Altera Reports 2002 Financial Results.Business Editors/High-Tech Writers SAN JOSE San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Calif.--(BUSINESS WIRE)--Jan. 22, 2003 Altera Altera Corporation (NASDAQ: ALTR) is a leading manufacturer of programmable logic devices. It is a member of the NASDAQ-100 group of technology stocks and the S&P 500. Corporation (Nasdaq:ALTR) today reported 2002 net income of $91.3 million, $0.23 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, versus a net loss of $39.8 million, or $0.10 per diluted share in 2001. Income in 2001, excluding restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and inventory charges, was $132.4 million, $0.33 per diluted share. Revenues in 2002 were $711.7 million compared to $839.4 million in 2001. Fourth quarter net income was $27.1 million, $0.07 per diluted share, compared to a net loss of $34.4 million, $0.09 per diluted share, in the fourth quarter of 2001. Fourth quarter earnings included an $11.2 million pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern benefit resulting from the release of reserves associated with the sale of previously reserved inventory. Fourth quarter revenues were $180.6 million, compared to $162.5 million in the fourth quarter of 2001. Altera repurchased 1.1 million shares of its common stock during the quarter at a cost of $13.4 million. Altera ended the quarter with $942.7 million in cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments. "We successfully completed a highly ambitious new product introduction agenda, bringing to market three innovative FPGA (Field Programmable Gate Array) A type of gate array that is programmed in the field rather than in a semiconductor fab. Containing up to hundreds of thousands of gates, there are a variety of FPGA architectures on the market. families during the year. Each of these new families -- Stratix(TM), Stratix GX and Cyclone cyclone, atmospheric pressure distribution in which there is a low central pressure relative to the surrounding pressure. The resulting pressure gradient, combined with the Coriolis effect, causes air to circulate about the core of lowest pressure in a (TM) -- brings unique capabilities and performance highly desired by our customers," said John Daane, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "In the fourth quarter, new product revenues more than doubled from year ago levels. Leveraging the strength of our industry-leading product portfolio, and, as the only programmable logic See PLD. company with production qualified 0.13-micron devices, we want to build on the momentum we have created. We will be pushing hard for additional design wins across all the markets we serve." Altera continues to advance its leadership position in system-on-a-programmable-chip (SOPC SOPC System on a Programmable Chip SOPC Special Operations Preparation Course SOPC Second-Order Power Control SOPC Shuttle Operations and Planning Center SOPC 1-Stearoyl-2-Oleoyl-Sn-Glycero-3-Phosphatidylcholine SOPC Shaastra Online Programming Contest ) solutions as described by these highlights from the last several months: -- The Stratix device family, manufactured on an advanced 0.13-micron process, continues to gain momentum in the marketplace. Stratix engineering samples began shipping in May 2002. Six of the eight Stratix family members are now shipping and four devices have now moved to full production status. With the APEX apex (a´peks) pl. apexes, a´pices [L.] tip; the pointed end of a conical part; the top of a body, organ, or part.ap´ical apex of lung the rounded upper extremity of either lung. (TM) II EP2A70 device, Altera was the first PLD (Programmable Logic Device) Refers to a variety of logic chips that are programmable at the customer's site, the customer being the vendor of the finished chip, not the end user. vendor to offer PLDs utilizing 0.13-micron technology. Today Altera remains the only PLD vendor to offer production devices at this leading-edge process technology node See technology generation. . -- Announced in September September: see month. , the first members of Altera's Cyclone device family are now sampling -- ahead of schedule. The Cyclone family is the industry's lowest-cost FPGA and targets high-volume, cost-sensitive applications across all of Altera's markets. The Cyclone family was the first in the PLD industry to be designed from the ground up to address the needs of the high-volume customer, creating a device architecture optimized to deliver low price and leading-edge performance with typical Altera gross margins. The family offers better performance and more memory with prices 50% less than the closest comparable PLD alternative. The Cyclone family expands the reach of Altera's PLD technology into applications traditionally reserved for low-cost ASICs. All Cyclone family members are expected to reach full production status during the first half of 2003. -- The Stratix GX family, announced in November November: see month. , began shipping in January January: see month. and offers the benefits of second-generation sec·ond-gen·er·a·tion adj. 1. Of or relating to a person or persons whose parents are immigrants. 