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 April 4, 1999
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 May 18, 1999:
21,495,646.
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
ACTEL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------
Apr. 4, Mar. 29, Jan. 3,
1999 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Net revenues............................................................ $ 40,838 $ 38,465 $ 40,174
Costs and expenses:
Cost of revenues..................................................... 15,994 15,785 15,797
Research and development............................................. 8,447 7,250 8,483
Selling, general, and administrative................................. 10,931 10,581 10,359
------------ ------------ ------------
Total costs and expenses....................................... 35,372 33,616 34,639
------------ ------------ ------------
Income from operations.................................................. 5,466 4,849 5,535
Interest income and other, net.......................................... 741 544 565
------------ ------------ ------------
Income before tax provision............................................. 6,207 5,393 6,100
Tax provision........................................................... 1,986 1,780 1,982
------------ ------------ ------------
Net income.............................................................. $ 4,221 $ 3,613 $ 4,118
============ ============ ============
Net income per share:
Basic................................................................ $ 0.20 $ 0.17 $ 0.20
============ ============ ============
Diluted.............................................................. $ 0.19 $ 0.17 $ 0.19
============ ============ ============
Shares used in computing net income per share:
Basic................................................................ 21,347 21,163 21,091
============ ============ ============
Diluted.............................................................. 21,673 21,864 22,201
============ ============ ============
</TABLE>
<PAGE>
ACTEL CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
Apr. 4, Jan. 3,
1999 1999
------------ ------------
(unaudited) *
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................................... $ 11,339 $ 13,947
Short-term investments.............................................................. 66,069 56,449
Accounts receivable, net............................................................ 21,755 20,820
Inventories, net.................................................................... 24,948 25,669
Deferred income taxes............................................................... 16,922 18,169
Other current assets................................................................ 4,084 3,458
------------ ------------
Total current assets.......................................................... 145,117 138,512
Property and equipment, net............................................................ 13,917 14,592
Investment in Chartered Semiconductor.................................................. 10,680 10,680
Other assets........................................................................... 17,781 15,924
------------ ------------
$ 187,495 $ 179,708
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................................... $ 9,482 $ 11,525
Accrued salaries and employee benefits.............................................. 3,127 4,960
Other accrued liabilities........................................................... 6,864 4,198
Deferred income..................................................................... 34,345 31,971
------------ ------------
Total current liabilities..................................................... 53,818 52,654
Shareholders' equity:
Common stock........................................................................ 21 21
Additional paid-in capital.......................................................... 94,590 92,092
Accumulated earnings................................................................ 38,984 34,763
Accumulated other comprehensive income.............................................. 82 178
------------ ------------
Total shareholders' equity.................................................... 133,677 127,054
------------ ------------
$ 187,495 $ 179,708
============ ============
- -----------------------------------------------------------
<FN>
* The balance sheet at January 3, 1999, has been derived from the audited financial statements at that
date. See Notes to Consolidated Condensed Financial Statements.
</FN>
</TABLE>
<PAGE>
ACTEL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
Three Months Ended
------------ ------------
Apr. 4, Mar. 29,
1999 1998
------------ ------------
<S> <C> <C>
Operating activities:
Net income.......................................................................... $ 4,221 $ 3,613
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization..................................................... 2,396 2,423
Changes in operating assets and liabilities:
Accounts receivable............................................................. (935) 3,949
Inventories..................................................................... 721 (240)
Other current assets............................................................ (776) (1,071)
Accounts payable, accrued salaries and employee benefits, and other accrued
liabilities................................................................... (1,210) (1,968)
Deferred income................................................................. 2,374 (407)
Deferred income taxes........................................................... 1,247 (347)
------------ ------------
Net cash provided by operating activities........................................... 8,038 5,952
------------ ------------
Investing activities:
Purchases of property and equipment................................................. (1,231) (1,776)
Purchases of short-term investments................................................. (29,148) (53,882)
Sales of short-term investments..................................................... 19,432 46,388
Other assets........................................................................ (2,197) (125)
------------ ------------
Net cash used in investing activities............................................... (13,144) (9,395)
------------ ------------
Financing activities:
Sale of common stock................................................................ 2,498 2,101
------------ ------------
Net cash provided by financing activities........................................... 2,498 2,101
------------ ------------
Net increase (decrease) in cash and cash equivalents................................... (2,608) (1,342)
Cash and cash equivalents, beginning of period......................................... 13,947 7,763
------------ ------------
Cash and cash equivalents, end of period............................................... $ 11,339 $ 6,421
============ ============
Supplemental disclosures of cash flows information and non-cash investing and
financing activities:
Cash paid for taxes................................................................. $ 579 $ 45
</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 January 3, 1999.
