Altera Reports Record Third Quarter `99 Results; Sales Increase 9% Sequentially; Net Income Up 9% Sequentially.

SAN JOSE, Calif.--(BUSINESS WIRE)--Oct. 13, 1999--

Altera Corporation (Nasdaq: ALTR) today reported record third quarter sales of $215.1 million, up 9% from the previous quarter and up 31% over the same period last year. Third quarter sales growth of 9% was achieved by record sales in all geographic channels with sequential gains of 10% in North America, 12% in Europe, 10% in Asia/Pacific and 1% in Japan. New and mainstream products made up 68% of sales for the quarter. New product revenues were 33% of sales and grew 37% sequentially and 205% over the same period last year. Mainstream product revenues were 35% of sales and grew 1% sequentially and 27% over the third quarter of last year. Mature product sales declined 5% sequentially.

Third quarter net income of $55.6 million was a record and represented an increase of 9% over the previous quarter and an increase of 38% over the third quarter of 1998. Third quarter earnings per share, on a diluted basis, were $0.27, an increase of $0.02 from the prior quarter and up $0.07 from the same period last year. Third quarter earnings included after-tax charges of $2.8 million representing the Company's share in the start-up losses of WaferTech. Altera added $110.4 million of cash to its balance sheet during the quarter after the repurchase of 395,000 shares of its common stock for $14.3 million and routine capital expenditures of $8.1 million.

During the third quarter, Altera continued to enhance its leadership position in System-on-a-Programmable-Chip(TM) (SOPC(TM)) solutions: -0-

--   Altera completed the rollout of the 2.5-volt APEX(TM) 20K family
     with the introduction of the EP20K200 device, which provides
     200,000 usable gates (526,000 maximum system gates) including
     106,496 bits of embedded RAM. Additionally, an advanced systems
     integration platform for SOPC designers was announced utilizing
     the APEX EP20K400 device. The SOPC development board enables
     prototyping and debugging of designs that combine custom logic
     and standard intellectual property cores available from Altera or
     one of its AMPP(SM) (Altera Megafunction Partners Program)
     partners. Altera further expanded its System-on-a-Programmable-
     Chip capability with the addition of two new AMPP partners: ARC
     Cores Ltd. and Tensilica, Inc., each of which provide 32-bit,
     configurable RISC processors optimized for APEX devices.

--   Altera's IP (Intellectual Property) Business Unit opened the
     doors of the IP MegaStore(TM), an innovative Internet web site
     where SOPC designers use the IP MegaSearch(TM) engine to access
     over 120 IP megafunctions. The designer may then use Altera's
     OpenCore(TM) technology to download any core and perform a free,
     no-risk evaluation.

--   Altera completed the rollout of the 2.5-volt FLEX(R) 10KE family
     with the introduction of the EPF10K30E. The FLEX 10KE family,
     manufactured on a state-of-the-art 0.22-micron process, consists
     of five devices that cover densities ranging from 30,000 to
     200,000 usable gates. Each device offers embedded memory
     capabilities, full 64-bit, 66-MHz PCI compliance, and PLL
     features. In the third quarter, revenues of the FLEX 10KE family
     grew 117% sequentially to $13 million, and cumulative revenues
     since introduction have totaled $22 million.

--   As part of the exclusive arrangement between Altera and Synopsys
     Inc. (NASDAQ:SNPS), Synopsys delivered FPGA Compiler(TM) II -
     Altera Edition to its entire base of Design Compiler licensees.
     To date, over 750 users have taken advantage of the one year,
     free-of-charge offer by requesting a license from Synopsys. FPGA
     Compiler II - Altera Edition can transparently run scripts
     created by Design Compiler, a tool used by more than 80% of all
     ASIC designers. This seamless integration enables Design Compiler
     users to directly target Altera FLEX and APEX devices within a
     familiar design methodology.
-0-

Rodney Smith, President and CEO, stated, "We are very pleased with our performance in the third quarter - Altera achieved record sales results in each of our sales channels and the growth of new products surpassed our expectations. All members of the APEX 20K family are now shipping and we have delivered over 17,500 copies of the Quartus development software. This powerful combination has resulted in a significant number of Altera design wins during the quarter. Furthermore, the 2.5-volt FLEX 10KE family with 117% sequential growth and the 3.3-volt MAX(R) 7000A family with 105% sequential growth continue to demonstrate Altera's unique leadership position within the industry in both the look-up table and product-term market segments."

