UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-21970
--------------------------------------
ACTEL CORPORATION
(Exact name of Registrant as specified in its charter)
California 77-0097724
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
955 East Arques Avenue
Sunnyvale, California 94086-4533
(Address of principal executive offices) (Zip Code)
(408) 739-1010
(Registrant's telephone number, including area code)
--------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Number of shares of Common Stock outstanding as of August 12, 1998:
21,510,513
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
ACTEL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(unaudited, in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------------------- --------------------------
June 28, June 29, Mar. 29, June 28, June 29,
1998 1997 1998 1998 1997
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net revenues................................ $ 37,160 $ 40,823 $ 38,465 $ 75,625 $ 80,626
Costs and expenses:
Cost of revenues......................... 14,815 16,731 15,785 30,600 33,170
Research and development................. 7,527 6,461 7,250 14,777 13,008
Selling, general, and administrative..... 10,392 10,394 10,581 20,973 20,525
------------ ------------ ------------ ------------ ------------
Total costs and expenses........... 32,734 33,586 33,616 66,350 66,703
------------ ------------ ------------ ------------ ------------
Income from operations...................... 4,426 7,237 4,849 9,275 13,923
Interest income and other, net.............. 599 413 544 1,143 753
------------ ------------ ------------ ------------ ------------
Income before tax provision................. 5,025 7,650 5,393 10,418 14,676
Tax provision............................... 1,606 2,716 1,780 3,386 5,211
------------ ------------ ------------ ------------ ------------
Net income.................................. $ 3,419 $ 4,934 $ 3,613 $ 7,032 $ 9,465
============ ============ ============ ============ ============
Net income per share:
Basic.................................... $ 0.16 $ 0.24 $ 0.17 $ 0.33 $ 0.48
============ ============ ============ ============ ============
Diluted.................................. $ 0.16 $ 0.23 $ 0.17 $ 0.32 $ 0.43
============ ============ ============ ============ ============
Shares used in computing net income per share:
Basic.................................... 21,288 20,834 21,163 21,225 19,747
============ ============ ============ ============ ============
Diluted.................................. 21,968 21,890 21,864 21,908 21,988
============ ============ ============ ============ ============
</TABLE>
<PAGE>
ACTEL CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited, in thousands)
<TABLE>
<CAPTION>
June 28, Dec. 28,
1998 1997
------------ ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................................... $ 5,953 $ 7,763
Short-term investments.............................................................. 67,020 51,272
Accounts receivable, net............................................................ 18,829 25,135
Inventories, net.................................................................... 24,628 20,472
Deferred income taxes............................................................... 20,537 20,782
Other current assets................................................................ 2,850 1,839
------------ ------------
Total current assets.......................................................... 139,817 127,263
Property and equipment, net............................................................ 14,699 15,081
Investment in foundry.................................................................. 10,680 10,680
Other assets........................................................................... 6,900 6,970
------------ ------------
$ 172,096 $ 159,994
============ ============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable.................................................................... $ 12,912 $ 12,440
Accrued salaries and employee benefits.............................................. 3,779 4,718
Other accrued liabilities........................................................... 5,714 2,898
Deferred income..................................................................... 30,908 30,928
------------ ------------
Total current liabilities..................................................... 53,313 50,984
Shareholders' equity:
Common stock........................................................................ 21 21
Additional paid-in capital.......................................................... 88,723 85,965
Accumulated earnings................................................................ 30,039 23,024
------------ ------------
Total shareholders' equity.................................................... 118,783 109,010
------------ ------------
$ 172,096 $ 159,994
============ ============
</TABLE>
<PAGE>
ACTEL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------
June 28, June 29,
1998 1997
------------- -------------
<S> <C> <C>
Operating activities:
Net income...................................................................... $ 7,032 $ 9,465
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization................................................. 4,733 3,836
Changes in operating assets and liabilities:
Accounts receivable......................................................... 6,306 1,401
Inventories................................................................. (4,156) 3,937
