Altera Reports Quarterly And Annual Results; Fourth Quarter Sales Increase 1% Annually And 9% Sequentially.

SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 22, 1997--Altera Corporation (NASDAQ:ALTR) today reported fourth quarter sales of $127.2 million were up 1% over the same period last year, and up 9% over the prior quarter. Total year 1996 sales were a record $497.3 million, an increase of 24% from 1995.

Gross margin, as a percentage of sales for the fourth quarter was 61.5%, up 0.2 percentage points over the same period last year and up 0.1 percentage point over the previous quarter. Gross margin, as a percentage of sales for 1996, was 61.4%, an increase of 0.9 percentage points from 1995. Wafer price reductions, improved yields, and technology advancements have offset price reductions through the year.

Net income for the fourth quarter was $29.3 million, up 3% over the fourth quarter of 1995 and 22% above the previous quarter. Fourth quarter earnings per share, on a fully diluted basis, were $0.31, an increase of $0.01 from the same period last year and up $0.05 from the previous quarter. 1996 earnings per share were a record $1.15, an increase of $0.20 from 1995. On a primary basis, earnings per share for the December quarter were $0.32 and for the year 1996 were $1.19. Altera completed a 2-for-1 stock split effective on December 18, 1996.

Quarterly cash activity includes a payment of $42 million for Wafertech, a joint venture with TSMC and other partners to manufacture wafers in a state-of-the-art facility in Camas, Washington, an expenditure of $15.6 million toward the construction of the new San Jose headquarters facility, and $3.0 million for routine capital expenditures.

Rodney Smith, President & CEO stated, "The financial results for the December quarter reflect an improving business climate. Orders were strong and we increased our backlog. We are very pleased with the 24% annual growth in revenues during a difficult year for the semiconductor industry. We have outgrown the competition and captured market share in the last year."

Mr. Smith concluded, "Our aggressive action plans in 1996 are paying off. Fourth quarter inventory declined 15% sequentially and is now at 4.6 months of supply. Sequential revenue growth for our mainstream products was 12%. For new products, units consumed by customers grew 83% sequentially, however, revenue growth was 8% due to our aggressive price moves."

Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation risks of dependence on third-party wafer suppliers, intellectual property rights and litigation, market acceptance of and demand for the Company's products as well as general market conditions, competition and pricing, and development of technology and manufacturing capabilities. 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, founded in 1983, is a world-wide leader in high-performance, high-density programmable logic devices and associated computer aided engineering (CAE) logic development tools. Programmable logic devices are semiconductor chips that offer on-site programmability to customers. The chips are programmed with tools that run on personal computers or engineering workstations. User benefits include ease of use, lower risk, and fast time-to-market. The Company offers the broadest line of CMOS programmable logic devices that address high-speed, high-density, and lower power applications. Altera products serve a broad range of market areas, including telecommunications, data communications, computers, and industrial applications. Altera common stock is traded on The NASDAQ Stock Market using the symbol ALTR. -0-

                          ALTERA CORPORATION
                CONSOLIDATED STATEMENTS OF OPERATIONS
                 (Thousands, except per share data)
                              (Unaudited)

                          THREE MONTHS ENDED          YEAR ENDED
                    Dec. 31   Dec. 31   Sept. 30   Dec. 31   Dec. 31
                      1996      1995      1996       1996      1995

Sales              $127,185  $125,316  $116,728   $497,306  $401,598
Costs & Expenses:
Cost of Sales        48,961    48,451    45,094    191,958   158,808
Research and
 Development         12,339    10,481    13,308     49,513    33,849
Selling, General,
 and Administrative  21,258    21,922    20,590     87,742    74,658
Total Costs &
 Expenses            82,558    80,854    78,992    329,213   267,315
Income from
 Operations          44,627    44,462    37,736    168,093   134,283
Interest & Other
 Income, Net           (215)      638       (51)     1,044     3,608
Income before Taxes  44,412    45,100    37,685    169,137   137,891
Taxes                15,100    16,687    13,567     60,002    51,020
Net Income         $ 29,312  $ 28,413  $ 24,118   $109,135  $ 86,871
Net Income per
 Share:
  Primary             $0.32     $0.31     $0.26      $1.19     $0.95
  Fully diluted       $0.31     $0.30     $0.26      $1.15     $0.95
Weighted average
 shares and
 equivalents:
  Primary            92,364    91,674    91,150     91,824    91,154
  Fully diluted     101,578   100,664   100,610    101,437    96,088
Tax rate                 34%       37%       36%        35%       37%
% of Sales
 Gross Margin            62%       61%       61%        61%       60%
 Research &
  Development            10%        8%       11%        10%        8%
  Selling, General,
   and Administrative    17%       17%       18%        18%       19%
  Income from
   Operations            35%       35%       32%        34%       33%
  Net Income             23%       23%       21%        22%       22%


                           ALTERA CORPORATION
                      CONSOLIDATED BALANCE SHEETS
                              (Thousands)
                              (Unaudited)

                                       Dec. 31    Sept. 30   Dec. 31
                                        1996       1996       1995
Assets

Current assets:
 Cash and short-term investments      $280,850    $285,636  $365,219
 Accounts receivable, net               68,486      54,282    54,518
 Inventories                            75,798      89,429    55,421
 Other assets                           47,853      46,221    42,849
Total current assets                   472,987     475,568   518,007
Property and equipment, net             89,804      71,006    54,846
Investments & intangibles              215,421     217,025   142,701
                                      --------    --------  --------
                                      $778,212    $763,599  $715,554

Liabilities and Shareholders' Equity

Current liabilities                   $177,967    $194,925  $171,765
Long term debt                         230,000     230,000   288,600
Shareholders' equity                   370,245     338,674   255,189
                                      --------    --------  --------
                                      $778,212    $763,599  $715,554

Key Ratios & Information

Current Assets/Current Liabilities         3:1         2:1       3:1
Liabilities/Equity                         1:1         1:1       2:1
Annualized Quarterly Return on Equity       33%         29%       48%
Quarterly Depreciation Expense           4,147       3,837     2,531
Quarterly Capital Expenditures          18,555      10,776     8,174
Annualized Sales per Employee              562         528       591

CONTACT: Altera Corporation, San Jose

Thomas J. Nicoletti, 408/894-7000