Altera Reports Quarterly & Annual Results
Fourth Quarter Sales Increase 1% Annually & 9% Sequentially

San Jose, Calif., January 22, 1997 - Altera Corporation (Nasdaq: ALTR) today reported fourth quarter sales of $127.2 million were up 1% over the same period last year, and up 9% over the prior quarter. Total year 1996 sales were a record $497.3 million, an increase of 24% from 1995.

Gross margin, as a percentage of sales for the fourth quarter was 61.5%, up 0.2 percentage points over the same period last year and up 0.1 percentage point over the previous quarter. Gross margin, as a percentage of sales for 1996, was 61.4%, an increase of 0.9 percentage points from 1995. Wafer price reductions, improved yields, and technology advancements have offset price reductions through the year.

Net income for the fourth quarter was $29.3 million, up 3% over the fourth quarter of 1995 and 22% above the previous quarter. Fourth quarter earnings per share, on a fully diluted basis, were $0.31, an increase of $.01 from the same period last year and up $0.05 from the previous quarter. 1996 earnings per share were a record $1.15, an increase of $0.20 from 1995. On a primary basis, earnings per share for the December quarter were $0.32 and for the year 1996 were $1.19. Altera completed a 2-for-1 stock split effective on December 18, 1996.

Quarterly cash activity includes a payment of $42 million for Wafertech, a joint venture with TSMC and other partners to manufacture wafers in a state-of-the-art facility in Camas, Washington, an expenditure of $15.6 million toward the construction of the new San Jose headquarters facility, and $3.0 million for routine capital expenditures.

Rodney Smith, President & CEO stated, "The financial results for the December quarter reflect an improving business climate. Orders were strong and we increased our backlog. We are very pleased with the 24% annual growth in revenues during a difficult year for the semiconductor industry. We have outgrown the competition and captured market share in the last year."

Mr. Smith concluded, "Our aggressive action plans in 1996 are paying off. Fourth quarter inventory declined 15% sequentially and is now at 4.6 months of supply. Sequential revenue growth for our mainstream products was 12%. For new products, units consumed by customers grew 83% sequentially, however, revenue growth was 8% due to our aggressive price moves."

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.