Other current assets........................................................ (1,010) (344)
Accounts payable and accrued liabilities.................................... 2,331 (3,408)
Deferred income............................................................. (20) 1,464
Deferred income taxes....................................................... 245 --
------------- -------------
Net cash provided by operating activities....................................... 15,461 16,351
------------- -------------
Investing activities:
Purchases of property and equipment............................................. (3,913) (2,952)
Purchases of short-term investments............................................. (77,940) (41,306)
Sales of short-term investments................................................. 62,192 43,450
Other assets.................................................................... (368) (8)
------------- -------------
Net cash used in investing activities........................................... (20,029) (816)
------------- -------------
Financing activities:
Sale of common stock............................................................ 2,758 1,936
------------- -------------
Net cash provided by financing activities....................................... 2,758 1,936
------------- -------------
Net increase (decrease) in cash and cash equivalents............................... (1,810) 17,471
Cash and cash equivalents, beginning of period..................................... 7,763 3,543
------------- -------------
Cash and cash equivalents, end of period........................................... $ 5,953 $ 21,014
============= =============
Supplemental disclosures of cash flows information and non-cash investing and
financing activities:
Cash paid for taxes............................................................. 373 $ 9,861
Conversion of preferred stock................................................... -- 18,147
</TABLE>
<PAGE>
ACTEL CORPORATION
Notes to Consolidated Condensed Interim Financial Statements
(unaudited)
1. Basis of Presentation and Summary of Significant Accounting Policies
The accompanying unaudited consolidated financial statements of Actel
Corporation (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these
financial statements do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included.
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.
The interim financial statements should be read in conjunction with the
audited financial statements included in the Company's Annual Report on Form
10-K for the year ended December 28, 1997.
The results of operations for the six months ended June 28, 1998, are
not necessarily indicative of results that may be expected for the entire year
ending January 3, 1999.
2. Recent Accounting Pronouncements
As of January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130").
SFAS 130 establishes new rules for the reporting and display of comprehensive
income and its components; however, the adoption of SFAS 130 had no impact on
the Company's net income or shareholders' equity. SFAS 130 requires unrealized
gains or losses on the Company's available-for-sale securities and foreign
currency translation adjustments, which prior to adoption were reported
separately in shareholders' equity to be included in other comprehensive income.
Prior year financial statements have been reclassified to conform to the
requirements of SFAS 130.
Total comprehensive income for the three- and six-month periods ended
June 28, 1998 were $3,452,000 and $7,069,000, respectively. Total comprehensive
income for the three- and six-month periods ended June 29, 1997 were $4,934,000
and $9,465,000, respectively.
The American Institute of Certified Public Accountants issued Statement
of Position 98-1, "Accounting For the Costs of Computer Software Developed or
Obtained For Internal Use" ("SOP 98-1") on March 4, 1998. SOP 98-1 provides
guidelines for accounting for costs of computer software developed for internal
use. SOP 98-1 is effective for financial statements for fiscal years beginning
after December 15, 1998. The adoption of SOP 98-1 is not expected to materially
impact the Company's results of operations or financial position.
3. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
June 28, Dec. 28,
1998 1997
------------- -------------
<S> <C> <C>
Inventories:
Purchased parts and raw materials................................................... $ 4,520 $ 3,681
Work-in-process..................................................................... 9,866 8,438
Finished goods...................................................................... 10,242 8,353
------------- -------------
$ 24,628 $ 20,472
============= =============
</TABLE>
Inventories are stated at the lower of cost (first-in, first-out) or
market (net realizable value). Given the volatility of the market for the
Company's products, the Company makes inventory provisions for potentially
excess and obsolete inventory based on backlog and forecast demand. However,
such backlog demand is subject to revisions, cancellations, and rescheduling.
Actual demand will inevitably differ from such backlog and forecast demand, and
such differences may be material to the financial statements. Excess inventory
increases handling costs and the risk of obsolescence, is a non-productive use
of capital resources, and delays realization of the price and performance
benefits associated with more advanced manufacturing processes.
4. Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share" ("SFAS 128"), which is applicable to all
financial statements issued for periods ending after December 15, 1997. Under
SFAS 128, the Company was required to change the method it has used to compute
earnings per share and to restate all prior periods. The new requirements
include a calculation of basic earnings per share, from which the dilutive
effect of stock options, warrants, and convertible debt are excluded; and a
calculation of diluted earnings per share, which does not differ from previously
reported net income (loss) per share. The Company adopted the provisions of SFAS
128 beginning with the financial statements for the year ended December 31,
1997, and all share and per share data for prior periods have been adjusted
retroactively to comply with the new requirement.
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- --------------------------
June 28, June 29, June 28, June 29,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Basic:
Average common shares outstanding......................... 21,288 20,834 21,225 19,747
Shares used in computing net income per share............. 21,288 20,834 21,225 19,747
============ ============ ============ ============
Net income................................................ $ 3,419 $ 4,934 $ 7,032 $ 9,465
============ ============ ============ ============
Net income per share...................................... $ 0.16 $ 0.24 $ 0.33 $ 0.48
============ ============ ============ ============
Diluted:
Average common shares outstanding......................... 21,288 20,834 21,225 19,747
Net effect of dilutive stock options and convertible
preferred stock - based on the treasury stock method... 680 1,056 683 2,241
------------ ------------ ------------ ------------
Shares used in computing net income per share............. 21,968 21,890 21,908 21,988
============ ============ ============ ============
Net income................................................ $ 3,419 $ 4,934 $ 7,032 $ 9,465
============ ============ ============ ============
Net income per share...................................... $ 0.16 $ 0.23 $ 0.32 $ 0.43
============ ============ ============ ============
</TABLE>
5. Conversion of Preferred Stock
On March 12, 1997, Texas Instruments Incorporated converted all of the
outstanding shares of Series A Preferred Stock into 2,631,578 shares of Common
Stock.
6. Pending Acquisition
On May 12, 1998, the Company announced that it had signed a letter of
intent to acquire AutoGate Logic, Inc. ("AGL") of Fremont, California. AGL is a
software service company that offers a range of development tools, including
place and route and timing analysis software. The letter of intent between the
Company and AGL does not contain all matters upon which agreement must be
reached in order for the proposed acquisition to be consummated. A binding
commitment with respect to the proposed acquisition will result only from the
execution and delivery by the Company and AGL of definitive agreements, which
would include numerous conditions to closing. There can be no assurance that the
Company and AGL will enter into definitive agreements or that the conditions to
closing contained in such agreements will be satisfied or waived.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
This quarterly Report on Form 10-Q contains forward-looking statements
that involve risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in such forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed under the caption "Year 2000 Compliance and Other Factors
Affecting Future Operating Results."
Results of Operations
Net Revenues
Net revenues for the second quarter of fiscal 1998 were $37.2 million,
which represents a decline of 3% compared with the Company's net revenues for
the first quarter of 1998 and a decline of 9% compared with the Company's net
revenues for the second quarter of 1997. Net revenues for the first six months
of fiscal 1998 were $75.6 million, which represents a decline of 6% compared
with the Company's net revenue for the first six months of 1997.
The decline in sequential quarterly net revenues resulted primarily
from a 3% decline in the overall average selling price of field programmable
gate arrays ("FPGAs"), while unit sales were flat. The overall average selling
price of the Company's mature products was essentially flat sequentially, in
contrast to the overall average selling price of the Company's new products,
which declined due to proportionately greater sales of the Company's new MX
family.
The year-to-year decline in quarterly net revenues was driven by a 9%
reduction in the overall average selling price of FPGAs, with units sales
remaining flat. The decline in average selling prices was driven primarily by a
change in the mix of military products sold.
As is typical in the semiconductor industry, the average selling prices
of the Company's products generally decline over the lives of such products. To
increase revenues, the Company seeks to increase unit sales of existing
products, principally by reducing prices, and to introduce and sell new
products. No assurance can be given that these efforts will be successful.
Gross Margin
Gross margin for the second quarter of 1998 was 60.1% of net revenues,
compared with 59.0% of net revenues for the first quarter of 1998 and 59.0% for
the second quarter of 1997. Gross margin for the first six months of 1998 was
59.5% of net revenues, compared with 58.9% of net revenues for the first six
months of 1997.
