<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1998 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
Commission file number 0-16617
ALTERA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 77-0016691
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Innovation Drive, San Jose, California 95134
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 544-7000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for at least the past 90 days.
Yes [X] No [ ]
Number of shares of common stock outstanding at May 8, 1998: 89,084,155
<PAGE> 2
ALTERA CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED
MARCH 31, 1998
PART I
FINANCIAL INFORMATION AND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
2
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ALTERA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Mar. 31, Dec.31,
1998 1997
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 64,303 $ 22,761
Short-term investments 348,730 354,808
-------- --------
Total cash, cash equivalents,
and short-term investments 413,033 377,569
Accounts receivable, net 55,037 55,251
Inventories 97,258 98,883
Deferred income taxes 64,576 63,076
Other current assets 26,612 21,423
-------- --------
Total current assets 656,516 616,202
Property and equipment, net 151,760 152,417
Investments and other assets 178,339 183,899
-------- --------
$986,615 $952,518
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 25,297 $ 20,649
Accrued liabilities 19,975 16,688
Accrued compensation 10,296 20,226
Deferred income on sales to distributors 126,661 128,268
Income taxes payable 14,118 --
-------- --------
Total current liabilities 196,347 185,831
Convertible subordinated notes 230,000 230,000
-------- --------
Total liabilities 426,347 415,831
-------- --------
Stockholders' equity:
Common stock 89 89
Additional paid-in capital 111,990 123,544
Retained earnings 448,189 413,054
-------- --------
Total stockholders' equity 560,268 536,687
-------- --------
$986,615 $952,518
======== ========
</TABLE>
See accompanying notes to financial information.
3
<PAGE> 4
ALTERA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1998 1997*
--------- ---------
<S> <C> <C>
Net sales $ 157,216 $ 146,043
--------- ---------
Costs & expenses:
Cost of sales 60,090 55,355
Research and development 14,407 12,315
Selling, general and administrative 28,138 24,760
--------- ---------
Total costs and expenses 102,635 92,430
--------- ---------
Income from operations 54,581 53,613
Interest & other income, net 152 329
--------- ---------
Income before taxes 54,733 53,942
Provision for income taxes 17,787 18,340
--------- ---------
Income before accounting change and equity investment 36,946 35,602
Equity in income (loss) of WaferTech (1,811) --
--------- ---------
Income before cumulative effect of accounting change 35,135 35,602
Cumulative effect of change in accounting principle -- (18,064)
--------- ---------
Net income $ 35,135 $ 17,538
========= =========
BASIC EARNINGS PER SHARE:
Income before accounting change $ 0.40 $ 0.41
========= =========
Net income $ 0.40 $ 0.20
========= =========
DILUTED EARNINGS PER SHARE:
Income before accounting change $ 0.37 $ 0.36
========= =========
Net income $ 0.37 $ 0.19
========= =========
WEIGHTED AVERAGE SHARES:
Basic 88,885 87,873
========= =========
Diluted 101,961 102,119
========= =========
</TABLE>
* Restated to reflect change in accounting principle.
See accompanying notes to financial information.
4
<PAGE> 5
ALTERA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1998 1997*
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 35,135 $ 17,538
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of change in accounting principle -- 18,064
Equity in loss of WaferTech 1,811 --
Depreciation and amortization 7,636 6,317
Deferred income taxes (1,500) (4,203)
Changes in assets and liabilities:
Accounts receivable, net 214 (4,265)
Inventories 1,625 13,769
Other current assets (5,189) (507)
Accounts payable and accrued liabilities (1,995) 8,891
Deferred income on sales to distributors (1,607) 25,992
Income taxes payable 14,990 14,392
--------- ---------
Cash provided by operating activities 51,120 95,988
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment (5,228) (23,345)
Net change in short-term investments 6,078 (85,674)
Long-term investments 1,126 (688)
--------- ---------
Cash provided by (used for) investing activities 1,976 (109,707)
--------- ---------
Cash flows from financing activities:
Tax benefit from employee stock transactions 1,680 5,000
Net proceeds from issuance of common stock 3,792 4,966
Repurchase of common stock (17,026) --
--------- ---------
Cash provided by (used for) financing activities (11,554) 9,966
--------- ---------
Net increase (decrease) in cash and cash equivalents 41,542 (3,753)
Cash and cash equivalents at beginning of period 22,761 70,788
--------- ---------
Cash and cash equivalents at end of period $ 64,303 $ 67,035
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes $ 221 $ 2,820
Cash paid during the period for interest $ -- $ --
</TABLE>
*Restated to reflect change in accounting principle.
