ALTERA CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended

Six Months Ended

(In thousands, except per share amounts)

June 27, 2014

March 28, 2014

June 28, 2013

June 27, 2014

June 28, 2013

Net sales

$

491,517

$

461,092

$

421,759

$

952,609

$

832,260

Cost of sales

162,391

151,868

135,104

314,259

261,187

Gross margin

329,126

309,224

286,655

638,350

571,073

Operating expense

Research and development expense

101,121

97,657

95,489

198,778

183,206

Selling, general, and administrative expense

78,974

74,507

77,869

153,481

156,469

Amortization of acquisition-related intangible assets

2,464

2,465

915

4,929

1,128

Total operating expense

182,559

174,629

174,273

357,188

340,803

Operating margin ⁽¹⁾

146,567

134,595

112,382

281,162

230,270

Compensation expense /(benefit)— deferred compensation plan

3,126

1,454

(160)

4,580

3,262

(Gain)/loss on deferred compensation plan securities

(3,126)

(1,454)

160

(4,580)

(3,262)

Interest income and other

(7,819)

(5,985)

(2,778)

(13,804)

(4,437)

Gain reclassified from other comprehensive income

(43)

(48)

(42)

(91)

(96)

Interest expense

10,877

10,488

3,389

21,365

5,854

Income before income taxes

143,552

130,140

111,813

273,692

228,949

Income tax expense

16,548

13,626

10,304

30,174

7,251

Net income

127,004

116,514

101,509

243,518

221,698

Other comprehensive income/(loss):

Unrealized gain/(loss) on investments:

Unrealized holding gain/(loss) on investments arising during period, net of tax of $23, $23, ($47),$46 and ($41)

14,471

12,560

(9,031)

27,031

(9,032)

Less: Reclassification adjustments for gain on investments included in net income, net of tax of $6, $4, $5, $10 and $10

(37)

(44)

(37)

(81)

(86)

Other comprehensive income/(loss)

14,434

12,516

(9,068)

26,950

(9,118)

Comprehensive income

$

141,438

$

129,030

$

92,441

$

270,468

$

212,580

Net income per share:

Basic

$

0.41

$

0.37

$

0.32

$

0.78

$

0.69

Diluted

$

0.41

$

0.37

$

0.31

$

0.77

$

0.69

Shares used in computing per share amounts:

Basic

311,000

316,552

320,472

313,713

320,175

Diluted

313,513

318,901

323,527

316,145

323,279

Dividends per common share

$

0.15

$

0.15

$

0.10

$

0.30

$

0.20

Tax rate

11.5

%

10.5

%

9.2

%

11.0

%

3.2

%

% of Net sales:

Gross margin

67.0

%

67.1

%

68.0

%

67.0

%

68.6

%

Research and development ⁽¹⁾

21.1

%

21.7

%

22.9

%

21.4

%

22.1

%

Selling, general, and administrative

16.1

%

16.2

%

18.5

%

16.1

%

18.8

%

Operating margin ⁽²⁾

29.8

%

29.2

%

26.6

%

29.5

%

27.7

%

Net income

25.8

%

25.3

%

24.1

%

25.6

%

26.6

%