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 losses/(gains) 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

Nine Months Ended

(In thousands, except per share amounts)

September 28,

2012

June 29,

2012

September 30,

2011

September 28,

2012

September 30,

2011

Operating margin (non-GAAP)

$

177,154

$

159,364

$

205,420

$

453,355

$

689,118

Compensation (gain) expense — deferred compensation plan

3,274

(2,313)

(6,642)

6,697

(4,926)

Income from operations (GAAP)

$

173,880

$

161,677

$

212,062

$

446,658

$

694,044

ALTERA CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except par value amount)

September 28,

2012

December 31,

2011

Assets

Current assets:

Cash and cash equivalents

$

2,849,829

$

3,371,933

Short-term investments

144,195

65,222

Total cash, cash equivalents, and short-term investments

2,994,024

3,437,155

Accounts receivable, net

348,273

232,273

Inventories

157,848

122,279

Deferred income taxes — current

65,223

58,415

Deferred compensation plan — marketable securities

58,151

54,041

Deferred compensation plan — restricted cash equivalents

18,524

17,938

Other current assets

42,134

52,710

Total current assets

3,684,177

3,974,811

Property and equipment, net

200,172

171,721

Long-term investments

685,945

74,033

Deferred income taxes — non-current

23,047

26,629

Other assets, net

49,519

35,074

Total assets

$

4,642,860

$

4,282,268

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

45,589

$

52,154

Accrued liabilities

39,183

34,029

Accrued compensation and related liabilities

43,563

78,181

Deferred compensation plan obligations

76,675

71,979

Deferred income and allowances on sales to distributors

400,351

279,876

Credit facility

—

500,000

Total current liabilities

605,361

1,016,219

Income taxes payable — non-current

261,843

263,423

Long-term debt

500,000

—

Other non-current liabilities

9,496

8,730

Total liabilities

1,376,700

1,288,372

Stockholders' equity:

Common stock: $.001 par value; 1,000,000 shares authorized; outstanding - 320,563 shares at September 28, 2012 and 322,054 shares at December 31, 2011

321

322

Capital in excess of par value

1,107,614

1,050,752

Retained earnings

2,151,627

1,942,955

Accumulated other comprehensive income (loss)

6,598

(133)

Total stockholders' equity

3,266,160

2,993,896

Total liabilities and stockholders' equity

$

4,642,860

$

4,282,268

ALTERA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

Nine Months Ended

September 28,

2012

September 30,

2011

Cash Flows from Operating Activities:

Net income

$

436,002

$

624,100

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

26,426

23,443

Stock-based compensation

70,790

59,983

Deferred income tax benefit

(3,367)

(9,549)

Tax effect of employee stock plans

14,381

26,077

Excess tax benefit from employee stock plans

(20,790)

(22,959)

Changes in assets and liabilities:

Accounts receivable, net

(116,000)

(23,228)

Inventories

(35,569)

12,496

Other assets

5,478

47,986

Accounts payable and other liabilities

(34,670)

(40,004)

Deferred income and allowances on sales to distributors

120,475

11,115

Income taxes payable

(650)

30,122

Deferred compensation plan obligations

(2,001)

(345)

Net cash provided by operating activities

460,505

739,237

Cash Flows from Investing Activities:

Purchases of property and equipment

(53,712)

(23,178)

Sales of deferred compensation plan securities, net

2,001

345

Purchases of available-for-sale securities

(819,662)

(130,146)

Proceeds from sale and maturity of available-for-sale securities

135,650

1,750

Purchases of intangible assets

(2,280)

—

Purchases of other investments

(4,510)

—

Net cash used in investing activities

(742,513)

(151,229)

Cash Flows from Financing Activities:

Proceeds from issuance of common stock through various stock plans

37,514

93,619

Shares withheld for employee taxes

(30,529)

(31,122)

Payment of dividends to stockholders

(83,570)

(64,328)

Proceeds from issuance of long-term debt

500,000

—

Repayment of credit facility

(500,000)

—

Long-term debt and credit facility issuance costs

(5,244)

—

Repurchases of common stock

(179,057)

(197,018)

Excess tax benefit from employee stock plans

20,790

22,959

Net cash used in financing activities

(240,096)

(175,890)

Net (decrease) increase in cash and cash equivalents

(522,104)

412,118

Cash and cash equivalents at beginning of period

3,371,933

2,765,196

Cash and cash equivalents at end of period

$

2,849,829

$

3,177,314