Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended January 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)
--------------------------------------
Securities registered pursuant to Section 12 (b) of
the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
(Title of class)
--------------------------------------
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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Annual Report on Form
10-K or any amendment to this Annual Report on Form 10-K.
The aggregate market value of the voting stock held by non-affiliates
of the Registrant, based upon the closing price for shares of the Registrant's
Common Stock on March 31, 2000, as reported by the National Market System of the
National Association of Securities Dealers Automated Quotation System, was
approximately $613,642,000. In calculating such aggregate market value, shares
of Common Stock owned of record or beneficially by all officers, directors, and
persons known to the Registrant to own more than five percent of any class of
the Registrant's voting securities were excluded because such persons may be
deemed to be affiliates. The Registrant disclaims the existence of control or
any admission thereof for any other purpose.
Number of shares of Common Stock outstanding as of March 31, 2000:
23,036,802.
--------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference in Parts II, III,
and IV of this Annual Report on Form 10-K: (i) portions of Registrant's annual
report to security holders for the fiscal year ended January 2, 2000 (Parts II
and IV), and (ii) portions of Registrant's proxy statement for its annual
meeting of shareholders to be held on May 19, 2000 (Part III).
All information contained or incorporated by reference in this Annual
Report on Form 10-K should be read in conjunction with and in the context of the
Risk Factors set forth at the end of Part I. Unless otherwise indicated, the
statements contained in this Annual Report on Form 10-K are made as of March 31,
2000, and the Company undertakes no obligation to update such statements,
including all forward-looking statements.
PART I
ITEM 1. BUSINESS
Overview
Actel designs, develops, and markets field programmable gate arrays
("FPGAs") and associated design and development software and programming
hardware. FPGAs are used by designers of communications, computer, consumer and
internet-appliance, industrial, military/aerospace, and other electronic systems
to differentiate their products and get them to market faster. Actel is the
leading supplier of FPGAs based on antifuse technology, and in 1999 introduced
FPGAs based on flash technology. Actel's strategy is to be The Programmable ASIC
Solutions Company, a complete solution provider for programmable application
specific integrated circuit ("ASIC") systems.
Actel shipped its first products in 1988 and thousands of its
development systems are in the hands of customers, including Alcatel, Allen
Bradley/Rockwell, Cabletron, General Electric, Honeywell, Hughes Aircraft,
Lockheed Martin, Lucent Technologies, Marconi, Nortel, and Siemens. Actel
derived 9% of its net revenues for 1999 from Nortel and expects to derive 10% or
more of net revenues for 2000 from Nortel. Actel has foundry relationships with
Chartered Semiconductor Manufacturing Pte Ltd ("Chartered Semiconductor") in
Singapore; Lockheed Martin Space Electronics & Communications ("Lockheed Martin
SEC") in the United States; Matsushita Electronics Company ("MEC") in Japan; UMC
Corp. ("UMC") in Taiwan; and Winbond Electronics Corp. ("Winbond") in Taiwan.
Actel's product line consists of eleven families of antifuse-based
FPGAs; Designer Series Development System, DeskTOP, and CoreHDL software;
Silicon Sculptor device programmers; Silicon Explorer debugging and diagnostic
tools; and an evaluation board and sockets. To meet the diverse customer
requirements in the broad FPGA market, each member of a product family generally
is offered in a variety of speed grades, package types, reliability screenings,
and ambient temperature tolerances. Designers can use Actel's integrated suite
of design tools (DeskTOP) or third-party software for circuit design and then
translate the design into a programmed FPGA using Actel's highly automated
software (Designer Series Development System) and device programmers (Silicon
Sculptor). CoreHDL blocks or "cores" can reduce development time by being
"dropped into" designs, and Silicon Explorer can reduce design-verification time
by enabling the user to monitor the functionality of a programmed FPGA in "real
time." The evaluation board allows designers to assess the suitability of their
designs for specific applications, and sockets permit designers to replace an
FPGA without damaging the board. Actel also offers system-level design,
prototyping, and consulting services through its Protocol Design Services Group.
In 1999, Actel introduced the SX-A family of antifuse FPGAs, which
currently is manufactured at MEC using 0.25-micron design rules. This means that
Actel is manufacturing antifuse FPGAs at the same geometry as the mainstream
process technology used for static random access memory ("SRAM") FPGAs, such as
those offered by Xilinx, Inc. ("Xilinx") and Altera Corporation ("Altera"). As a
result, the cost, performance, and power advantages inherent in the antifuse
have again become evident. The SX-A family is currently positioned as the
industry's price/performance/power leader, permitting customers to use
programmable devices with ASIC-like speed, power consumption, and pricing in
volume production. The new family is particularly well suited for products
enabling the portability of the internet, or "e-appliances," such as MP3
players, digital cable set-top boxes, digital cameras, digital film, and DSL
modems. In addition, radiation-tolerant versions of SX-A devices will help Actel
maintain its position as the world's leading supplier of FPGAs to commercial
satellites and other military/aerospace applications.
Actel refocused its reprogrammable SRAM strategy in 1999. Actel
believes that the size and power advantages of its SRAM architecture can now be
used to greatest efficacy in the emerging market for embedded programmable
products. A strategic product marketing team has been formed to position Actel's
SRAM technology at the forefront of this emerging market. Actel also renewed its
commitment in the area of intellectual property ("IP") cores in 1999. Actel's IP
program is aimed at addressing customers' design and design reuse needs by
providing immediate access to pre-verified soft logic cores implemented in Actel
silicon. The strategic product marketing team's charter in this area is to
aggressively pursue third-party strategic relationships and proprietary IP
programs.
In 1999, Actel introduced the ProASIC family of non-volatile,
single-chip, very low power, "live-at-power-up" family of reprogrammable gate
arrays. The product family, which will consist of seven devices have capacities
ranging up to 512,000 gates, was developed by GateField Corporation
("GateField"). The ProASIC family is currently manufactured on a mainstream,
0.25-micron embedded flash process at Infineon Technologies (formerly Siemens
Semiconductor) in Germany. Flash-based ProASIC products offer benefits over
other programmable logic devices ("PLDs") available on the market today, which
are either volatile or non-reprogrammable. ProASIC devices are non-volatile and
reprogrammable. ProASIC devices also exhibit a high level of portability between
PLD and ASIC design flows. ProASIC devices permit ASIC designers to use their
standard design flow, with no new design methodologies to learn, and also be
seamlessly migrated to standard ASIC designs. The design methodology also
enables designers to "drop in" IP cores from proprietary and third-party
sources, eliminating much of the architecture-specific re-engineering required
by other PLDs. ProASIC products are closely coupled with the ASICmaster
automated place-and-route electronic design automation ("EDA") software, which
is optimized for hardware description language ("HDL") design and methodology.
ASICmaster performs place and route of the design into the selected device and
provides back-annotated delay information for simulation. Once the design is
verified, ASICmaster downloads the layout into a device programmer for chip
programming. Actel is currently engaged in limited software and silicon sampling
of ProASIC at selected customers throughout the world.
As part of its strategic alliance with GateField entered into in 1998,
Actel acquired the exclusive right to market and sell standard ProASIC products
in process geometries of 0.35-micron and smaller, as well as the ASICmaster
design tool software. In 1999, the Company loaned $8.0 million to GateField in
exchange for a promissory note that is convertible (at Actel's election) into
1,230,769 shares of GateField common stock. In addition, Actel increased its
ownership of GateField common stock during 1999 from 16,500 shares to 190,529
shares. As a result of these developments, Actel began accounting for its
interests in GateField under the equity method of accounting during 1999.
In 1999, Actel also completed its acquisition of AutoGate Logic, Inc.
("AGL") in a transaction accounted for as a purchase. AGL developed a wide range
of very large scale integration (VLSI) development tools, including FPGA and
custom integrated circuit ("IC") place and route and timing analysis software.
The purchase price of $7.2 million included the issuance by Actel of 285,943
shares of Common Stock and the assumption of options to purchase 89,057 shares
of Common Stock. Goodwill of $4.9 million and completed technology of $2.1
million associated with the AGL acquisition will be amortized using the
straight-line method over a period of five years beginning with the first
quarter of fiscal year 2000. The $0.2 million value assigned to the assembled
workforce is being amortized over an estimated useful life of six months.
For 1999, Actel's pre-tax net income was reduced by $1.1 million under
the equity method of accounting as a result of Actel's equity interest in
GateField and by $1.9 million due to amortization of goodwill and other
acquisition-related charges. These amounts are expected to increase in future
years.
During the second quarter of 1999, Actel completed a restructuring plan
that included a reduction in force as well as the elimination of certain
projects and non-critical activities. The total pretax restructure and other
charges for these activities, including employee severance and outplacement
expenses and the write-off of prepaid license and abandoned capital assets, was
$2.0 million. These measures were taken to bring overall spending in line with
revenue projections for the year and to sharpen Actel's focus on new product
development. For the year, Actel's selling, general, and administrative expenses
increased by more (on a percentage basis) than net revenues, principally because
of an accrual of estimated settlement costs of claims for alleged patent
infringement, an increased level of sales and marketing activities in support of
new products, and expenses related to the termination of a distributor.
Actel was named as one of the "200 Best Small Companies" by Forbes
magazine in its issue dated November 1, 1999. In addition, Actel was added to
the Standard & Poor's "SmallCap 600 Index" after the close of trading on January
7, 2000. Actel is included in the S&P SmallCap 600 Electronics (Semiconductors)
industry group. No significant disruptions were experienced by Actel as a result
of either the September 1999 earthquake in Taiwan or the Year 2000 date change.
Actel markets its products through a worldwide, multi-tiered sales and
distribution network. In 1999, a majority of Actel's sales were made through
distributors. Actel's principal distributors are Pioneer-Standard Electronics,
Inc. ("Pioneer") and Unique Technologies, Inc. ("Unique") in North America and
Arrow Electronics, Inc. and Zeus Electronics (collectively, "Arrow") worldwide.
In 1999, Arrow, Pioneer, and Unique accounted for 16%, 12%, and 13%,
respectively, of Actel's net revenues. In addition to the three major industrial
distributors, the North American sales network includes 20 sales management
and/or technical sales offices and 20 manufacturers' representative firms. The
European network includes five sales offices and 12 distributors. The Pan-Asia
network includes four sales management offices and seven distributors. Three
additional distributors serve the remaining international markets in which Actel
offers its products. In 1999, sales to customers outside the United States
accounted for 29% of Actel's net revenues, compared with 33% for 1998 and 31%
for 1997.
Actel was incorporated in California in 1985 and has been authorized by
shareholders to reincorporate as a Nevada corporation. The Company's principal
facilities and executive offices are located at 955 East Arques Avenue,
Sunnyvale, California 94086-4533, and its telephone number at that address is
(408) 739-1010. The Company's World Wide Web address is http://www.actel.com .
As used in this Annual Report on Form 10-K, "Actel" and "the Company" mean Actel
Corporation and its consolidated subsidiaries; and "gate" or "gates" means
"ASIC-equivalent" gates, unless otherwise indicated.
"Actel" and the Actel logo are registered trademarks of the Company,
and "ProASIC" and "ASICmaster" are registered trademarks of GateField. This
Annual Report on Form 10-K also includes unregistered trademarks of the Company
and trademarks of companies other than Actel.
Actel Strategy
Actel's strategy is to be The Programmable ASIC Solutions Company. For
customers requiring discrete logic solutions, the Company's FPGAs offer the
benefits of both ASICs and programmable devices:
- Like ASICs, the Company's FPGA devices provide non-volatile,
"live-at-power-up," low-power, single-chip solutions at very
low prices in volume production. Like other programmable
devices, the Company's FPGAs reduce design risk, inventory
investment, and time to market.
- To further shorten the design cycle, logic designers can
choose to use either ASIC or FPGA software tools and design
methodologies, and the architectures of the Company's FPGAs
enable the utilization of predefined IP cores, which can be
reused across multiple designs or product versions.
- Depending upon their requirements or preferences, customers
can choose to use either FPGAs based on antifuse technology,
which are one-time programmable and have ASIC-like speed; or
FPGAs based on flash technology, which are reprogrammable. In
either case, the Company can provide programming services,
making the offering a "virtual ASIC" from the customer's point
of view.
For customers requiring integrated logic (or system-on-a-chip)
solutions, the Company's SRAM-based logic core (or standard cell) will enable
the integration of reprogrammable logic with predefined functions on a single
chip using a standard process.
For customers requiring either discrete or integrated solutions, the
Company's IP cores and design services can be provided as needed to help
customers accelerate design creation and verification, prototyping, and time to
market.
Products and Services
The Company's product line consists of eleven families of
antifuse-based FPGAs; Designer Series Development System, DeskTOP, and CoreHDL
software; Silicon Explorer debugging and diagnostic tools; Silicon Sculptor
device programmers; and an evaluation board and sockets. In 1999, the Company
introduced the SX-A family of antifuse FPGAs and the ProASIC family of
reprogrammable gate arrays. The Company also offers system-level design,
prototyping, and consulting services through its Protocol Design Services Group.
Antifuse FPGAs
To meet the diverse customer requirements in the broad programmable
logic market, each of the Company's antifuse FPGA families (except the RadHard
family) is offered in a variety of speed grades, package types, reliability
screenings, and ambient temperature tolerances. The five members of the ACT 1
and ACT 2 families, for example, can be ordered in more than 100 speed,
packaging, screening, and tolerance variations.
ACT 1
The ACT 1 family of FPGAs consists of two products: the
1,200-gate A1010, which was first shipped for revenue in 1988; and the
2,000-gate A1020, which was first shipped for revenue in 1989. This
family of devices was introduced at 2.0 micron and is manufactured
using 1.0-micron design rules.
The Company offers 5.0- and 3.3-volt versions of both ACT 1 products.
ACT 2
The ACT 2 family of FPGAs consists of three products: the
4,000-gate A1240 and the 8,000-gate A1280, which were first shipped for
revenue in 1991; and the 2,500-gate A1225, which was first shipped for
revenue in 1992. This family of devices was introduced at 1.2 micron
and is manufactured using 1.0-micron design rules.
ACT 3
The ACT 3 family of FPGAs consists of five products: the
2,500-gate A1425 and the 6,000-gate A1460, which were first shipped for
revenue in 1993; and the 1,500-gate A1415, the 4,000-gate A1440, and
the 10,000-gate A14100, which were first shipped for revenue in 1994.
