Rodney Smith, President and CEO, stated, "We are very pleased that during a year in which the overall programmable logic market declined, Altera was able to achieve its sixth straight year of record revenues and financial performance and to further enhance our market share position. During the year, we successfully implemented major product transitions in which sales of our new and mainstream FLEX and MAX products grew from $124 million in 1997 to $301 million in 1998, an increase of 143%. When combined with record sales both domestically and internationally, we believe this makes a strong statement about the success these products are enjoying in the marketplace. We are optimistic about prospects that growth will return to the programmable logic market in 1999, and we believe the broad capabilities of the FLEX and MAX product lines together with the product rollout of the new APEXTM 20K family and QuartusTM development software place Altera in an excellent position in the coming year to take advantage of market expansion."
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", "positions" 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 10KA, FLEX 10KE, MAX 7000AE, and APEX 20K
product development, Quartus software development, market acceptance of the Company's new products, market growth in 1999, 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.
Altera Corporation, The Programmable Solutions CompanyTM, was founded in 1983 and is a leading supplier of programmable logic devices and associated logic development software tools. Programmable logic devices are semiconductor chips that can be programmed on-site, using software tools that run on personal computers or engineering workstations. User benefits include ease of use, lower risk, and fast time-to-market. Altera's CMOS-based programmable logic address high-speed, high-density and low-power applications in the telecommunications, data communications, computer peripheral, and industrial markets. Altera common stock is traded on the Nasdaq Stock Market under the symbol ALTR. More information on Altera can be obtained on the Internet at http://www.altera.com.
ALTERA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| |
(Unaudited) |
|
| |
THREE MONTHS ENDED |
YEAR ENDED |
|
|
Dec. 31
1998 |
Dec. 31
1997 |
Sept. 30
1998 |
Dec. 31
1998 |
Dec. 31
1997 |
|
Net sales |
$172,432
---------- |
$157,088
---------- |
$164,218
---------- |
$654,342
---------- |
$631,114
---------- |
|
Costs & expenses: |
|
|
|
|
|
|
Cost of sales |
65,182 |
58,967 |
62,511 |
249,474 |
236,958 |
|
Research and development |
16,001 |
13,329 |
15,223 |
59,864 |
54,417 |
|
Selling, general and administrative |
29,309
---------- |
29,361
---------- |
27,142
---------- |
113,161
---------- |
112,784
---------- |
|
Total costs and expenses |
110,492
---------- |
101,657
---------- |
104,876
---------- |
422,499
---------- |
404,159
---------- |
|
Income from operations |
61,940 |
55,431 |
59,342 |
231,843 |
226,955 |
|
Interest & other income, net |
5,458
---------- |
100
---------- |
5,065
---------- |
12,340
---------- |
2,616
---------- |
|
Income before taxes |
67,398 |
55,531 |
64,407 |
244,183 |
229,571 |
|
Provision for income taxes |
21,905
---------- |
18,881
---------- |
20,931
---------- |
79,356
---------- |
78,054
---------- |
Income before accounting change
and equity investment |
45,493 |
36,650 |
43,476 |
164,827 |
151,517 |
|
Equity in loss of WaferTech |
(3,000)
---------- |
-
---------- |
(3,333)
---------- |
(10,440)
---------- |
-
---------- |
Income before cumulative effect
of accounting change |
42,493 |
36,650 |
40,143 |
154,387 |
151,517 |
Cumulative effect of change in
accounting principle |
-
---------- |
-
---------- |
-
---------- |
-
---------- |
(18,064)
---------- |
|
Net income |
$ 42,493
======= |
$ 36,650
======= |
$ 40,143
======= |
$154,387
======= |
$133,453
======= |
Basic earnings per share:
Income before accounting change |
$ 0.44
======= |
$ 0.41
======= |
$ 0.41
======= |
$ 1.65
======= |
$ 1.71
======= |
|
Net income |
$ 0.44
======= |
$ 0.41
======= |
$ 0.41
======= |
$ 1.65
======= |
$ 1.51
======= |
Diluted earnings per share:
Income before accounting change
and equity investment |
$ 0.45
======= |
$ 0.38
======= |
