UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 2, 2000
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 No
Number of shares of Common Stock outstanding as of May 16, 2000:
23,195,435.
<PAGE>
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
-------------------------------
Apr. 2, Apr. 4, Jan. 2,
2000 1999 2000
-------- -------- --------
<S> <C> <C> <C>
Net revenues ........................................................ $ 50,666 $ 40,838 $ 46,042
Costs and expenses:
Cost of revenues ................................................. 19,208 15,994 17,496
Research and development ......................................... 8,351 8,447 8,087
Selling, general, and administrative ............................. 11,529 10,441 11,637
Amortization of goodwill and other acquisition related intangibles 1,023 490 1,047
Purchased in-process research and development .................... -- -- 600
-------- -------- --------
Total costs and expenses ................................... 40,111 35,372 38,867
-------- -------- --------
Income from operations .............................................. 10,555 5,466 7,175
Interest income and other, net ...................................... 1,305 741 1,239
-------- -------- --------
Income before tax provision and equity in net loss of equity method
investee ......................................................... 11,860 6,207 8,414
Equity in net (loss) of equity method investee ...................... (123) -- 24
Tax provision ....................................................... 3,638 1,986 2,615
-------- -------- --------
Net income .......................................................... $ 8,099 $ 4,221 $ 5,823
======== ======== ========
Net income per share:
Basic ............................................................ $ 0.36 $ 0.20 $ 0.26
======== ======== ========
Diluted .......................................................... $ 0.32 $ 0.19 $ 0.24
======== ======== ========
Shares used in computing net income per share:
Basic ............................................................ 22,767 21,347 22,048
======== ======== ========
Diluted .......................................................... 25,467 22,673 24,015
======== ======== ========
</TABLE>
<PAGE>
ACTEL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
Apr. 2, Jan. 2,
2000 2000
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents .......................... $ 2,791 $ 4,939
Short-term investments ............................. 114,343 102,201
Accounts receivable, net ........................... 25,753 22,753
Inventories, net ................................... 26,792 25,324
Deferred income taxes .............................. 21,377 20,622
Prepaid expenses and other current assets .......... 2,401 2,045
--------- ---------
Total current assets ......................... 193,457 177,884
Property and equipment, net ........................... 11,661 12,564
Investment in Chartered Semiconductor ................. 48,570 37,619
Other assets, net ..................................... 29,921 31,144
--------- ---------
$ 283,609 $ 259,211
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................... $ 10,995 $ 15,374
Accrued salaries and employee benefits ............. 5,424 6,884
Other accrued liabilities .......................... 2,605 2,887
Income taxes payable ............................... 6,340 4,025
Deferred income .................................... 43,079 39,896
--------- ---------
Total current liabilities .................... 68,443 69,066
Deferred tax liability ............................. 15,812 11,515
--------- ---------
Total liabilities ............................ 84,255 80,581
Commitments and contingencies
Shareholders' equity:
Common stock ....................................... 23 22
Additional paid-in capital ......................... 116,623 110,146
Accumulated earnings ............................... 60,500 52,401
Note receivable from officer ....................... (368) --
Accumulated other comprehensive income ............. 22,576 16,061
--------- ---------
Total shareholders' equity ................... 199,354 178,630
--------- ---------
$ 283,609 $ 259,211
========= =========
<PAGE>
ACTEL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Three Months Ended
