Altera Reports Record First Quarter 2000 Results; Sales Increase 15% Sequentially & 46% Annually.

Business Editors

SAN JOSE, Calif.--(BUSINESS WIRE)--April 12, 2000

Altera Corporation (Nasdaq:ALTR) today reported record first quarter sales of $272.8 million, up 15% from the previous quarter and up 46% over the same period last year. First quarter sales growth of 15% was achieved through gains of 17% in North America, 30% in Europe, and 12% in Asia/Pacific; sales declined 6% in Japan. New and mainstream products made up 75% of sales for the quarter. New product revenues were 42% of sales, grew 28% sequentially and 187% over the same period last year. Mainstream product revenues were 33% of sales, grew 10% sequentially and 29% over the first quarter of last year. Mature product sales grew 2% sequentially.

First quarter net income of $75.2 million, or $0.36 per diluted share, was a record. Net income increased 17% over the previous quarter's income excluding the effect of one-time events in that quarter, principally the gain on the sale of the MAX(R) 5000 product family. Diluted earnings per share of $0.36 increased $0.05 from the $0.31 reported in the prior quarter excluding the one-time items. First quarter earnings included after-tax charges of $1.4 million representing the company's share in the start-up losses of WaferTech. Altera added $85.0 million of cash to its balance sheet during the quarter with routine capital expenditures of $15.5 million.

Rodney Smith, President and CEO, stated, "We are extremely pleased with this quarter's revenue growth and profit performance. Revenues were ahead of our expectations driven by accelerating growth in North America and Europe and continued new product sales strength. Our aggressive roll-out of new products continued on schedule and we augmented our design tool capabilities with the addition of several leading electronic design automation packages. The APEX(TM) E product family roll-out continued, the ACEX(TM) family of products for low-cost high-volume applications began shipping, and we introduced the first member of the MAX(R) 7000B family, the most advanced product-term device available on the market. We continue to step up our pace to address rapidly growing customer demand for the flexibility and fast time-to-market advantages available through Altera's industry leading programmable logic devices."

Altera continued to advance its leadership position in system-on-a-programmable-chip solutions.

      --  Continuing the roll-out of 1.8-V APEX 20KE products, four new
        family members shipped during the first quarter. The APEX 20KE
        family features on-chip content addressable memory (CAM),
        low-voltage differential signaling (LVDS), and phased-locked
        loops (PLLs), enabling designers to create true
        system-on-a-programmable-chip silicon for leading-edge
        communications applications. Additional APEX 20KE family
        members will ship by mid-year, providing a density range from
        60,000 to 1,500,000 usable gates.

      --  Altera began shipping the EPM7128B, the first member of the
        MAX 7000B family -- the industry's most advanced product-term
        device family. The MAX 7000B devices are the industry's first
        0.22-micron, 2.5-V product-term devices and provide as low as
        3.5-nanosecond pin-to-pin performance and support several new
        high bandwidth I/O features, making them ideal for
        communications applications. An additional MAX 7000B device,
        the EPM7256B, began customer sampling in the quarter with
        entire family rollout to be completed during the second
        quarter.

      --  Altera's new ACEX device family, aimed at low-cost,
        high-volume applications, was introduced, and three members of
        the 2.5-V ACEX 1K family shipped this quarter. These look-up
        table (LUT)-based devices provide the industry's lowest cost
        structure while offering density and performance levels that
        enable designers to replace ASICs and ASSPs in high-volume,
        price-sensitive communications applications, including
        low-cost switches, cable modems, and xDSL modems.

      --  Version 2000.02 of Altera's Quartus(TM) development software
        was released. This update provides enhanced capabilities that
        improve design performance of high-density APEX devices by an
        average of more than 40 percent. Altera's Quartus software
        meets the challenges of designing for multi-million-gate
        devices and enables system-on-a-programmable-chip design
        methodology and fast time-to-market.

