Altera Reports Third Quarter 1996 Results

San Jose, Calif., October 9, 1996 - Altera Corporation (Nasdaq: ALTR) today reported that third quarter sales of $116.7 million were up 7% over the same period last year, and flat from the previous quarter.

Gross margin as a percentage of sales for the third quarter was 61.4%, up 0.7 percentage points over the same period last year and flat over the prior quarter. Gross margin improvements, on a yearly comparison, are attributed to improved manufacturing yields and reduced wafer prices after price reductions on several product families throughout the year.

Net income for the third quarter was $24.1 million, compared to $23.7 million for the third quarter of 1995 and $24.3 million for the previous quarter. Third quarter earnings per share, on a fully-diluted basis, were $0.52, which equaled the prior quarter and compared to $0.51 for the third quarter of 1995.

Quarterly cash activity included the repurchase of 150,000 shares for $4.3 million and expenditures of $7.8 million towards the construction of the new San Jose headquarters facility.

Rodney Smith, President & CEO stated, "The financial results for the September quarter indicate that the inventory reduction at end customers and their subcontract manufacturers is nearing completion. Backlog increased during the quarter and September in particular was a month for strong orders, with a very high turns content (turns are orders that are received and shipped in the same month).

Mr. Smith continued, "Looking at the operations activity, we reduced our inventory levels by $11.7 million and achieved a similar reduction in distribution channel inventories as well. Gross margins held, despite the reduced factory activity, reflecting our variable cost manufacturing strategy."

Mr. Smith concluded, "Revenues for new products were up significantly from the prior quarter and the book-to-bill ratio was positive. Revenues for the FLEX 10K family more than doubled sequentially. On October 1, prices for this family were reduced by up to 50%, further strengthening our price leadership position. The density, price, and speed advantages of this product family are unmatched by any other competitive product shipping in the marketplace today."

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.