The improved margin was the result of favorable foreign exchange
variances on the Japanese yen, in which a significant number of the Company's
wafer purchases are denominated; continued reductions in wafer costs at all
foundries; and better overall utilization of the Company's manufacturing
capacity. The 60.1% gross margin for the quarter was a record high for the
Company.
As is typical in the semiconductor industry, margins on the Company's
products often decline as the average selling prices of such products decline.
The Company seeks to offset margin erosion by reducing costs and by selling a
higher percentage of new products, which tend to have higher margins than more
mature products after satisfactory, sustainable yields are achieved. The Company
seeks to reduce costs by improving wafer yields, negotiating price reductions
with suppliers, increasing the level and efficiency of its testing and packaging
operations, achieving economies of scale by means of higher production levels,
and increasing the number of die produced per wafer by shrinking the die size of
its products. There can be no assurance that these efforts will be successful.
The ability of the Company to shrink the die size of its FPGAs is dependent on
the availability of more advanced manufacturing processes. Because of the custom
steps involved in manufacturing antifuse-based FPGAs, the Company typically
obtains access to new manufacturing processes later than its competitors using
standard manufacturing processes.
Research and Development
Research and development expenditure for the second quarter of 1998
were $7.5 million, or 20% of net revenues, compared with $7.3 million, or 19% of
net revenues, for the first quarter of 1998 and $6.5 million, or 16% of
revenues, for the second quarter of 1997.
Research and development expenditures for the first six months of 1998
were $14.7 million, or 20% of net revenues, compared with $13.0 million, or 16%
of net revenues, for the first six months of 1997. Research and development
expenditures for the first six months of 1998 increased by 14% compared with the
first six months of 1997.
The Company has boosted the level of its research and development
expenditures over the last several quarters to accelerate the introduction of
new products. Research and development expenditures for the second quarter and
first six months of 1998 increased approximately in line with the Company's
expectations. The increased spending, coupled with a decline in net revenues,
resulted in research and development expenditures increasing as a percentage of
net revenues sequentially and year-to-year.
The Company's research and development consists of circuit design,
software development, and process technology activities. The Company believes
that continued substantial investment in research and development is critical to
maintaining a strong technological position in the industry and, therefore,
expects to continue increasing its research and development expenditures. Since
the Company's antifuse FPGAs are manufactured using a customized process, the
Company's research and development expenditures will probably always be higher
as a percentage of net revenues than that of its major competitors.
Selling, General, and Administrative
Selling, general, and administrative expenses for the second quarter of
1998 were $10.4 million, or 28% of net revenues, compared with $10.6 million, or
28% of net revenues, for the first quarter of 1998 and $10.4 million, or 25% of
net revenues, for the second quarter of 1997. Selling, general, and
administrative expenses for the first six months of 1998 were 21.0 million, or
28% of net revenues, compared with $20.5 million, or 25% of net revenues, for
the first six months of 1997.
Selling, general, and administrative expenses for the second quarter
and first six months of 1998 were approximately in line with the Company's
expectations, declining by $0.2 million compared with the first quarter of 1998
and increasing by $0.5 million compared with the first six months of 1997.
Selling, general, and administrative expenditures increasing as a percentage of
net revenues sequentially, as well as year-to-year, because of the decline in
net revenues.
Tax Provision
The Company's effective tax rate for the three months and six months
ended June 28, 1998, was 32.0% and 32.5%, respectively. This rate is based on
the estimated annual tax rate complying with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." This rate differs from the
federal statutory rate due primarily to state income taxes (net of federal
benefit), the benefits of research and development credits and tax exempt
income, and recognition of certain deferred tax assets subject to valuation
allowances as of December 29, 1997.
Liquidity and Capital Resources
At the end of the second quarter of 1998, the Company's cash, cash
equivalents, and short-term investments were $73.0 million, compared with $59.0
million at the beginning of fiscal 1998. The amount of cash, cash equivalents,
and short-term investments increased principally because of cash provided by
operations.
The Company believes that existing cash, cash equivalents, and
short-term investments, together with cash from operations, will be sufficient
to meet its cash requirements for the next 12 months. A portion of available
cash may be used for investment in or acquisition of complementary businesses,
products, or technologies.