The results of operations for the three months ended April 4, 1999, are
not necessarily indicative of results that may be expected for the entire year
ending January 2, 2000.
2. Recent Accounting Pronouncements
As of January 4, 1999, the Company adopted Statement of Position 98-1,
"Accounting For the Costs of Computer Software Developed or Obtained For
Internal Use" ("SOP 98-1"). 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 has not materially impacted the Company's results of
operations or financial position.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), which is required to be
adopted in years beginning after June 15, 1999. The Company is currently
evaluating the impact that the adoption of SFAS 133 will have on future results
of operations or financial position.
3. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
Apr. 4, Jan. 3,
1999 1999
------------ ------------
<S> <C> <C>
Inventories:
Purchased parts and raw materials................................................... $ 1,445 $ 1,285
Work-in-process..................................................................... 11,988 12,052
Finished goods...................................................................... 11,515 12,332
------------ ------------
$ 24,948 $ 25,669
============ ============
</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
The following table sets forth the computation of basic and diluted
earnings per share in accordance with Statement of Financial Accounting
Standards No. 128, "Earnings per Share" ("SFAS 128"):
<TABLE>
<CAPTION>
Three Months Ended
------------ ------------
Apr. 4, Mar. 29,
1999 1998
------------ ------------
(in thousands, except per
share amounts)
<S> <C> <C>
Basic:
Average common shares outstanding...................................................... 21,347 21,163
Shares used in computing net income per share.......................................... 21,347 21,163
============ ============
Net income............................................................................. $ 4,221 $ 3,613
============ ============
Net income per share................................................................... $ 0.20 $ 0.17
============ ============
Diluted:
Average common shares outstanding...................................................... 21,347 21,163
Net effect of dilutive stock options - based on the treasury stock method.............. 1,326 701
Shares used in computing net income per share.......................................... 22,673 21,864
============ ============
Net income............................................................................. $ 4,221 $ 3,613
============ ============
Net income per share................................................................... $ 0.19 $ 0.17
============ ============
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Forward-Looking Statements
All forward-looking statements contained in this Quarterly Report on
Form 10-Q, including all forward-looking statements contained in any document
incorporated herein by reference, are made pursuant to the safe harbor
provisions of the Public Securities Litigation Reform Act of 1995. Words such as
"anticipates," "believes," "estimates," "expects," intends," "plans," "seeks,"
and variations of such words and similar expressions are intended to identify
the forward-looking statements. The forward-looking statements include
projections relating to trends in markets, revenues, average selling prices,
gross margin, wafer yields, research and development expenditures, selling,
general, and administrative expenditures, and the Year 2000 compliance issue.
All forward-looking statements are based on current expectations and projections
about the semiconductor industry and programmable logic market, and assumptions
made by the Company's management that reflect its best judgment based on other
factors currently known by management, but they are not guarantees of future
performance. Accordingly, actual events and results may differ materially from
those expressed or forecast in the forward-looking statements due to the risk
factors identified herein or for other reasons. Actel undertakes no obligation
to update any forward-looking statement contained or incorporated by reference
in this Quarterly Report on Form 10-Q.
Results of Operations
Net Revenues
Net revenues for the first quarter of fiscal 1999 were a record $40.8
million, which represents an increase of 2% compared with the Company's net
revenues for the fourth quarter of 1998 and an increase of 6% compared with the
Company's net revenues for the first quarter of 1998.