See accompanying notes to financial information.
5
<PAGE> 6
ALTERA CORPORATION
NOTES TO FINANCIAL INFORMATION
(Unaudited)
Note 1 - Interim Statements:
In the opinion of the Company, the accompanying unaudited financial data
contains all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the financial information included therein. This
financial data should be read in conjunction with the audited financial
statements and notes thereto included in the Company's Annual Report to
Stockholders for the year ended December 31, 1997. Results for the interim
period presented are not necessarily indicative of results for the entire year.
Certain prior year amounts have been reclassified to conform to the current
year's presentation.
Note 2 - Balance Sheet Details:
<TABLE>
<CAPTION>
(In thousands)
Mar. 31, Dec. 31,
1998 1997
--------- ---------
<S> <C> <C>
Inventories:
Purchased parts and raw materials $ 114 $ 1,503
Work-in-process 72,740 67,442
Finished goods 24,404 29,938
--------- ---------
$ 97,258 $ 98,883
========= =========
Property and equipment:
Land $ 20,496 $ 20,496
Building 76,094 75,111
Equipment 104,036 102,953
Office furniture and equipment 10,013 9,767
Leasehold improvements 1,032 1,884
--------- ---------
211,671 210,211
Accumulated depreciation and
Amortization (59,911) (57,794)
--------- ---------
$ 151,760 $ 152,417
========= =========
</TABLE>
Note 3 - Income Per Share:
Basic net income per share is computed by dividing net income available to
common stockholders (numerator) by the weighted average number of common shares
outstanding (denominator) during the period and excludes the dilutive effect of
stock options and convertible securities. Diluted net income per share gives
effect to all dilutive common shares and other dilutive securities outstanding
during the period. In computing diluted net income per share, the average stock
price for the period is used in determining the number of shares assumed to be
purchased from exercise of stock options.
6
<PAGE> 7
ALTERA CORPORATION
NOTES TO FINANCIAL INFORMATION (continued)
(Unaudited)
A reconciliation of the numerators and denominators of the basic and diluted
income per share is presented below:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1998 1997*
-------- --------
<S> <C> <C>
Basic:
Net income $ 35,135 $ 17,538
======== ========
Weighted average common shares
outstanding 88,885 87,873
======== ========
Basic net income per share $ 0.40 $ 0.20
======== ========
Diluted:
Net income $ 35,135 $ 17,538
Convertible notes interest,
net of income taxes and capitalized interest 2,232 1,624
-------- --------
$ 37,367 $ 19,162
======== ========
Weighted average common shares outstanding 88,885 87,873
Dilutive stock options 4,086 5,256
Assumed conversion of notes 8,990 8,990
-------- --------
101,961 102,119
======== ========
Diluted net income per share $ 0.37 $ 0.19
======== ========
</TABLE>
*Restated to reflect change in accounting principle.
Note 4 - Common Stock Repurchase:
In January 1998, the Company repurchased 540,000 shares of common stock for a
total price of $17.0 million. The repurchased shares were retired upon
acquisition.
