Altera Announces Fourth Quarter Results

® V, CycloneIV, Arria^® V, ArriaII, Stratix^® V,Stratix IV FPGAs, MAX^® V CPLDs and HardCopy^®IV device families, as well as changes in economic conditions and other risk factors discussed in documents filed by the company with the Securities and Exchange Commission (SEC) from time to time. Copies of Altera's SEC filings are posted on the company's website and are available from the company without charge. Forward-looking statements are made as of the date of this release, and, except as required by law, the company does not undertake an obligation to update its forward-looking statements to reflect future events or circumstances.

About Altera

Altera programmable solutions enable system and semiconductor companies to rapidly and cost-effectively innovate, differentiate and win in their markets. Find out more about Altera's FPGA, CPLD and ASIC devices at www.altera.com. Follow Altera via Facebook, RSS and Twitter.

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INVESTOR CONTACT		MEDIA CONTACT
Scott Wylie - Vice President		Sue Martenson - Senior Manager
Investor Relations		Public Relations
(408) 544-6996		(408) 544-8158
swylie@altera.com		newsroom@altera.com

ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

	Three Months Ended									Years Ended
(In thousands, except per share amounts)	December 31, 2012			September 28, 2012			December 31, 2011			December 31, 2012			December 31, 2011

Net sales	$	439,440		$	495,010		$	457,804		$	1,783,035		$	2,064,475
Cost of sales	133,367			152,007			136,764			541,523			610,329
Gross margin	306,073			343,003			321,040			1,241,512			1,454,146
Operating expense
Research and development expense	94,162			91,606			90,295			360,421			325,733
Selling, general, and administrative expense	74,030			74,243			70,667			289,854			279,217
Total operating expense	168,192			165,849			160,962			650,275			604,950
Operating margin ⁽¹⁾	137,881			177,154			160,078			591,237			849,196
Compensation expense (benefit) - deferred compensation plan	358			3,274			2,962			7,055			(1,964)
(Gain) loss on deferred compensation plan securities	(358)			(3,274)			(2,962)			(7,055)			1,964
Interest income and other	(2,390)			(2,775)			(1,039)			(8,388)			(3,544)
(Gain)/loss reclassified from other comprehensive income	(205)			108			18			(268)			18
Interest expense	2,589			2,333			1,013			7,976			3,730
Income before income taxes	137,887			177,488			160,086			591,917			848,992
Income tax expense	17,082			19,999			13,475			35,110			78,281
Net income	$	120,805		$	157,489		$	146,611		$	556,807		$	770,711

Other comprehensive (loss) income:
Unrealized (loss)/gain on investments:
Unrealized holding (loss)/gain on investments arising during period, net of tax of ($11), $43, $8, $114 and ($17)	(889)			3,620			41			5,839			(149)
Less: Reclassification adjustments for (gain)/loss on investments included in net income, net of tax of $24, $1, ($2), $25 and ($2)	(44)			(41)			16			(114)			16
	(933)			3,579			57			5,725			(133)
Unrealized (loss)/gain on derivatives:
Unrealized gain/(loss) on derivatives arising during period, net of tax of $9, ($6) and $45	17			(10)			—			84			—
Less: Reclassification adjustments for (gain)/loss on derivatives included in net income, net of tax of $48, ($53) and $45	(89)			97			—			(84)			—
	(72)			87			—			—			—
Other comprehensive (loss) income:	(1,005)			3,666			57			5,725			(133)
Comprehensive income	$	119,800		$	161,155		$	146,668		$	562,532		$	770,578

Net income per share:
Basic	$	0.38		$	0.49		$	0.46		$	1.74		$	2.39
Diluted	$	0.37		$	0.49		$	0.45		$	1.72		$	2.35

Shares used in computing per share amounts:
Basic	319,765			319,870			321,553			320,830			321,892
Diluted	322,209			323,560			325,653			324,497			327,606

Cash dividends per common share	$	0.10		$	0.10		$	0.08		$	0.36		$	0.28

Tax rate	12.4		%	11.3		%	8.4		%	5.9		%	9.2		%
% of Net sales:
Gross margin	69.7		%	69.3		%	70.1		%	69.6		%	70.4		%
Research and development	21.4		%	18.5		%	19.7		%	20.2		%	15.8		%
Selling, general, and administrative	16.8		%	15.0		%	15.4		%	16.3		%	13.5		%
Operating margin ⁽¹⁾	31.4		%	35.8		%	35.0		%	33.2		%	41.1		%
Net income	27.5		%	31.8		%	32.0		%	31.2		%	37.3		%

Notes:
(1)We define operating margin as gross margin less research and development and selling, general and administrative expenses, as presented above. This presentation differs from income from operations as defined by U.S. Generally Accepted Accounting Principles ("GAAP"), as it excludes the effect of compensation associated with the deferred compensation plan obligations. Since the effect of compensation associated with our deferred compensation plan obligations is offset by gains and losses from related securities, we believe this presentation provides a more meaningful representation of our ongoing operating performance. A reconciliation of operating margin to income from operations follows:
	Three Months Ended									Years Ended
(In thousands)	December 31, 2012			September 30, 2012			December 31, 2011			December 31, 2012			December 31, 2011
Operating margin (non-GAAP)	$	137,881		$	177,154		$	160,078		$	591,237		$	849,196
Compensation expense (benefit) — deferred compensation plan	358			3,274			2,962			7,055			(1,964)
Income from operations (GAAP)	$	137,523		$	173,880		$	157,116		$	584,182		$	851,160

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