The increase in sequential quarterly net revenues resulted primarily
from a 8% increase in unit sales of field programmable gate arrays ("FPGAs"),
while the overall average selling price (ASP) declined by 6%. The ASP on
commercial products remained flat and the ASP on space and military products was
down about 13% as the mix changed to include a higher percentage of the lower
ASP Rad Tolerant devices.
The year-to-year increase in quarterly net revenues was driven by an
increase of 21% in unit shipments, which was offset by a decline in the ASP of
14%. The decline in the ASP was driven by a higher percentage of shipments of MX
product, coupled with normal average selling price erosion.
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 first quarter of 1999 was a record 60.8% of net
revenues, compared with 60.7% of net revenues for the fourth quarter of 1998 and
59.0% for the first quarter of 1998.
The improved margin vs. the fourth quarter of 1998 and the first
quarter of 1998 was driven by a number of items: continued reduction of wafer
costs at all foundries; improved sort yields, especially on newer products; and
better utilization of manufacturing capacity.
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 expenditures for the first quarter of 1999
were $8.4 million, or 21% of net revenues, compared with $8.5 million, or 21% of
net revenues, for the fourth quarter of 1998 and $7.3 million, or 19% of
revenues, for the first quarter of 1998. The increased spending in the first
quarter of 1999 compared to the first quarter of 1998 was primarily driven by
the need to accelerate the introduction of new products.
Selling, General, and Administrative
Selling, general, and administrative expenses for the first quarter of
1999 were $10.9 million, or 27% of net revenues, compared with $10.4 million, or
26% of net revenues, for the fourth quarter of 1998 and $10.6 million, or 28% of
net revenues, for the first quarter of 1998.
Selling, general, and administrative expenses for the first quarter
were in line with the Company's expectations. It was slightly higher in the
first quarter of 1999 vs. the fourth quarter of 1998 due to increased spending
in marketing and a settlement payment for terminating a distribution
arrangement. As a percent of sales, it was slightly offset due to the revenue
increase in the quarter.
Interest Income and Other
Interest and other income for the first quarter of 1999 was $741,
compared to $565 in the fourth quarter of 1998 and $544 for the first quarter of
1998. Increase was driven primarily by increased cash, cash equivalents, and
short term investments available for investing by the Company.
Tax Provision
The Company's effective tax rate for the three months ended April 4,
1999, was 32.0% compared with 32.5% for the fourth quarter 0f 1998 and 33% for
the first quarter of 1998. 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, tax exempt income, and recognition of certain
deferred tax assets subject to valuation allowances as of January 3, 1998.
Liquidity and Capital Resources
At the end of the first quarter of 1999, the Company's cash, cash
equivalents, and short-term investments were $77.4 million, compared with $70.4
million at the beginning of fiscal 1999. 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 foreseeable future. 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 April 4, 1999, 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 April
4, 1999. The line of credit, which expires in May 2000, 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 April 4, 1999. 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 January 3, 1999.
These quarterly operating results are not necessarily indicative of the results
for any future period.
