Altera Reports Record Fourth Quarter and Annual Results, Sequential Results for the Fourth Quarter - Sales Increase 5% With Net Income Up 6%.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. 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 North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. up 3% and International up 8% as a result of 4% growth in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , 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 diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of 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 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. 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 af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charges of $3.0 million or $0.03 per share representing the Company's share in the start-up Start-up The earliest stage of a new business venture. losses of WaferTech (a joint venture with TSMC TSMC Taiwan Semiconductor Manufacturing Company, Ltd TSMC Taiwan Semiconductor Manufacturing Corporation TSMC Traffic Systems Management Center TSMC Toll Station Management Controller TSMC Transportation Supply Maintenance Command TSMC Technical Services Manager Code to manufacture wafers wafers compressed roughage in flat plates useful for feeding to animals in transit. 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(R) 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 (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. ) - MAX(R) 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 EPM EPM equine protozoal myeloencephalitis. 7512AE 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 (MegaHertZ) One million cycles per second. It is used to measure the transmission speed of electronic devices, including channels, buses and the computer's internal clock. A one-megahertz clock (1 MHz) means some number of bits (16, 32, 64, etc. . Additionally, new on-chip features enable MAX 7000AE in-system programming In-System Programming (abbreviated ISP) is the ability of some programmable logic devices, microcontrollers, and other programmable electronic chips to be programmed while installed in a complete system, rather than requiring the chip to be programmed prior to installing it into 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 European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. Design Center in High Wycombe High Wycombe (wĭk`əm), city (1991 pop. 69,575), Buckinghamshire, S England. The city is well known for its furniture industry and also has paper mills, sawmills, and engineering works. , 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 (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. , stated, "We are very pleased that during a year in which the overall programmable logic See PLD. 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 op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op 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 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) 20K family and Quartus(tm) 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 Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of 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 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 (1) A small, thin continuous-loop magnetic tape cartridge that has been used from time to time for data storage and specialized applications. (2) The base unit of chip making. It is a slice taken from a salami-like silicon crystal ingot up to 12" (300mm) in diameter. 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 Company(tm), was founded in 1983 and is a leading supplier of programmable logic devices See PLD. 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 Communicating information, including data, text, pictures, voice and video over long distance. See communications. , data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. , computer peripheral, and industrial markets. Altera common stock is traded on the Nasdaq Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. under the symbol ALTR. More information on Altera can be obtained on 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 at http://www.altera.com. -0-
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
1998 1997 1998 1998 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 Sept. 30 Dec. 31
1998 1998 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
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