Altera Announces 2005 Results
Wednesday January 25, 4:15 pm ET
Sales Up 11%
SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 25, 2006--Altera Corporation (Nasdaq:ALTR - News) today announced 2005 sales of $1.12 billion, up 11%, compared with $1.02 billion in 2004. New product sales increased 73%. Net income for 2005 was $278.8 million, $0.74 per diluted share, versus net income of $275.1 million, $0.72 per diluted share, in 2004.
Fourth quarter sales were $281.9 million, up 18% from the fourth quarter of 2004 and down 3% from the third quarter of 2005. The company's prior guidance was for fourth quarter sales to be in the range of $286 to $297 million. Fourth quarter net income was $69.7 million, $0.19 per diluted share, up 20%, compared with net income of $58.0 million, $0.15 per diluted share, in the fourth quarter of 2004. Gross profit margin was 66.7% for the fourth quarter of 2005 versus 69.8% for the fourth quarter of 2004.
Altera repurchased 19.9 million shares of its common stock during 2005 at a cost of $369.9 million, with 11.0 million shares repurchased during the fourth quarter at a cost of $194.8 million. Altera ended the quarter with $1.3 billion in cash and investments.
"We were the fastest growing major programmable logic company in 2005, as our Stratix® and Cyclone(TM) series FPGAs drove market share gains," said John Daane, president, chief executive officer, and chairman of the board. "During the year we completed the rollout of the Cyclone II and MAX® II families and announced our third generation HardCopy® II structured ASICs and Stratix II GX transceiver-based FPGAs. Our product delivery performance was excellent and our lead times remained short. Customer-focused innovation, quality, and reliability made the year a success, and equip Altera for growth and solid performance in 2006."
Several recent accomplishments mark the company's continuing progress.
For the first time, Altera was named to the Forbes Platinum 400, the magazine's exclusive list of America's Best Big Companies, selected from corporations with sales above $1 billion. Companies are evaluated compared to their industry peers on a variety of financial and performance measures: sales and earnings growth, stock market returns, debt to total capital, consensus long-term earnings growth forecast, as well as the quality of a company's accounting and governance, financial condition, and earnings. During five of the past six years, the Forbes Platinum 400 outperformed both the S&P 500 and the Dow Jones Industrial Average.
Altera introduced version 5.1 of its Quartus® II design software. The latest Quartus II release completes the rollout of two key tools for increasing designer productivity -- the PowerPlay technology suite and Quartus II incremental compilation. Quartus II software supports all Altera devices, including the recently announced Stratix II GX family. In combination with a broad portfolio of design-ready intellectual property cores, Quartus II software gives designers unparalleled levels of performance and ease of use while reducing time to market and total cost of ownership. In this latest edition, the Quartus II PowerPlay power optimization feature delivers an average of 20% and up to a 60% reduction in dynamic power consumption in Stratix II devices. The incremental compilation capabilities added to this release permit engineers to independently optimize functions and then easily aggregate them into a completed design. When combined with other unique Altera productivity tools, these enhancements offer customers faster design completion and lower cost of ownership.
Altera's low-cost, production-oriented solutions are driving greater penetration in the consumer market segment. Lower-density Cyclone series devices plus the combination of the high-density Stratix FPGAs and HardCopy series structured ASICs are increasingly accepted in this fast-moving market. Typical of the growing appeal of Altera programmable solutions is the use of Stratix devices in Sanyo's projection TVs and its home entertainment LCD projector PLV-Z4. Using a Stratix FPGA hosting a Nios® II processor, Sanyo developed advanced image processing and enhancement functions that provided low-cost product differentiation not possible with ASSPs, costly ASICs, or traditional processors. Sanyo demonstrated these products at this year's Consumer Electronics Show, after winning ProjectorReviews.com's Hot Product Award and HiVi magazine's 2005 Best Buy Award.
Business Outlook for the First Quarter 2006
Altera expects that first quarter sales will increase 4% to 7% sequentially. Gross margin will be in the range of 65.5% to 67.5%. With the company's adoption of SFAS123R, first quarter operating expenses will include approximately $20 million of share-based compensation charges. Including those charges, operating expenses are expected to be approximately $138 million. Inclusion of stock-based compensation charges in operating expense adds significantly to the volatility of actual versus expected expense due to volatility in our stock price, which we cannot predict. Other income will be approximately $10 million. The company anticipates that its first quarter and full year tax rate will be in the range of 14% to 16%, including 200-300 basis points of benefit due to the inclusion of stock-based compensation expense in the income statement.
Note: The outlook above assumes the impact from the operation of the company's non-qualified deferred compensation plan will be nil.