7
<PAGE> 8
ALTERA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net Sales. Net sales during the first quarter of 1998 were $157.2
million, 7.7% higher than the $146.0 million reported for the same period last
year, and flat compared to 1997 fourth quarter net sales of $157.1 million. Net
sales in the first quarter of 1998 increased over the same period last year
primarily due to significantly higher sales of new product families, including
the FLEX 10K and MAX 7000S product families, which were partially offset by
declines in sales of mainstream and mature product families. Net sales of new
products increased from $16.7 million in the first quarter of 1997 to $52.1
million in the first quarter of 1998 while net sales of mainstream products,
consisting of the MAX 7000, FLEX 8000, and FLASHlogic families, decreased from
$96.9 million to $79.8 million. During the same periods, net sales of mature
products, consisting of the Classic and MAX 5000 families, have decreased from
$22.7 million to $14.3 million. Management expects that the decline in sales of
the mainstream and mature products, which presently comprise more than half of
the Company's revenue base, will continue. The Company's ability to maintain or
increase net sales in the future is dependent on sales of new product families
increasing more rapidly than the decline in sales of mainstream and mature
product families. While management is optimistic that new product sales will
increase, there can be no assurances that new product sales growth will offset
the decline in sales of mainstream and mature products.
Japan and Asia Pacific experienced decreases in net sales in the
first quarter of 1998 as compared to the first quarter of 1997, and as compared
to the fourth quarter of 1997. A significant portion of the Company's sales are
in Japan and the Asia Pacific regions, which are currently experiencing slow or
negative economic growth. Management believes that the poor economic environment
is limiting sales of its products in those regions, particularly in the
communications segment, and this is evidenced by the recent quarter's results.
Management expects that as the economic environment in Japan and Asia Pacific
remains unfavorable, the Company's overall sales will continue to be diluted as
a result. Further economic decline in those regions could result in an overall
decrease in sales.
During the first quarter of 1998, the Company's inventories decreased
to $97.3 million from $98.9 million at December 31, 1997. During the fourth
quarter of 1997, the Company increased its inventory levels to improve
responsiveness to customer demand, essentially on the Company's newer product
families.
Gross Margin. The gross margin percentage in the first quarter of
61.8% was down from 62.1% in the same period a year ago and 62.5% during the
prior quarter. Gross margins during the first quarter decreased slightly from
the fourth quarter of 1997 due to aggressive pricing of newer products, which
was
8
<PAGE> 9
partially offset by lower manufacturing costs due to process
advancements, increased manufacturing activity and lower wafer costs.
Yields measured as a total for all product families decreased
slightly from the fourth quarter of 1997. Yields for the MAX 7000
product families were slightly lower in the first quarter of 1998 as the Company
transitioned certain MAX 7000 product family members to new and more advanced
processes. The Company continues to spend significant research and development
resources to improve production yields on both new and established products.
Difficulties in production yields often occur when the Company is beginning
production of new products or transitioning to new processes. These difficulties
can potentially result in significantly higher costs and lower product
availability. Management expects to continue to introduce new and established
products using new process technologies and may encounter similar start-up
difficulties during the transition to such process technologies. Further,
production throughput times vary considerably among the Company's wafer
suppliers, and the Company may experience delays from time to time in processing
some of its products which also may result in higher costs and lower product
availability.
Research and Development. Research and development expenditures were
$14.4 million for the first quarter of 1998, $2.1 million higher than the same
period a year ago, and $1.1 million higher than the prior quarter. The research
and development expenditures include expenditures for labor, prototype and
pre-production costs, development of process technology, development of software
to support new products and design environments, and development of new
packages. As a percentage of sales, research and development expenditures
increased to 9.2% for the first quarter of 1998, compared to 8.4% for the first
quarter a year ago and 8.5% for the fourth quarter of 1997. Historically, the
level of research and development expenditures as a percentage of sales has
fluctuated in part due to the timing of the purchase of wafers used in
development and prototyping of new products. The Company currently expects that,
in the long term, research and development expenses will continue to increase in
absolute dollars but may fluctuate as a percentage of sales.