      --  Altera entered into strategic partnerships with Mentor
        Graphics (Nasdaq: MENT) and Synopsys Inc. (Nasdaq: SNPS).
        Altera customers now have easy access to two of the world's
        leading synthesis tools--Mentor Graphics LeonardoSpectrum(TM)
        and Synopsys FPGA Express(TM)--as well as Mentor Graphics
        ModelSim(TM) advanced hardware description language simulation
        tools, all at no additional cost to customers. These
        leading-edge capabilities give customers a robust design
        platform with seamless Altera integration.

This press release contains "forward-looking statements" which are made pursuant to the safe harbor provisions of 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", "provides", or "creating". Investors are cautioned that all forward-looking statements in the release involve risks and uncertainty, including without limitation the risk that future performance is dependent on APEX, ACEX, and MAX 7000B product development schedules and market acceptance, the design performance of Quartus software tools, as well as the company's development 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.

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 and associated logic development software tools. Programmable logic devices are semiconductor chips that may 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 devices address high-speed, high-density and low-power applications in the telecommunications, data communications, computer peripheral, and industrial markets. Altera common stock is traded on the Nasdaq Stock Market under the symbol ALTR. More information on Altera can be obtained on the Internet at http://www.altera.com.

                          ALTERA CORPORATION
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except per share data)
                              (Unaudited)

                                        THREE MONTHS ENDED
                                 Mar. 31       Mar. 31       Dec. 31
                                   2000          1999          1999

Net sales                        $272,781      $186,399      $237,320

Costs & expenses:
Cost of sales                      94,590        69,154        83,193
Research and development           34,442        17,023        25,967
Selling, general and
 administrative                    43,378        32,320        40,369
Total costs and expenses          172,410       118,497       149,529

Income from operations            100,371        67,902        87,791
Interest & other income, net       10,548         4,618        18,445

Income before income taxes and
 equity investment                110,919        72,520       106,236
Provision for income taxes         34,386        23,569        34,526

Income before equity investment    76,533        48,951        71,710
Equity in loss of WaferTech        (1,379)       (1,976)       (1,341)

Net income                       $ 75,154      $ 46,975      $ 70,369

Earnings per share:
   Basic                         $   0.38      $   0.24      $   0.35
   Diluted                       $   0.36      $   0.23      $   0.34

Shares used in computation:
   Basic                          199,269       195,866       199,390
   Diluted                        209,776       205,374       208,913

Tax rate                             31.0%         32.5%         32.5%

% of Sales:
  Gross margin                       65.3%         62.9%         64.9%
  Research and development           12.6%          9.1%         10.9%
  Selling, general & administrative  15.9%         17.4%         17.0%
  Income from operations             36.8%         36.4%         37.0%
  Net income                         27.6%         25.2%         29.7%

      Note: Earnings per share and shares used in computation reflect
the two-for-one stock split effective May 4, 1999 for all periods
presented.

                          ALTERA CORPORATION
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (In thousands)
                              (Unaudited)

                                               Mar. 31       Dec. 31
                                                2000           1999
Assets

Current assets:
  Cash and short-term investments          $   930,701    $   845,666
  Accounts receivable, net                     119,334         90,101
  Inventories                                   81,597         64,027
  Other assets                                 118,739        107,091
Total current assets                         1,250,371      1,106,885
Property and equipment, net                    163,375        155,217
Investments & intangibles                      175,903        177,497
                                           $ 1,589,649    $ 1,439,599

Liabilities and Stockholders' Equity

Accounts payable and current liabilities   $   103,546    $    93,766
Deferred income on sales to distributors       259,696        227,760
   Total current liabilities                   363,242        321,526
Stockholders' equity                         1,226,407      1,118,073
                                           $ 1,589,649    $ 1,439,599

Key Ratios & Information

Current Assets/Current Liabilities                 3:1            3:1
Liabilities/Equity                                 1:3            1:4
Annualized Quarterly Return on Equity               26%            26%
Quarterly Depreciation Expense, Net              7,334          7,639
Quarterly Capital Expenditures                  15,487         10,774
Annualized Sales per Employee                      753            689