Conference Call and Quarterly Update:
A conference call will be held today at 1:45 p.m. Pacific Time to discuss the quarter's results and management's outlook for the first quarter of 2006. The web cast and subsequent replay will be available in the investor relations section of the company's web site at 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 6.
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, market acceptance of the company's products, the rate of growth of the company's new products including the Stratix, Stratix II, Cyclone, Cyclone II, MAX II, HardCopy, and HardCopy II 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 Corporation (Nasdaq:ALTR - News) is the world's pioneer of system-on-a-programmable-chip (SOPC) solutions. Combining programmable logic technology with software tools, intellectual property, and technical services, Altera provides high-value programmable solutions to approximately 14,000 customers worldwide. More information is available at 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 and note)
(Unaudited)
THREE MONTHS ENDED YEAR ENDED
----------------------------- -----------------------
Dec. 30 Sept. 30 Dec. 31 Dec. 30 Dec. 31
2005 2005 2004 2005 2004
--------- --------- --------- ----------- -----------
Net sales $281,910 $291,530 $239,885 $1,123,739 $1,016,364
Cost of sales 93,817 97,647 72,335 365,946 310,168
--------- --------- --------- ----------- -----------
Gross margin 188,093 193,883 167,550 757,793 706,196
--------- --------- --------- ----------- -----------
Operating expenses:
Research and
development 53,593 49,443 46,946 209,765 180,525
Selling,
general, and
administrative 58,343 57,289 54,578 225,861 210,745
--------- --------- --------- ----------- -----------
Total operating
expenses 111,936 106,732 101,524 435,626 391,270
--------- --------- --------- ----------- -----------
Income from
operations 76,157 87,151 66,026 322,167 314,926
Interest and
other income,
net 10,945 11,368 4,957 34,869 15,857
--------- --------- --------- ----------- -----------
Income before
income taxes 87,102 98,519 70,983 357,036 330,783
Provision for
income taxes (17,420) (20,704) (13,019) (78,207) (55,672)
--------- --------- --------- ----------- -----------
Net income $ 69,682 $ 77,815 $ 57,964 $ 278,829 $ 275,111
========= ========= ========= =========== ===========
Income per share:
Basic $ 0.19 $ 0.21 $ 0.16 $ 0.75 $ 0.74
========= ========= ========= =========== ===========
Diluted $ 0.19 $ 0.21 $ 0.15 $ 0.74 $ 0.72
========= ========= ========= =========== ===========
Shares used in
computation:
Basic 362,047 372,690 373,347 370,164 373,785
========= ========= ========= =========== ===========
Diluted 366,753 378,987 381,351 376,192 382,473
========= ========= ========= =========== ===========
Tax rate 20.0% 21.0% 18.3% 21.9% 16.8%
% of Net Sales:
Gross margin 66.7% 66.5% 69.8% 67.4% 69.5%
Research and
development 19.0% 17.0% 19.6% 18.7% 17.8%
Selling,
general, and
administrative 20.7% 19.7% 22.8% 20.1% 20.7%
Income from
operations 27.0% 29.9% 27.5% 28.7% 31.0%
Net income 24.7% 26.7% 24.2% 24.8% 27.1%
Note: Our Nonqualified Deferred Compensation Plan (NQDC Plan) had
gains of $0.9 million and $2.1 million, respectively, for the three
month periods ended December 30, 2005 and September 30, 2005. There
was no net impact on income before income taxes or net income arising
from this plan. The gains were included in interest and other income,
as well as compensation expense as follows.
