Altera Reports Record Quarterly Results

Second Quarter Sales Increase 41% Annually and 15% Sequentially, Net Income up 64% Annually and 17% Sequentially

San Jose, Calif., July 16, 1997 - Altera Corporation (Nasdaq: ALTR) today reported record levels of sales, operating income, net income, and earnings per share for the quarter ended June 30, 1997.

Second quarter sales of $164.1 million were up 41% over the same period last year, and 15% over the previous quarter.

Gross margin, as a percentage of sales for the second quarter was 62.7%, up 1.3 percentage points over the same period last year and up 0.7 percentage points over the previous quarter. Gross margin improvements are attributed to improved yields and increased manufacturing productivity.

Net income for the second quarter was a record $39.7 million, up 64% over the second quarter of 1996 and 17% above the previous quarter. Second quarter earnings per share, on a fully diluted basis, were $0.40, an increase of $0.14 from the same period last year and up $0.05 from the previous quarter.

Altera added $10.7 million of cash to its balance sheet during the quarter, after expenditures of $17.9 million toward the construction of the new San Jose headquarters facility, and $7.6 million for routine capital expenditures.

Rodney Smith, President & CEO stated, "The financial results for the June quarter exceeded our expectations and are indicative of our continued success in the marketplace. The Domestic channel provided the strongest sales growth and the International channel also contributed another solid increase. The communications segment continued to provide the largest component of our results, followed by the computing segment. Each of these market segments enjoyed double-digit sequential growth."

Mr. Smith concluded, "Sales for new products were up significantly from the prior quarter. To further leverage the market elasticity for these products, we reduced prices on the MAX 7000S and the FLEX 10K families on July 1, 1997. We introduced the FLEX 6000 family on June 23, 1997. As of that date, all worldwide distribution suppliers were stocked with product and we recorded resales in the quarter. We believe that our aggressive price moves and our ability to deliver new products have allowed us to increase our design win leadership."

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. More information can be obtained on the world wide web at http://www.altera.com.

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.