The ACT 3 family was designed for applications requiring high speed and
a high number of inputs and outputs ("I/Os"). The five members of the
ACT 3 family can be ordered in approximately 150 speed, packaging,
screening, and tolerance variations. The Company offers 5.0- and
3.3-volt versions of all five ACT 3 products, as well as versions
(A1460BP and A14100BP) that are compliant with the peripheral component
interconnect ("PCI") standard. The ACT 3 family was introduced at 0.8
micron and is manufactured using 0.6-micron design rules.
XL
The 1200XL family of FPGAs, which was first shipped for
revenue in 1995, consists of three products: the 2,500-gate A1225XL,
the 4,000-gate A1240XL, and the 8,000-gate A1280XL. Taking advantage of
0.6 micron design rules and redesigned I/O modules and clock
distribution networks, 1200XL products offer system performance
significantly in excess of that offered by pin-compatible ACT 2
devices. The Company offers 5.0- and 3.3-volt versions of all three
members of the 1200XL family, which can be ordered in approximately 100
speed, packaging, screening, and tolerance variations.
DX
The 3200DX family of FPGAs consists of five products: the
6,500-gate A3265DX, which was first shipped for revenue in 1995; the
14,000-gate A32140DX and the 20,000-gate A32200DX, which were first
shipped for revenue in 1996; and the 10,000-gate A32100DX and the
30,000-gate A32300DX, which were first shipped for revenue in 1997. The
3200DX family permits designers to integrate the register-intensive
datapath functions of FPGAs, the control and decode modules commonly
implemented in CPLDs, and the fast dual-port SRAM typically used for
high-speed buffering. Supported by the Company's extensive selection of
automated design tools, the 3200DX family is optimized for synthesis
design methodologies to yield predictable performance for system logic
integration. To further assist designers, most members of the family
offer JTAG boundary scan logic, which permits testing of the design
during manufacture. The Company offers 5.0- and 3.3-volt versions of
all five members of the 3200DX family, which is manufactured using
0.6-micron design rules and can be ordered in approximately 150 speed,
packaging, screening, and tolerance variations.
MX
The MX family of FPGAs consists of six products: the
4,000-gate A40MX04 and the 16,000-gate A42MX16, which were first
shipped for revenue in 1997; and the 2,000-gate A40MX02, the 9,000-gate
A42MX09, the 24,000-gate A42MX24, and the 36,000-gate A42MX36, which
were first shipped for revenue in 1998. The MX family includes the best
features from the Company's ACT 1, ACT2, 1200XL, and 3200DX families
and should, over time, replace those earlier families in new 5.0-volt
commercial designs. The largest MX devices include system logic
integration functions, such as embedded SRAM and decode logic, that are
used by designers to integrate disparate functions in data networking,
telecommunication, and industrial control applications. The MX family
is manufactured using 0.45-micron design rules, which permits it to
work in pure 5.0-volt, pure 3.3-volt, and mixed 5.0- and 3.3-volt
systems. The family can be ordered in more than 200 speed, packaging,
screening, and tolerance variations.
As the Company's first line of low-cost, single-chip ASIC
alternatives, the MX family ramped to volume the fastest of any product
in Actel's history. In March 1999, only eighteen months after
introduction, the Company announced that it had shipped the
two-millionth MX device. In April 1999, the Company announced that it
had shipped one million units of the MX04 device. This milestone was
achieved just thirteen months after the availability of
production-qualified devices. In January 2000, the Company announced
that it had shipped one million units of the MX family in the fourth
calendar quarter of 1999. The unit volume of MX shipments demonstrates
the acceptance of antifuse technology in high-volume applications, such
as those serving the internet, and is evidence that electronics
engineers are opting with increasing frequency for the time-to-market
advantage of FPGAs over the longer lead times associated with
traditional ASICs.
In July 1999, the Company announced the availability of "-3"
speed grade MX devices, which resulted from a proprietary process
breakthrough by Actel's foundry partner, Chartered. The -3 speed grade
improves overall speed by 35% compared with the standard MX speed
grade. The MX family is currently positioned as a line of low-cost,
single-chip, mixed-voltage ASIC-alternative FPGAs for 5.0-volt
applications.
SX
The SX family of FPGAs consists of four products, all of which
were first shipped for revenue in 1998: the 8,000-gate A54SX08, the
16,000-gate A54SX16 and A54SX16P, and the 32,000-gate A54SX32. The SX
family is manufactured using 0.35-micron design rules. All SX devices
have full pin compatibility within the family and provide mixed 5.0-
and 3.3-volt support with 3.3-volt output drive and 5.0-volt tolerant
inputs. The SX family can be ordered in more than 200 speed, packaging,
screening, and tolerance variations, and approximately 50 more
variations are planned.
SX was the first family to be built on the Company's
triple-layer metal, "sea of modules" architecture. The foundation for
the architecture is a "sea" of logic modules laid out as a grid across
the entire silicon floor. This sea-of-modules design minimizes chip
area by covering almost the entire silicon substrate with logic
resources. To further increase design efficiency and device
performance, these modules have been organized into "superclusters."
Two different levels of local routing resources within superclusters
give designers the ability to achieve very fast performance. The
interconnect resources are located on the upper two layers of metal.
The result is dramatically reduced die size (regardless of capacity),
increased device performance, and reduced cost.
The SX family's combination of performance and density enables
designers to combine multiple high-performance CPLDs into a single
FPGA, thereby cutting power consumption, saving board space, and
reducing costs. In May 1999, the Company announced the availability of
"-3" speed grade SX devices, which are 35% faster than the standard SX
speed grade and were then the world's fastest FPGAs. The SX family and
the SX-A family, discussed below, are currently positioned as industry
price/performance/power leaders, permitting customers to use
programmable devices with ASIC-like speed, power consumption, and
pricing in volume production.
SX-A
The SX-A family of FPGAs, which was first shipped for revenue
in 1999, currently consists of four products: the 8,000-gate A54SX08A,
the 16,000-gate A54SX16A, the 32,000-gate A54SX32A, and the 72,000-gate
A54SX72A. The SX-A family currently is manufactured at MEC using
0.25-micron design rules. This means that, for the first time in more
five years, the Company is manufacturing antifuse FPGAs at the same
geometry as the mainstream process technology used for SRAM FPGAs. As a
result, the cost, performance, and power advantages inherent in the
antifuse have again become evident.
The SX-A family was introduced in September 1999. The family's
fine-grained "sea-of-modules" antifuse architecture and small process
geometry permit the Company to offer the world's fastest and
lowest-power FPGAs at very competitive prices. This combination of low
cost and industry-leading performance and power dissipation delivers
what the Company calls "performance without penalty": system designers
can reach their performance targets in less time, avoiding weeks or
months of struggle to meet performance goals, using fast devices that
consume less power and cost less than alternative PLDs. In addition,
the SX-A family offers I/O capabilities that provide full support for
"hot-swapping." Hot-swapping permits boards to be exchanged while
systems are running (or "hot"), which is a capability important in
networking, telecommunication, and fault-tolerant computing
applications. The SX-A family includes other I/O features, such as slew
rate control, and supports mixed-voltage (2.5-, 3.3-, and 5.0-volt)
systems. SX-A devices are available in variety of plastic flat pack and
ball grid array ("BGA") packages.
In March 2000, the Company announced that it had successfully
developed a 0.22-micron antifuse process technology at UMC. This new
technology, which has already yielded working silicon and is currently
being qualified for production, should reduce die size by 20% and
improve performance by 10% compared with the Company's current
0.25-micron SX-A devices. The new 0.22-micron process was developed in
record time, as was also true of the 0.25-micron process. In recent
years, most standard logic processes have adopted the use of
multi-voltage transistors and polishing methods that were previously
unique to antifuse FPGAs. This, together with the narrowing difference
in mask sets between standard and antifuse processes, has significantly
reduced the time required to bring up new antifuse processes. Early
indications are that the Company is also on an accelerated development
cycle for its next-generation family of antifuse products.
HiRel/Military
HiRel and military devices are designed for use in military
and extreme temperature environments. The Company's HiRel offering
includes all members of the Company's ACT 1, ACT 2, ACT 3, XL, DX, MX,
and SX families in plastic as well as ceramic packages. All of the
HiRel devices offered in plastic packages are certified for commercial
(0 to +70(0)C), industrial (-40 to +85(0)C), or military (-55 to
+125(0)C) temperature ranges. All of the HiRel devices offered in
ceramic packages are certified for commercial or military temperature
ranges or with Class B (MIL-STD-883) qualification.
In March 1999, the Company announced that it has been awarded
Full Certification to Qualified Manufacturers Listing ("QML") status.
This certification confirms that the Company has an approved quality
system and control of its processes and procedures according to the
standards set forth in the MIL-PRF-38535. QML certification, which is
granted by the Defense Supply Center, Columbus, Ohio ("DSCC"),
qualifies processes and materials rather than individual products or
production lots. In June 1999, the Company announced that it had
completed QML certification for its full line of plastic-packaged
antifuse FPGAs, giving customers using commercial off-the-shelf
("COTS") components access to a wide range of package type, density,
performance, and price points. With QML plastic certification, the
entire line of Actel devices can be integrated into design applications
that would otherwise require higher-cost ceramic package devices,
thereby providing designers with a lower-cost solution. The
certification also permits the integration of commercial and military
production without compromising quality or reliability. In addition,
many suppliers of microelectronic components have implemented QML as
their primary worldwide business standard. Appropriate use of this
standard helps not only in the implementation of advanced technologies,
but also in providing more effective logistical support throughout the
life cycle of the product.
In January 2000, the Company announced that it had registered
as a STACK International supplier. STACK International members consist
of a distinguished worldwide group of major electronic equipment
manufacturers serving the high-reliability and communications markets.
STACK registration signifies formal acceptance by the Company of the
requirements in the "STACK Purchase Specification -- General
Requirements for Integrated Circuits." Registration is the first step
in acquiring full STACK Certification.
RT
RadTolerant devices are designed to meet all types of digital
logic requirements for space applications, including commercial,
military, and civilian satellites as well as deep-space probes. These
devices are offered in ceramic packages and certified for military
temperature ranges with either Class B or Class E (extended flow/space)
qualification and include complete total dose radiation test reports on
every lot of devices. In addition, all RadTolerant devices have design-
and pin-compatible commercial versions for easy and inexpensive
prototyping.
The RadTolerant family of FPGAs currently consists of seven
products: the 2,000-gate RT1020, the 2,500-gate RT1425A, the 6,000-gate
RT1460A, the 8,000-gate RT1280A, the 10,000-gate RT14100A, the
16,000-gate RT54SX16, and the 32,000-gate RT54SX32. The RTSX16 and
RTSX32 products, which were introduced in 1999, are capable of up to
100 Krads of total dose immunity. RadTolerant FPGAs provide
cost-effective alternatives to radiation-hardened devices for
applications requiring high reliability. One such application is the
growing market for commercial satellites, which are widely used in
telecommunications for cellular phones, pagers, and global positioning
system products and services.
In November 1999, the Company announced a plan to expand its
line of RadTolerant FPGAs with a new family based on 0.25-micron
antifuse SX-A devices. This new RTSX-S family of parts will be enhanced
for space applications by the addition of a hardened register module,
which will improve the new family's tolerance to device upsets caused
by the bombardment of external radiation and space particulate. Two
devices for the new RadTolerant family have been identified. The first
part, the RTSX32S device with a density of 32,000 gates, is currently
expected to complete qualification in the third quarter of 2000. The
second part, the RTSX72S device with a density of 72,000 gates, will be
the Company's largest HiRel FPGA. When qualified, these RTSX-S devices
are expected to be the fastest and lowest-power FPGAs operating in
space, permitting design engineers to increase system performance,
reduce power consumption, and lighten payload through system
integration. Both the RTSX and RTSX-S families are fabricated in Japan
by the Company's long-time foundry partner, MEC.
RH
The RadHard family of FPGAs consists of two products: the
8,000-gate RH1280, which was first shipped for revenue in 1996; and the
2,000-gate RH1020, which was first shipped for revenue in 1998. RadHard
devices are offered in ceramic packages and certified with Class VQ
(QML) qualification. Actel's RadHard FPGAs are manufactured by Lockheed
Martin SEC at its QML facility in Manassas, Virginia, using a
high-reliability, radiation-hardened 0.8-micron process. The Company
and Lockheed Martin SEC jointly developed the RadHard family to meet
the demands of applications requiring guaranteed levels of performance
and radiation survivability, including the growing telecommunications
satellite market. Additional applications for RadHard FPGAs include
satellites for military use, deep space probes and planetary missions,
and ground-based military applications in which radiation survivability
is required.
Software
A key element of the Company's strategy is to support users' EDA tools
of choice by facilitating the use of leading synthesis software as a "front end"
to Actel's proprietary Designer Series Development System software. Rather than
developing this capability alone, the Company has established the Actel Industry
Alliance, which the Company uses to maintain relationships with EDA vendors and
to develop interfaces between such vendors' EDA tools and Actel's proprietary
software. Under the Alliance program, the Company provides members with access
to Actel's proprietary software specifications, early access to software
revisions, verification services, and participation in joint marketing efforts.
The Alliance currently has more than 20 members, including all major EDA vendors
supporting high-level design for both VHDL and Verilog. The Company provides
comprehensive HDL solutions for the EDA environments of Aldec, Cadence Design
Systems, Exemplar Logic, Mentor Graphics, OrCAD, Synopsys, Synplicity, and
Viewlogic.
Designer Series Development System
The Designer Series Development System tool set is a software suite
built on an object-oriented database that helps optimize and simplify FPGA
circuit design, implementation, and testing. In 1999, Designer Series software
was integrated into Actel's DeskTOP suite of design tools to perform place and
route tasks.
In June 1999, the Company announced the release of its free Designer
Series R1 1999 software update, which included a timing-driven place and route
("TDPR") software module designed to increase performance for applications using
the SX family. In November 1999, the Company announced the release of its R2
1999 design tool update, which included support for the SX-A product family and
a series of performance and ease-of-use enhancements. The Designer Series TDPR
software was enhanced to provide support for all of the Company's product
families. Users can now specify the required performance of their designs using
parameters (such as system frequency, clock-to-out, input setup time, and path
delay) and the TDPR software will automatically place and route the design
utilizing those parameters. Due to the abundance of routing resources in the
Company's antifuse FPGAs, the TDPR software can typically meet the most
demanding design requirements and improve the design's performance by 15% or
more. In addition, the R2 1999 release included new ACTGen macros that provide
barrel shifter, register file, and FIFO capabilities for both SX-A and SX
devices. Additional support was provided for a new 66MHz, 64-bit Target+Master
PCI soft core in the SX32A device.