The Company expects to continue to make significant investments in
prototyping of the FLEX 6000 and FLEX 10K product families. Also, the Company is
focusing its efforts on the development of new programmable logic chips, related
development software and hardware, and advanced semiconductor wafer fabrication
processes. However, even if the Company accomplishes its goals for the
development of new products and manufacturing processes, there is no assurance
that these products will achieve market acceptance, that the new manufacturing
processes will be successful, or that the suppliers will provide the Company
with the quality or quantity of wafers and materials that the Company requires.
The Company must continue to develop and introduce new products in a timely
manner to help counter the industry's historical trend of declining prices as
products mature.
Selling, General, and Administrative. First quarter selling, general,
and administrative expenses of $28.1 million are $3.4 million higher than the
same quarter a year ago and $1.2 million lower than the prior
9
<PAGE> 10
quarter. Compared to the same period a year ago, the increase in selling,
general and administrative expenses relates primarily to higher payroll costs as
a result of increased headcount and higher selling expenses on increased sales,
offset by decreased legal expenses. The decrease in selling, general, and
administrative expenses from the fourth quarter of 1997 to the first quarter of
1998 was a result of a reduction in legal and travel costs. Selling, general,
and administrative expenses includes commission and incentive expenses,
advertising and promotional expenditures, legal, and salary expenses related to
field sales, marketing, and administrative personnel.
Operating Income. First quarter 1998 operating income of $54.6
million, representing 34.7% of net sales, was lower than the 36.7% for the same
quarter a year ago and the 35.3% achieved during the fourth quarter of 1997. The
year-to-year decrease in operating income, as a percentage of net sales, was
affected by the overall decrease in the Company's gross margin and the increases
in research and development and selling, general and administrative expenses as
a percentage of net sales.
Interest and Other Income. Interest and other income decreased
compared to the same quarter a year ago and increased slightly compared to the
fourth quarter of 1997. Interest and other income consists of interest income on
cash balances available for investment offset by interest expense related to the
Company's convertible notes (such interest expense is net of capitalized
interest incurred during the construction of the new headquarters). The increase
in interest and other income from the fourth quarter of 1997 to the first
quarter of 1998 is primarily a result of higher cash balances available for
investment.
Income Taxes. The Company's provision for income taxes was 32.5% for
the first quarter of 1998 compared to 34.0% for the quarter ended December 31,
1997. The decrease in the income tax provision rate is due in part to increased
research and development tax credits, a change in the geographic mix of income,
and an increased amount of tax-exempt interest income in 1998 compared to 1997.
Equity Investment. In June 1996, Altera, TSMC, and several other
partners formed WaferTech, LLC ("WaferTech"), a joint venture company in the
development stage, to build and operate a wafer manufacturing plant in Camas,
Washington. In return for a $140.4 million cash investment, Altera received an
18% equity ownership in the joint venture company and certain rights to procure
output from the facility at market prices. The Company accounts for this
investment under the equity method based on the Company's ability to exercise
significant influence on the operating and financial policies of WaferTech.
During the first quarter of 1998, the Company recorded a charge of $1.8 million
representing the Company's equity in the loss of WaferTech, net of tax.
Change in Accounting Principle. In October 1997, the Company changed
its accounting method for recognizing sales to distributors with an effective
date of January 1, 1997. The Company previously recognized sales upon shipment
to distributors as title passes to customers, including distributors, net of
appropriate reserves for sales returns and allowances. The accounting change
involves the deferral of sales
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<PAGE> 11
recognition on shipments to distributors until the product is sold to the end
customer. The Company believes that deferral of distributor sales and related
gross margins until the product is shipped by the distributors results in a more
meaningful measurement of operations and is a preferable method of accounting
for distributor sales. The cumulative effect in prior years of the change in
accounting method was $18.1 million. The results of operations and cash flows
for the period ended March 31, 1997 have been restated to reflect the accounting
change.
Future Results. Future operating results will depend on the Company's
ability to develop, manufacture, and sell complicated semiconductor components
and complex software that offers customers greater value than products of
competing vendors. The Company's efforts in this regard may not be successful.
