Altera Announces Second Quarter Earnings; Completes SEC Filings.

SAN JOSE, Calif. -- Altera Corporation (NASDAQ:ALTR) today announced second quarter 2006 net income, on a generally accepted accounting principles (GAAP) basis, of $77.3 million, $0.21 per diluted share, compared with net income of $67.6 million, $0.18 per diluted share, in the second quarter of 2005. Non-GAAP net income, which excludes the effects of stock-based compensation expense, was $91.0 million, $0.25 per diluted share, in the second quarter of 2006.

The company had previously announced second quarter revenues of $334.1 million, up 14 percent from the first quarter of 2006 and 17 percent from the second quarter of 2005. New product sales increased 49 percent sequentially and were up 138 percent from the prior year's second quarter.

On a GAAP basis, second quarter gross margin was 66.1 percent and operating expenses were $140.7 million. Excluding the effects of stock-based compensation expense, non-GAAP gross margin was 66.2 percent and operating expenses were $122.5 million.

Prior to the temporary suspension of its share repurchase program in May 2006, Altera repurchased 448,000 shares of its common stock during the second quarter at a cost of $9.4 million. Altera ended the quarter with $1.5 billion in cash and investments.

Altera's 2005 Form 10-K/A, first quarter Form 10-Q, and second quarter Form 10-Q are also being filed with the Securities and Exchange Commission today.

"With today's SEC filings we will have completed the restatement we previously announced and become current in our periodic reports. We have taken steps to ensure that Altera's financial reporting is as it should be: accurate, transparent, timely, and compliant with applicable accounting standards," said John Daane, president, chief executive officer, and chairman of the board. "I want to apologize to our shareholders for the past events that resulted in the need to restate historical financial statements. We are committed to investing in ongoing efforts to continuously improve our internal controls and to remediate the material weakness identified in our SEC reports."

Conference Call

A conference call will be held today at 2:00 p.m. Pacific Time to discuss the second quarter's results. To participate in the conference call, dial [phone] (use access code 7292741). The live web cast 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 [phone] and referencing confirmation code 258712. The telephonic replay will be available for two weeks following the live call.

Third Quarter Results

Third quarter results are currently scheduled to be released November 6, 2006 after the market close.

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 statements relating to today's filing of Altera's periodic reports with the SEC, the timing of our third quarter earnings release, the adequacy of Altera's subsequent periodic reports, and Altera's efforts to improve internal controls and remediate an identified material weakness in the company's internal controls. 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, technical difficulties with the SEC and EDGAR system, a delay in the release of our third quarter earnings or future periodic reports, judgments required in the application of accounting standards, and delays or difficulties in improvement of our internal controls or remediation of the company's material weakness, as well as other risk factors discussed in documents filed by the company with the SEC 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.

Use of Non-GAAP Financial Information

In addition to disclosing financial results calculated in accordance with U.S. GAAP, this release and accompanying financial tables contain non-GAAP financial measures to exclude the effects of the non-cash stock-based compensation expense and the related tax effects of SFAS 123R, "Share-based Payment." The non-GAAP financial measures are neither in accordance with, nor an alternative for, generally accepted accounting principles and may be different from similarly titled non-GAAP financial measures used by other companies. Accordingly, the reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures included below should be carefully evaluated. Altera believes that the use of these non-GAAP financial measures, when shown in conjunction with corresponding GAAP financial measures, provide useful information to management and investors regarding financial and business trends relating to Altera's financial condition and results of operations. Altera management uses these non-GAAP financial measures, in addition to the corresponding GAAP financial measures, to review Altera's financial performance. Non-GAAP reporting represents relevant and useful information that is widely used by financial analysts, investors and other interested parties in our industry. Altera's management believes this presentation is useful to investors in evaluating performance on a basis that is consistent and comparable with periods prior to the adoption of SFAS 123R. Since expensing stock-based compensation expense does not require cash expenditures by the company, the company's non-GAAP presentation that excludes these expenses may be a useful measure of the company's performance. A reconciliation between GAAP and non-GAAP financial results is provided on pages 4 to 6 of this release.

About Altera

Altera's programmable solutions enable system and semiconductor companies to rapidly and cost-effectively innovate, differentiate and win in their markets. Find out more at www.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.

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