Financial: Altera Reports Record Fourth Quarter and Annual Results, Sequential Results for the Fourth Quarter - Sales Increase 5% With Net Income Up 6% - Company Financial Information

Edge: Work-Group Computing Report, Jan 25, 1999

Altera Corporation (Nasdaq:ALTR) Wednesday reported record fourth quarter sales of $172.4 million, up 5% from the previous quarter and up 10% over the same period last year. Total sales for the year, also a record, were $654.3 million, an increase of 4% over 1997. Fourth quarter sales growth of 5% was achieved by sequential gains in all channels with North America up 3% and International up 8% as a result of 4% growth in Europe, 10% in Japan and 22% in Asia/Pacific.

New and mainstream products made up 57% of sales for the quarter with new product revenues growing 28% sequentially, representing a seven fold increase over the same period last year, and mainstream product revenues growing 15% sequentially, an increase of 70% over the fourth quarter of last year. Net income and diluted earnings per share were at record levels both for the quarter and for the year. Net income for the fourth quarter was $42.5 million, an increase of 6% from the previous quarter and up 16% from the fourth quarter of 1997. Net income for the year was $154.4 million, up 2% from 1997 excluding the cumulative effect of a change in accounting principle. Fourth quarter earnings per share, on a diluted basis, were $0.42, an increase of $0.02 from the prior quarter and up $0.04 over the same period last year. Diluted earnings per share for the year were $1.56, an increase of $0.01 over 1997 excluding the cumulative effect of a change in accounting principle. Fourth quarter earnings included after-tax charges of $3.0 million or $0.03 per share representing the Company's share in the start-up losses of WaferTech (a joint venture with TSMC to manufacture wafers in a state-of-the-art facility in Camas, Washington). Excluding the WaferTech results, diluted earnings per share were $0.45 for the fourth quarter and $1.66 for the year, up $0.07 or 18% and $0.11 or 7%, respectively from the same periods last year. Altera added $84.3 million of cash to its balance sheet during the quarter after routine capital expenditures of $5.6 million. Fourth quarter highlights included: o New FLEX 10K family products achieved significant sales growth and market acceptance. Sales to customers of the 3.3-Volt FLEX 10KA devices grew 25% sequentially, an increase of seven fold over the same period last year. The 2.5-Volt FLEX 10KE devices achieved significant market endorsement, with 115 customers taking the initial deliveries of the new family members introduced during the quarter, the FLEX 10K50E and FLEX 10K200E. o Altera continued to see excellent growth in its product lines that support In-System Programmability (ISP) - MAX 7000S, MAX 7000A, and MAX 9000. ISP product revenues grew 16% sequentially to $39.5 million, positioning the Company as the leading supplier in this market segment. Also in the quarter, the performance of the 3.3-Volt MAX 7000A devices was enhanced with the introduction of the first two of five new MAX 7000AE devices, the EPM7512AE and EPM7064AE. The MAX 7000AE devices offer pin-to-pin performance as fast as 4.5 nanoseconds for peak on-chip speeds of up to 196.5 MHz. Additionally, new on-chip features enable MAX 7000AE in-system programming times to be up to ten times faster than comparable ISP devices. o The Company announced its agreement to invest $37.5 million during the first quarter of 1999 to increase its ownership in WaferTech by five percentage points, bringing Altera's total equity position to 23%. After a successful start-up earlier this year, WaferTech is now manufacturing four FLEX 10KA and two FLEX 6000 products in volume and with excellent quality and yield. o Altera further expanded its R&D capabilities during the quarter with the formal dedication of its newest R&D facility, the Asian Design Center in Penang, Malaysia. Earlier in the year, the Company opened its European Design Center in High Wycombe, United Kingdom. These two new facilities along with the San Jose Design Center have enabled Altera to implement "round-the-clock" development activities and to grow development personnel resources by 18% over the year. Rodney Smith, President and CEO, stated, "We are very pleased that during a year in which the overall programmable logic market declined, Altera was able to achieve its sixth straight year of record revenues and financial performance and to further enhance our market share position. During the year, we successfully implemented major product transitions in which sales of our new and mainstream FLEX and MAX products grew from $124 million in 1997 to $301 million in 1998, an increase of 143%. When combined with record sales both domestically and internationally, we believe this makes a strong statement about the success these products are enjoying in the marketplace. We are optimistic about prospects that growth will return to the programmable logic market in 1999, and we believe the broad capabilities of the FLEX and MAX product lines together with the product rollout of the new APEX 20K family and Quartus development software place Altera in an excellent position in the coming year to take advantage of market expansion." Altera Corporation, The Programmable Solutions Company, was founded in 1983 and is a leading supplier of programmable logic devices and associated logic development software tools. Programmable logic devices are semiconductor chips that can be programmed on-site, using software tools that run on personal computers or engineering workstations. User benefits include ease of use, lower risk, and fast time-to-market. Altera's CMOS-based programmable logic address high-speed, high-density and low-power applications in the telecommunications, data communications, computer peripheral, and industrial markets. Altera common stock is traded on the Nasdaq Stock Market under the symbol ALTR. More information on Altera can be obtained on the Internet at http://www.altera.com.