Also, a number of factors outside of the Company's control, including general
economic conditions and cycles in world markets, exchange rate fluctuations, or
a lack of growth in the Company's end markets could impact future results. The
Company is highly dependent upon subcontractors to fabricate silicon wafers and
perform assembly and testing services. Disruptions or adverse supply conditions
arising from market conditions, political strife, labor disruptions, natural or
man-made disasters, other factors, and normal process variations could have a
material adverse effect on the Company's future operating results. Competitive
break-throughs and particularly competitive pricing could also impact future
operating results. Additionally, litigation relating to competitive patents and
intellectual property could have an adverse impact on the Company's financial
condition or operating results.
The Company owns numerous United States patents and has additional
pending United States and foreign patent applications on its semiconductor and
software products. The Company also has technology licensing agreements with
AMD, Cypress Semiconductor, Intel, and Texas Instruments that give the Company
royalty-free rights to design, manufacture, and package products using certain
patents they control. Other companies have filed applications for, or have been
issued, other patents and may develop, or obtain proprietary rights relating to,
products or processes competitive with those of the Company. From time to time
the Company may find it desirable to obtain additional licenses from the holders
of patents relating to products or processes competitive with those of the
Company. Although its patents and patent applications may have value in
discouraging competitive entry into the Company's market segment and the Company
believes that its current licenses will assist it in developing additional
products, there can be no assurance that any additional patents will be granted
to the Company, that the Company's patents will provide meaningful protection
from competition, or that any additional products will be developed based on any
of the licenses that the Company currently holds. The Company believes that its
future success will depend primarily upon the technical competence and creative
skills of its personnel, rather than on its patents, licenses, or other
proprietary rights.
The Company, in the normal course of business, from time to time
receives and makes inquiries with respect to possible patent infringements. As a
result of inquiries received from companies, it may be necessary or desirable
for the Company to obtain additional licenses relating to one or more of its
current or
11
<PAGE> 12
future products. There can be no assurance that such additional licenses could
be obtained, and, if obtainable, could be obtained on conditions that would not
have a material adverse effect on the Company's operating results. If the
inquiring companies were to allege infringement of their patents, as is the case
in the Company's current litigation with competitors, there can be no assurance
that any necessary licenses could be obtained, and, if obtainable, that such
licenses would be on terms or conditions that would not have a material adverse
effect on the Company. In addition, if litigation were initiated, there can be
no assurance that these companies would not succeed in obtaining significant
monetary damages or an injunction against the manufacture and sale of one or
more of the Company's product families. It may be necessary or desirable for the
Company to incur significant litigation expenses to enforce its intellectual
property rights.
Liquidity and Capital Resources
The Company's cash, cash equivalents and short-term investments
increased by $35.5 million in the first three months of 1998, from $377.6
million at December 31, 1997 to $413.0 million at March 31, 1998. The increase
is mainly attributable to net income of $35.1 million, adjusted by non-cash
items including the equity in loss of WaferTech and depreciation and
amortization aggregating $9.4 million. Also during the first quarter, the
Company repurchased $17.0 million of common stock.
The Company believes that its cash, cash equivalents, and short-term
investments, combined with cash generated from ongoing operations, will be
adequate to finance the Company's operations and capital expenditures for at
least the next year.
Impact of Currency and Inflation. The Company purchases the majority
of its materials and services in U.S. dollars, and most of its foreign sales are
transacted in U.S. dollars. However, Altera does have Yen denominated purchase
contracts with Sharp Corporation of Japan for processed silicon wafers. In
recent years, the Company did not hold or purchase any foreign exchange
contracts for the purchase or sale of foreign currencies. However, in January
1998, the Company entered into a forward exchange contract to purchase Malaysian
ringgit to meet a portion of its firm contractual commitments of ringgit
required in 1998. The Company may choose to enter into similar contracts from
time to time should conditions appear favorable. Effects of inflation on
Altera's financial results have not been significant.