DeskTOP
In February 1999, the Company became the first PLD supplier to offer a
free integrated suite of design tools. The Actel DeskTOP is a three-vendor suite
of logic design tools from Synplicity, VeriBest (now wholly owned by Mentor
Graphics), and Actel, with technical support provided by Actel. The basic
DeskTOP version (for users designing Actel FPGAs of up to 50,000 gates) was
offered at no charge to qualified designers through January 31, 2000. The basic
Actel DeskTOP design tool suite integrates the functionality of VeriBest's
Design View, Design Manager, schematic entry, and VHDL simulator; Synplicity's
Synplify synthesis software; and Actel's Designer Series place and route tool.
In June 1999, the Company announced the expansion of the DeskTOP
integrated suite of design tools to include Actel DeskTOP Pro and Actel DeskTOP
Open as migration path options from the basic DeskTOP. These products take the
software offerings from VeriBest, Synplicity, and Actel to the highest level of
functional performance and productivity, according to the needs of each Actel
customer. DeskTOP Pro is a reasonably priced, complete tool suite solution for
power users designing high gate count, system-level devices. It offers
feature-rich design solutions with no maximum size limitation for all supported
Actel devices. DeskTOP Open provides an open synthesis environment for customers
who have already invested in their own synthesis tools. It also offers the
ability to design with no maximum size limitation for all of the Company's
current and planned antifuse devices. Like DeskTOP Pro, the DeskTOP Open upgrade
provides VeriBest's Compliant VHDL simulator, VeriBest's state diagram editor,
and Actel's Designer Advantage. It also provides easy integrated support for
Synplicity's Synplify and Synopsys's FPGA Express synthesis software.
In July 1999, the Company announced the expansion of its Actel DeskTOP
integrated suite of design tools to include Verilog design entry and simulation.
With the integration of Verilog into Actel DeskTOP, users can choose between
VHDL or Verilog versions for seamless design entry and simulation of Actel
antifuse device designs of up to 50,000 gates. In September 1999, the Company
announced that it had already filled more than 4,000 individual software
registration requests for the three versions of Actel DeskTOP.
CoreHDL Intellectual Property
As integrated circuits move to ever higher levels of capacity and
integration, the use of IP in the form of cores becomes more important. In
offering CoreHDL IP, the Company is targeting high-density FPGA designers who
are interested in combining customized logic with predefined functions optimized
for high performance applications. By using predefined cores, designers save
engineering resources for the value-added portions of their designs while
shortening the design cycle. In addition, the portable nature of cores enables
design reuse across multiple product versions.
The Company's CoreHDL IP portfolio consists of seven cores, which are
available in either Verilog-HDL or VHDL source code: Core 8b/10b (8 bit/10 bit
encoder/decoder interface); CoreARBITER (PCI arbiter); CoreASYNC (PCI
asynchronous backend interface); CoreCRC (cyclic redundancy code
generator/checker); CorePCI (peripheral component interface); CoreSDRAM (SDRAM
controller interface); and CoreUART (serial communication controller).
In September 1999, the Company announced its commitment in the area of
IP to aggressively pursue third-party strategic relationships and proprietary IP
programs. The Company's IP program will be aimed at addressing customers' design
and design reuse needs by providing immediate access to pre-verified soft logic
cores implemented in Actel silicon. A four-fold program approach is planned.
First, the program will include an internal mini-core IP program to develop
functions such as next-generation PCI buses, UART, and SDRAM controllers.
Second, the Company plans to create a partnership program to support key
third-party IP suppliers who will provide system designers with a portfolio of
validated IP blocks. Third, there will be further enhancements to ActGEN, a
parameterizable function generator with a graphical user interface ("GUI").
Fourth, the Company will offer design services consulting for IP customization
and system-level integration through its Protocol Design Services Group. In
January 2000, the Company announced the appointment of Dennis Kish to the
newly-created position of Vice President of Strategic Marketing. In this role,
Mr. Kish is responsible for identifying emerging markets and opportunities
(including third-party strategic relationships and proprietary IP programs) that
will benefit from the Company's products and technologies.
In September 1999, the Company also announced the release of its
CorePCI Version 5.11, which added extensive design flexibility benefits for PCI
bus design. The CorePCI 5.11 macro conforms to the PCI Local Bus Specification
2.2 and provides 32/64-bit bus widths and 33/66MHz performance using SX devices.
In October 1999, the Company announced that it could deliver a 32,000-gate
programmable device with Master/Target PCI functionality in a 329-pin BGA
package for under $25 in high volume. This put an FPGA PCI solution in the same
price/performance bracket as traditionally lower-cost ASICs. In November 1999,
the Company announced the release of its CorePCI Version 5.2, which was the
first programmable 64-bit, 66MHz PCI core to offer a complete solution,
including Target Only, Master Only, and Master/Target (containing Target+DMA and
Target+Master) functions. By offering the complete PCI solution, the Company now
provides designers with an even more flexible, cost-effective solution for
design reuse, as well as a low-cost migration path to ASICs and next-generation
process technologies. A unique benefit of the Company's PCI core is the use of a
soft register transfer level ("RTL") design flow, which provides complete PCI
design portability to ASICs. The RTL implementation also makes it easy to
integrate with user-defined logic at a higher level of abstraction. In addition,
CorePCI cores do not require fixed placement, further reducing constraints on
the design; and include SDRAM, DRAM, and FIFO controllers, permitting designers
to create memory interfaces as required. In combination with the Company's SX
and SX-A FPGAs, Actel's PCI core provides a low-power, high-performance,
cost-effective, and very flexible platform for a broad scope of PCI and embedded
PCI needs in communications, consumer, computer, industrial, and military
applications. The soft core is available as customizable VHDL and Verilog-HDL
code, and a firm solution can be provided as required.
The Company also offers nine cores developed by Inicore AG, a Swiss IP
provider, which are available only in VHDL source code: iniADPLL (all digital
phase locked loop); iniCAN (controller area network bus interface); iniCPU (6809
8-bit microprocessor); iniG704; iniHDLC (high level data link controller);
iniSCI (I2C master and slave interfaces); iniUART (universal asynchronous
receiver/transmitter interface); iniUTOPIA (ATM interface); and iniVME (slave
interface). In general, these cores are targeted to telecommunications and
industrial control applications.
Programmers
The Company's FPGAs can be programmed by Silicon Sculptor, a highly
reliable programmer that is easy to setup and use. The Company also supports
programmers that are offered by third parties, including BP Microsystems Inc.,
Data I/O, SMS Sprint, and System General. Programmers execute instructions
included in fuse files, which are obtained from the Company's Designer Series
software, to program Actel FPGAs.
The compact size of the Silicon Sculptor permits designers to program
the Company's FPGAs from their desktop PC rather than in a lab. A single adapter
module can be used to program all Actel antifuse or all flash devices within a
package type, regardless of pinout. In May 1999, the Company announced that,
together with BP Microsystems, it had developed single- and six-site versions of
the Silicon Sculptor device programmer that are "native mode" compliant with
Windows 95/98/NT. Up to 12 Actel devices can be concurrently programmed from a
single PC by daisy chaining two six-site Silicon Sculptors together with a
simple expansion cable.
Silicon Explorer
Silicon Explorer is a powerful debugging and verification tool that
enables the user to monitor the internal operation of a programmed FPGA as it
performs its functions at speed within a real system. By permitting real-time
probing, Silicon Explorer can significantly reduce the amount of time necessary
to debug and verify an FPGA design. In June 1999, the Company released
testimonials from designers at several leading networking companies regarding
Silicon Explorer's effectiveness and ease of use. Designers from Ascend
Communications, E/O Networks, and Applied Signal Technology experienced
productivity gains by using the real-time diagnostic tool for design
verification and debugging.
In February 2000, the Company announced a new generation of its Silicon
Explorer debugging and diagnostic tool, Silicon Explorer II and Silicon Explorer
II Lite. Silicon Explorer II further optimizes design performance, flexibility,
and ease of use for all of the Company's antifuse FPGA product families. The
logic analysis system in Silicon Explorer II was enhanced to support an external
power supply; internal probing of 5.0-, 3.3-, and 2.5-volt FPGAs; four levels of
triggering; decompression on download; and system acquisition rates up to
100MHz. In addition to being a logic analyzer that captures external bus
activity, Silicon Explorer II includes "Probe Pilot." Probe Pilot attaches to
the system being tested, providing access to internal FPGA signals. Probe Pilot
hardware samples up to eighteen channels of synchronous or asynchronous signals
in real time at system rates up to 100MHz. Its "Explore" software permits a user
to dynamically set two of its eighteen channels to analyze signals internal to
the FPGA. "Action Probe," a function available only with the Company's devices,
permits dynamic access to any internal node. The Silicon Explorer II logic
analysis system is compliant with Windows 95/98/NT and offers a Windows-like
GUI. Silicon Explorer II Lite is a less-expensive version of Silicon Explorer II
without the real-time logic analyzer.
Evaluation Board
In May 1999, the Company announced the availability of a 16,000-gate
evaluation board for its SX and MX families of FPGAs. This evaluation board
enables designers to conduct real-time evaluation of functionality and
performance of both SX and MX family devices. In addition, a connector is
provided to allow easy access to Silicon Explorer so that internal functionality
and delays can be investigated. Since the user prototype area of the SX/MX
evaluation board enables designers to interface their own surrounding circuits
with the FPGA, the evaluation board also permits designers to assess the
suitability of their own designs for specific applications.
Sockets
Sockets for the Company's FPGAs are available in prototype quantities
from the Company and in production quantities from Actel-qualified socket
manufacturers. Sockets permit designers to replace a chip without damaging the
board, which reduces some of the risk commonly associated with using an antifuse
FPGA in prototype board design. The complete line of sockets accommodates all of
the Company's FPGAs in TQFP, PQFP, RQFP, and VQFP packages.
In March 1999, the Company announced a range of BGA sockets for use
with its FPGAs. The BGA sockets are well suited to the prototyping environment
and are compatible with Actel's MX, SX, and flash devices. The use of BGA
sockets facilitates migration to full production, reducing both time to market
and production costs. The sockets are designed to be reliable and have zero
insertion force, meaning that the device is not stressed before, during, or
after testing. The principal benefit of these sockets is that they are placed on
the printed circuit board ("PCB") in the same pad layout as the device itself
will eventually occupy. This avoids changes to the PCB during the transition
from prototyping to production. BGA packaging is becoming more popular, due
mainly to its ease of use and ability to be reworked.
In November 1999, the Company announced the availability of its new
SX72A FPGA in fine-pitch ball grid array ("fBGA") packaging. This 1.0mm ball
pitch fBGA with 484 pins occupies the same space as a standard 1.27mm ball pitch
BGA with 256 pins. The increased number of I/Os permits designers to utilize a
smaller package while supporting higher I/O counts. The very low cost and
industry-leading performance and power dissipation of the SX72A, in combination
with the high pin count and greatly reduced footprint of the fBGA484, permits
the SX72A to address the I/O requirements of high-density PLD and ASIC designs.
ProASIC
In June 1999, the Company introduced the ProASIC family of
non-volatile, single-chip, very low power, "live-at-power-up" family of
reprogrammable gate arrays. The product family, which will consist of seven
devices have capacities ranging up to 512,000 gates, was developed by GateField.
The family is currently manufactured on a mainstream, 0.25-micron embedded flash
process at Infineon Technologies ("Infineon") in Germany. The Company is
currently engaged in limited software and silicon sampling at selected customers
throughout the world.
As the first reprogrammable gate arrays, ProASIC devices offer the
benefits of both gate arrays and FPGAs. Like traditional gate arrays, the
ProASIC family provides non-volatile, high-density, single-chip solutions. In
addition, ProASIC reprogrammable devices have a fine-grained architecture, which
ensures compatibility with ASIC design tools and methodologies, and contain an
ample amount of embedded dual-port memory/FIFO blocks. The architecture and
design methodology also enable designers to "drop-in" soft IP from proprietary
and third-party sources, eliminating much of the architecture-specific
re-engineering required by other PLDs. Networking engineers in particular are
receptive to the advantages of a non-volatile, single-chip, reprogrammable
device that is designed using ASIC tools and methodologies. Like other PLDs,
ProASIC devices reduce time to market and minimize design risk and investment,
requiring no mask sets or silicon respins. The use of ProASIC devices also
simplifies board design and cost by eliminating the need for a boot device
(e.g., serial PROM) associated with SRAM FPGAs. In addition, ProASIC devices
operate at very low power, using only one-third to one-half of the power
consumed by SRAM FPGAs and other PLDs based on look-up tables ("LUTs"). Finally,
the ease of converting ASIC IP into ProASIC significantly broadens the
availability of reusable cores for FPGA designers. In short, the ProASIC family
brings significant benefits to any designer of high-density logic.
ASICmaster Software
ASICmaster, the ProASIC design suite, was designed from the beginning
to support both ASIC and FPGA design flows. As a result, it is the first
programmable family that allows ASIC designers to use all of their existing
tools and scripts. Thus, there is no significant investment of money to buy or
time to learn new design tools. The achievement of timing convergence using
standard ASIC tools was one of the key technical challenges resolved by ProASIC.
The most significant outcome is that the decision to choose a programmable or
masked silicon solution can be deferred to a much later point in the design
cycle. In addition, it blurs the distinction between ASIC and FPGA designs by
permitting engineers to focus on system logic, rather than specific silicon
solutions.
The ASICmaster tool set is based on a complex, multimillion-gate
capable ASIC tool that includes TDPR. ASICmaster software integrates a global
router, static timing analyzer, 2 1/2 D-based RC extractor, AWE (asymptotic
waveform extraction) delay calculator, and ECO (engineering change order) editor
into an advanced design flow. Users have the option of automated flow or
interactive control for placement and routing. Additional capabilities include
automated memory generation with the ProASIC MemoryMaster tool, power
estimation, and a layout viewer for identifying and optimizing critical paths.
ProASIC tools utilize the same VHDL and Verilog HDL descriptions that
are targeted for gate arrays and standard cells. This allows the use of leading
EDA tools such as Design Compiler, Build Gates, PrimeTime, Design Time, Verilog
XL, VCS, Formality, and others. As a result, ProASIC design tools can be used in
almost any ASIC design environment. This permits ASIC designers to operate from
within their existing design environments, and also frees them from having to
modify HDL code with special directives and instantiations, as is required with
SRAM devices. Designers utilizing an FPGA design flow value the ease of use and
fast run times they have come to expect from FPGA design tools. ProASIC is
supported by leading FPGA tools such as LeonardoSpectrum (Exemplar) and FPGA
Express (Synopsys), both of which are discussed below, as well as Synplify
(Synplicity) and the Model Technology simulation environment.
