Altera Announces 2004 Results; Sales up 23%; Net Income up 77%

Business Wire, Jan 24, 2005

SAN JOSE, Calif. -- Altera Corporation (Nasdaq:ALTR) today announced 2004 sales of $1.02 billion, up 23%, compared to $827.2 million in 2003. New product sales increased 186%. Net income for 2004 was $275.1 million, $0.72 per diluted share, versus net income of $155.1 million, $0.40 per diluted share in 2003.

Fourth quarter sales were $239.9 million, up 10% from the fourth quarter of 2003 and down 9% from the third quarter of 2004, versus the company's prior guidance for sales reductions of 9% to 12%. Fourth quarter net income was $58.0 million, $0.15 per diluted share, up 28%, compared to net income of $45.1 million, $0.12 per diluted share, in the fourth quarter of 2003. Gross profit margin was 69.8% for the fourth quarter of 2004 versus 67.5% for the fourth quarter of 2003.

Altera's tax rate for 2004 was 16.8% and included a $17.1 million or a 5.2 percentage point tax rate benefit primarily related to a tax settlement with Hong Kong's Inland Revenue Department recorded in the third quarter. The effective tax rate for the year was lowered in the fourth quarter by 1 percentage point, resulting in a favorable fourth quarter adjustment of $2.6 million (3.7 percentage points) and an effective tax rate for the fourth quarter of 18.3%.

Altera repurchased 8.3 million shares of its common stock during 2004 at a cost of $176.3 million, with 606,600 shares repurchased during the fourth quarter at a cost of $12.6 million. Altera ended the quarter with $1.2 billion in cash and short-term investments.

"The year's revenue growth, fueled by great new product traction and FPGA market share gains, demonstrates that our R&D investments are paying off. The last half of the year was very challenging, and even as business moderated, we maintained strong gross margins and kept inventories under control," said John Daane, president and CEO. "In 2004 we announced another generation of products with a distinct performance edge. We introduced our Nios(R) II processor, a higher performance and more flexible version of our industry-leading Nios soft-core processor. Our new programmable devices, Stratix(R) II and Cyclone(TM) II FPGAs and MAX(R) II CPLDs, all have substantial competitive performance advantages and the potential for rapid new product growth in 2005 and beyond. Across all our served markets we are uncovering new applications for programmable logic as we continue to pursue the substantial growth opportunities available to us."

Altera continued to advance its leadership position in system-on-a-programmable-chip (SOPC) solutions.

--As revealed in recent benchmarking studies, Altera FPGA and CPLD performance leads the industry. Altera's performance advantage results from the combined power of Altera's innovative device architecture and Quartus(R) II design software. Using Quartus II version 4.2 software, Altera's 90-nm Stratix II FPGAs deliver on average 39% higher performance than Virtex-4 devices, 90-nm Cyclone II FPGAs deliver 60% better performance than Spartan-3 devices, and MAX II CPLDs deliver 50% better performance than CoolRunner-II devices. Details on Altera's performance leadership, the results of our third-party-endorsed benchmarking methodology, and a web-based net seminar comparing Stratix II and Virtex-4 performance can be found at www.altera.com/alterazone.> --In addition to having the industry's best performance, Altera's Stratix II family features the highest density FPGAs shipping today. With the arrival of the Stratix II EP2S180, which contains nearly 180,000 equivalent logic elements, Altera's largest FPGA has 82% more logic elements than any available competing alternative. The entire Stratix II family is now shipping and readily available, with three devices already fully production qualified. The remainder of the Stratix II family will move to production status in the first half of 2005. The combination of high density, superior performance, and availability makes Altera the best programmable logic choice for the complex high-performance designs traditionally served by ASIC solutions.

--The HardCopy(R) II family, Altera's unique 90-nm structured ASIC solution, has been announced, taking the HardCopy value proposition to new levels. HardCopy II devices deliver the flexibility of an FPGA and the performance of a standard-cell ASIC. Combining a Stratix II-based FPGA front-end design methodology with cost as low as $15 for 1 million ASIC gates, the HardCopy II family gives customers a time-to-market advantage and economics unequaled by other structured ASICs or standard-cell ASICs. The HardCopy II family offers core logic performance as much as 100% faster and power consumption as much as 50% lower than a Stratix II FPGA prototype. With this performance, and densities up to 2.2 million ASIC gates, the HardCopy II family allows Altera to compete for a new range of designs untouchable by other PLD competitors. HardCopy II-based designs are an appealing solution across all of Altera's markets for higher-density applications that previously required an ASIC or ASSP implementation for high-volume production.