2. Of or relating to a person or persons whose parents are citizens by birth and whose grandparents are immigrants. 3. transceiver (TRANSmitter reCEIVER) An electronic device or circuit that transmits and receives analog or digital signals. It comes in many forms; for example, a transponder on a satellite, a network adapter in the computer or the circuits in a cellphone. technology integrated with Altera's advanced Stratix FPGA architecture. Stratix GX devices build on the experience gained from Altera's first-to-market Mercury Mercury, in astronomy Mercury, in astronomy, nearest planet to the sun, at a mean distance of 36 million mi (58 million km); its period of revolution is 88 days. (TM) embedded Inserted into. See embedded system. transceiver family. As a result, this second-generation, 3.125-Gbps transceiver technology provides a low-risk path for designers with multi-gigabit applications in mass storage, high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. broadcast, and communications markets. Conference Call and Quarterly Update A conference call will be held today at 1:45 PM Pacific Time to discuss the quarter's results and management's business outlook. A webcast and subsequent replay will be available on the company's website, www.altera.com. A telephonic replay of the call may be accessed after 5:00 PM Pacific Time by calling 719/457-0820 and referencing code 258712. Altera will provide a business update on March 11, 2003. This business update will be made available after the market close and will be posted on the company's web site. Those who do not have access to the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the may contact Altera's investor relations Investor relations The process by which the corporation communicates with its investors. department at 408/544-7707. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements are generally written in the future tense future tense n. A verb tense expressing future time. Noun 1. future tense - a verb tense that expresses actions or states in the future future and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. preceded by words such as "will" or words that imply or predict a future state such as "expect" or "intend". Investors are cautioned that all forward-looking statements in this release involve risks and uncertainty which can cause actual results to differ from those currently anticipated, due to a number of factors, including without limitation the risk that future performance is dependent on the design performance of software and other tools, customer business environment, market acceptance of the company's products, and particularly the company's new products, as well as the effects of changing economic conditions and other risk factors discussed in documents filed by the company with the Securities and Exchange Commission from time to time. 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . About Altera Altera Corporation (Nasdaq:ALTR) 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 ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 14,000 customers worldwide. More information is available at www.altera.com. Note to Editors: Altera, The Programmable Solutions Company, the stylized styl·ize tr.v. styl·ized, styl·iz·ing, styl·iz·es 1. To restrict or make conform to a particular style. 2. To represent conventionally; conventionalize. 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.
ALTERA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED YEAR ENDED
----------------------------- -------------------
Dec. 31 Dec. 31 Sept. 30 Dec. 31 Dec. 31
2002 (a) 2001 2002 (a) 2002 (a) 2001
-------- -------- -------- -------- --------
Net sales $180,647 $162,525 $180,144 $711,684 $839,376
Costs and expenses:
Cost of sales 59,130 102,265 65,189 263,067 458,699
Research and
