Altera Announces Second Quarter Results; Sales Up 8% Sequentially; New Products Grow 25%


About Altera

Altera Corporation (Nasdaq: ALTR) is the world's pioneer of system-on-a-programmable-chip (SOPC) solutions. Combining programmable logic technology with software tools, intellectual property, and technical services, Altera provides high-value programmable solutions to approximately 14,000 customers worldwide. More information is available at http://www.altera.com.

Altera, The Programmable Solutions Company, the stylized Altera logo, specific device designations and all other words that are identified as trademarks and/or service marks are, unless noted otherwise, the trademarks and service marks of Altera Corporation in the U.S. and other countries. All other product or service names are the property of their respective holder.
                          ALTERA CORPORATION
              CONDENSED CONSOLIDATED STATEMENTS OF INCOME
            (In thousands, except per share data and note)
                              (Unaudited)

                           THREE MONTHS ENDED        SIX MONTHS ENDED
                     ----------------------------- -------------------
                       Jul. 1    Apr. 1    Jul. 2    Jul. 1    Jul. 2
                        2005      2005      2004      2005      2004
                     --------- --------- --------- --------- ---------

Net sales            $285,477  $264,822  $268,972  $550,299  $511,880
Cost of sales          90,592    83,890    81,026   174,482   156,867
                     --------- --------- --------- --------- ---------

Gross margin          194,885   180,932   187,946   375,817   355,013
                     --------- --------- --------- --------- ---------

Operating expenses:
   Research and
    development        55,340    51,389    42,738   106,729    85,320
   Selling, general,
    and
    administrative     55,895    54,334    52,712   110,229   102,590
                     --------- --------- --------- --------- ---------
Total operating
 expenses             111,235   105,723    95,450   216,958   187,910
                     --------- --------- --------- --------- ---------

Income from
 operations            83,650    75,209    92,496   158,859   167,103
Interest and other
 income, net            8,058     4,498     3,272    12,556     7,008
                     --------- --------- --------- --------- ---------

Income before income
 taxes                 91,708    79,707    95,768   171,415   174,111
Provision for income
 taxes                (24,142)  (15,941)  (20,459)  (40,083)  (40,045)
                     --------- --------- --------- --------- ---------

Net income           $ 67,566  $ 63,766  $ 75,309  $131,332  $134,066
                     ========= ========= ========= ========= =========

Income per share:
   Basic             $   0.18  $   0.17  $   0.20  $   0.35  $   0.36
                     ========= ========= ========= ========= =========
   Diluted           $   0.18  $   0.17  $   0.20  $   0.35  $   0.35
                     ========= ========= ========= ========= =========
Shares used in
 computation:
   Basic              373,040   372,881   373,696   372,961   374,723
                     ========= ========= ========= ========= =========
   Diluted            379,585   379,443   382,819   379,514   384,314
                     ========= ========= ========= ========= =========


Tax rate                 26.3%     20.0%     21.4%     23.4%     23.0%
% of Net sales:
  Gross margin           68.3%     68.3%     69.9%     68.3%     69.4%
  Research and
   development           19.4%     19.4%     15.9%     19.4%     16.7%
  Selling, general,
   and administrative    19.6%     20.5%     19.6%     20.0%     20.1%
  Income from
   operations            29.3%     28.4%     34.4%     28.9%     32.6%
  Net income             23.7%     24.1%     28.0%     23.9%     26.2%



Note: Our Nonqualified Deferred Compensation Plan (NQDC Plan) had a
gain of $0.7 million and a loss of $1.2 million, respectively, for the
three month periods ended July 1, 2005 and April 1, 2005. Gains or 
(losses) were included in interest and other income, as well as
compensation expense as follows. There was no net impact on income
before income taxes or net income for any period presented.
   
                                                                 Q-Q
 NQDC Impact (In Millions)                 Q2'05     Q1'05    Change
 -----------                                              -------      -------      -------

  Increase/(Decrease)  in  R&D  Expense            $    0.4        $  (0.4)      $    0.8
  Increase/(Decrease)  in  SG&A  Expense                0.3            (0.8)            1.1
                                                                                  -------      -------      -------
  Increase/(Decrease)  in  Interest  and
      other  income                                                    $    0.7        $  (1.2)      $    1.9
                                                                                  =======      =======      =======



                                                    ALTERA  CORPORATION
                                  CONDENSED  CONSOLIDATED  BALANCE  SHEETS
                                                (Dollars  in  thousands)
                                                            (Unaudited)

                                                                            Jul.  1            Apr.  1          Dec.  31
                                                                              2005                2005                2004
                                                                      -----------  -----------  -----------
Assets

Current  assets:
    Cash  and  short-term  investments    $1,203,033    $1,209,470    $1,203,248
    Accounts  receivable,  net                        146,252          113,832            67,522
    Inventories                                                    63,588            55,604            67,454
    Deferred  compensation  plan  assets        57,134            58,965            56,148
    Other  current  assets                                148,094          132,401          142,725
                                                                      -----------  -----------  -----------
Total  current  assets                                1,618,101      1,570,272      1,537,097
Long-term  investments                                    72,301                      -                      -
Property  and  equipment,  net                      156,937          158,145          159,587
Deferred  income  taxes  and  other
  assets,  net                                                      47,321            49,391            49,982
                                                                      -----------  -----------  -----------
                                                                      $1,894,660    $1,777,808    $1,746,666
                                                                      ===========  ===========  ===========