$ 0.43
======= |
$ 1.66
======= |
$ 1.55
======= |
|
Income before accounting change |
$ 0.42
======= |
$ 0.38
======= |
$ 0.40
======= |
$ 1.56
======= |
$ 1.55
======= |
|
Net income |
$ 0.42
======= |
$ 0.38
======= |
$ 0.40
======= |
$ 1.56
======= |
$ 1.37
======= |
Shares used in computation:
Basic |
97,414
======= |
89,104
======= |
97,235
======= |
93,493
======= |
88,525
======= |
|
Diluted |
101,899
======= |
102,615
======= |
100,902
======= |
101,589
======= |
102,616
======= |
|
Tax rate |
32.5% |
34.0% |
32.5% |
32.5% |
34.0% |
|
% of Sales: |
|
|
|
|
|
|
Gross margin |
62% |
62% |
62% |
62% |
62% |
|
Research and development |
9% |
8% |
9% |
9% |
9% |
|
Selling, general & administrative |
17% |
19% |
17% |
17% |
18% |
|
Income from operations |
36% |
35% |
36% |
36% |
36% |
|
Income before accounting change |
25% |
23% |
24% |
24% |
24% |
ALTERA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| |
(Unaudited) |
| |
Dec. 31
1998 |
Sept. 30
1998 |
Dec. 31
1997 |
|
Assets |
|
|
Current assets: |
|
|
Cash and short-term
investments |
$ 579,106 |
$ 494,853 |
$ 377,569 |
|
Accounts receivable, net |
56,138 |
64,667 |
55,251 |
|
Inventories |
69,869 |
70,039 |
98,883 |
|
Other assets |
94,420
--------- |
87,495
--------- |
84,499
--------- |
|
Total current assets |
799,533 |
717,054 |
616,202 |
|
Property and equipment, net |
152,320 |
152,981 |
152,417 |
|
Investments & intangibles |
141,478
--------- |
154,309
--------- |
183,899
--------- |
| |
$ 1,093,331
======== |
$ 1,024,344
======== |
$ 952,518
======== |
|
Liabilities and Stockholders' Equity |
|
|
Accounts payable and current
liabilities |
$ 50,450 |
$ 52,233 |
$ 57,563 |
|
Deferred income on sales to
distributors |
161,160
--------- |
143,107
--------- |
128,268
--------- |
|
Total current liabilities |
211,610 |
195,340 |
185,831 |
|
Convertible subordinated notes |
-
--------- |
-
--------- |
230,000
--------- |
|
Total liabilities |
211,610 |
195,340 |
415,831 |
|
Stockholders' equity |
881,721 |
829,004 |
536,687 |
| |
$ 1,093,331
======== |
$ 1,024,344
======== |
$ 952,518
======== |
|
Key Ratios & Information |
|
| |
|
|
|
|
Current Assets/Current Liabilities |
4:1 |
4:1 |
3:1 |
|
Liabilities/Equity |
1:4 |
1:4 |
1:1 |
|
Annualized Quarterly Return on Equity |
20% |
20% |
28% |
|
Quarterly Depreciation Expense |
6,249 |
5,971 |
5,549 |
|
Quarterly Capital Expenditures |
5,587 |
6,364 |
9,498 |
|
Annualized Sales per Employee |
605 |
587 |
584 |
Altera Corporate Profile
Revenue by Market Segment
| |
Q2'98
-------- |
Q3'98
--------
|
Q4'98
-------- |
|
|
|
Communications |
63% |
65% |
67% |
|
- Serve over 13,000 customers
|
|
EDP |
19% |
16% |
15% |
|
- Three distributors in North America
-
|
|
Industrial |
12% |
12% |
12% |
|
85 branch locations
|
|
Consumer |
3% |
3% |
3% |
|
- 46% of sales in export markets
|
|
Other |
3% |
4% |
3% |
|
- Distributors in all European countries
And major Asian markets
|
| Revenue: Product Family |
|
Channel |
| |
Q2'98
-------- |
Q3'98
-------- |
Q4'98
-------- |
|
|
Q2'98
-------- |
Q3'98
-------- |
Q4'98
-------- |
|
New |
10% |
15% |
18% |
|
North America |
55%
------ |
55%
------ |
54%
------ |
|
Mainstream |
33% |
36% |
39% |
|
Europe |
22% |
23% |
23% |
|
Mature |
47% |
41% |
35% |
|
Japan |
19% |
18% |
18% |
|
Other |
10%
------ |
8%
------ |
8%
------ |
|
Asia/Pacific |
4%
------ |
4%
------ |
5%
------ |
|
Total |
100%
===== |
100%
===== |
100%
===== |
|
International |
45%
------ |
45%
------ |
46%
------ |
| |
|
|
|
|
Total |
100%
===== |
100%
===== |
100%
===== |
Financial Highlights: (In thousands)
|
|
1994 |
1995 |
1996 |
1997 |
1998 |
|
Net sales |
$198,796 |
$401,598 |
$497,306 |
$631,114 |
$654,342 |
|
Income before effect of
accounting change |
14,608 |
86,871 |
109,135 |
151,517 |
154,387 |
|
Cash and investments |
92,594 |
365,219 |
280,850 |
377,569 |
579,106 |
|
Total assets |
213,882 |
715,554 |
778,212 |
952,518 |
1,093,331 |
|
Stockholders' equity |
158,019 |
255,189 |
370,245 |
536,687 |
881,721 |
|
Annualized ROE |
23% |
42% |
35% |
28% |
20% |
Ownership:
|
Management/Directors/Employees: 5% |
|
Corporate Office: San Jose, CA
|
| Institutional Holdings: 80% |
|
|
| Retail/Other: 15% |
|
Employees: 1,151
|
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