Altera Reports Record Quarterly and Annual Results; Fourth Quarter Sales Increase 112% Annually and 15% Sequentially.

SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 17, 1996--Altera Corporation (Nasdaq: ALTR) today reported record levels of sales, operating income, net income, and earnings per share for the quarter and year ended December 31, 1995.

Fourth quarter sales of $125.3 million were up 112% over the same period last year, and 15% over the previous quarter. Total year 1995 sales were $401.6 million, an increase of 102% from 1994.

Operating margin as a percentage of sales for the fourth quarter was 35.5%, up 8.7 percentage points over the same period last year, excluding the 1994 charge for in-process R&D related to the Intel PLD acquisition, and 1.7 percentage points over the previous quarter. Gross margin as a percentage of sales for the fourth quarter was 61.3%, up 1.2 percentage points over the same period last year and 0.6 percentage points over the previous quarter. Gross margin improvements are attributed to a greater proportion of proprietary product shipments at higher margins and to improved manufacturing yields.

Net income for the fourth quarter was a record $28.4 million, up 173% over the fourth quarter of 1994, excluding the 1994 charge for in-process R&D, and 20% above the previous quarter. Fourth quarter earnings per share were $0.62, an increase of $0.39 from the same period last year, before consideration of the 1994 charge for in- process R&D, and up $0.10 from the previous quarter. 1995 earnings per share were $1.91, an increase of 137% from 1994, before consideration of the 1994 charge for in-process R&D.

Altera added $23.4 million of cash to its balance sheet during the quarter, after capital expenditures of $8.2 million and a convertible debt interest payment of $6.4 million. Annualized return on equity was 48% for the quarter.

Rodney Smith, President & CEO stated, "Altera's financial results for this quarter are indicative of our increasing momentum in the marketplace. Sales growth was strongest in the domestic channel and our International business posted a solid increase."

Mr. Smith continued, "Quarterly sales growth was driven by our MAX 7000 and FLEX 8000 product families. These products, which are sole-sourced, account for the major portion of our business and continue to be the fastest growing of our product offerings. FLEX 10K50, the first member of our FLEX 10K family and the industry's first programmable embedded array, began shipping in the fourth quarter as planned."

Mr. Smith concluded, "The communications marketplace continued to pace our growth, creating strong demand for our products, and resulting in a backlog increase of over $23 million compared to the prior quarter."

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 quarterly earnings 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 National Market using the symbol ALTR. -0-

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

                        THREE MONTHS ENDED           YEAR ENDED
                      Dec.      Dec.     Sept.      Dec.      Dec.
                       31        31        30        31        31
                      1995      1994      1995      1995      1994

Sales              $125,316  $ 59,174  $109,079   $401,598  $198,796

Costs & Expenses:
Cost of Sales        48,451    23,615    42,817    158,808    77,672
Research and
 Development         10,481     6,521     9,105     33,849    22,249
Research and
 Development
 in Process                   23,745                         23,745
Selling, General, &
  Administrative     21,922    13,191    20,340     74,658    45,771

Total Costs &
 Expenses            80,854    67,072    72,262    267,315   169,437

Income (Loss) from
 Operations           44,462   (7,898)    36,817    134,283    29,359
Interest & Other        638       668       848      3,608     2,137
Income, Net
Income before Taxes  45,100    (7,230)   37,665    137,891    31,496
Taxes                16,687     2,559    13,936     51,020    16,888
Net Income          $28,413  $ (9,789)  $23,729    $86,871   $14,608
Net Income
 per Share           $ 0.62   $ (0.22)  $ 0.52     $ 1.91     $ 0.34
Avg. shares and
 equivalents
 used in
 calculation of
 net income per
 share               45,837    44,614    45,852    45,577    43,246

Tax rate                 37%      -35%       37%      37%      54%

% of Sales
 Gross Margin            61%       60%       61%      60%      61%
 Research & Development   8%       11%        8%       8%      11%
 Selling, General
  and Administrative     17%       22%       19%      19%      23%
 Income from Operations  36%       N/A       34%      33%      15%
 Net Income              23%       N/A       22%      22%       7%

                         ALTERA CORPORATION
                     CONSOLIDATED BALANCE SHEETS
                            (Thousands)
                            (Unaudited)

                             Dec. 31     Sept. 30     Dec.31
                              1995         1995        1994
Assets

Current assets:
  Cash and short-term         $365,219     $341,833   $  92,594
investments
  Accounts receivable, net      54,518       65,497      31,662
  Inventories                   55,421       42,369      38,477
  Other assets                  42,849       26,671      14,609
Total Current Assets           518,007      476,370     177,342
Property and equipment,         54,846       49,203      18,212
net
Investments & Intangibles      142,701      37,624       18,328
                              $715,554    $563,197     $213,882
Liabilities and
Shareholders' Equity

Current Liabilities          $ 171,765    $  97,688   $  55,863
Long Term Debt                 288,600      244,400
Shareholders' Equity           255,189      221,109     158,019
                              $715,554     $563,197   $ 213,882

Key Ratios & Information

Current assets/current             3:1          5:1         3:1
liabilities
Liabilities/Equity                 2:1          2:1         1:3
Annualized Quarterly
Return on Equity                   48%          46%         N/A
Quarterly Depreciation Expense   2,531        2,182       1,879
Quarterly Capital Expenditures   8,174        6,905       4,224
Annualized Sales per Employee      591          556         366
-0-

CONTACT: Altera Corp.

Thomas J. Nicoletti, 408/894-7000