Safe Harbor Notice
This Quarterly Report on Form 10-Q contains "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward looking statements
are generally written in the future tense and/or are preceded preceded by words
such as "expects," "suggests," "believes," "anticipates," or "intends." The
Company's future results of operations and the other forward looking statements
contained in this Report involve a number of risks and uncertainties,
12
<PAGE> 13
many of which are outside the Company's control. Some of these risks and
uncertainties are described in proximity to forward looking statements that are
contained in the section of this Report entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations." Factors that could
cause actual results to differ materially from projected results include but are
not limited to risks associated with the Company's ability to achieve continued
cost reductions and maintain gross margins, the Company's ability to achieve and
maintain appropriate inventory levels and respond successfully to changes in
product demand, the ability of price reductions to increase demand and
strengthen the Company's market share over the long term, successful development
of new products through investment in research and development and application
of new process technologies to old and new product lines, market acceptance of
and demand for the Company's products, litigation involving intellectual
property rights, issuance of new patents and acquisition of other intellectual
property rights, the Company's ability to finance its operations and
expenditures, and general market conditions. Additional risk factors are
disclosed in the Company's 1997 Annual Report on Form 10-K on file with the
Securities and Exchange Commission.
13
<PAGE> 14
ALTERA CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED
MARCH 31, 1998
PART II
OTHER INFORMATION
14
<PAGE> 15
Item 1. Legal Proceedings
In June 1993, Xilinx, Inc. ("Xilinx") brought suit against the
Company seeking monetary damages and injunctive relief based on the Company's
alleged infringement of certain patents held by Xilinx. In June 1993, the
Company brought suit against Xilinx, seeking monetary damages and injunctive
relief based on Xilinx's alleged infringement of certain patents held by the
Company. In April 1995, the Company filed a separate lawsuit against Xilinx in
Delaware, Xilinx's state of incorporation, seeking monetary damages and
injunctive relief based on Xilinx's alleged infringement of one of the Company's
patents. In May 1995, Xilinx counterclaimed against the Company in Delaware,
asserting defenses and seeking monetary damages and injunctive relief based on
the Company's alleged infringement of certain patents held by Xilinx.
Subsequently, the Delaware case has been transferred to California. Due to the
nature of the litigation with Xilinx and because the lawsuits are still in the
pre-trial stage, the Company's management cannot estimate the total expense, the
possible loss, if any, or the range of loss that may ultimately be incurred in
connection with the allegations. Management cannot ensure that Xilinx will not
succeed in obtaining significant monetary damages or an injunction against the
manufacture and sale of the Company's MAX 5000, MAX 7000, FLEX 8000, or MAX 9000
families of products, or succeed in invalidating any of the Company's patents.
Although no assurances can be given as to the results of these cases, based on
the present status, management does not believe that any of such results will
have a material adverse effect on the Company's financial condition or results
of operations.
In August 1994, Advanced Micro Devices, Inc. ("AMD") brought suit
against the Company seeking monetary damages and injunctive relief based on the
Company's alleged infringement of certain patents held by AMD. In September
1994, Altera answered the complaint asserting that it is licensed to use the
patents which AMD claims are infringed and filed a counterclaim against AMD
alleging infringement of certain patents held by the Company. In October 1997,
upon completion of trials bifurcated from the infringement claims, the Court
ruled that the Company is licensed under all patents asserted by AMD in the
suit. In December 1997, AMD filed a Notice of Appeal of the Court's rulings. Due
to the nature of the litigation with AMD, and because AMD has appealed the court
rulings that the Company is licensed under all of the patents asserted by AMD in
the suit, the Company's management cannot estimate the total expense, the
possible loss, if any, or the range of loss that may ultimately be incurred in
connection with the allegations. Management cannot ensure that AMD will not
succeed in obtaining significant monetary damages or an injunction against the
manufacture and sale of the Classic, MAX 5000, MAX 7000, FLEX 8000, MAX 9000,
FLEX 10K and FLASHlogic product families, or succeed in invalidating any of the
Company's patents remaining in the suit. Although no assurances can be given to
the results of this case, based on its present status, management does not
believe that any of such results will have a material adverse effect on the
Company's financial condition or results of operations.