----------------------
Apr. 2, Apr. 4,
2000 1999
--------- ---------
Operating activities:
Net income ......................................... $ 8,099 $ 4,221
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .................... 3,117 2,396
Equity in net loss of equity method invested ..... 123 --
Changes in operating assets and liabilities:
Accounts receivable ............................ (3,000) (935)
Inventories .................................... (1,468) 721
Other current assets ........................... (356) (776)
Accounts payable, accrued salaries and employee
benefits, and other accrued liabilities ...... (3,806) (1,210)
Deferred income ................................ 3,183 2,374
Deferred income taxes .......................... (801) 1,247
--------- ---------
Net cash provided by operating activities .......... 5,091 8,038
--------- ---------
Investing activities:
Purchases of property and equipment ................ (1,191) (1,231)
Purchases of short-term investments ................ (41,773) (29,148)
Sales of short-term investments .................... 29,538 19,432
Other assets ....................................... 76 (2,197)
--------- ---------
Net cash used in investing activities .............. (13,350) (13,144)
--------- ---------
Financing activities:
Issuance of note receivable from officer ........... (368) --
Sale of common stock ............................... 6,479 2,498
--------- ---------
Net cash provided by financing activities .......... 6,111 2,498
--------- ---------
Net decrease in cash and cash equivalents ............. (2,148) (2,608)
Cash and cash equivalents, beginning of period ........ 4,939 13,947
--------- ---------
Cash and cash equivalents, end of period .............. $ 2,791 $ 11,339
========= =========
Supplemental disclosures of cash flows information
and non-cash investing and financing activities:
Cash paid for taxes ................................ $ 2,098 $ 579
<PAGE>
1. Basis of Presentation and Summary of Significant Accounting Policies
The accompanying unaudited consolidated financial statements of Actel
Corporation ("Actel" or "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 2, 2000.
The results of operations for the three months ended April 2, 2000, are
not necessarily indicative of results that may be expected for the entire year
ending December 31, 2000.
2. Recent Accounting Pronouncements
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, 2000. The Company is currently
evaluating the impact that the adoption of SFAS 133 will have on future results
of operations or financial position.
3. Equity Accounting
In light of Actel's common and preferred equity interest in GateField
Corporation ("GateField"), $8.0 million convertible promissory note from
GateField, and marketing and licensing agreements with GateField, Actel began
accounting for its equity interest in GateField under the equity method of
accounting during 1999. At April 2, 2000, the Company owned 191,529 shares of
GateField common stock and 300,000 shares of Series C Convertible Preferred
Stock that is convertible into 200,000 shares of GateField Common Stock.
The impact of using equity accounting was a $652,000 charge to the
Company's net income for the first quarter of fiscal 2000 ($529,000 included in
amortization of goodwill and $123,000 included in equity in net losses of equity
method investee). Assuming conversion of all outstanding GateField convertible
preferred stock owned by Actel and conversion of the convertible promissory note
due from GateField, the aggregate total of GateField common stock owned by Actel
would be 1,622,298 shares, or 26.6% of the total common stock of GateField.
GateField common stock, which is listed on the National Association of
Security Dealers ("NASD") Over-The-Counter Bulletin Board, closed at $5.25 on
March 31, 2000.
<PAGE>
4. Inventories
Inventories consist of the following:
Apr. 2, Jan. 2,
2000 2000
--------- ---------
(in thousands)
Inventories:
Purchased parts and raw materials ..................... $ 5,035 $ 3,363
Work-in-process ....................................... 9,183 8,366
Finished goods ........................................ 12,574 13,595
--------- ---------
$ 26,792 $ 25,324
========= =========
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.