The Company has a line of credit with a bank that provides for
borrowings not to exceed $5,000,000. The agreement contains covenants that
require the Company to maintain certain financial ratios and levels of net
worth. As of June 28, 1998, the Company was in compliance with the covenants for
the line of credit. Borrowings against the line of credit bear interest at the
bank's prime rate. There were no borrowings against the line of credit at June
28, 1998. The line of credit, which expires in May 1999, may be terminated by
either party upon not less than thirty days' prior written notice.
The Company currently has no material financial obligations to its
current wafer suppliers. However, wafer manufacturers are increasingly demanding
financial support from customers in the form of equity investments and advance
purchase price deposits, which in some cases are substantial. If the Company
requires additional capacity, it may be required to incur significant
expenditures to secure such capacity.
The Company believes that the availability of adequate financial
resources is a substantial competitive factor. To take advantage of
opportunities as they arise, or to withstand adverse business conditions should
they occur, it may become prudent or necessary for the Company to raise
additional capital. The Company intends to continue monitoring the availability
and cost of potential capital resources, including equity, debt, and off-balance
sheet financing arrangements, and may consider raising additional capital on
terms that are acceptable to the Company. There can be no assurance that
additional capital will become available on acceptable terms.
Additional Quarterly Information
The following table presents certain unaudited quarterly results for
each of the eight quarters in the period ended June 28, 1998. In the opinion of
management, all necessary adjustments (consisting only of normal recurring
accruals) have been included in the amounts stated below to present fairly the
unaudited quarterly results when read in conjunction with the audited
consolidated financial statements of the Company and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 28, 1997.
These quarterly operating results are not necessarily indicative of the results
for any future period.
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------------------------------------------------------------
Jun 28, Mar. 29, Dec. 28, Sept. 28, June 29, Mar. 30, Dec. 29, Sept. 29,
1998 1998 1997 1997 1997 1997 1996 1996
---------- --------- --------- --------- -------- --------- --------- ---------
(unaudited, in thousands except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net revenues.......................... $ 7,160 $ 38,465 $ 37,012 $ 38,220 $ 40,823 $ 39,803 $ 39,027 $ 38,014
Cost of revenues...................... 14,815 15,785 15,287 15,788 16,731 16,439 16,381 16,164
---------- --------- --------- --------- -------- --------- --------- ---------
Gross profit.......................... 22,345 22,680 21,725 22,432 24,092 23,364 22,646 21,850
Research and development.............. 7,527 7,250 6,816 6,641 6,461 6,547 5,855 6,417
Selling, general, and administrative.. 10,392 10,581 10,313 10,355 10,394 10,131 10,651 9,854
---------- --------- --------- --------- -------- --------- --------- ---------
Income from operations................ 4,426 4,849 4,596 5,436 7,237 6,686 6,140 5,579
Net income............................ $ 3,419 $ 3,613 $ 3,382 $ 3,921 $ 4,934 $ 4,531 $ 4,153 $ 3,905
Net income per share:
Basic............................... $ 0.16 $ 0.17 $ 0.16 0.19 $ 0.24 $ 0.24 $ 0.23 $ 0.22
=========== ========= ========= ========= ======== ========= ========= =========
Diluted............................. $ 0.16 $ 0.17 $ 0.16 $ 0.18 $ 0.23 $ 0.21 $ 0.19 $ 0.18
=========== ========= ========= ========= ======== ========= ========= =========
Shares used in computing net income per share:
Basic............................... 21,288 21,163 21,032 20,956 20,834 18,636 17,971 17,890
=========== ========= ========= ========= ======== ========= ========= =========
Diluted............................. 21,968 21,864 21,623 22,172 21,890 22,082 21,893 21,475
=========== ========= ========= ========= ======== ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------------------------------------------------------------
Jun 28, Mar. 29, Dec. 28, Sept. 28, June 29, Mar. 30, Dec. 29, Sept. 29,
1998 1998 1997 1997 1997 1997 1996 1996
---------- --------- --------- --------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
As a Percentage of Net Revenues:
Net revenues.......................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues...................... 39.9 41.0 41.3 41.3 41.0 41.3 42.0 42.5