15
<PAGE> 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule for the three months ended March 31,
1998.
27.2 Financial Data Schedule for the periods ended March 31, 1997,
June 30, 1997 and September 30, 1997, restated to report basic
and diluted earnings per share in accordance with FASB
Statement No. 128, "Earnings per Share," and to reflect a
change in accounting principle.
27.3 Financial Data Schedule for the periods ended March 31, 1996,
June 30, 1996, September 30, 1996, and December 31, 1996,
restated to report basic and diluted earnings per share in
accordance with FASB Statement No. 128, "Earnings per Share."
27.4 Financial Data Schedule for the year ended December 31, 1995,
restated to report basic and diluted earnings per share in
accordance with FASB Statement No. 128, "Earnings per Share."
(b) Reports on Form 8-K
None.
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALTERA CORPORATION
/s/ NATHAN SARKISIAN
---------------------------------------------
Nathan Sarkisian, Senior Vice President
(duly authorized officer) and Chief Financial
Officer (principal financial officer)
Date: May 14, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 64,303
<SECURITIES> 348,730
<RECEIVABLES> 55,037
<ALLOWANCES> 3,174
<INVENTORY> 97,258
<CURRENT-ASSETS> 656,516
<PP&E> 211,671
<DEPRECIATION> 59,911
<TOTAL-ASSETS> 986,615
<CURRENT-LIABILITIES> 196,347
<BONDS> 230,000
0
0
<COMMON> 89
<OTHER-SE> 560,179
<TOTAL-LIABILITY-AND-EQUITY> 986,615
<SALES> 157,216
<TOTAL-REVENUES> 157,216
<CGS> 60,090
<TOTAL-COSTS> 60,090
<OTHER-EXPENSES> 42,545
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,491
<INCOME-PRETAX> 54,733
<INCOME-TAX> 17,787
<INCOME-CONTINUING> 36,946
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,135
<EPS-PRIMARY> 0.40<F1>
<EPS-DILUTED> 0.37
<FN>
<F1>For purposes of this Exhibit, Primary means Basic.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE IS A RESTATEMENT OF SCHEDULES FROM PREVIOUS FILINGS TO INCORPORATE
THE PROVISIONS OF SFAS NO. 128 - EARNINGS PER SHARE AND A CHANGE IN ACCOUNTING
PRINCIPLE.
</LEGEND>
<RESTATED>
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 JAN-01-1997 JAN-01-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 67,035 66,467 87,282
<SECURITIES> 295,736 306,959 323,511
<RECEIVABLES> 72,751 57,992 49,259
<ALLOWANCES> 2,359 2,765 2,465
<INVENTORY> 62,029 71,988 97,913
<CURRENT-ASSETS> 559,420 587,942 637,416
<PP&E> 164,590 187,418 202,041
<DEPRECIATION> 55,521 57,082 53,573
<TOTAL-ASSETS> 882,361 923,193 988,562
<CURRENT-LIABILITIES> 254,612 247,426 262,477
<BONDS> 230,000 230,000 230,000
0 0 0
0 0 0
<COMMON> 100,610 89 89
<OTHER-SE> 297,139 445,678 495,996
<TOTAL-LIABILITY-AND-EQUITY> 882,361 923,193 988,562
<SALES> 146,043 311,900 474,026
<TOTAL-REVENUES> 146,043 311,900 474,026
<CGS> 55,355 117,242 177,991
<TOTAL-COSTS> 55,355 117,242 177,991
<OTHER-EXPENSES> 37,075 81,014 124,511
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 2,647 5,034 8,280
<INCOME-PRETAX> 53,942 115,235 174,040
<INCOME-TAX> 18,340 39,179 59,173
<INCOME-CONTINUING> 35,602 76,056 114,867
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> (18,064) (18,064) (18,064)
<NET-INCOME> 17,538 57,992 96,803
<EPS-PRIMARY> 0.20 0.66 1.10<F1>
<EPS-DILUTED> 0.19 0.60 0.99
<FN>
<F1>For purposes of this Exhibit, Primary means Basic.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE IS A RESTATEMENT OF SCHEDULES FROM PREVIOUS FILINGS TO INCORPORATE
THE PROVISIONS OF SFAS NO. 128 - EARNINGS PER SHARE.