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------------------------------------------------------------
Apr. 4, Jan. 3, Oct. 4, Jun 28, Mar. 29, Dec. 28, Sept. 28, June 29,
1999 1999 1998 1998 1998 1997 1997 1997
---------- --------- ---------- ---------- --------- ---------- --------- ----------
(unaudited, in thousands except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net revenues.......................... $ 40,838 $ 40,174 $ 38,628 $ 37,160 $ 38,465 $ 37,012 $ 38,220 $ 40,823
Cost of revenues...................... 15,994 15,797 15,245 14,815 15,785 15,287 15,788 16,731
Gross profit.......................... 24,844 24,377 23,383 22,345 22,680 21,725 22,432 24,092
Research and development.............. 8,447 8,483 7,960 7,527 7,250 6,816 6,641 6,461
Selling, general, and administrative.. 10,931 10,359 10,411 10,392 10,581 10,313 10,355 10,394
Income from operations................ 5,466 5,535 5,012 4,426 4,849 4,596 5,436 7,237
Net income............................ $ 4,221 $ 4,118 $ 3,837 $ 3,419 $ 3,613 $ 3,382 $ 3,921 $ 4,934
Net income per share:
Basic............................... $ 0.20 $ 0.20 $ 0.18 $ 0.16 $ 0.17 $ 0.16 $ 0.19 $ 0.24
Diluted............................. $ 0.19 $ 0.19 $ 0.18 $ 0.16 $ 0.17 $ 0.16 $ 0.18 $ 0.23
Shares used in computing net income
per share:
Basic............................... 21,347 21,091 21,449 21,288 21,163 21,032 20,956 20,834
Diluted............................. 22,673 22,201 21,724 21,968 21,864 21,623 22,172 21,890
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------------------------------------------------------------
Apr. 4, Jan. 3, Oct. 4, Jun 28, Mar. 29, Dec. 28, Sept. 28, June 29,
1999 1999 1998 1998 1998 1997 1997 1997
---------- --------- ---------- ---------- --------- ---------- --------- ----------
<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...................... 39.2 39.3 39.5 39.9 41.0 41.3 41.3 41.0
Gross margin.......................... 60.8 60.7 60.5 60.1 59.0 58.7 58.7 59.0
Research and development.............. 20.7 21.1 20.6 20.3 18.9 18.4 17.4 15.8
Selling, general, and administrative.. 26.7 25.8 27.0 28.0 27.5 27.9 27.1 25.5
Income from operations................ 13.4 13.8 13.0 11.9 12.6 12.4 14.2 17.7
Net income............................ 10.3 10.3 9.9 9.2 9.4 9.1 10.3 12.1
</TABLE>
<PAGE>
Year 2000 Risks
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of the
Company's computer programs or hardware that have date-sensitive software or
embedded chips may recognize a date using "00" as the year 1900 rather than the
year 2000. The failure of internal systems to correctly recognize and process
date information beyond the year 1999 could result in miscalculations,
classification errors or system failures that could have a material impact on
the operations of the Company.
The Company's plan to resolve the Year 2000 issue involves the
following four phases: inventory, assessment, remediation, and
testing/implementation. Based on assessments performed, the Company determined
that it would be required to upgrade, modify, and/or replace portions of its
internal software and certain internal hardware so that those systems would
properly utilize dates beyond December 31, 1999. The Company presently believes
that, with modifications or replacements of identified software and hardware,
the impact of the Year 2000 issue can be mitigated. However, if the
modifications and replacements are not made on a timely basis, no assurance can
be given that the Company's internal networks, desktops, and test equipment will
be operational, or that third party vendors will be able to meet the Company's
production needs.
The Company has completed its inventory and assessment of information
technology ("IT") and non-information technology ("Non-IT") systems that could
be significantly affected by the Year 2000. The assessment indicated that most
of the Company's significant IT systems could be affected, particularly the
order entry, general ledger, billing, and inventory systems. As a result the
Company has upgraded its Enterprise Resource Planning (ERP) systems to versions
that are Year 2000 compliant based on vendor assurances. Non-IT systems that
could be affected include testers and bar-code devices used in various aspects
of the manufacturing and shipping process.
Based on a review of its product lines (FPGA devices and programming
software and hardware), the Company has determined that the majority of its
products it has sold and those it will continue to sell do not require
remediation to be Year 2000 compliant. Accordingly, the Company does not believe
that the Year 2000 presents a material exposure as it relates to the Company's
products.
With respect to its IT exposure, to date the Company has completed the
upgrade of its ERP systems (systems for order entry, general ledger, billing,
production tracking, inventory and shipping) by upgrading to Year 2000 compliant
versions. The Company plans to have most of the remaining IT systems fully
tested and implemented by June 30, 1999, with 100% completion targeted for
September 30, 1999.