In August 1999, the Company announced the validation of Exemplar
Logic's LeonardoSpectrum 99.1 synthesis tool as fully supporting designs for
ProASIC devices. Exemplar Logic is a wholly-owned subsidiary of Mentor Graphics.
Exemplar's LeonardoSpectrum synthesis tool was proven in both an ASIC and an
FPGA design flow. In qualifying LeonardoSpectrum, the Company determined that
the tool provides optimized synthesis results in the ProASIC flow and works with
all currently announced high-density ProASIC devices. LeonardoSpectrum also
integrates seamlessly with ASICmaster.
In November 1999, the Company announced that Synopsys had enhanced its
support of ProASIC devices. Synopsys offers design flow flexibility for ProASIC
devices with FPGA Compiler II and FPGA Express. Designers can choose an
ASIC-like design flow through FPGA Compiler II or a more traditional FPGA design
flow through FPGA Express. Both tools have integrated architecture-specific
optimization for ProASIC devices to achieve high quality of results. In addition
to architecture-specific optimization, Synopsys incorporated several new
features for ProASIC devices, including the following: logic replication, which
enables the user to duplicate high-fanout logic cells in order to reduce routing
congestion and increase design performance; timing constraint file output, which
permits designers to enter constraints only once by automatically passing on the
timing constraints to ASICmaster; timing back-annotation, which accelerates
debugging time by providing more accurate data to the integrated static timing
analysis tool in FPGA Compiler II and FPGA Express; and partner-designed module
generation, which greatly increases quality of results for arithmetic functions
by automatically using architecture-specific modules developed by the Company.
Reusable Core/IP Integration
Reusable cores, or IP, have not yet substantially penetrated the
programmable market. The reasons for this include the high level of IP
optimization required to be useful in a LUT-based architecture; the lack of
security provided by SRAM programmable logic; and the inability to control the
number of units programmed with a single IP element, which is a critical control
factor for the standard IP business model. ProASIC devices solve each of these
issues. The fine-grained architecture ensures that little modification to the
core will be required. The minimal effort required to retarget from ASIC to
programmable silicon should make ProASIC attractive to third-party IP vendors
and users of captive IP. Security features on the devices ensure that, once
programmed, the device cannot be read back. Finally, a proprietary licensing
feature, combined with factory programming, means that the standard business
model for IP can be extended to programmable technologies. In addition to IP
that can be purchased from the Company, such as PCI cores, a variety of
independent core vendors (such as Sican and Inicore) are working with ProASIC
devices.
Protocol Design Services Group
The Company's Protocol Design Services Group is a leading provider of
FPGA, ASIC, software, and electronic system design solutions. With the Company's
acquisition of the Protocol Design Services Group from GateField in August 1998,
Actel became the first FPGA provider to offer system-level design expertise to
its customers, expanding the Company's capability to support a greater portion
of customers' overall design and risk management. The Protocol Design Services
Group is located in a secure facility in Mt. Arlington, New Jersey, and is
certified to handle government, military, and proprietary designs. Protocol has
an eleven-year history of providing engineering design solutions to both the
commercial and government sectors in North America and Europe. Protocol's focus
has been in telecommunications and networking applications, but it also has
significant experience in the automotive, computer, military/aerospace, and
consumer markets. Using industry-standard tools and methodologies, Protocol
provides varying levels of design services, including system-level and
system-on-a-chip design, turnkey FPGA and ASIC design and verification, software
development, and circuit card design.
In January 1999, the Company announced that the Protocol Design
Services Group was actively involved with a major customer to supply a new RTL
core for a 66MHz PCI design application in an FPGA. The Company believes this
PCI implementation was the first programmable application operating within the
PCI 66MHz specification. This PCI solution was developed by the Protocol Design
Services Group for a PC-based accelerator board that also uses a number of
ProASIC products. The accelerator uses the Company's 66 MHz PCI core in a
16,000-gate SX antifuse FPGA, and has a shared local bus interface between the
PCI core and the ProASIC devices. The choice of ProASIC products as building
blocks of the solution was driven by the requirement that the accelerator board
function as a secure platform for IP. ProASIC devices have several security
features, including the ability to prevent read-back of design content.
In June 1999, the Company announced that its Protocol Design Services
Group had completed 50 ProASIC reprogrammable gate array designs using the
ASICmaster design suite. The Protocol Design Services Group completed the
designs over the preceding three years for uses ranging from ASIC prototyping to
production. This included the frequent use of ProASIC devices as a quick path to
verified silicon design, enabling system software to be developed while the ASIC
is being fabricated. The Protocol Design Services Group leveraged the ProASIC
family's unique reprogrammable gate array technology and its ASIC-like design
flow and methodology to increase design productivity and significantly improve
time to market compared with traditional ASIC design development.
In February 2000, the Company announced that the Protocol Design
Services Group had opened a design center in the Boston area. The new Protocol
Design Center, located in Chelmsford, Mass., offers a broad range of expertise
in engineering design and verification services for FPGAs, ASICs, and electronic
systems. The Boston area design center is the newest of a several North American
regional centers planned by the Protocol Design Services Group.
Market and Applications
FPGAs can be used in a broad range of applications across nearly all
electronic system market segments. Net revenues from the sale of FPGAs accounted
for 96% of the Company's net revenues for 1999, and virtually all of such
revenues were derived from the sale of antifuse FPGAs. Most customers use the
Company's antifuse FPGAs in low to medium volumes in the final production form
of their products. Some high-volume electronic system manufacturers use the
Company's antifuse FPGAs as a prototyping vehicle and convert production to
lower-cost conventional gate arrays or standard cells, while others with
time-to-market constraints use Actel's FPGAs in the initial production and then
convert to conventional gate arrays or standard cells. As product life cycles
continue to shorten, foundry capacity becomes more difficult to secure, and
manufacturing efficiencies for antifuse FPGAs increase, some high-volume
electronic system manufacturers are electing to retain antifuse FPGAs in volume
production because conversion to conventional gate arrays or standard cells may
not yield sufficiently attractive savings before the electronic system reaches
the end of its life. With the introduction of the MX, SX, and SX-A families, the
Company believes that its antifuse FPGAs will be used increasingly in high
volume production.
Communications
The high density, high performance, and low power consumption of
antifuse FPGAs make them appropriate for use in communications equipment.
Increasingly complex equipment must frequently be designed to fit in the space
occupied by previous product generations. In addition, the rapidly changing
communications environment rewards short development times and early market
entry.
Representative customers of the Company in the communications market
include: 3Com, ADC Kentrox, Advanced Fibre Communications, Alcatel, Cabletron,
Chipcom, Cisco Systems, Ericsson, Hughes Network Systems, Lucent Technologies,
Marconi, Motorola, Nokia, and Nortel. The Company derived 9% of its net revenues
for 1999 from Nortel and expects to derive 10% or more of net revenues for 2000
from Nortel.
Computer Systems and Peripherals
The computer systems market is intensely competitive, placing a premium
on early market entry for new products. FPGAs reduce the time to market and
facilitate early completion of production models so that development of hardware
and software can occur in parallel.
Representative customers of the Company in the computer market
include: Compaq Computer, Hewlett-Packard, Hypercom, and IBM.
Consumer and e-Appliances
The high performance, low power consumption, and low cost of antifuse
FPGAs make them appropriate for use in products enabling the portability of the
internet, or "e-appliances," and other high-volume electronic systems targeted
for consumers. E-appliance applications include MP3 "music-off-the-internet"
players, digital cable set-top boxes, DSL and cable modems, digital cameras, and
digital film. Like the computer market, the market for consumer and e-appliance
products places a premium on early market entry for new products and is
characterized by short product life cycles.
Representative customers of the Company in the consumer/e-appliance
market include: Diamond Multimedia, General Instruments, NEC, NuCam, and
PairGain.
In February 1999, the Company announced that TacT Audio had launched
the first direct-drive digital amplifier targeted for the top-end of the
high-fidelity market. The TACT Millennium achieves its high-quality sound
performance using two MX FPGAs (an MX09 and an MX16), which replaced two 24-bit
DSPs and two CPLDs running at over 90MHz. The FPGAs have on-chip program storage
that is not easily compromised and use far less power than the original
components. The next generation will be even further improved by replacing the
two MX parts with a single SX family device, which will include volume control
to create a basic system-level building block for future generations of the
amplifier. The SX device will also enable future generations of the amplifier to
run at much higher speeds.
In August 1999, the Company announced that Pathways Development Group,
Inc. will use the MX02 FPGA in its new Team Xtreme video game interfaces for
people with disabilities. Team Xtreme is a family of products allowing people
with disabilities to play Nintendo video game systems without slowdown hardware
or special software. A disabled person using Team Xtreme can make use of up to
five switches controlled by his or her hands, feet, head, or breath. These
switches are combined with a standard game controller played by a teammate and
the two teammates are made to look like one person to the game system. Players
using Team Xtreme work on hand-eye coordination and motor movement skills,
mental and physical endurance, and socialization skills while having fun. The
design flexibility of the MX02 device permitted Team Xtreme's designers to
develop a single circuit board that works for all three Nintento game interfaces
(standard NES, Super NES, and Nintendo 64), providing considerable cost savings.
Industrial Control Equipment
Industrial control and instrumentation applications often require
complex electronic functions tailored to specific needs. FPGAs offer
programmability and high density, making them attractive to this segment of the
electronic equipment market.
Representative customers of the Company in the industrial market
include: Agilent, Allen Bradley/Rockwell, Eastman Kodak, General
Electric-Medical, Hewlett-Packard, Marquette, Siemens, and Varian.
Military and Aerospace
Rigorous quality and reliability standards, stringent volume
requirements, and the need for design security are characteristics of the
military and aerospace market. The Company's antifuse FPGAs have high quality
and reliability and are virtually impossible to reverse engineer, making them
appropriate for many military and aerospace applications. The Company's antifuse
FPGAs are especially well suited for space applications, due to the high
radiation tolerance of the antifuse, and for many aircraft and missile flight
applications, due to the high density and high performance of antifuse FPGAs.
For these reasons, the Company is the world's leading supplier of military,
radiation-tolerant, and radiation-hardened FPGAs.
The Company's antifuse FPGAs were first designed into a space mission
in 1992. Since then, thousands of the Company's programmable logic circuits have
performed aboard manned space vehicles, earth observation satellites, and
deep-space probes. The Company's FPGAs often perform mission-critical functions
on important scientific missions in space. They have, for example, been aboard
numerous Mars missions, and were included in the controlling electronics for the
Mars Pathfinder Rover. In addition, there are Actel devices performing functions
on the repaired and revitalized Hubbell Space Telescope. The Company's FPGAs are
also being readied for the next space infrared telescope facility (SIRTF), which
is scheduled to launch in 2001. As a final example, the Stardust probe, which
was launched in 1999 and is scheduled to make several large loops around the sun
and rendezvous with the tail of the comet Wild 2 in January of 2004, carries
about 100 Actel FPGAs.
The Company participates in programs administered by NASA's Goddard,
Johnson, and Marshall Space Flight Centers (including the Space Shuttle) as well
as programs at California Institute of Technology's Jet Propulsion Laboratory
("JPL"). However, the Company's success has not been limited to the United
States. Today, the Company's FPGAs can be found in spacecraft launched by
virtually every civilian space agency around the world, including the European
Space Agency (ESA) and the Japanese National Space Development Agency (NASDA),
as well as on board the International Space Station (ISS).
Representative customers of the Company in the military and aerospace
market include: Boeing, Harris, Honeywell, Hughes Aircraft, JPL, Lockheed
Martin, Loral, Marconi, National Aeronautics Space Administration ("NASA"),
Northrup, Olin Corporation, Raytheon, SCI Systems, and TRW.
Sales and Distribution
The Company maintains a worldwide, multi-tiered selling organization
that includes a direct sales force, independent manufacturers' representatives,
and electronics distributors. In March 1999, the Company announced the
appointment of Paul Indaco as Vice President of Worldwide Sales. In August 1999,
the Company announced the expansion and reorganization of its senior sales
management team. The new sales organization included the appointment of Area
Sales Managers for the Western and Central United States, who joined the Area
Sales Manager for the Eastern United States to form Actel's area sales
management team in North America. The Company also moved to strengthen its
distribution channel management with the appointment of a Director of North
American Distribution and Sales Operations, and to support its important
aerospace product segment with the appointment of a Director of Worldwide
Aerospace Sales. These new positions in the sales organization were created to
increase sales management coverage and support for new products.
The Company's North American sales force consists of 55 sales and
administrative personnel and field application engineers ("FAEs") operating from
20 sales offices located in major metropolitan areas. Direct sales personnel
call on target accounts and support direct original equipment manufacturers
("OEMs"). Besides overseeing the activities of direct sales personnel, the
Company's sales managers also oversee the activities of 20 manufacturers'
representative firms that operate from approximately 50 office locations. The
manufacturers' representatives concentrate on selling to major industrial
companies in North America. To service smaller, geographically dispersed
accounts in North America, the Company has distributor agreements with Arrow,
Pioneer, and Unique. Arrow, Pioneer, and Unique have approximately 51, 39, and
26 branch offices in North America, respectively.
Actel generates a significant portion of its revenues from
international sales. Sales to customers outside the United States for 1999,
1998, and 1997 accounted for 29%, 33%, and 31% of net revenues, respectively. Of
these export sales, the largest portion was derived from European customers. The
Company's European sales organization consists of 17 employees operating from
five sales offices and 12 distributors and sales representatives having 31
offices (including Arrow and Unique, which have eight and seven offices in
Europe, respectively). Actel's Pan-Asia sales organization consists of 10
employees operating from four sales offices and seven distributors having 15
offices (including Unique, which has eight offices in Pan-Asia). Three
additional distributors serve the remaining international markets in which Actel
offers its products.
The Company's sales cycle for the initial sale of a design system is
generally lengthy and often requires the ongoing participation of sales,
engineering, and managerial personnel. After a sales representative or
distributor evaluates a customer's logic design requirements and determines if
there is an application suitable for the Company's FPGAs, the next step
typically is a visit to the qualified customer by a regional sales manager or
the FAE from Actel or its distributor. The sales manager or FAE may then
determine that additional analysis is required by engineers based at the
Company's headquarters.