Liabilities  and  Stockholders'
  Equity

Current  liabilities:
    Accounts  payable  and  current
      liabilities                                          $    200,735    $    183,798    $    190,813
    Deferred  compensation  plan
      obligations                                                  57,134            58,965            56,148
    Deferred  income  and  allowances  on
      sales  to  distributors                            255,554          225,186          221,081
                                                                      -----------  -----------  -----------
Total  current  liabilities                          513,423          467,949          468,042
Stockholders'  equity                                1,381,237      1,309,859      1,278,624
                                                                      -----------  -----------  -----------
                                                                      $1,894,660    $1,777,808    $1,746,666
                                                                      ===========  ===========  ===========


Key  Ratios  &  Information

Current  Assets/Current  Liabilities                3:1                  3:1                  3:1
Liabilities/Equity                                                1:3                  1:3                  1:3
Annualized  YTD  Return  on  Equity                      20%                  20%                  24%
Quarterly  Depreciation  Expense                  $6,480            $6,982            $6,245
Quarterly  Capital  Expenditures                  $5,272            $5,540            $8,862
Annualized  Sales  per  Employee                        $499                $486                $489
Number  of  Employees                                          2,259              2,197              2,164
Inventory  MSOH(a):  Altera                                  2.1                  2.0                  2.8
Inventory  MSOH(a):  Distribution                      1.3                  1.3                  1.4
Days  Sales  Outstanding                                          47                    39                    26

(a)MSOH:  Months  Supply  On  Hand

Note:  Certain  reclassifications  have  been  made  to  prior  period
balances  in  order  to  conform  to  the  current  period's  presentation.



                                                    ALTERA  CORPORATION
                                                      REVENUE  SUMMARY
                                                          (Unaudited)

                                                                                                                    Q-Q            Y-Y
                                                          Q2'05      Q1'05      Q2'04          Growth      Growth
                                                        ------    ------    ------          ------      ------
Geography
---------
North  America                                    24%          24%          27%                  4%            -9%
                                                        ------    ------    ------
Europe                                                  25%          27%          24%                  0%            10%
Japan                                                    25%          25%          26%                  9%              6%
Asia  Pacific                                      26%          24%          23%                20%            19%
                                                        ------    ------    ------
International                                    76%          76%          73%                  9%            12%
                                                        ------    ------    ------
Total                                                  100%        100%        100%                  8%              6%
                                                        ======    ======    ======


Product  Category
----------------
New                                                        40%          34%          25%                25%            70%
Mainstream                                          36%          39%          43%                  0%          -13%
Mature  &  Other                                  24%          27%          32%                -3%          -18%
                                                        ------    ------    ------
Total                                                  100%        100%        100%                  8%              6%
                                                        ======    ======    ======


Market  Segment
--------------
Communications                                  43%          41%          41%                12%            10%
Industrial                                          31%          31%          34%                  9%            -2%
Computer  &  Storage                          10%          11%          11%                -1%              1%
Consumer                                              16%          17%          14%                  2%            20%
                                                        ------    ------    ------
Total                                                  100%        100%        100%                  8%              6%
                                                        ======    ======    ======


FPGAs  and  CPLDs
---------------
FPGA                                                      69%          69%          69%                  9%              7%
CPLD                                                      20%          21%          23%                  2%            -9%
Other                                                    11%          10%            8%                14%            40%
                                                        ------    ------    ------
Total                                                  100%        100%        100%                  8%              6%
                                                        ======    ======    ======



Product  Category  Description
----------------------------
      Category                                    Products
      --------                                    --------
      New                                              Stratix,  Stratix  II,  Stratix  GX,  Cyclone,
                                                            Cyclone  II,  MAX  3000A,  MAX  II,  and
                                                            HardCopy  devices
      Mainstream                                APEX  20K,  APEX  20KC,  APEX  20KE,  APEX  II,
                                                            FLEX  10KE,  ACEX  1K,  Excalibur,  Mercury,
                                                            MAX  7000A,  and  MAX  7000B  devices
      Mature  &  Other                        FLEX  6000,  FLEX  8000,  FLEX  10K,  FLEX
                                                            10KA,  MAX  7000,  MAX  7000S,  MAX  9000,
                                                            Classic,  configuration  and  other
                                                            devices,  software  and  other  tools,  and
                                                            intellectual  property  cores


Note:  During  the  quarter  ended  July  1,  2005,  we  refined  our
methodology  for  classifying  revenue  by  market  segment.    All  prior
period  data  have  been  adjusted  to  conform  to  the  current  period's
methodology.  Data  calculated  under  both  the  new  and  former
methodologies  are  available  in  the  investor  relations  section  of  the
company's  website  at  
  http://www.altera.com  .
 





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