5. 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":
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------
Apr. 2, Apr. 4, Jan. 2,
2000 1999 2000
-------- -------- --------
(in thousands, except per share amounts)
<S> <C> <C> <C>
Basic:
Average common shares outstanding ................................... 22,767 21,347 22,048
Shares used in computing net income per share ....................... 22,767 21,347 22,048
======== ======== ========
Net income .......................................................... $ 8,099 $ 4,221 $ 5,823
======== ======== ========
Net income per share ................................................ $ 0.36 $ 0.20 $ 0.26
======== ======== ========
Diluted:
Average common shares outstanding ................................... 22,767 21,347 22,048
Net effect of dilutive stock options - based on the treasury stock
method.............................................................. 2,700 1,326 1,967
-------- -------- --------
Shares used in computing net income per share ....................... 25,467 22,673 24,015
======== ======== ========
Net income .......................................................... $ 8,099 $ 4,221 $ 5,823
======== ======== ========
Net income per share ................................................ $ 0.32 $ 0.19 $ 0.24
======== ======== ========
</TABLE>
6. Comprehensive Income
The components of comprehensive income, net of tax, are as follows:
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------
Apr. 2, Apr. 4, Jan. 2,
2000 1999 2000
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Net Income .......................................................... $ 8,099 $ 4,221 $ 5,823
Unrealized gain/(loss) on available for sale securities, net of tax . 6,515 (65) 16,040
Less reclassification adjustment for (gains) losses included in net
income ............................................................. 11 -- (9)
-------- -------- --------
Other Comprehensive Income .......................................... 6,526 (65) 16,031
======== ======== ========
Total Comprehensive Income .......................................... $ 14,625 $ 4,156 $ 21,854
======== ======== ========
</TABLE>
Accumulated other comprehensive income presented in the accompanying
consolidated condensed balance sheets consists of the accumulated net unrealized
gain (loss) on available-for-sale securities.
7. Patent Infringement
As is typical in the semiconductor industry, the Company has been and
expects to be notified from time to time of claims that it may be infringing
patents owned by others. The Company continues to hold discussions with several
third parties regarding potential patent infringement issues, including two
semiconductor manufacturers with significantly greater financial and
intellectual property resources than Actel. As it has in the past, the Company
may obtain licenses under patents that it is alleged to infringe. The Company
has made provision for the estimated settlements costs of claims for alleged
infringement prior to the balance sheet date. While the Company believes that
reasonable resolution will occur, there can be no assurance that these claims
will be resolved or that the resolution of these claims will not have a
materially adverse effect on Actel's business, financial condition, or results
of operations. In addition, the Company's evaluation of the probable impact of
these pending disputes could change based upon new information learned by Actel.
On March 29, 2000, Unisys Corporation ("Unisys") brought suit in the
United States District Court for the Northern District of California, San Jose
Division, against the Company seeking monetary damages and injunctive relief
based on Actel's alleged infringement of four patents held by Unisys. The
Company believes that it has meritorious defenses to the claims asserted by
Unisys and intends to defend itself vigorously in this matter. After
consideration of the information currently known, the Company does not believe
that the ultimate outcome of this case will have a materially adverse effect on
Actel's business, financial condition, or results of operations, although no
assurance to that effect can be given. The foregoing is a forward-looking
statement subject to all of the risks and uncertainties of a legal proceeding,
including the discovery of new information and unpredictability as to the
ultimate outcome.
8. Subsequent Events
In May 2000, the Company participated in a secondary offering of shares
of Chartered Semiconductor. The Company sold 2.6 million Singapore shares, or
approximately one-half of the Company's holdings of Chartered Semiconductor
common stock, and received proceeds of $16.4 million, net of underwriting fees
of $0.5 million.This transaction resulted in a gain of $11.0 million before tax.
On May 11, 2000, GateField Corporation and Actel Corporation announced
the singing of a letter of intent to merge. In the merger, Actel would pay cash
consideration of $5.25 per share of GateField Common Stock not already owned by
Actel (approximately 4.5 million shares). Actel would also assume all
outstanding GateField stock options. The merger is subject to several
conditions, including execution by the parties of a definitive agreement and
approval by GateField's stockholders at a special meeting. In the definitive
agreement, Actel would agree to convert its $8.0 million Convertible Promissory
Note into GateField Preferred Stock and Actel and Idanta Partners, Ltd would
agree to convert their GateField Preferred Stock into GateField Common Stock
before the record date for the special meeting and to vote their shares of
GateField Common Stock for approval of the merger.