</LEGEND>
<RESTATED>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1996 JAN-01-1996 JAN-01-1996 JAN-01-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-30-1996 DEC-31-1996
<CASH> 102,479 104,067 66,885 70,788
<SECURITIES> 247,187 187,284 218,751 210,062
<RECEIVABLES> 60,362 40,048 54,282 68,486
<ALLOWANCES> 1,460 1,662 1,976 2,399
<INVENTORY> 75,146 101,124 89,429 75,798
<CURRENT-ASSETS> 534,134 479,613 475,568 472,987
<PP&E> 100,857 110,171 118,990 141,334
<DEPRECIATION> 42,922 46,104 47,984 51,530
<TOTAL-ASSETS> 735,306 762,310 71,006 778,212
<CURRENT-LIABILITIES> 205,705 160,606 194,925 177,967
<BONDS> 239,600 286,160 230,000 230,000
0 0 0 0
0 0 0 0
<COMMON> 86,817 88,095 88,385 90,644
<OTHER-SE> 203,184 227,449 250,289 279,601
<TOTAL-LIABILITY-AND-EQUITY> 735,306 762,310 763,599 778,212
<SALES> 137,098 253,393 370,121 497,306
<TOTAL-REVENUES> 137,098 253,393 370,121 497,306
<CGS> 53,054 97,903 142,997 191,958
<TOTAL-COSTS> 53,054 97,903 142,997 191,958
<OTHER-EXPENSES> 35,843 69,760 103,658 137,255
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 1,920 6,342 9,403 12,284
<INCOME-PRETAX> 49,124 87,040 124,725 169,137
<INCOME-TAX> 17,684 31,335 44,902 60,002
<INCOME-CONTINUING> 31,440 55,705 79,823 109,135
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 31,440 55,705 79,823 109,135
<EPS-PRIMARY> 0.36 0.64 0.91 1.25<F1>
<EPS-DILUTED> 0.33 0.59 0.85 1.16
<FN>
<F1>For purposes of this Exhibit, Primary means Basic.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE IS A RESTATEMENT OF SCHEDULES FROM PREVIOUS FILINGS TO INCORPORATE
THE PROVISIONS OF SFAS NO. 128 - EARNINGS PER SHARE.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 79,409
<SECURITIES> 285,810
<RECEIVABLES> 54,518
<ALLOWANCES> 1,005
<INVENTORY> 55,421
<CURRENT-ASSETS> 518,007
<PP&E> 94,653
<DEPRECIATION> 39,807
<TOTAL-ASSETS> 715,554
<CURRENT-LIABILITIES> 171,765
<BONDS> 288,600
83,445
0
<COMMON> 0
<OTHER-SE> 171,744
<TOTAL-LIABILITY-AND-EQUITY> 715,554
<SALES> 401,598
<TOTAL-REVENUES> 401,598
<CGS> 158,808
<TOTAL-COSTS> 158,808
<OTHER-EXPENSES> 108,507
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,401
<INCOME-PRETAX> 137,891
<INCOME-TAX> 51,020
<INCOME-CONTINUING> 86,871
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 86,871
<EPS-PRIMARY> 1.00<F1>
<EPS-DILUTED> 0.95
<FN>
<F1>For purposes of this Exhibit, Primary means Basic.
</FN>
</TABLE>
