Altera Reports Record Second Quarter '99 Revenues; Sales Increase 6% Sequentially; Net Income Up 9% Sequentially.

SAN JOSE, Calif.--(BUSINESS WIRE)--July 15, 1999--

Altera Corporation (Nasdaq:ALTR) today reported record second quarter sales of $197.8 million, up 6% from the previous quarter and up 23% over the same period last year. Second quarter sales growth of 6% was achieved by sequential gains in all channels with North America up 5%, Europe up 1%, and Japan and Asia/Pacific both recording double-digit growth of 10% and 24%, respectively. New and mainstream products made up 64% of sales for the quarter. New product revenues were 27% of sales and grew 30% sequentially and 216% over the same period last year. Mainstream product revenues were 37% of sales and grew 6% sequentially and 39% over the second quarter of last year. Mature product sales declined 3% sequentially.

Second quarter net income of $51.1 million was a record and represented an increase of 9% over the previous quarter and an increase of 40% over the second quarter of 1998. Second quarter earnings per share, on a diluted basis, were $0.25, an increase of $0.02 from the prior quarter and up $0.06 from the same period last year. Second quarter earnings included after-tax charges of $1.5 million representing the Company's share in the start-up losses of WaferTech. Altera added $84.9 million of cash to its balance sheet during the quarter after routine capital expenditures of $5.3 million.

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     Highlights for the second quarter included:

--   Altera expanded its System-on-a-Programmable-Chip(TM) solution
     with the introduction of the second APEX(TM) device, the
     EP20K100. Built using a 0.22-micron, six-layer-metal process,
     this newest member of the APEX family features 4,160 logic
     elements and 53,248 RAM bits in embedded system blocks (ESBs)
     that can be configured for product-term logic into the equivalent
     of 416 macrocells. Utilizing Altera's patented four-level,
     continuous FastTrack(R) Interconnect, the EP20K100 is the
     performance leader at 100,000 typical gates (263,000 maximum
     system gates).

--   Altera released its fourth-generation Quartus(TM) development
     software and initiated shipments to its software subscription
     base of over 11,000 customers. The combination of APEX devices
     and state-of-the-art Quartus software makes
     System-on-a-Programmable-Chip designs possible. The Quartus
     software brings several new and unique features to million-gate
     programmable logic designs, including: nSTEP(TM) timing-driven
     compilation with CoreSyn(TM) synthesis optimization,
     NativeLink(TM) integration with all leading electronic design
     automation (EDA) tools, SignalTap(TM) logic analysis, and
     workgroup computing with integrated support for industry-standard
     revision control software.

--   Altera completed the acquisition of privately held Boulder Creek
     Engineering, an innovative EDA company and co-developer of the
     powerful SignalTap logic analysis tool. The SignalTap solution
     provides customers with time-to-market advantages by enabling
     in-system, at-speed verification addressing the most time
     intensive function in the design process.

--   Altera continued the rollout of the 2.5-volt FLEX(R) 10KE devices
     with the introduction of the EPF10K130E. Manufactured on an
     advanced 0.22-micron, five-layer-metal process, the EPF10K130E
     has 130,000 typical gates (342,000 maximum system gates) and
     features 6,656 logic elements and 65,536 bits of on-chip
     dual-port RAM. The FLEX 10KE devices continue to receive strong
     market acceptance with sales more than doubling over the previous
     quarter and are experiencing the fastest product ramp of any FLEX
     10K family to date.

--   The MAX(R) families of product-term devices were enhanced both by
     the introduction of additional MAX 7000AE devices and the
     announcement of the new MAX 3000A family. Shipments of the
     EPM7128AE and the EPM7256AE devices completed the rollout of the
     five-member family which provides densities from 32 to 512
     macrocells, operates at 3.3-volts, and offers an enhanced ISP
     feature set. The new, four-member, 3.3-volt MAX 3000A device
     family -- targeted at high-volume, low-cost designs from 32 to
     256 macrocells -- has propagation delays as fast as 4.5 ns
     providing exceptional performance at the lowest price per
     macrocell among MAX products.

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Rodney Smith, President and CEO, stated, "We are pleased with the results of the quarter and the continued progress of our new products in the marketplace. Our new Quartus software, now distributed to our total subscription base, reestablishes our position as the compile time leader for high-density programmable logic designs. The expanding APEX family, in conjunction with Quartus, sets new standards for performance and power consumption and gives us a clear leadership position in both areas. This, coupled with our superior cost structure, will drive new designs going forward, and I look forward to APEX becoming the fastest growing programmable logic family in our history."