development 49,294 39,703 48,449 182,766 170,869
Selling, general,
and administrative 41,515 47,806 41,153 168,484 215,318
Restructuring and
other special
charges - 16,841 - - 47,669
--------- -------- --------- --------- --------
Total costs and
expenses 149,939 206,615 154,791 614,317 892,555
--------- -------- --------- --------- --------
Income (loss) from
operations 30,708 (44,090) 25,353 97,367 (53,179)
Interest and other
income, net 5,944 6,801 6,263 25,961 40,176
--------- -------- --------- --------- --------
Income (loss)
before income
taxes 36,652 (37,289) 31,616 123,328 (13,003)
Benefit from
(provision for)
income taxes (9,529) 2,867 (8,220) (32,065) (26,779)
--------- -------- --------- --------- --------
Net income (loss) $ 27,123 $(34,422) $ 23,396 $ 91,263 $(39,782)
======== ======== ======== ======== ========
Income (loss)
per share:
Basic $ 0.07 $ (0.09) $ 0.06 $ 0.24 $ (0.10)
======== ======== ======== ======== ========
Diluted $ 0.07 $ (0.09) $ 0.06 $ 0.23 $ (0.10)
======== ======== ======== ======== ========
Shares used in
computation:
Basic 382,176 385,219 381,594 383,619 386,097
======== ======== ======== ======== ========
Diluted 387,595 385,219 387,428 391,708 386,097
======== ======== ======== ======== ========
Tax rate 26.0% - 26.0% 26.0% -
% of Sales:
Gross margin 67.3% 37.1% 63.8% 63.0% 45.4%
Research and
development 27.3% 24.4% 26.9% 25.7% 20.4%
Selling, general,
and administrative 23.0% 29.4% 22.8% 23.6% 25.7%
Income (loss)
from operations 17.0% (27.1%) 14.1% 13.7% (6.3%)
Net income (loss) 15.0% (21.2%) 13.0% 12.8% (4.7%)
(a) The statements of operations for the three months ended
December 31, 2002 and September 30, 2002 include benefits of $11.2
million and $5.4 million, respectively, resulting from releases of
inventory reserves due to the sale of inventory previously
reserved in 2001. Excluding these benefits, gross margins were
61.1% and 60.8%, respectively. For the year ended December 31,
2002, the benefit was $18.0 million. Excluding this benefit, gross
margin was 60.5%.
ALTERA CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED YEAR ENDED
----------------------------- -------------------
Dec. 31 Dec. 31 Sept. 30 Dec. 31 Dec. 31
2002 2001 2002 2002 2001
-------- -------- -------- -------- ---------
Pro forma Pro forma
Net sales $180,647 $162,525 $180,144 $711,684 $839,376
Costs and expenses:
Cost of sales 59,130 63,865 65,189 263,067 304,213
Research and
development 49,294 39,703 48,449 182,766 170,869
Selling, general,
and administrative 41,515 47,806 41,153 168,484 215,318
-------- -------- -------- -------- ---------
Total costs and
expenses 149,939 151,374 154,791 614,317 690,400
-------- -------- -------- -------- ---------
Income from
operations 30,708 11,151 25,353 97,367 148,976
Interest and other
income, net 5,944 6,801 6,263 25,961 40,176
-------- -------- -------- -------- ---------
Income before
income taxes 36,652 17,952 31,616 123,328 189,152
Provision for
income taxes (9,529) (5,386) (8,220) (32,065) (56,746)
-------- -------- -------- -------- ---------
Net income $ 27,123 $ 12,566 $ 23,396 $ 91,263 $ 132,406
======== ======== ======== ======== =========
Income per share:
Basic $ 0.07 $ 0.03 $ 0.06 $ 0.24 $ 0.34
======== ======== ======== ======== =========
Diluted $ 0.07 $ 0.03 $ 0.06 $ 0.23 $ 0.33
======== ======== ======== ======== =========
Shares used in
computation:
Basic 382,176 385,219 381,594 383,619 386,097
======== ======== ======== ======== =========
Diluted 387,595 396,396 387,428 391,708 399,576
======== ======== ======== ======== =========
Tax rate 26.0% 30.0% 26.0% 26.0% 30.0%
% of Sales:
Gross margin 67.3% 60.7% 63.8% 63.0% 63.8%
Research and
development 27.3% 24.4% 26.9% 25.7% 20.4%
Selling, general,
and administrative 23.0% 29.4% 22.8% 23.6% 25.7%
Income from
operations 17.0% 6.9% 14.1% 13.7% 17.7%
Net income 15.0% 7.7% 13.0% 12.8% 15.8%
Pro Forma to GAAP
Reconciliation:
-----------------
Pro forma net income $ 12,566 $ 132,406
Items excluded from
pro forma results:
Inventory charge (38,400) (154,486)
Restructuring and
other special charges (16,841) (47,669)
Benefit from
income taxes 8,253 29,967
-------- ---------
(46,988) (172,188)
-------- ---------
Net loss $(34,422) $ (39,782)
======== =========
Note: The company provides pro forma financial data as an alternative
for understanding its operating results. These measures are not in
compliance with accounting principles generally accepted in the United
States of America, and may be different from pro forma measures used
by other companies.