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. -0-

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

                           THREE MONTHS ENDED       NINE MONTHS ENDED
                      Sept. 30  Sept. 30  June 30   Sept. 30  Sept. 30
                        1999     1998      1999       1999      1998
                      --------  --------  -------   --------  --------
Net sales            $215,121  $164,218  $197,783   $599,303 $481,910
Costs & expenses:
Cost of sales          76,707    62,511    72,268    218,129  184,292
Research and
 development           23,213    15,223    19,862     60,098   43,863
Selling, general
 and administrative    36,784    27,142    33,741    102,845   83,852
Total costs and
 expenses             136,704   104,876   125,871    381,072  312,007

Income from
 operations            78,417    59,342    71,912    218,231  169,903
Interest & other
 income, net            7,987     5,065     6,005     18,610    6,882

Income before
 income taxes
 and equity
 investment            86,404    64,407    77,917    236,841  176,785
Provision for
 income taxes          28,081    20,931    25,323     76,973   57,451

Income before
 equity investment     58,323    43,476    52,594    159,868  119,334
Equity in loss
 of WaferTech          (2,751)   (3,333)   (1,516)    (6,243)  (7,440)


Net income            $55,572   $40,143   $51,078   $153,625 $111,894
                      -------   -------   -------   -------- --------
Basic earnings
 per share:
   Net income         $  0.28   $  0.21  $  0.26    $  0.78   $  0.61
Diluted earnings
 per share:
   Income before
    equity investment $  0.28   $  0.22  $  0.25    $  0.77   $  0.61
   Net income         $  0.27   $  0.20  $  0.25    $  0.74   $  0.57
Shares used in
 computation:
   Basic              198,880   194,470   197,533    197,656  184,346
   Diluted            208,175   201,804   206,748    206,995  202,976

Tax Rate                 32.5%     32.5%     32.5%      32.5%    32.5%
% of Sales:
  Gross margin             64%       62%       63%        63%      62%
  Research and
  development              11%        9%       10%        10%       9%
  Selling, general
  & administrative         17%       17%       17%        17%      17%
  Income from
   operations              36%       36%       36%        36%      36%
  Net income               26%       24%       26%        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)

                                     Sept. 30      June 30
                                       1999          1999
Assets

Current assets:
  Cash and short-term investments   $  786,169   $  675,770
  Accounts receivable, net              91,164       77,908
  Inventories                           58,835       65,861
  Other assets                         100,409       93,946
Total current assets                 1,036,577      913,485
Property and equipment, net            152,082      150,621
Investments and intangibles            156,541      161,869
                                    ----------    ---------
                                    $1,345,200   $1,225,975

Liabilities and Stockholders' Equity

Accounts payable and current
 liabilities                        $   54,518   $   34,786
Deferred income on sales to
 distributors                          204,867      166,308
   Total current liabilities           259,385      201,094
Stockholders' equity                 1,085,815    1,024,881
                                    ----------   ----------
                                    $1,345,200   $1,225,975

Key Ratios & Information

Current Assets/Current Liabilities         4:1          5:1
Liabilities/Equity                         1:4          1:5
Annualized Quarterly Return on Equity       21%          21%
Quarterly Depreciation Expense           6,633        6,401
Quarterly Capital Expenditures           8,094        5,290
Annualized Sales per Employee              645          628