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 are preceded by words such as "expects", "believes", "offers", "enhances", "projects", "provides", "plans" "addresses", "drives" or "intends". Investors are cautioned that all forward looking statements in this release involve risks and uncertainty, including without limitation the risk that future performance is dependent on FLEX 10KE, MAX 7000AE, MAX 3000A, APEX 20K and Quartus product developments and market acceptance, market growth in 1999, development of technology and manufacturing capabilities, and third-party wafer suppliers meeting the Company's wafer requirements. 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, 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 can 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.

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

                                          THREE MONTHS ENDED
                                   June 30,    June 30,    March 31,
                                     1999       1998         1999


Net sales                        $ 197,783    $ 160,476    $ 186,399

Costs & expenses:
Cost of sales                       72,268       61,691       69,154
Research and development            19,862       14,233       17,023
Selling, general and
 administrative                     33,741       28,572       32,320
Total costs and expenses           125,871      104,496      118,497

Income from operations              71,912       55,980       67,902
Interest & other income, net         6,005        1,665        4,618

Income before income taxes and
 equity investment                  77,917       57,645       72,520
Provision for income taxes          25,323       18,733       23,569

Income before equity investment     52,594       38,912       48,951
Equity in loss of WaferTech         (1,516)      (2,296)      (1,976)

Net income                       $  51,078    $  36,616    $  46,975

Basic earnings per share:
   Net income                    $    0.26    $    0.20    $    0.24

Diluted earnings per share:
   Income before equity
    investment                   $    0.25    $    0.20    $    0.24
   Net income                    $    0.25    $    0.19    $    0.23

Shares used in computation:
   Basic                           197,533      180,622      195,866
   Diluted                         206,748      203,224      205,374

Tax rate                              32.5%        32.5%        32.5%
% of Sales:
  Gross margin                          63%          62%          63%
  Research and development              10%           9%           9%
  Selling, general &
   administrative                       17%          18%          18%
  Income from operations                36%          35%          36%
  Net income                            26%          23%          25%


                                             SIX MONTHS ENDED
                                           June 30,     June 30,
                                            1999          1998

Net sales                                 $ 384,182    $ 317,692

Costs & expenses:
Cost of sales                               141,422      121,781
Research and development                     36,885       28,640
Selling, general and
 administrative                              66,061       56,710
Total costs and expenses                    244,368      207,131

Income from operations                      139,814      110,561
Interest & other income, net                 10,623        1,817

Income before income taxes and
 equity investment                          150,437      112,378
Provision for income taxes                   48,892       36,520

Income before equity investment             101,545       75,858
Equity in loss of WaferTech                  (3,492)      (4,107)

Net income                                $  98,053    $  71,751

Basic earnings per share:
   Net income                             $    0.50    $    0.40

Diluted earnings per share:
   Income before equity
    investment                            $    0.49    $    0.39
   Net income                             $    0.48    $    0.37

Shares used in computation:
   Basic                                    196,699      179,202
   Diluted                                  206,060      203,570


Tax rate                                       32.5%        32.5%
% of Sales:
  Gross margin                                   63%          62%
  Research and development                       10%           9%
  Selling, general &
   administrative                                17%          18%
  Income from operations                         36%          35%
  Net income                                     26%          23%

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)

                                                June 30,     March 31,
                                                  1999          1999
Assets

Current assets:
  Cash and short-term investments            $  675,770    $  590,895
  Accounts receivable, net                       77,908        52,167
  Inventories                                    65,861        74,530
  Other assets                                   93,946        92,183
Total current assets                            913,485       809,775
Property and equipment, net                     150,621       151,732
Investments and intangibles                     161,869       172,251
                                             ----------    ----------
                                             $1,225,975    $1,133,758

Liabilities and Stockholders' Equity

Accounts payable and current liabilities     $   34,786    $   52,656
Deferred income on sales to distributors        166,308       145,620
   Total current liabilities                    201,094       198,276
Stockholders' equity                          1,024,881       935,482
                                             ----------    ----------
                                             $1,225,975    $1,133,758

Key Ratios & Information

Current Assets/Current Liabilities                  5:1           4:1
Liabilities/Equity                                  1:5           1:5
Annualized Quarterly Return on Equity                21%           21%
Quarterly Depreciation Expense                    6,401         6,250
Quarterly Capital Expenditures                    5,290         5,663
Annualized Sales per Employee                       628           632