<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 revenues, average selling prices, gross margin,
financial resources, resolution of pending patent claims, and the impact of
export licensing requirements. 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. The Company 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 2000 were a record $50.7
million, which represents an increase of 10% compared with the Company's net
revenues for the fourth quarter of fiscal 1999 and an increase of 24% compared
with the Company's net revenues for the first quarter of fiscal 1999.
The increase in sequential quarterly net revenues resulted from a 10%
increase in the overall average selling price ("ASP") of field programmable gate
arrays ("FPGAs"), due primarily from the strength of the Company's new product
families, and an increase of 1% in unit shipments.
The year-to-year increase in quarterly net revenues resulted from an
increase of 25% in unit shipments, with ASPs remaining essentially flat.
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 2000 was a record 62.1% of net
revenues, compared with 62.0% for the fourth quarter of 1999 and 60.8% for the
first quarter of 1999. The improved gross margin resulted from a number of
factors, including improved sort yields, especially on newer products; reduction
of wafer costs; and better utilization of manufacturing capacity.
The Company seeks to improve gross margin by reducing costs. These cost
reduction activities include 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 2000
were $8.4 million, or 17% of net revenues, compared with $8.1 million, or 18% of
net revenues, for the fourth quarter of 1999 and $8.4 million, or 21% of
revenues, for the first quarter of 1999.
Selling, General, and Administrative
Selling, general, and administrative expenses for the first quarter of
2000 were $11.5 million, or 23% of net revenues, compared with $11.6 million, or
25% of net revenues, for the fourth quarter of 1999 and $10.4 million, or 26% of
net revenues, for the first quarter of 1999.
The increase in selling, general, and administrative expenses during
the first quarter of fiscal 2000 compared with the same quarter in the prior
year was primarily the result of increased sales commission and bonus expense
due to increased revenue.
Amortization of Goodwill, Other Acquisition-Related Intangibles and Other
Acquisition-Related Expenses
Amortization of goodwill and other acquisition-related intangibles for
the first quarter of 2000 was $1.0 million compared with $1.6 million for the
fourth quarter of 1999 and $0.5 million for the first quarter of 1999. The
decrease in the first quarter of fiscal 2000 compared with the prior quarter was
due to a one-time charge of $0.6 million in the fourth quarter for purchased
in-process research and development that was incurred in the acquisition of
AutoGate Logic, Inc. ("AGL"). The increase in the first quarter of 2000 compared
with the first quarter of 1999 was due primarily to AGL goodwill charges of $0.4
million and an equity charge in GateField Corporation ("GateField") of $0.5
million, partially offset by a reduction in TI goodwill.
Interest Income and Other
Interest and other income for the first quarter of 2000 was $1.3
million, compared with $1.2 million for the fourth quarter of 1999 and $0.7
million for the first quarter of 1999. The increases in interest and other
income were driven primarily by increased cash, cash equivalents, and short-term
investments available for investing by the Company.
Tax Provision
The Company's effective tax rates for the three months ended April 2,
2000, was 31.0% compared with 32.0% for the three months ended April 4, 1999.
The decrease in the effective tax rate was due primarily to an increase in the
benefit associated with federal and state research and development tax credits
and other state income tax incentives. The effective tax rates are based on the
estimated annual tax rate in compliance 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 2, 2000.
Liquidity and Capital Resources
At the end of the first quarter of 2000, the Company's cash, cash
equivalents, and short-term investments were $117.1 million, compared with
$107.1 million at the end of 1999. The amount of cash, cash equivalents, and
short-term investments increased principally because of cash provided by
operations and cash received from stock transactions.
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 2, 2000, 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
2, 2000. The line of credit, which expires in May 2000, may be terminated by
either party upon not less than thirty days' prior written notice.
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.
Other Factors Affecting Future Operating Results
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 1999, which is incorporated herein by this reference.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of April 2, 2000, the Company's investment portfolio consisted
primarily of corporate bonds, floating rate notes, and federal and municipal
obligations. The primary objectives of the Company's investment activities are
to preserve principal, meet liquidity needs, and maximize yields. To meet these
objectives, the Company invests only in high credit quality debt securities with
average maturities of less than two years. The Company also limits the
percentage of total investments that may be invested in any one issuer.