---------- --------- --------- --------- -------- --------- --------- ---------
Gross margin.......................... 60.1 59.0 58.7 58.7 59.0 58.7 58.0 57.5
Research and development.............. 20.3 18.9 18.4 17.4 15.8 16.4 15.0 16.9
Selling, general, and administrative.. 28.0 27.5 27.9 27.1 25.5 25.5 27.3 25.9
---------- --------- --------- --------- -------- --------- --------- ---------
Income from operations................ 11.9 12.6 12.4 14.2 17.7 16.8 15.7 14.7
Net income............................ 9.2 9.4 9.1 10.3 12.1 11.4 10.6 10.3
</TABLE>
<PAGE>
Year 2000 Compliance and Other Factors Affecting Future Operating Results
Like most other companies, the year 2000 computer issue creates risk
for the Company. If internal systems do not correctly recognize date information
when the year changes to 2000, there could be an adverse impact on the Company's
operations. The Company has initiated a comprehensive project to prepare its
computer systems for the year 2000 and plans to have changes to critical systems
completed by the first quarter of 1999 to allow time for testing. The Company is
also assessing the capability of its products sold to customers over a period of
years to handle the year 2000, but does not currently believe there are product
issues. Management believes that the likelihood of a material adverse impact due
to problems with internal systems or products sold to customers is remote and
expects that the cost of these projects over the next two years will not have a
material effect on the Company's financial position or overall trends in results
of operations. The Company is also developing a plan to contact critical
suppliers of products and services to determine that the suppliers' operations
and the products and services they provide are year 2000 capable or to monitor
their progress toward year 2000 capability. There can be no assurance that
another company's failure to ensure year 2000 capability will not have an
adverse effect on the Company.
The Company's operating results are subject to general economic
conditions and a variety of risks characteristic of the semiconductor industry
(including booking and shipment uncertainties, wafer supply fluctuations, and
price erosion) or specific to the Company, any of which could cause the
Company's operating results to differ materially from past results. For a
discussion of such risks, see "Risk Factors" in Part I of the Company's Annual
Report on Form 10-K for 1997, which is incorporated herein by this reference.
PART II -- OTHER INFORMATION
Item 3. Changes in Securities and Use of Proceeds
Recent Sales of Unregistered Securities
On March 30, 1998, the Company and Crosspoint Solutions, Inc.
("Crosspoint") entered into a Patent Sale and Purchase Agreement (the
"Agreement"), pursuant to which the Company purchased from Crosspoint its
patents and patent applications in consideration of 25,000 shares of the
Company's Common Stock (the "Shares"). On the same day, Crosspoint assigned its
right to receive the Shares to ASCII of America, Inc. ("AOA"). The Shares issued
and delivered to AOA, as assignee of Crosspoint, are exempt from registration
pursuant to Section 4(2) of the Securities Act, based on the fact that the
Shares were sold to an accredited investor who had access to financial and other
relevant data concerning the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of Shareholders of the Company held on May 22,
1998, at the principal executive offices of the Company, the Company's
shareholders (i) elected directors to serve until the next Annual Meeting of
Shareholders and until their successors are elected; (ii) approved amendments to
the Company's Articles of Incorporation increasing the number of authorized
shares of Common Stock by 25,000,000; (iii) approved amendments to the Company's
1993 Employee Stock Purchase Plan ("ESPP") increasing the number of shares of
Common Stock reserved for issuance under the ESPP by 1,869,680; and (iv)
approved amendments to the Company's 1993 Directors' Stock Option Plan
("Director Plan") increasing the number of shares of Common Stock reserved for
issuance under the Director Plan (a) in 1998 by 30,000, bringing the total
number of shares available for issuance under the Director Plan to 100,000, and
(b) on the first day of each subsequent fiscal year during the term of the
Director Plan by (x) 100,000 less (y) the number of shares available for
issuance under the Director Plan on the last day of the immediately preceding
fiscal year; and (v) ratified the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending January 3, 1999.