In 1999, a majority of the Company's sales were made through
distributors. As is common in the semiconductor industry, the Company generally
grants price protection to distributors. Under this policy, distributors are
granted a credit upon a price reduction for the difference between their
original purchase price for products in inventory and the reduced price. From
time to time, distributors are also granted credit on an individual basis for
Company-approved price reductions on specific transactions to meet competition.
The Company also generally grants distributors limited rights to return
products. To date, product returns under this policy have not been material. The
Company maintains reserves against which these credits and returns are charged.
Because of its price protection and return policies, the Company does not
recognize revenue on products sold to distributors until the products are resold
to end customers.
Backlog
At December 31, 1999, the Company's backlog was approximately $49.6
million, compared with approximately $25.5 million at December 31, 1998. The
Company includes in its backlog all OEM orders scheduled for delivery over the
next nine months and all distributor orders scheduled for delivery over the next
six months. The Company sells standard products that may be shipped from
inventory within a short time after receipt of an order. The Company's business,
and to a large extent that of the entire semiconductor industry, is
characterized by short-term order and shipment schedules, rather than volume
purchase contracts. In accordance with industry practice, the Company's backlog
may be cancelled or rescheduled by the customer on short notice without
significant penalty. As a result, the Company's backlog may not be indicative of
actual sales and therefore should not be used as a measure of future revenue.
Customer Service and Support
The Company believes that superior customer service and technical
support are essential for success in the FPGA market. The Company facilitates
service and support through service team meetings that address particular
aspects of the overall service strategy and support. The most significant areas
of customer service and technical support are regularly measured. The Company's
customer service organization emphasizes prompt, accurate responses to questions
about product delivery and order status.
The Company's FAEs provide technical support to customers in Canada,
Europe, Japan, Korea, Taiwan, and the United States. This network of experts is
augmented by FAEs working for the Company's sales representatives and
distributors throughout the world. Customers in any stage of design can also
obtain assistance from the Company's technical support hotline or web-based
technical support database called "Guru." In addition, the Company offers
technical seminars on its products and comprehensive training classes on its
software.
The Company generally warrants its products against defects in material
and workmanship for one year. The Company also warrants that its automatic place
and route software will achieve gate utilization at not less than the rates
advertised. To date, the Company has not experienced significant warranty
returns.
Manufacturing and Assembly
The Company's strategy is to utilize third-party manufacturers for its
wafer requirements, which permits Actel to allocate its resources to product
design, development, and marketing. Wafers used in the Company's FPGAs are
manufactured by Chartered Semiconductor in Singapore; by Lockheed Martin SEC in
Manassas, Virginia; by MEC in Japan; by UMC in Taiwan; and by Winbond in Taiwan.
The Company's FPGAs in production are manufactured by Chartered Semiconductor
using 0.6, 0.45, and 0.35 micron design rules; by Lockheed Martin SEC using 0.8
micron design rules; by MEC using 1.0, 0.8, and 0.25 micron design rules; by UMC
using 0.22 micron design rules; and by Winbond using 0.8 and 0.6 micron design
rules. In addition, the ProASIC flash devices are being manufactured by Infineon
in Germany using 0.25 micron design rules.
In March 1999, the Company announced that it had, in partnership with
MEC, successfully developed a 0.25-micron antifuse process in what was then
record time. In March 2000, the Company announced that it had successfully
developed a 0.22-micron antifuse process technology at UMC, again in record
time.
Wafers purchased by the Company from its suppliers are assembled,
tested, marked, and inspected by Actel and/or a subcontractor of the Company
before shipment to customers. The Company assembles most of its plastic
commercial products in Hong Kong, Korea, and Singapore. Ceramic package
assembly, which is generally required for military applications, is performed at
one or more subcontractor manufacturing facilities, some of which are in the
United States.
The Company is ISO 9002 certified for the manufacturing and testing of
its FPGAs. The certification was granted by DSCC. The ISO standards, developed
by the International Organization for Standardization, provide an international
benchmark for quality systems. Specifically, ISO 9002 requires compliance in the
following areas: management responsibility, customer service, supplier
management, internal quality audits, training process control, and inspection.
As the Company continues to establish itself as a leading supplier of
high-quality FPGAs, ISO certification provides a globally recognized benchmark
that Actel's devices have been certified for integrity in the manufacturing and
test process.
Strategic Relationships
In addition to strategic relationships that the Company enjoys with its
customers, foundries, assembly houses, distributors, and sales representatives,
Actel also has the following strategic partners:
BP Microsystems
The Company has worked with BP Microsystems of Houston, Texas, to
jointly develop Silicon Sculptor based on BP's world class technology. BP
Microsystems offers a wide variety of programmers, including EPROM programmers,
universal programmers, concurrent programming systems, and fine pitch automated
programming systems. The modules of the Silicon Sculptor are designed to be
fully upward compatible with all BP Microsystems antifuse FPGA programmers,
which permits design engineers to move from prototype programming to high volume
production programming.
GateField
In 1998, the Company entered into a Product Marketing Agreement with
GateField and purchased GateField Series C Convertible Preferred Stock.
Concurrently, the Company acquired the Design Services Business Unit of
GateField in a transaction accounted for as a purchase. Consideration paid in
these transactions totaled $10.4 million, consisting entirely of cash.
Marketing Rights
During the term of the Product Marketing Agreement, the
Company has exclusive, worldwide distribution rights to GateField's
standard ProASIC FPGA products utilizing less than .35 micron
geometries, including FPGA products that are integrated with SRAM or
flash memory. For these rights, the Company paid GateField an initial
fee and agreed to pay a fee of $1 million upon qualification of the
initial .25 micron product. In addition, the Company and GateField will
split equally the gross margins from ProASIC product sales.
License Rights
Pursuant to the terms of a License Agreement, GateField
granted to the Company a fully paid, nonexclusive, nontransferable
license to sell and, upon certain events, to make, have made, import,
and use GateField's standard ProASIC FPGA products utilizing less than
.35 micron geometries.
Preferred Stock
Pursuant to terms of a Series C Preferred Stock Purchase
Agreement, the Company purchased 300,000 shares of GateField's Series C
Convertible Preferred Stock, par value $0.10. The Series C Shares are
convertible into 200,000 shares of GateField common stock and are
entitled to certain liquidation and redemption rights. In the event
that all of GateField's outstanding shares of Series B Preferred Stock
are redeemed, the Company shall be entitled to redeem its Series C
Shares, subject to applicable law. The Company is entitled to certain
registration rights and has a right of first refusal to purchase its
pro rata share of certain new securities GateField may issue.
In May 1999, the Company paid $8.0 million to GateField in exchange for
a convertible promissory note bearing interest at 5.22% per annum with a
five-year term. Interest is payable quarterly and the note is secured by a lien
against all the assets of GateField. The note is convertible at the Company's
election into 420,000 shares of GateField Series C-1 Convertible Preferred
Stock, which are convertible into 1,230,769 shares of GateField common stock,
equating to a price of $6.50 per share of GateField common stock. In addition,
the Company increased its ownership of GateField common stock during 1999 from
16,500 shares to 190,529 shares. GateField common stock, which is listed on the
National Association of Security Dealers Over-The-Counter Bulletin Board, closed
at $3.875 on December 31, 1999. The Company assesses the recoverability of its
investments in GateField, as well as the amounts due from GateField, on a
regular basis. No impairment has been indicated to date.
In light of the Company's common and preferred equity interest in
GateField, $8.0 million convertible promissory note from GateField, and
marketing and licensing agreements with GateField, Actel began accounting for
its interests in GateField under the equity method of accounting during 1999.
The impact of this implementation was a $1.1 million charge to the Company's net
income for 1999 (consisting of $0.9 million in amortization of goodwill and $0.2
million of GateField's net loss).
SEi
In October 1999, the Company announced that it had expanded its
strategic partnership with Space Electronics, Inc. ("SEi") of San Diego, Calif.
by making SEi the sole authorized selling agent for the RAD-PAK line of
radiation-tolerant FPGAs. RAD-PAK FPGAs provide the survivability and
cost-effectiveness sought by growing markets using radiation-tolerant FPGAs. SEi
sells 1280A and 14100A RAD-PAK devices of up to 10,000 gates screened to either
Class B or Class S levels. In addition, SEi brands the RAD-PAK devices by
marking the products with its logo and has full responsibility for RAD-PAK
customer design support. SEi also assumed responsibility for maintaining
inventory, order processing, and order fulfillment.
Synopsys
In November 1999, the Company announced an extended partnership
agreement with Synopsys. The purpose of this agreement is to forge a closer
relationship that will produce increasingly better design flows and quality of
results for customers using FPGA Compiler II or FPGA Express to target the
Company's programmable logic devices. The first outcome of this new agreement
was enhanced support of ProASIC devices (see "BUSINESS -- Products -- ProASIC --
ASICmaster").
Synplicity and VeriBest (Mentor Graphics)
In 1998, the Company announced that it had, together with Synplicity
and VeriBest, begun developing an integrated tool environment for Actel FPGA
designs. The Actel DeskTOP suite of tools was released in the first quarter of
1999 (see "BUSINESS -- Products -- Software -- DeskTOP").
Founded in 1994, Synplicity delivers the benefits of logic synthesis
and embedded synthesis technologies to programmable logic designers by
developing fast, easy-to-use, affordable tools with excellent quality of
results. Synplicity products support industry-standard design languages (VHDL
and Verilog), run on popular platforms (Windows '95, Windows NT and UNIX), and
support leading PLD manufacturers.
VeriBest is a broad-line supplier of enterprise EDA tools that enable
customers to solve their critical business issues. VeriBest integrates with many
industry-leading tool providers, including Actel, Altera, Bentley Systems,
Dynamic Soft Analysis, Lucent Technologies, Minc, Synopsys, Synplicity, and
Xilinx. In November 1999, Mentor Graphics Corporation ("Mentor Graphics")
purchased all or substantially all of the assets of VeriBest. Mentor Graphics
has agreed to continue supporting the DeskTOP tool set for one year.
Research and Development
In 1999, 1998, and 1997, the Company spent $32.3 million, $31.2
million, and $26.5 million, respectively, on research and development, which
represented approximately 19%, 20%, and 17% of net revenues, respectively, for
such periods. The Company's research and development expenditures are divided
among circuit design, software development, and process technology activities,
all of which are involved in the development of new products based on existing
or emerging technologies. In the areas of circuit design and process technology,
the Company's research and development activities also involve continuing
efforts to cut the cost and improve the performance of current products,
including reductions in the design rules under which such products are
manufactured. The Company's software research and development activities include
enhancing the functionality, usability, and availability of high-level CAE tools
and IP cores in a complete and automated desktop design environment on popular
personal computer and workstation platforms.
The research and development projects that the Company publicly
discussed in 1999 included the following:
ES Architecture and Reprogrammable Embedded IP
In 1996, the Company announced its intention to enter the
reprogrammable FPGA market by offering an SRAM-based product family utilizing
the new ES programmable architecture. The ES architecture combines a
fine-grained cell structure with a routing-centric architecture. The expected
result is logic cells that are more readily synthesized and more efficient than
current programmable architectures. The key to the architectural efficiencies is
a technology in which separate transistors are used to implement logic and to
drive the interconnects. By separating these functions, Actel believes that more
efficient die utilization is achievable, resulting in lower-cost designs. In
addition, the interconnect drivers are tailored to routing length, which should
provide high performance even for cross-chip routing. The ES architecture also
makes greater use of hierarchy than current programmable architectures. A
constant, maximum routing delay is associated with each level of hierarchy,
which should provide the device with fanout independent delays. This means that,
regardless of the number of logic elements being driven, the delay should always
be constant, making the chip's performance predictable. Many aspects of the ES
architecture are switch-technology independent, making possible future variants
of the ES architecture employing antifuse, flash, or other basic programming
elements.
In 1999, after experiencing significant delays in matching the
capabilities of its software and the resources of its silicon, the Company
refocused its reprogrammable SRAM strategy. The Company believes that the size
and power advantages of the ES architecture can now be used to greatest efficacy
in the emerging market for embedded programmable products. The Company has
formed a strategic product marketing team to position Actel's SRAM technology at
the forefront of this emerging market. In January 2000, the Company announced
the appointment of Dennis Kish to the newly-created position of Vice President
of Strategic Marketing. In this role, Mr. Kish is responsible for leading the
Company's embedded SRAM effort.
Competition
The FPGA market is highly competitive, and the Company expects that
competition will continue to increase as the market grows. The Company's
competitors include suppliers of TTLs and ASICs, including conventional gate
arrays, standard cells, CPLDs, and FPGAs. Of these, the Company competes
principally with suppliers of conventional gate arrays, standard cells, CPLDs,
and FPGAs.
The primary advantages of conventional gate arrays and standard cells
are high capacity, high density, high speed, and low cost in production volumes.
The Company competes with conventional gate array and standard cell suppliers by
offering lower design costs, shorter design cycles, and reduced inventory risks.
However, some customers elect to design and prototype with the Company's
products and then convert to conventional gate arrays or standard cells to
achieve lower costs for volume production. For this reason, the Company also
faces competition from companies that specialize in converting CPLDs and FPGAs,
including Actel products, into conventional gate arrays or standard cells.
The Company also competes with suppliers of CPLDs. Suppliers of these
devices include Altera and Lattice-Vantis Semiconductor Corporation ("Lattice").
The circuit architecture of CPLDs may give them a performance advantage in
certain lower capacity applications, although the Company believes that its SX
and SX-A families compete favorably with CPLDs. However, Altera and Lattice have
larger installed bases of development systems than the Company. In addition,
many newer CPLDs are reprogrammable, which permits customers to reuse a circuit
multiple times during the design process (unlike antifuse-based FPGAs, which
permanently retain the programmed configuration). No assurance can be given that
the Company will be able to overcome these competitive disadvantages.
The Company competes most directly with established FPGA suppliers,
such as Xilinx and Lucent Technologies (which is a licensed second source of
some Xilinx products). While the Company believes its products and technology
are superior to those of Xilinx in many applications requiring greater speed,
lower cost, or nonvolatility, Xilinx came to market with its FPGAs approximately
three years before Actel, has a larger installed base of development systems,
and its SRAM-based products are reprogrammable. No assurance can be given that
the Company will be able to overcome these competitive disadvantages.