Corporate investments as a group are also limited to a maximum percentage of the
Company's investment portfolio.
The Company's investments are subject to interest rate risk. An
increase in interest rates could subject the Company to a decline in the market
value of its investments. These risks are mitigated by the ability of the
Company to hold these investments to maturity. A hypothetical 100 basis point
increase in interest rates would result in a decrease of approximately
$1,088,000 (less than 1.0%) in the fair value of the Company's
available-for-sale securities.
The Company purchases a portion of the wafers it uses in production
from Japanese suppliers, which are denominated in Japanese yen. An adverse
change in the foreign exchange rate would affect the price the Company pays for
a portion of the wafers used in production over the long term. The Company
attempts to mitigate its exposure to risks from foreign currency fluctuations by
purchasing forward foreign exchange contracts to hedge firm purchase commitments
denominated in foreign currencies. Forward exchange contracts are short term and
do not hedge purchases that will be made for anticipated longer-term wafer
needs. An adverse change of 10% in exchange rates would result in a decline in
income before taxes of approximately $980,530 based on projected yen denominated
wafer purchases for the next year.
The Company is exposed to equity price risk on the investment in
Chartered Semiconductor that is held as an available-for-sale marketable equity
security entered into for the promotion of business and strategic objectives.
The Company does not attempt to reduce or eliminate its market risk on this
equity security. For every 10% adverse change in the market price of Chartered
Semiconductor common stock on April 2, 2000, the Company's investment would
decrease in value by approximately $4,857,000. As disclosed in Item 5 of Part
II, the Company sold approximately half of its investment in Chartered
Semiconductor in May 2000 at a price that was 31% less than the market price on
April 2, 2000.
All of the potential changes noted above are based upon sensitivity
analysis performed on the Company's financial position at April 2, 2000. Actual
results may differ materially.
<PAGE>
Additional Quarterly Information
The following table presents certain unaudited quarterly results for each of the
eight quarters in the period ended April 2, 2000. 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 2, 2000. These quarterly
operating results are not necessarily indicative of the results for any future
period.
<TABLE>
<CAPTION>
Three Months Ended
Apr. 2, Jan. 2, Oct. 3, Jul. 4, Apr. 4, Jan. 3, Oct. 4, June 28,
2000 2000 1999 1999 1999 1999 1998 1998
-------- -------- -------- -------- -------- -------- -------- --------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statements of Income Data:
Net revenues ................................. $ 50,666 $ 46,042 $ 43,162 $ 41,619 $ 40,838 $ 40,174 $ 38,628 $ 37,160
Gross profit ................................. 31,458 28,546 26,503 25,381 24,844 24,377 23,383 22,345
Income from operations ....................... 10,555 7,175 7,492 2,111 5,466 5,535 5,012 4,426
Net income ................................... $ 8,099 $ 5,823 $ 5,668 $ 1,926 $ 4,221 $ 4,118 $ 3,837 $ 3,419
Net income per share:
Basic ..................................... $ 0.36 $ 0.26 $ 0.26 $ 0.09 $ 0.20 $ 0.20 $ 0.18 $ 0.16
======== ======== ======== ======== ======== ======== ======== ========
Diluted ................................... $ 0.32 $ 0.24 $ 0.25 $ 0.09 $ 0.19 $ 0.19 $ 0.18 $ 0.16
======== ======== ======== ======== ======== ======== ======== ========
Shares used in computing net income per share:
Basic ..................................... 22,767 22,048 21,748 21,511 21,347 21,091 21,449 21,288
======== ======== ======== ======== ======== ======== ======== ========
Diluted ................................... 25,467 24,015 23,003 22,454 22,673 22,201 21,724 21,968
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
Apr. 2, Jan. 2, Oct. 3, Jul. 4, Apr. 4, Jan. 3, Oct. 4, June 28,
2000 2000 1999 1999 1999 1999 1998 1998
-------- -------- -------- -------- -------- -------- -------- --------
<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%
Gross profit ................................. 62.1 62.0 61.4 61.0 60.8 60.7 60.5 60.1
