EXHIBIT 99.1
INVESTOR CONTACT
Scott Wylie
Vice President – Investor Relations
Altera Corporation
(408) 544-6996
swylie@altera.com
MEDIA CONTACT
Anna del Rosario
Director – Public Relations
Altera Corporation
(408) 544-7496
anna.delrosario@altera.com
ALTERA ANNOUNCES THIRD QUARTER RESULTS
San Jose, Calif., October 20, 2004 — Altera Corporation (Nasdaq: ALTR) today announced third quarter sales of $264.6 million, up 26% from the third quarter of 2003 and down 2% from the second quarter of 2004. Sales of the company’s new products grew 25% sequentially and were up 212% versus the prior year’s third quarter.
Third quarter net income was $83.1 million, $0.22 per diluted share, up 90%, versus net income of $43.8 million, $0.11 per diluted share, in the third quarter of 2003. Gross profit margin was 69.4% for the third quarter of 2004 versus 68.7% for the third quarter of 2003. Net income was favorably impacted by a one-time tax benefit of $17.1 million, $0.05 per diluted share, primarily related to a settlement with Hong Kong’s Inland Revenue Department for the tax years 1997 to 2003.
Altera repurchased 1.2 million shares of its common stock during the quarter at a cost of $23.2 million and ended the quarter with $1.1 billion in cash and short-term investments.
“Despite this quarter’s challenges, our new 0.13-micron products remain on a fast track, with very strong sequential growth. While we continue to see increasing production-driven demand for the Stratix® and Cyclone™ families, we are still early in the transition from customer prototype volumes to large scale production-based orders. The peak of demand for these families is still ahead of us,” said John Daane, president and CEO. “Available since June, and the only FPGAs to use a 90-nanometer process with high-performance, low-k dielectric materials, our Stratix II family rollout is progressing smoothly. The combination of this proven 90-nanometer manufacturing process, the new Stratix II architecture, and our Quartus® II development software delivers benchmarking comparisons that confirm the Stratix II family’s performance superiority in the PLD industry.”
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Altera continued to advance its leadership position in system-on-a-programmable-chip (SOPC) solutions.
| • | Current design-win activity indicates that the Stratix II family is continuing the momentum set by the original Stratix family. Thousands of units of the EP2S60 device, the first member of the Stratix II family, available since June, have now shipped. The Stratix II family leverages a well thought out design methodology and uses a highly reliable mainstream 90-nanometer process. As a result, Stratix II customers can be confident of on-time delivery of the critical first parts needed to complete their prototype hardware design. In addition, Altera’s unique redundancy-based silicon design helps drive higher and more predictable yields. With redundancy, Altera can rapidly roll out new devices to supply customers with leading-edge technology for their development requirements. The next two Stratix II family members will begin shipping in the fourth quarter. The EP2S130 device is expected to ship at the end of December and will provide Altera customers with logic density well beyond any FPGAs available today, giving Altera both density and performance leadership. Also shipping in the quarter will be the EP2S30, which will be delivered as a fully production-qualified device, demonstrating the manufacturing stability of the Stratix II family and the fast rollout of this leading-edge FPGA family. |
| • | Altera has now shipped more than five million low-cost Cyclone FPGA devices. Introduced only 21 months ago, the Cyclone family has reached this milestone faster than any other Altera FPGA family. Cyclone devices have proven to be a compelling ASIC and ASSP alternative for designers of price-sensitive, high-volume products. The Cyclone family was the industry’s first to be developed from the ground up to deliver a dramatically lower cost FPGA, allowing Altera to compete for business previously beyond the reach of any FPGA vendor. The Cyclone family also delivers best-in-class performance — significantly faster than Xilinx’s competing low-cost device, the 90-nanometer-based Spartan-3 family. In the hands of 3,800 customers worldwide, Cyclone devices have broadened the company’s presence in all of its served markets and in a wide range of applications including video displays, cameras, telematics, home networking, and office automation equipment. |
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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 fourth quarter. The webcast and subsequent replay will be available in the investor relations section of the company’s web site at http://www.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 fourth quarter business update will be made available on December 8 after the market close and will be posted on the company’s web site. Those who do not have access to the Internet may contact Altera’s investor relations department directly at (408) 544-7707.
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”, or words that imply or predict a future state. 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, customer business environment, Altera’s ability to meet product introduction schedules, market acceptance of the company’s products, the rate of growth of the company’s new products and in particular the Stratix, Stratix GX, and Cyclone device families, the rate at which our customers new platforms enter production, the rollout of the company’s Stratix II, Cyclone II, and MAX® II families, as well as changing 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) 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 http://www.altera.com.
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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.