Several companies have either already marketed antifuse-based FPGAs,
including QuickLogic Corporation ("QuickLogic"), or announced their intention to
do so. In 1995, the Company acquired the antifuse FPGA business of TI, which was
the only second-source supplier of Actel products. Xilinx, which is a licensee
of certain of the Company's patents, introduced antifuse-based FPGAs in 1995 and
abandoned its antifuse FPGA business in 1996. Cypress Semiconductor Corporation,
which was a licensed second source of QuickLogic, sold its antifuse FPGA
business to QuickLogic in 1997. QuickLogic is also a licensee of certain of the
Company's patents. See "BUSINESS -- Patents and Licenses."
The Company believes that important competitive factors in its market
are price, performance, density (concentration of usable gates), capacity (total
number of usable gates), ease of use and functionality of development system
software, installed base of development systems, adaptability of products to
specific applications, length of development cycle (including reductions to
finer micron design rules), number of I/Os, reliability, adequate wafer
fabrication capacity and sources of raw materials, protection of products by
effective utilization of intellectual property laws, and technical service and
support. Failure of the Company to compete successfully in any of these or other
areas could have a materially adverse effect on its business, financial
condition, or results of operations.
Patents and Licenses
As of March 31, 2000, the Company had 174 United States patents and
applications pending for an additional 31 United States patents. Actel also had
41 foreign patents and applications pending for 105 patents outside the United
States. The Company's patents cover, among other things, Actel's basic circuit
architecture, antifuse structure, and programming method. The Company expects to
continue filing patent applications as appropriate to protect its proprietary
technologies. The Company believes that patents, along with such factors as
innovation, technological expertise, and experienced personnel, will become
increasingly important.
The Company attempts to protect its circuit designs, software, trade
secrets, and other proprietary information through patent and copyright
protection, agreements with customers and suppliers, proprietary information
agreements with employees, and other security measures. No assurance can be
given that the steps taken by the Company will be adequate to protect its
proprietary rights.
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.
In connection with the settlement of patent litigation in 1993, the
Company and Xilinx entered into a Patent Cross License Agreement, under which
Xilinx was granted a license under certain of Actel's patents that permits
Xilinx to make and sell antifuse-based PLDs, and the Company was granted a
license under certain of Xilinx's patents to make and sell SRAM-based PLDs. In
1996, Xilinx announced that it had discontinued its antifuse-based FPGA product
line. In 1999, the Company refocused its reprogrammable SRAM strategy on the
emerging market for embedded programmable products. See "BUSINESS -- Research
and Development -- ES Architecture and Reprogrammable Embedded IP."
In 1995, the Company and BTR, Inc. ("BTR") entered into a License
Agreement pursuant to which BTR licensed its proprietary technology to the
Company for development and use in FPGAs and certain multichip modules. As
partial consideration for the grant of the license, the Company pays to BTR
non-refundable advance royalties. The Company has also employed the principals
of BTR to assist Actel in its development and implementation of the licensed
technology.
In connection with the settlement of patent litigation in 1998, the
Company and QuickLogic entered into a Patent Cross License Agreement that
protects all existing FPGA products of both companies for the lives of those
products. In 1998, the Company also entered into a patent litigation settlement
agreement with the Lemelson Medical, Education & Research Foundation.
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. During 1999, the Company continued 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 settlement costs of claims for
alleged infringement through end of 1999. While the Company believes that
reasonable resolution will occur, no assurance can be given 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.
Employees
At the end of 1999, the Company had 449 full-time employees, including
136 in marketing, sales, and customer support; 144 in research and development;
122 in operations; 13 in design services; and 34 in administration and finance.
None of the Company's employees is represented by a labor union nor does Actel
have employment agreements with any of its employees. The Company has not
experienced any work stoppages, and believes that its employee relations are
satisfactory.
Risk Factors
Shareholders of Actel and prospective investors should carefully
consider, along with the other information in this Annual Report on Form 10-K,
the following risk factors:
Acts of God
The performance of the Company and each of its suppliers, distributors,
subcontractors, and agents is subject to events or conditions beyond such
party's control, including labor disputes, acts of public enemies or terrorists,
war or other military conflicts, blockades, insurrections, riots, epidemics,
quarantine restrictions, landslides, lightning, earthquake, fires, storms,
floods, washouts, arrests, civil disturbances, restraints by or actions of
governmental bodies acting in a sovereign capacity (including export or security
restrictions on information, material, personnel, equipment, or otherwise),
breakdowns of plant or machinery, inability to obtain transport or supplies, and
the like. The occurrence of any of these circumstances could disrupt the
Company's operations and may have a materially adverse effect on Actel's
business, financial condition, or results of operations.
"Blank Check" Preferred Stock; Change in Control Arrangements
The Company's Articles of Incorporation authorize the issuance of up to
5,000,000 shares of "blank check" Preferred Stock (of which 4,000,000 shares
remain available for issuance) with such designations, rights, and preferences
as may be determined from time to time by the Board of Directors. Accordingly,
the Board is empowered, without approval by holders of the Company's Common
Stock, to issue Preferred Stock with dividend, liquidation, redemption,
conversion, voting, or other rights that could adversely affect the voting power
or other rights of the holders of the Common Stock. Issuance of Preferred Stock
could be used as a method of discouraging, delaying, or preventing a change in
control of the Company. In addition, such issuance could adversely affect the
market price of the Common Stock. Although the Company does not currently intend
to issue any additional shares of its Preferred Stock, there can be no assurance
that it will not do so in the future.
The Company has adopted an Employee Retention Plan that provides for
payment of a benefit to Actel's employees who hold unvested stock options in the
event of a change of control of the Company. Payment is contingent upon the
employee remaining with the Company for six months after the change of control.
The Company has also entered into Management Continuity Agreements with each of
its executive officers, which provide for the acceleration of stock options
unvested at the time of a change of control in the event the executive officer's
employment is actually or constructively terminated other than for cause
following the change of control.
Competition
The semiconductor industry is intensely competitive and is
characterized by rapid rates of technological change, product obsolescence, and
price erosion. The Company's existing competitors include suppliers of
conventional gate arrays, standard cells, CPLDs, and FPGAs. The Company's
principal competitors are Xilinx, a supplier of SRAM-based FPGAs; Altera, a
supplier of CPLDs and SRAM-based FPGAs; QuickLogic, a supplier of antifuse-based
FPGAs; and Lattice, a supplier of CPLDs. The Company also faces competition from
companies that specialize in converting FPGAs, including Actel's products, into
conventional gate arrays or standard cells. See "BUSINESS -- Competition."
In addition, all existing FPGAs not based on antifuse technology and
certain CPLDs are reprogrammable, a feature that makes them more attractive to
designers. The Company also believes that, if there were a downturn in the
market for CPLDs and FPGAs, companies with broader product lines and
longer-standing customer relationships may be in a stronger competitive position
than Actel. Many of the Company's current competitors offer broader product
lines and have significantly greater financial, technical, manufacturing, and
marketing resources than Actel.
Significant additional competition is possible from major domestic and
international semiconductor suppliers. All such companies are larger, offer
broader product lines, and have substantially greater financial and other
resources than the Company, including the capability to manufacture their own
wafers. Additional competition could adversely affect the Company's business,
financial condition, or results of operations.
The Company may also face competition from suppliers of logic products
based on new or emerging technologies. The Company seeks to monitor developments
in existing and emerging technologies. No assurance can be given that the
Company will be able to compete successfully with suppliers offering products
based on new or emerging technologies. In any event, given the intensity of the
competition and the research and development being done, no assurance can be
given that the Company's technologies will remain competitive.
Dependence on Customized Manufacturing Processes
The Company's antifuse-based FPGAs and, to a lesser extent, flash-based
ProASIC FPGAs are manufactured using customized steps that are added to
otherwise standard manufacturing processes of independent wafer suppliers. There
is considerably less operating history for the customized process steps than for
the foundries' standard manufacturing processes. The dependence of Actel on
customized processing steps means that, in contrast with competitors using
standard manufacturing processes, the Company has more difficulty establishing
relationships with independent wafer manufacturers; takes longer to qualify a
new wafer manufacturer; takes longer to achieve satisfactory, sustainable wafer
yields on new processes; may experience a higher incidence of production yield
problems; must pay more for wafers; and generally will not obtain early access
to the most advanced processes. Any of the above factors could be a material
disadvantage against competitors that use standard manufacturing processes. As a
result of these factors, the Company's products typically have been fabricated
using processes one or two generations behind the processes used by competing
products. As a consequence, the Company generally has not fully realized the
price, performance, and power benefits of its antifuse technology. The Company
is attempting to accelerate the rate at which its products are reduced to finer
geometries and is working with its wafer suppliers to obtain earlier access to
advanced processes, but no assurance can be given that such efforts will be
successful.
Dependence on Design Wins
In order for the Company to sell an FPGA to a customer, the customer
must incorporate the FPGA into the customer's product in the design phase. The
Company therefore devotes substantial resources, which it may not recover
through product sales, in support of potential customer design efforts
(including, among other things, providing development system software) and to
persuade potential customers to incorporate the Company's FPGAs into new or
updated products. These efforts usually precede by many months (and often a year
or more) the generation of volume FPGA sales, if any, by the Company. The value
of any design win, moreover, will depend in large part upon the ultimate success
of the customer's product. No assurance can be given that the Company will win
sufficient designs or that any design win will result in significant revenues.
Dependence on Independent Assembly Subcontractors
The Company relies primarily on foreign subcontractors for the assembly
and packaging of its products and, to a lesser extent, for the testing of its
finished products. The Company generally relies on one or two subcontractors to
provide particular services and has from time to time experienced difficulties
with the timeliness and quality of product deliveries. The Company has no
long-term contracts with its subcontractors and certain of those subcontractors
are currently operating at or near full capacity. There can be no assurance that
these subcontractors will continue to be able and willing to meet the Company's
requirements for such components or services. Any significant disruption in
supplies from, or degradation in the quality of components or services supplied
by, these subcontractors could delay shipments and result in the loss of
customers or revenues or otherwise have a materially adverse effect on the
Company's business, financial condition, or results of operations.
Dependence on Independent Software and Hardware Developers
Actel is dependent upon independent software and hardware developers
for the development, maintenance, and support of certain elements of its
Designer Series Development Systems and Actel DeskTOP software, Silicon Explorer
debugging and verification tool, Silicon Sculptor device programmers, evaluation
board, and sockets. The Company's reliance on independent software and hardware
developers involves certain risks, including lack of control over development
and delivery schedules and the availability of customer support. In 1999,
Boulder Creek Corporation, with whom the Company had worked exclusively to
jointly develop and manufacturer Silicon Explorer, was acquired by Altera, one
of Actel's principal competitors. Also in 1999, Mentor Graphics purchased all or
substantially all of the assets of VeriBest, which has software included in the
Actel DeskTOP integrated tool suite, and Mentor Graphics refused to assume or
agree in writing to be bound by the OEM Agreement between VeriBest and the
Company. No assurance can be given that the Company's independent developers
will be able to complete software and/or hardware under development, or provide
updates or customer support in a timely manner, which could delay future
software or FPGA releases and disrupt Actel's ability to provide customer
support services. Any significant delays in the availability of the Company's
software and/or hardware could be detrimental to the capability of Actel's new
families of products to win designs, delay shipments and result in the loss of
customers or revenues, or otherwise have a materially adverse effect on the
Company's business, financial condition, or results of operations.
Dependence on Independent Wafer Manufacturers
The Company does not manufacture any of the wafers used in the
production of its FPGAs. Such wafers are manufactured by Chartered Semiconductor
in Singapore, Lockheed Martin SEC in the United States, MEC in Japan, UMC in
Taiwan, and Winbond in Taiwan. The Company's reliance on independent wafer
manufacturers to fabricate its wafers involves significant risks, including the
risk of events limiting production and reducing yields, such as technical
difficulties or damage to production facilities, lack of control over capacity
allocation and delivery schedules, and lack of adequate capacity.
The Company has from time to time experienced delays in obtaining
wafers from its foundries, and no assurance can be given that Actel will not
experience similar or more severe delays in the future. In addition, although
the Company has supply agreements with several of its wafer manufacturers, a
shortage of raw materials or production capacity could lead any of the Company's
wafer suppliers to allocate available capacity to customers other than Actel, or
to internal uses, which could interrupt the Company's capability to meet its
product delivery obligations. Any inability or unwillingness of the Company's
wafer suppliers to provide adequate quantities of finished wafers to satisfy
Actel's needs in a timely manner would delay production and product shipments
and could have a materially adverse effect on the Company's business, financial
condition, or results of operations.
If the Company's current independent wafer manufacturers were unable or
unwilling to manufacture Actel's products as required, the Company would have to
identify and qualify additional foundries. The qualification process typically
takes one year or longer. No assurance can be given that any additional wafer
foundries would become available or be able to satisfy the Company's
requirements on a timely basis or that qualification would be successful. In
addition, the semiconductor industry has from time to time experienced shortages
of manufacturing capacity. To secure an adequate supply of wafers, the Company
has considered, and continues to consider, various possible transactions,
including the use of substantial nonrefundable deposits to secure commitments
from foundries for specified levels of manufacturing capacity over extended
periods, equity investments in exchange for guaranteed production, and the
formation of joint ventures to own foundries. No assurance can be given as to
the effect of any such transaction on the Company's business, financial
condition, or results of operations.
Dependence on International Operations
The Company purchases almost all of its wafers from foreign foundries
and has almost all of its commercial products assembled, packaged, and tested by
subcontractors located outside the United States. These activities are subject
to the uncertainties associated with international business operations,
including trade barriers and other restrictions, changes in trade policies,
foreign governmental regulations, currency exchange fluctuations, reduced
protection for intellectual property, war and other military activities,
terrorism, changes in political or economic conditions, and other disruptions or
delays in production or shipments, any of which could have a materially adverse
effect on the Company's business, financial condition, or results of operations.
In order to expand international sales and service, the Company will
need to maintain and expand existing foreign operations or establish new foreign
operations. This entails hiring additional personnel and maintaining or
expanding existing relationships with international distributors and sales
representatives. This will require significant management attention and
financial resources and could adversely affect the Company's financial condition
and operating results. No assurance can be given that the Company will be
successful in its maintenance or expansion of existing foreign operations, in
its establishment of new foreign operations, or in its efforts to maintain or
expand its relationships with international distributors or sales
representatives.