ALTERA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Dec. 31 Sept. 30 Dec. 31
2002 2002 2001
---------- ---------- ----------
Assets
Current assets:
Cash and short-term
investments $ 942,659 $ 885,304 $ 805,691
Accounts receivable, net 57,111 63,024 33,931
Inventories, net 39,089 36,106 77,611
Other current assets 137,317 142,438 212,115
---------- ---------- ----------
Total current assets 1,176,176 1,126,872 1,129,348
Property and equipment, net 183,999 191,062 217,282
Investments and other assets 11,562 10,305 14,797
---------- ---------- ----------
$1,371,737 $1,328,239 $1,361,427
========== ========== ==========
Liabilities and
Stockholders' Equity
Accounts payable and
current liabilities $ 96,194 $ 99,392 $ 99,182
Deferred income on sales
to distributors 144,307 143,964 147,745
---------- ---------- ----------
Total current liabilities 240,501 243,356 246,927
Stockholders' equity 1,131,236 1,084,883 1,114,500
---------- ---------- ----------
$1,371,737 $1,328,239 $1,361,427
========== ========== ==========
Key Ratios & Information
Current Assets/Current Liabilities 5:1 5:1 5:1
Liabilities/Equity 1:5 1:4 1:5
Annualized Return on Equity (b) 8% 8% 11%
Quarterly Depreciation Expense, Net 10,321 10,150 13,356
Quarterly Capital Expenditures 3,258 2,946 8,112
Annualized Sales per Employee 375 372 417
Number of Employees 1,882 1,875 1,987
Inventory MSOH (c): Altera 2.0 1.7 3.6
Inventory MSOH (c): Distribution 1.6 1.5 2.2
Days Sales Outstanding 29 32 19
(b) Calculated based on pro forma financial data for 2001
(c) MSOH: Months Supply On Hand
ALTERA CORPORATION
REVENUE SUMMARY
Q-Q Y-Y
Q4'02 Q3'02 Q4'01 Growth Growth
----- ----- ----- ------ ------
Geography
---------
North America 34% 38% 44% -10% -14%
----- ----- -----
Europe 24% 23% 22% 2% 18%
Japan 25% 21% 21% 19% 31%
Asia Pacific 17% 18% 13% -2% 50%
----- ----- -----
International 66% 62% 56% 7% 30%
----- ----- -----
Total 100% 100% 100% 0% 11%
===== ===== =====
Product Category
----------------
New 33% 30% 17% 10% 113%
Mainstream 35% 37% 41% -4% -5%
Mature & Other 32% 33% 42% -3% -15%
----- ----- -----
Total 100% 100% 100% 0% 11%
===== ===== =====
Market Segment
--------------
Communications 45% 44% 50% 1% -1%
Industrial & Automotive 27% 27% 25% 1% 22%
Computer & Storage 13% 13% 13% 0% 13%
Digital Consumer 15% 16% 12% -3% 36%
----- ----- -----
Total 100% 100% 100% 0% 11%
===== ===== =====
Product Category Description
----------------------------
Category Products
New ACEX 1K, APEX 20KC, APEX 20KE, APEX II, MAX 7000B,
Cyclone, Excalibur, HardCopy, Mercury, and Stratix
families
Mainstream APEX 20K, FLEX 6000, FLEX 10KA, FLEX 10KE,
MAX 3000A, and MAX 7000A families
Mature & Other Classic, FLEX 8000, FLEX 10K, MAX 7000, MAX 7000S,
and MAX 9000 families, MPLD, configuration and
other devices, tools, and intellectual property
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