THREE MONTHS ENDED YEAR ENDED
---------------------------- -----------
Dec. 30 Sept. 30 Q-Q Dec. 30
NQDC Impact (In Millions) 2005 2005 Change 2005
------------------------- --------- --------- --------- -----------
Increase in R&D Expense $ 0.4 $ 0.7 $ (0.3) $ 1.1
Increase in SG&A Expense 0.5 1.4 (0.9) 1.4
--------- --------- --------- -----------
Increase in Interest and
other income $ 0.9 $ 2.1 $ (1.2) $ 2.5
========= ========= ========= ===========
ALTERA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
Dec. 30 Sept. 30 Dec. 31
2005 2005 2004
----------- ----------- -----------
Assets
Current assets:
Cash and short-term investments $1,166,588 $1,171,636 $1,203,248
Accounts receivable, net 80,509 125,371 67,522
Inventories 70,711 70,677 67,454
Deferred compensation plan assets 61,567 60,188 56,148
Other current assets 115,826 179,682 159,725
----------- ----------- -----------
Total current assets 1,495,201 1,607,554 1,554,097
Long-term investments 115,965 137,005 -
Property and equipment, net 165,999 165,372 159,587
Deferred income taxes and other
assets, net 45,616 45,723 49,982
----------- ----------- -----------
$1,822,781 $1,955,654 $1,763,666
=========== =========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and current
liabilities $ 234,849 $ 269,300 $ 207,813
Deferred compensation plan
obligations 61,567 60,188 56,148
Deferred income and allowances on
sales to distributors 258,285 246,284 221,081
----------- ----------- -----------
Total current liabilities 554,701 575,772 485,042
Capital lease obligations 3,871 4,065 -
Stockholders' equity 1,264,209 1,375,817 1,278,624
----------- ----------- -----------
$1,822,781 $1,955,654 $1,763,666
=========== =========== ===========
Key Ratios & Information
Current Assets/Current Liabilities 3:1 3:1 3:1
Liabilities/Equity 1:2 1:2 1:3
Annualized YTD Return on Equity 21% 21% 24%
Quarterly Depreciation Expense $ 7,038 $ 6,468 $ 6,245
Quarterly Capital Expenditures $ 7,665 $ 14,903 $ 8,862
Annualized Sales per Employee $ 498 $ 503 $ 489
Number of Employees 2,361 2,310 2,164
Inventory MSOH (a): Altera 2.3 2.2 2.8
Inventory MSOH (a): Distribution 1.4 1.2 1.4
Days Sales Outstanding 26 39 26
(a) MSOH: Months Supply On Hand
ALTERA CORPORATION
REVENUE SUMMARY
(Unaudited)
Quarterly
Growth Year
Rates ending Annual
-------- ----------- Growth
Q4'05 Q3'05 Q4'04 Q-Q Y-Y 2005 2004 Rate
------- ----- ----- ---- --- ----- ----- ------
Geography
----------------------
North America 26% 24% 29% 1% 3% 25% 29% -5%
------- ----- ----- ----- -----
Europe 24% 25% 22% -6% 30% 25% 23% 21%
Japan 24% 25% 24% -6% 18% 25% 25% 9%
Asia Pacific 26% 26% 25% -3% 24% 25% 23% 21%
------- ----- ----- ----- -----
International 74% 76% 71% -5% 23% 75% 71% 17%
------- ----- ----- ----- -----
Total 100% 100% 100% -3% 18% 100% 100% 11%
======= ===== ===== ===== =====
Product Category
----------------------
New 47% 48% 33% -5% 68% 43% 27% 73%
Mainstream 29% 29% 37% -1% -7% 33% 42% -12%
Mature & Other 24% 23% 30% -1% -7% 24% 31% -14%
------- ----- ----- ----- -----
Total 100% 100% 100% -3% 18% 100% 100% 11%
======= ===== ===== ===== =====
Market Segment
----------------------
Communications 43% 40% 36% 4% 38% 42% 40% 16%
Industrial 33% 33% 37% -3% 6% 32% 35% 3%
Computer & Storage 9% 11% 11% -20% -3% 10% 11% 3%
Consumer 15% 16% 16% -11% 11% 16% 14% 20%
------- ----- ----- ----- -----
Total 100% 100% 100% -3% 18% 100% 100% 11%
======= ===== ===== ===== =====
FPGAs and CPLDs
----------------------
FPGA 71% 70% 69% -3% 20% 70% 68% 13%
CPLD 20% 19% 22% 4% 9% 20% 23% -4%
Other 9% 11% 9% -16% 21% 10% 9% 32%
------- ----- ----- ----- -----
Total 100% 100% 100% -3% 18% 100% 100% 11%
======= ===== ===== ===== =====
Product Category Description
------------------------------
Category Products
New Stratix, Stratix II, Stratix GX, Cyclone,
Cyclone II, MAX 3000A, MAX II, and HardCopy
devices
Mainstream APEX 20K, APEX 20KC, APEX 20KE, APEX II, FLEX
10KE, ACEX 1K, Excalibur, Mercury, MAX 7000A,
and MAX 7000B devices
Mature & Other FLEX 6000, FLEX 8000, FLEX 10K, FLEX 10KA, MAX
7000, MAX 7000S, MAX 9000, Classic,
configuration and other devices, software and
other tools, and intellectual property cores
Note: During the quarter ended July 1, 2005, we refined our
methodology for classifying revenue by market segment. All prior
period data have been adjusted to conform to the current period's
methodology. Data calculated under both the new and former
methodologies are available in the investor relations section of the
Company's website at altera.com.
--------------------------------------------------------------------------------
Source: Altera Corporation |