Dependence on Key Personnel
The success of the Company is dependent in large part on the continued
service of its key management, engineering, marketing, sales, and support
employees. Competition for qualified personnel is intense in the semiconductor
industry, and the loss of the Company's key employees, or the inability of Actel
to attract other qualified personnel, could have a materially adverse effect on
the Company. The Company does not have employment agreements with any of its key
employees.
Dependence on Military and Aerospace Customers
Although the Company is unable to determine with certainty the ultimate
uses of its products, Actel estimates that sales of its products to customers in
the military and aerospace industries, which sometimes carry higher profit
margins than sales of products to other customers, accounted for approximately
21% of net revenues for 1999. In general, the Company believes that the military
and aerospace industries have accounted for a significantly greater percentage
of the Company's net revenues since the introduction of RH1280 in 1996. No
assurance can be given that future sales to customers in the military and
aerospace industries will continue at current volume or margin levels. In 1994,
Secretary of Defense William Perry directed the Department of Defense to adopt a
new way of doing business as it relates to acquisition by avoiding
government-unique requirements and relying more on the commercial marketplace.
Under the Perry initiative, the Department of Defense must increase access to
commercial state-of-the-art technology and facilitate the adoption by its
suppliers of business processes characteristic of world class suppliers.
Integration of commercial and military development and manufacturing facilitates
the development of dual-use processes and products and contributes to an
expanded industrial base that is capable of meeting defense needs at lower
costs. To that end, many of the cost-driving specifications that have been part
of military procurements for many years were cancelled in the interest of buying
commercial products. The Company anticipates that this trend toward the use of
COTS products will continue, and that it may erode the revenues and/or margins
that Actel derives from sales to customers in the military and aerospace
industries, which could have a materially adverse effect on the Company's
business, financial condition, or results of operations.
Orders from the military and aerospace customers tend to be large and
irregular, which creates operational challenges and contributes to fluctuations
in the Company's net revenues and gross margins. These sales are also subject to
more extensive governmental regulations, including greater import and export
restrictions. In addition, products for military and aerospace applications
require processing and testing that is more lengthy and stringent than for
commercial applications, increasing the risk of failure. It is often not
possible to determine before the end of processing and testing whether products
intended for military or aerospace applications will fail and, if they do fail,
a significant period of time is often required to process and test replacements.
This makes it difficult to accurately estimate quarterly revenues and could have
a materially adverse effect on the Company's business, financial condition, or
results of operations.
The Strom Thurmond National Defense Authorization Act for 1999
required, among other things, that 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 has caused 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 its business, although significant delays might cause some
customers to seek an alternative solution.
Dividend Policy
The Company has never declared or paid any cash dividends on its
capital stock. The Company intends to retain any earnings for use in its
business and does not anticipate paying any cash dividends in the future.
Fluctuations in Operating Results
The Company's quarterly and annual operating results are subject to
fluctuations resulting from general economic conditions and a variety of risks
specific to Actel or characteristic of the semiconductor industry, including
booking and shipment uncertainties, supply problems, and price erosion. Any of
these factors can have a materially adverse effect on the Company's business,
financial condition, or results of operations, but they also make it difficult
to accurately estimate quarterly revenues and other operating results.
Booking and Shipment Uncertainties
The Company typically generates a large percentage of its
quarterly revenues from orders received during the quarter and shipped
in the final weeks of the quarter, making it difficult to accurately
estimate quarterly revenues. The Company's backlog (which may be
cancelled or deferred by customers on short notice without significant
penalty) at the beginning of a quarter accounts for only a fraction of
Actel's revenues during the quarter. This means that the Company
generates the rest of its quarterly revenues from orders received
during the quarter and "turned" for shipment within the quarter, and
that any shortfall in "turns" orders will have an immediate and adverse
impact on quarterly revenues. There are many factors that can cause a
shortfall in "turns" orders, including but not limited to a decline in
general economic conditions or the businesses of end users, excess
inventory in the channel, conversion to conventional gate arrays, or
the loss of business to other competitors for price or other reasons.
Historically, the Company has shipped a disproportionately
large percentage of its quarterly revenues in the final weeks of the
quarter. Any failure by the Company to effect scheduled shipments by
the end of the quarter can have a materially adverse effect on revenues
for such quarter. Since the Company does not recognize revenue on the
sale of a product to a distributor until the distributor resells the
product, Actel's quarterly revenues are also dependent on, and subject
to fluctuations in, shipments by the Company's distributors. When there
is a shortfall in revenues, operating results are likely to be
adversely affected because most of the Company's expenses do not vary
with revenues.
Supply Problems
In a typical semiconductor manufacturing process, silicon
wafers produced by a foundry are sorted and cut into individual die,
which are then assembled into individual packages and tested for
performance. The manufacture, assembly, and testing of semiconductor
products is highly complex and subject to a wide variety of risks,
including defects in masks, impurities in the materials used,
contaminants in the environment, and performance failures by personnel
and equipment. Semiconductor products intended for military and
aerospace applications are particularly susceptible to these risks.
As is common in the semiconductor industry, the Company's
independent wafer suppliers from time to time experience lower than
anticipated yields of usable die. For example, the Company experienced
a yield problem at one of its foundries in the fourth quarter of 1993
that was severe enough to have a materially adverse effect on Actel's
operating results. To the extent yields of usable die decrease, the
average cost to the Company of each usable die increases, which reduces
gross margin. Wafer yields can decline without warning and may take
substantial time to analyze and correct, particularly for a company
such as Actel that does not operate its own manufacturing facility, but
instead utilizes independent facilities, almost all of which are
offshore. Yield problems may also increase the time to market for the
Company's products and create inventory shortages and dissatisfied
customers. No assurance can be given that the Company will not
experience wafer supply problems in the future.
In addition, the Company typically experiences difficulties
and delays in achieving satisfactory, sustainable yields on new
processes or at new foundries, particularly when new technologies are
involved. For example, the Company and GateField have struggled for
more than a year to achieve acceptable yields on the flash process for
ProASIC devices at Infineon. Although the Company eventually has been
able to overcome these difficulties in the past, no assurance can be
given that it will be able to do so with respect to the flash process
at Infineon or any other new process and/or new foundry.
Price Erosion
The semiconductor industry is characterized by intense
competition. Historically, the average selling price of products in the
semiconductor industry generally, and for the Company's products in
particular, have declined significantly over the life of each product.
While the Company expects to reduce the average selling prices of its
products over time as it achieves manufacturing cost reductions, Actel
is sometimes required by competitive pressures to reduce the prices of
its products more quickly than such cost reductions can be achieved. In
addition, the Company sometimes approves price reductions on specific
sales to meet competition. Declines in the average selling prices of
the Company's products will reduce net revenues unless offset by
greater unit sales or a shift in the mix of products sold toward
higher-priced products. In addition, declines in the average selling
prices of the Company's products will reduce gross margins unless
offset by reductions in costs or by a shift in the mix of products sold
toward higher-margin products.
Forward-Looking Statements
All forward-looking statements contained in this Annual Report on Form
10-K, 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 and trends relating to average selling prices; gross margins;
litigation; markets; research and development expenditures; revenues; selling,
general, and administrative expenditures; wafer yields; 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. The
Company undertakes no obligation to update any forward-looking statement
contained or incorporated by reference in this Annual Report on Form 10-K.
Future Capital Needs
The Company must continue to make significant investments in research
and development as well as capital equipment and expansion of facilities. The
Company's future capital requirements will depend on many factors, including
(among others) product development, investments in working capital, and
acquisitions of complementary businesses, products, or technologies. To the
extent that existing resources and future earnings are insufficient to fund the
Company's operations, Actel may need to raise additional funds through public or
private debt or equity financings. If additional funds are raised through the
issuance of equity securities, the percentage ownership of current shareholders
will be reduced and such equity securities may have rights, preferences, or
privileges senior to those of the holders of the Company's Common Stock. No
assurance can be given that additional financing will be available or that, if
available, it can be obtained on terms favorable to the Company and its
shareholders. If adequate funds are not available, the Company may be required
to delay, limit, or eliminate some or all of its proposed operations.
Gross Margin
The Company's gross margin is the difference between the revenues it
receives from the sale of its products and the cost of those products. The price
the Company can charge for a product is constrained principally by its
competitors. While competition has always been intense, the Company believes
price competition is becoming more acute. This may be due in part to the
transition toward high-level design methodologies, which permit designers to
wait until later in the design process before selecting a programmable or masked
silicon device and make it easier to convert between PLDs and between
programmable and masked device. These competitive pressures may cause the
Company to reduce the prices of its products more quickly than it can achieve
cost reductions, which would reduce the Company's gross margin and may have a
materially adverse effect on its operating results.
One of the most important variables affecting the cost of the Company's
products is manufacturing yields. With its customized antifuse and flash
manufacturing process requirements, the Company almost invariably experiences
difficulties and delays in achieving satisfactory, sustainable yields on new
processes or at new foundries. The Company introduced the ProASIC family of
devices in 1999. Until satisfactory yields are achieved on this new product
family, they generally will be sold at lower gross margins than the Company's
mature product families. Depending upon the rate at which sales of these new
products ramp and the extent to which they displace mature products, the lower
gross margins could have a materially adverse effect on the Company's operating
results.
Management of Growth
The Company has in the past experienced and expects to again experience
growth in the number of its employees and the scope of its operations, resulting
in increased responsibilities for management personnel. To manage future growth
effectively, the Company will need to continue to hire, train, motivate, and
manage a growing number of employees. The future success of the Company will
also depend on its ability to attract and retain qualified technical, marketing,
and management personnel. In particular, the current availability of qualified
silicon design, software design, process, and test engineers is limited, and
competition among companies for skilled and experienced engineering personnel is
very strong. During strong business cycles, the Company expects to experience
difficulty in filling its needs for qualified engineers and other personnel. No
assurance can be given that the Company will be able to achieve or manage
effectively any such growth, and failure to do so could delay product
development and introductions or otherwise have a materially adverse effect on
Actel's business, financial condition, or results of operations.
Manufacturing Yields
The Company depends upon its independent wafer suppliers to produce
wafers with acceptable yields and to deliver them to the Company in a timely
manner. Currently, substantially all of the Company's revenues are derived from
products based on the Company's proprietary antifuse process technologies.
Successful implementation of antifuse process technology requires a high degree
of coordination between the Company and its foundry. Therefore, significant
lead-time is required to reach volume production on new processes and at a new
wafer supply locations. Accordingly, no assurance can be given that volume
production on the Company's new SX-A or next-generation families will be
achieved in the near term or at all.
The Company introduced its new ProASIC family of devices in 1999. While
ProASIC products are based on a flash process technology that is less customized
than an antifuse process, it is also leading-edge technology and less familiar
to the Company. In addition, it is generally more difficult to bring up an
advanced flash process than it is to bring up an advanced antifuse process. The
Company has always experienced difficulty achieving satisfactory, sustainable
yields on new process technologies at new foundries, and the flash process for
ProASIC devices at Infineon has been no different. Although the Company
eventually has been able to overcome these difficulties in the past, no
assurance can be given that it will be able to do so with respect to the ProASIC
products. In any event, until satisfactory yields are achieved on ProASIC
devices, they generally will be sold at lower gross margins than the Company's
mature product families, which could have a materially adverse effect on
operating results.
The fabrication of high-performance antifuse wafers or state-of-the-art
flash wafers is a complex process that requires a high degree of technical
skill, state-of-the-art equipment, and effective cooperation between the wafer
supplier and the circuit designer to produce acceptable yields. Minute
impurities, errors in any step of the fabrication process, defects in the masks
used to print circuits on a wafer, and other factors can cause a substantial
percentage of wafers to be rejected or numerous die on each wafer to be
non-functional. As is common in the semiconductor industry, the Company has
experienced from time to time in the past, and expects to experience in the
future, production yield problems and delivery delays. Any prolonged inability
to obtain adequate yields or deliveries could have a materially adverse effect
on the Company's business, financial condition, or results of operations.
One-Time Programmability
While the nonvolatility of the Company's antifuse FPGAs is necessary or
desirable in some applications, logic designers generally would prefer to
prototype with a reprogrammable logic device, all other things being equal. This
is because the designer can reuse the device if he or she makes an error. The
visibility associated with discarding a one-time programmable device often
causes designers to select a reprogrammable device even when the alternative
one-time programmable device offers significant advantages. This bias in favor
of designing with reprogrammable logic devices appears to increase as the size
of the design increases, and is a major reason the Company decided to offer
reprogrammable ProASIC devices.
Patent Infringement
On March 29, 2000, 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.
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. During 1999, the Company continued 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 settlement costs of claims for
alleged infringement through end of 1999. 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.
Although patent holders commonly offer licenses to alleged infringers,
no assurance can be given that licenses will be offered or that the terms of any
offered licenses will be acceptable to the Company. Failure to obtain a license
for technology allegedly used by the Company could result in litigation. All
litigation, whether or not determined in favor of the Company, can result in
significant expense to Actel and can divert the efforts of the Company's
technical and management personnel from productive tasks.
The Company has obtained patents covering aspects of its FPGA
architecture and logic modules and certain techniques for manufacturing its
antifuse, but no assurance can be given that Actel's patents will be determined
to be valid or that any assertions of infringement or invalidity by other
parties will not be successful. In addition, the Company has agreed to defend
and indemnify customers from and against claims that Actel products infringe the
patent or other intellectual rights of third parties. In the event of an adverse
ruling in any litigation involving intellectual property, the Company could
suffer significant (and possibly treble) monetary damages, which could have a
materially adverse effect on Actel's business, financial condition, or results
of operations. The Company may also be required to discontinue the use of
infringing processes; cease the manufacture, use, and sale of infringing
products; expend significant resources to develop non-infringing technology; or
obtain licenses under patents that it is infringing. In the event of a
successful claim against the Company, Actel's failure to develop or license a
substitute technology on commercially reasonable terms could have a materially
adverse effect on the Company's business, financial condition, and results of
operations.
Potential Acquisitions
In pursuing its business strategy, the Company may acquire products,
technologies, or businesses from third parties. Identifying and negotiating
these acquisitions may divert substantial management time away from the
Company's operations. An acquisition could absorb substantial cash resources,
require the Company to incur or assume debt obligations, and/or involve the
issuance of additional Actel equity securities. The issuance of additional
equity securities may dilute, and could represent an interest senior to the
rights of, the holders of the Company's Common Stock. An acquisition accounted
for as a purchase could involve significant one-time write-offs (possibility
resulting in a loss for the fiscal year in which it is taken) and would require
the amortization of any goodwill and indentifiable intangibles over a number of
years, which would adversely affect earnings in those years. Any acquisition
would require attention from the Company's management to integrate the acquired
entity into Actel's operations, may require the Company to develop expertise
outside its existing business, and could result in departures of management from
either Actel or the acquired entity. An acquired entity may have unknown
liabilities, and its business may not achieve the results anticipated at the
time it is acquired by the Company.