The vote for nominated directors was as follows:
<TABLE>
<CAPTION>
Nominee For Withheld Broker Nonvotes
- -------------------------------- --------------------------- ------------------------- -------------------------
<S> <C> <C> <C>
John C. East.................... 12,666,537 143,038 0
Jos C. Henkens.................. 12,674,936 134,639 0
Jacob S. Jacobsson.............. 12,673,437 136,138 0
Frederic N. Schwettmann......... 12,670,054 139,521 0
Robert G. Spencer............... 12,675,037 134,538 0
</TABLE>
The vote on the amendments to the Company's Articles of Incorporation
increasing the number of authorized shares of Common Stock by 25,000,000,
bringing the total number of authorized shares of capital stock to 60,000,000,
was as follows:
<TABLE>
<CAPTION>
For Against Abstain Broker Nonvotes
- -------------------------------- --------------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
12,274,863 471,551 63,161 0
</TABLE>
The vote on the amendments to the ESPP increasing the number of shares
of Common Stock reserved for issuance under the ESPP by 1,869,680, bringing the
total number of shares of Common Stock reserved for issuance under the ESPP to
3,019,680, was as follows:
<TABLE>
<CAPTION>
For Against Abstain Broker Nonvotes
- -------------------------------- --------------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
6,184,359 458,214 79,136 6,087,866
</TABLE>
The vote on the amendments to the Directors' Plan increasing the number
of shares of Common Stock reserved for issuance under the Director Plan (i) in
1998 by 30,000, bringing the total number of shares reserved for issuance under
the Director Plan to 230,000, and (ii) on the first day of each subsequent
fiscal year during the term of the Director Plan by (x) 100,000 less (y) the
number of shares available for issuance under the Director Plan on the last day
of the immediately preceding fiscal year, was as follows:
<TABLE>
<CAPTION>
For Against Abstain Broker Nonvotes
- -------------------------------- --------------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
5,469,691 1,160,608 91,410 6,087,866
</TABLE>
The vote on ratifying the appointment of Ernst & Young LLP was as
follows:
<TABLE>
<CAPTION>
For Against Abstain Broker Nonvotes
- -------------------------------- --------------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
12,747,033 18,915 43,627 0
</TABLE>
The Annual Meeting of Shareholders was adjourned until July 6, 1998, at
which time the Company's shareholders approved a proposed change in the
Company's state of incorporation from California to Nevada. The vote on the
proposed reincorporation into Nevada was as follows:
<TABLE>
<CAPTION>
For Against Abstain Broker Nonvotes
- -------------------------------- --------------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
11,152,229 2,289,481 64,910 4,998,496
</TABLE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACTEL CORPORATION
Date: August 12, 1998 /s/ Henry L. Perret
--------------------------------------------------------
Henry L. Perret
Vice President of Finance
and Chief Financial Officer
(as principal financial officer
and on behalf of Registrant)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-03-1999
<PERIOD-START> DEC-29-1997
<PERIOD-END> JUN-23-1998
<CASH> 5,953
<SECURITIES> 67,020
<RECEIVABLES> 20,990
<ALLOWANCES> 2,161
<INVENTORY> 24,628
<CURRENT-ASSETS> 139,817
<PP&E> 44,224
<DEPRECIATION> 29,525
<TOTAL-ASSETS> 172,096
<CURRENT-LIABILITIES> 53,313
<BONDS> 0
<COMMON> 88,744
0
0
<OTHER-SE> 30,600
<TOTAL-LIABILITY-AND-EQUITY> 172,096
<SALES> 75,625
<TOTAL-REVENUES> 75,625
<CGS> 30,600
<TOTAL-COSTS> 66,350
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,143
<INCOME-PRETAX> 10,418
<INCOME-TAX> 3,386
<INCOME-CONTINUING> 7,032
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,032
<EPS-BASIC> .33
<EPS-DILUTED> .32
[FISCAL-YEAR-END] DEC-28-1997
[PERIOD-END] JUN-29-1997
[PERIOD-TYPE] 6-MOS
<EPS-BASIC> .48
[EPS-DILUTED] .43
</TABLE>