Income from operations ....................... 20.8 15.6 17.4 5.1 13.4 13.8 13.0 11.9
Net income ................................... 16.0 12.6 13.1 4.6 10.3 10.3 9.9 9.2
</TABLE>
<PAGE>
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
As is typical in the semiconductor industry, the Company has been and
expects to be notified from time to time of claims that it may be infringing
patents owned by others. The Company continues to hold discussions with several
third parties regarding potential patent infringement issues, including two
semiconductor manufacturers with significantly greater financial and
intellectual property resources than Actel. As it has in the past, the Company
may obtain licenses under patents that it is alleged to infringe. The Company
has made provision for the estimated settlements costs of claims for alleged
infringement prior to the balance sheet date. While the Company believes that
reasonable resolution will occur, there can be no assurance that these claims
will be resolved or that the resolution of these claims will not have a
materially adverse effect on Actel's business, financial condition, or results
of operations. In addition, the Company's evaluation of the probable impact of
these pending disputes could change based upon new information learned by Actel.
On March 29, 2000, Unisys Corporation ("Unisys") brought suit in the
United States District Court for the Northern District of California, San Jose
Division, against the Company seeking monetary damages and injunctive relief
based on Actel's alleged infringement of four patents held by Unisys. The
Company believes that it has meritorious defenses to the claims asserted by
Unisys and intends to defend itself vigorously in this matter. After
consideration of the information currently known, the Company does not believe
that the ultimate outcome of this case will have a materially adverse effect on
Actel's business, financial condition, or results of operations, although no
assurance to that effect can be given. The foregoing is a forward-looking
statement subject to all of the risks and uncertainties of a legal proceeding,
including the discovery of new information and unpredictability as to the
ultimate outcome.
Item 5. Other Information
In May 2000, the Company participated in a secondary offering of shares
of Chartered Semiconductor. The Company sold 2.6 million Singapore shares, or
approximately one-half of the Company's holdings of Chartered Semiconductor
common stock, and received proceeds of $16.4 million, net of underwriting fees
of $0.5 million.This transaction resulted in a gain of $11.0 million before tax.
On May 11, 2000, GateField Corporation and Actel Corporation announced
the singing of a letter of intent to merge. In the merger, Actel would pay cash
consideration of $5.25 per share of GateField Common Stock not already owned by
Actel (approximately 4.5 million shares). Actel would also assume all
outstanding GateField stock options. The merger is subject to several
conditions, including execution by the parties of a definitive agreement and
approval by GateField's stockholders at a special meeting. In the definitive
agreement, Actel would agree to convert its $8.0 million Convertible Promissory
Note into GateField Preferred Stock and Actel and Idanta Partners, Ltd would
agree to convert their GateField Preferred Stock into GateField Common Stock
before the record date for the special meeting and to vote their shares of
GateField Common Stock for approval of the merger.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following exhibits are filed as part of, or
incorporated by reference into, this Report on Form 10-Q:
Exhibit Number Description
-------------- -----------------------------------------------
2.1 Letter of Intent between Actel Corporation and
GateField Corporation dated May 1, 2000 (filed
as Exhibit 2.1 to GateField Corporation's
Quarterly Report on Form 10-Q (File No.0-13244)
on May 15, 2000, and incorporated herein by
this reference).
(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 16, 2000 /s/ Henry L. Perret
------------------------------------------
Henry L. Perret
Vice President of Finance
and Chief Financial Officer
(as principal financial officer
and on behalf of Registrant)
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