The remediation of Non-IT systems is significantly more difficult than
remediation of IT systems due to the dependency on manufacturers for information
on the Year 2000 compliance status of the various components and products. The
Company is 50% complete with the remediation phase of its Non-IT systems. The
Company expects to complete its remediation of Non-IT systems by June 30, 1999.
Testing and implementation of affected equipment is expected to be fully
completed until September 30, 1999.
The Company has queried all of its significant suppliers and
subcontractors ("suppliers") and major distributors. To date, the Company is not
aware of any supplier or distributor with a Year 2000 issue that would
materially impact the Company's results of operations, liquidity, or capital
resources. However, the Company has no means of ensuring that its suppliers will
be Year 2000 ready. The inability of suppliers to complete their Year 2000
compliance process in a timely fashion could materially and adversely impact the
Company by impeding the production process and the ability of the Company to
fulfill customer orders. The failure of distributors due to Year 2000 problems
could temporarily reduce or delay the placement of orders for the Company's
products or temporarily inhibit the resale of those products to end customers.
The Company will utilize both internal and external resources to
reprogram or replace, test, and implement the software and embedded systems for
Year 2000 modifications. To date, the Company has incurred approximately $0.7
million of expenses on efforts directed solely at Year 2000 compliance. The
total cost of the Year 2000 project is not expected to exceed $2.0 million and
is being funded through operating cash flows.
The Company is currently in the process of developing contingency
plans designed to deal with Year 2000 issues that could have a material and
adverse effect on its business processes. The Company intends to have a
contingency plan in place no later than June 30, 1999.
Management of the Company believes it has an effective program in place
to resolve internal Year 2000 issues in a timely manner. Management of the
Company believes that its most reasonably likely worst-case Year 2000 scenario
would involve problems with the systems of external parties rather than with the
Company's internal systems or its products. Failure in the systems of external
parties could cause temporary interruption of supplier deliveries, orders from
customers or the transportation of shipments to customers.
Other Factors Affecting Future Operating Results
In addition to the risk factors discussed below, 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
1998, which is incorporated herein by this reference.
One-Time Charge Against Earnings
On May 5, 1999, the Company announced that it had completed a personnel
reduction of approximately 6% of its global workforce. The reduction in force
was taken in conjunction with a cutback in or the elimination of non-critical
projects, activities, and expenditures. The Company also announced that it
anticipates taking a one-time charge against earnings of up to $4 million in the
second quarter of 1999 to cover costs related to the reductions and cutbacks
noted.
Export Controls
On October 17, 1998, President Clinton signed Public Law 105-261, The
Strom Thurmond National Defense Authorization Act for 1999. The Act requires
that, among other things, communications satellites and related items (including
components) be controlled on the U.S. Munitions List. The effect of the Act was
to transfer jurisdiction over commercial communications satellites from the
Department of Commerce to the Department of State and to expand the scope of
export licensing applicable to commercial satellites. The need to obtain
additional export licenses may cause a delay in the shipment of some of the
Company's FPGAs. The Company does not believe that this will have a long-term
effect on the Company's business, although significant delays might cause some
customers to seek an alternative solution.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
There are no pending legal proceedings of a material nature to which
the Company is a party or of which any of its property is the subject. There are
no such legal proceedings known by the Company to be contemplated by any
governmental authority.
As it has in the past, the Company may obtain licenses under patents
that it is alleged to infringe. The Company is currently in license negotiations
with several companies, including two semiconductor manufacturers with
significantly greater financial and intellectual property resources than the
Company.
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: May 18, 1999 /s/ Henry L. Perret
--------------------------------------------------------
Henry L. Perret
Vice President of Finance
and Chief Financial Officer
(as principal financial officer
and on behalf of Registrant)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-02-2000
<PERIOD-START> JAN-04-1999
<PERIOD-END> APR-04-1999
<CASH> 11,339
<SECURITIES> 66,069
<RECEIVABLES> 24,157
<ALLOWANCES> 2,402
<INVENTORY> 24,948
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0
0
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</TABLE>