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ALTERA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data and note)
(Unaudited)
| THREE MONTHS ENDED | NINE MONTHS ENDED | ||||||||||||||
| Oct. 1 2004 | Jul. 2 2004 | Oct. 3 2003 | Oct. 1 2004 | Oct. 3 2003 | |||||||||||
Net sales | $264,599 | $268,972 | $209,446 | $776,479 | $609,781 | ||||||||||
Costs and expenses: | |||||||||||||||
Cost of sales | 80,966 | 81,026 | 65,578 | 237,833 | 195,260 | ||||||||||
Research and development | 48,259 | 42,738 | 40,976 | 133,579 | 137,269 | ||||||||||
Selling, general, and administrative | 53,577 | 52,712 | 46,943 | 156,167 | 136,740 | ||||||||||
Total costs and expenses | 182,802 | 176,476 | 153,497 | 527,579 | 469,269 | ||||||||||
Income from operations | 81,797 | 92,496 | 55,949 | 248,900 | 140,512 | ||||||||||
Interest and other income, net | 3,892 | 3,272 | 4,002 | 10,900 | 10,152 | ||||||||||
Income before income taxes | 85,689 | 95,768 | 59,951 | 259,800 | 150,664 | ||||||||||
Provision for income taxes | (2,608 | ) | (20,459 | ) | (16,188 | ) | (42,653 | ) | (40,681 | ) | |||||
Net income | $ 83,081 | $ 75,309 | $ 43,763 | $217,147 | $109,983 | ||||||||||
Income per share: | |||||||||||||||
Basic | $ 0.22 | $ 0.20 | $ 0.11 | $ 0.58 | $ 0.29 | ||||||||||
Diluted | $ 0.22 | $ 0.20 | $ 0.11 | $ 0.57 | $ 0.28 | ||||||||||
Shares used in computation: | |||||||||||||||
Basic | 372,137 | 373,696 | 381,366 | 373,873 | 382,290 | ||||||||||
Diluted | 379,785 | 382,819 | 391,013 | 382,810 | 390,104 | ||||||||||
Tax rate | 3.0% | 21.4% | 27.0% | 16.4% | 27.0% | ||||||||||
% of Sales: | |||||||||||||||
Gross margin | 69.4% | 69.9% | 68.7% | 69.4% | 68.0% | ||||||||||
Research and development | 18.2% | 15.9% | 19.6% | 17.2% | 22.5% | ||||||||||
Selling, general, and administrative | 20.3% | 19.6% | 22.4% | 20.1% | 22.5% | ||||||||||
Income from operations | 30.9% | 34.4% | 26.7% | 32.1% | 23.0% | ||||||||||
Net income | 31.4% | 28.0% | 20.9% | 28.0% | 18.0% | ||||||||||
Note: Statements of income for the three and nine month periods ended October 1, 2004 included a one-time tax benefit of $17.1 million primarily related to a settlement with Hong Kong’s Inland Revenue Department for the tax years 1997 to 2003.
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ALTERA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
Oct. 1 2004 | Jul. 2 2004 | Jan. 2 2004 | ||||
Assets | ||||||
Current assets: | ||||||
Cash and short-term investments | $1,148,525 | $1,079,042 | $1,031,890 | |||
Accounts receivable, net | 61,593 | 132,554 | 87,204 | |||
Inventories | 59,707 | 50,245 | 44,583 | |||
Other current assets | 179,177 | 154,884 | 136,938 | |||
Total current assets | 1,449,002 | 1,416,725 | 1,300,615 | |||
Long-term investments | — | — | 14,451 | |||
Property and equipment, net | 156,970 | 157,283 | 160,924 | |||
Deferred income taxes and other assets, net | 47,317 | 41,157 | 42,199 | |||
| $1,653,289 | $1,615,165 | $1,518,189 | ||||
Liabilities and Stockholders’ Equity | ||||||
Current liabilities: | ||||||
Accounts payable and current liabilities | $ 214,952 | $ 212,082 | $ 170,364 | |||
Deferred income and allowances on sales to distributors | 235,076 | 269,257 | 245,421 | |||
Total current liabilities | 450,028 | 481,339 | 415,785 | |||
Stockholders’ equity | 1,203,261 | 1,133,826 | 1,102,404 | |||
| $1,653,289 | $1,615,165 | $1,518,189 | ||||
Key Ratios & Information | ||||||
Current Assets/Current Liabilities | 3:1 | 3:1 | 3:1 | |||
Liabilities/Equity | 1:3 | 1:2 | 1:3 | |||
Annualized Return on Equity | 25% | 24% | 14% | |||
Quarterly Depreciation Expense | $ 6,184 | $ 6,637 | $ 10,875 | |||
Quarterly Capital Expenditures | $ 5,871 | $ 5,548 | $ 4,615 | |||
Annualized Sales per Employee | $ 504 | $ 504 | $ 426 | |||
Number of Employees | 2,132 | 2,069 | 1,995 | |||
Inventory MSOH(a): Altera | 2.2 | 1.9 | 1.9 | |||
Inventory MSOH(a): Distribution | 1.3 | 1.5 | 1.7 | |||
Days Sales Outstanding | 21 | 45 | 36 |
| (a) | MSOH: Months Supply On Hand |
Note: Certain reclassifications have been made to prior period balances in order to conform to the current period’s presentation.
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ALTERA CORPORATION
REVENUE SUMMARY
(Unaudited)
| Q3’04 | Q2’04 | Q3’03 | Q-Q Growth | Y-Y Growth | ||||||
| Geography | ||||||||||
North America | 28% | 27% | 33% | -1% | 5% | |||||
Europe | 22% | 24% | 22% | -12% | 25% | |||||
Japan | 26% | 26% | 24% | 4% | 39% | |||||
Asia Pacific | 24% | 23% | 21% | 2% | 46% | |||||
International | 72% | 73% | 67% | -2% | 37% | |||||
Total | 100% | 100% | 100% | -2% | 26% | |||||
| Product Category | ||||||||||
New | 32% | 25% | 13% | 25% | 212% | |||||
Mainstream | 39% | 43% | 50% | -10% | 0% | |||||
Mature & Other | 29% | 32% | 37% | -11% | -2% | |||||
Total | 100% | 100% | 100% | -2% | 26% | |||||
| Market Segment | ||||||||||
Communications | 48% | 47% | 43% | 1% | 42% | |||||
Industrial | 27% | 29% | 30% | -8% | 13% | |||||
Computer & Storage | 11% | 10% | 11% | 3% | 22% | |||||
Consumer | 14% | 14% | 16% | -2% | 11% | |||||
Total | 100% | 100% | 100% | -2% | 26% | |||||
Product Category Description
| Category | Products | |
New | Stratix, Stratix II, Stratix GX, Cyclone, 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 | |
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