Protection of Intellectual Property
The Company has historically devoted significant resources to research
and development and believes that the intellectual property derived from such
research and development is a valuable asset that has been and will continue to
be important to the success of Actel's business. The Company relies primarily on
a combination of nondisclosure agreements, other contractual provisions, and
patent and copyright laws to protect its proprietary rights. No assurance can be
given that the steps taken by the Company will be adequate to protect its
proprietary rights. In addition, the laws of certain territories in which the
Company's products are or may be developed, manufactured, or sold, including
Asia and Europe, may not protect Actel products and intellectual property rights
to the same extent as the laws of the United States. Failure of the Company to
enforce its patents or copyrights or to protect its trade secrets could have a
materially adverse effect on Actel's business, financial condition, or results
of operations.
Reliance on Distributors
In 1999, a majority of the Company's sales were made through
distributors. Three of the Company's distributors, Arrow, Pioneer, and Unique,
accounted for approximately 16%, 12%, and 13%, respectively, of the Company's
net revenues in 1999. No assurance can be given that future sales by these or
other distributors will continue at current levels or that the Company will be
able to retain its current distributors on terms that are acceptable to Actel.
The Company's distributors generally offer products of several
different companies, including products that are competitive with Actel's
products. Accordingly, there is a risk that these distributors may give higher
priority to products of other suppliers, thus reducing their efforts to sell the
Company's products. In addition, the Company's agreements with its distributors
are generally terminable at the distributor's option. A reduction in sales
efforts by one or more of the Company's current distributors or a termination of
any distributor's relationship with Actel could have a materially adverse effect
on the Company's business, financial condition, or results of operations.
The Company defers recognition of revenue on shipments to distributors
until the product is resold by the distributor to the end user. The Company's
distributors have on occasion built inventories in anticipation of substantial
growth in sales and, when such growth did not occur as rapidly as anticipated,
substantially reduced the amount of product ordered from Actel in subsequent
quarters. Such a slowdown in orders would generally reduce the Company's profit
margins on future sales of higher cost products because Actel would be unable to
take advantage of any manufacturing cost reductions while the distributor
depleted its inventory at lower average selling prices. In addition, while the
Company believes that its major distributors are currently adequately
capitalized, no assurance can be given that one or more of Actel's distributors
will not experience financial difficulties. The failure of one or more of the
Company's distributors to pay for products ordered from Actel or to continue
operations because of financial difficulties or for other reasons could have a
materially adverse effect on the Company's business, financial condition, or
results of operations.
Reliance on International Sales
Sales to customers outside the United States accounted for 29%, 33%,
and 31% of the Company's net revenues for 1999, 1998, and 1997, respectively. Of
these export sales, the largest portion was derived from European customers. The
Company expects that revenues derived from international sales will continue to
represent a significant portion of its total revenues. International sales are
subject to a variety of risks, including longer payment cycles, greater
difficulty in accounts receivable collection, currency restrictions, tariffs,
trade barriers, taxes, export license requirements, and the impact of
recessionary environments in economies outside the United States. All of the
Company's foreign sales are denominated in U.S. dollars, so Actel's products
become less price competitive in countries with currencies that are declining in
value against the dollar. In addition, since a majority of the Company's foreign
sales are made through distributors, such sales are subject to the risks
described above in "Reliance on Distributors."
Semiconductor Industry Risks
The semiconductor industry has historically been cyclical and
periodically subject to significant economic downturns, which are characterized
by diminished product demand, accelerated price erosion, and overcapacity. The
Company may in the future experience substantial period-to-period fluctuations
in business and results of operations due to general semiconductor industry
conditions, overall economic conditions, or other factors, including legislation
and regulations governing the import or export of semiconductor products.
Technological Change and Dependence on New Product Development
The market for the Company's products is characterized by rapidly
changing technology, frequent new product introductions, and declining average
selling prices over product life cycles, each of which makes the timely
introduction of new products a critical objective of Actel. The Company's future
success is highly dependent upon the timely completion and introduction of new
products at competitive price and performance levels. In evaluating new product
decisions, the Company must anticipate well in advance both the future demand
and the technology that will be available to supply such demand. Failure to
anticipate customer demand, delays in developing new products with anticipated
technological advances, or failure to coordinate the design and development of
silicon and associated software products could have a materially adverse effect
on the Company's business, financial condition, or results of operation.
No assurance can be given that the Company's design and introduction
schedules for new products or the supporting software will be met or that such
products will be well-received by customers. No assurance can be given that any
new products will gain market acceptance or that the Company will respond
effectively to new technological changes or new product announcements by others.
Any failure of the Company to successfully define, develop, market, manufacture,
assemble, or test competitive new products could have a materially adverse
effect on its business, financial condition, or results of operations.
In addition, there are greater technological and operational risks
associated with new products. The inability of the Company's wafer suppliers to
produce advanced products; delays in commencing or maintaining volume shipments
of new products; the discovery of product, process, software, or programming
failures; and any related product returns could each have a materially adverse
effect on Actel's business, financial condition, or results of operation.
The Company must also continue to make significant investments in
research and development to develop new products and achieve market acceptance
for such products. The Company conducts most of its research and development
activities at facilities operated by its foundries. Although the Company has not
to date experienced any significant difficulty in obtaining access to such
facilities, no assurance can be given that access will not be limited or that
such facilities will be adequate to meet Actel's needs in the future.
Volatility of Stock
The price of the Company's Common Stock can fluctuate substantially on
the basis of such factors as announcements of new products by Actel or its
competitors, quarterly fluctuations in the Company's financial results or the
financial results of other semiconductor companies, or general conditions in the
semiconductor industry or in the financial markets. In addition, stock markets
have experienced extreme price and volume volatility in recent years. This
volatility has had a substantial effect on the market prices of the securities
issued by high technology companies, at times for reasons unrelated to the
operating performance of the specific companies.
Year 2000 Compliance
In late 1999, the Company completed Year 2000 remediation and testing
of its mission-critical computer systems. As a result of its planning and
implementation efforts, the Company experienced no significant disruptions in
information or non-information technology systems and believes those systems
successfully responded to the Year 2000 date change. The Company incurred
expenses of approximately $0.4 million during 1999 and $0.5 million during 1998
in connection with the remediation of its systems. The Company is not aware of
any material problems resulting from Year 2000 issues, either with its products
or internal systems or with the products or services of third parties. The
Company will continue to monitor its mission-critical computer applications and
those of its suppliers and vendors throughout 2000 and promptly address any
latent Year 2000 matters that may arise. Based on its current understanding, the
Company believes that the Year 2000 issue will not have a materially adverse
effect on the Company's business, financial position, or results of operations,
but no assurance to that effect can be given.
Executive Officers of the Registrant
The following table identifies each executive officer of the Company as
of March 31, 2000:
Name Age Position
- ------------------------------------- ----- --------------------------------------------------------------
John C. East......................... 55 President and Chief Executive Officer
Henry L. Perret...................... 54 Vice President of Finance and Chief Financial Officer
Esmat Z. Hamdy....................... 50 Senior Vice President of Technology & Operations
Carl N. Burrow....................... 39 Vice President of Marketing
Anthony Farinaro..................... 37 Vice President & General Manager of Design Services
Paul V. Indaco....................... 49 Vice President of Worldwide Sales
Dennis M. Kish....................... 36 Vice President of Strategic Product Marketing
Fares N. Mubarak..................... 38 Vice President of Engineering
David L. Van De Hey.................. 44 Vice President & General Counsel and Secretary
Mr. East has served as President and Chief Executive Officer of the
Company since December 1988. From April 1979 until joining the Company, Mr. East
served in various positions with Advanced Micro Devices, a semiconductor
manufacturer, including Senior Vice President of Logic Products from November
1986 to November 1988. From December 1976 to March 1979, he served as Operations
Manager for Raytheon Semiconductor. From September 1968 to December 1976, Mr.
East served in various marketing, manufacturing, and engineering positions for
Fairchild Camera and Instrument Corporation, a semiconductor manufacturer.
Mr. Perret joined the Company in January 1996 as Controller and has
been Vice President of Finance and Chief Financial Officer since June 1997. From
April 1992 until joining the Company, he was the Site Controller for the
manufacturing division of Applied Materials, a maker of semiconductor
manufacturing equipment, in Austin, Texas. From 1978 to 1991, Mr. Perret held
various financial positions with National Semiconductor, a semiconductor
manufacturer.
Dr. Hamdy is a founder of the Company, was Vice President of Technology
from August 1991 to March 1996 and Senior Vice President of Technology from
March 1996 to September 1996, and has been Senior Vice President of Technology
and Operations since September 1996. From November 1985 to July 1991, he held a
number of management positions with the Company's technology and development
group. From January 1981 to November 1985, Dr. Hamdy held various positions at
Intel Corporation, a semiconductor manufacturer, lastly as project manager.
Mr. Burrow joined the Company in January 1992 as Southwest Regional
Sales Manager, was Director of Western Area Sales from February 1996 to October
1997, and has been Vice President of Marketing since October 1997. From June
1983 until January 1992, he held various sales and marketing positions at Texas
Instruments, a semiconductor manufacturer.
Mr. Farinaro joined the Company in August 1998 as Vice President &
General Manager of Design Services. From February 1990 until joining the
Company, he held various engineering and management positions with GateField
(formally Zycad Corporation until 1997), a semiconductor company, with the most
recent position of Vice President of Application & Design Services. From 1985 to
1990, Mr. Farinaro held various engineering and management positions at Singer
Kearfott, an aerospace electronics company, and it's spin-off, Plessey
Electronic Systems Corporation.
Mr. Indaco joined the Company in March 1999 as Vice President of
Worldwide Sales. From January 1996 until joining the Company, he served as Vice
President of Sales for Chip Express, a semiconductor manufacturer. From January
Septemebr 1994 to January 1996, Mr. Indaco was Vice President of Sales for
Redwood Microsystems, a semiconductor manufacturer. From February 1984 to
September 1994, he held senior sales management positions with LSI Logic, a
semiconductor manufacturer. From June 1978 to February 1984, Mr. Indaco held
various field engineering sales and marketing positions with Intel Corporation,
a semiconductor manufacturer. From June 1976 to June 1978, he held various
marketing positions with Texas Instruments, a semiconductor manufacturer.
Mr. Kish joined the Company in December 1999 as Vice President of
Strategic Product Marketing. Prior to joining the Company, he held senior
management positions at Synopsys, an EDA company, and Atmel, a semiconductor
manufacturer. Before that, Mr. Kish held sales and engineering positions with
Texas Instruments, a semiconductor manufacturer.
Mr. Mubarak joined the Company in November 1992, was Director of
Product and Test Engineering until October 1997, and has been Vice President of
Engineering since October 1997. From 1989 until joining the Company, he held
various engineering and engineering management positions with Samsung
Semiconductor Inc., a semiconductor manufacturer, and its spin-off, IC Works,
Inc. From 1984 to 1989, Mr. Mubarak held various engineering, product planning,
and engineering management positions with Advanced Micro Devices, a
semiconductor manufacturer.
Mr. Van De Hey joined the Company in July 1993 as Corporate Counsel,
became Secretary in May 1994, and has been Vice President & General Counsel
since August 1995. From November 1988 to September 1993, he was an associate
with Wilson, Sonsini, Goodrich & Rosati, Professional Corporation, a law firm in
Palo Alto, California, and the Company's outside legal counsel. From August 1985
until October 1988, he was an associate with the Cleveland office of Jones, Day,
Reavis & Pogue, a law firm.
Executive officers serve at the discretion of the Board of Directors.
ITEM 2. PROPERTIES
Actel's principal administrative, marketing, sales, customer support,
design, research and development, and testing facilities are located in
Sunnyvale, California, in three buildings that comprise approximately 138,000
square feet. These buildings are leased through June 2003, and the Company has a
renewal option for an additional five-year term. Actel also leases sales offices
in the metropolitan areas of Atlanta, Basingstoke (England), Boston, Chicago,
Dallas, Denver, Hong Kong (China), Kanata (Ontario) Los Angeles, Milano (Italy),
Minneapolis, Munich (Germany), New York, Orlando, Paris (France), Philadelphia,
Raleigh, Seattle, Seoul (Korea), Stockholm (Sweden), Taipei (Taiwan), Tokyo
(Japan), and Washington D.C., as well as the facilities of the Design Services
Group in Mt. Arlington, New Jersey. The Company believes its facilities will be
adequate for its needs in 2000, but is investigating options for continued
expansion beyond that time.
ITEM 3. LEGAL PROCEEDINGS
Except as described below, 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.
Unisys v. Actel and QuickLogic (CV C-00 01114 WDB)
On March 29, 2000, 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
The information appearing under the caption "Stock Listing" in the
Registrant's annual report to security holders for the fiscal year ended January
2, 2000 (the "1999 Annual Report"), is incorporated herein by this reference.
On March 30, 1998, the Company and Crosspoint Solutions, Inc.
("Crosspoint") entered into a Patent Sale and Purchase 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. On the same
day, Crosspoint assigned its right to receive such shares to ASCII of America,
Inc. ("AOA"). The shares issued and delivered to AOA, as assignee of Crosspoint,
were exempt from registration pursuant to Section 4(2) of the Securities Act
because such shares were sold to an accredited investor who had access to
financial and other relevant data concerning the Company.
On December 21, 1999, the Company acquired AGL by merger. The purchase
price of $7.2 million included the issuance of 285,943 shares of Actel Common
Stock and the assumption of options to purchase 89,057 shares of Actel Common
Stock. The shares issued and delivered to AGL shareholders were exempt from
registration pursuant to Section 4(2) of the Securities Act and/or Regulation D
promulgated thereunder because such shares were sold to investors who were
"accredited" and had access to financial and other relevant data concerning the
Company or were represented by a qualified "purchaser representative" under
Regulation D.
ITEM 6. SELECTED FINANCIAL DATA
The information appearing under the caption "Selected Consolidated
Financial Data" in the 1999 Annual Report is incorporated herein by this
reference.
ITEM 7. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information appearing under the caption "Management's Discussion
and Analysis of Financial Conditions and Results of Operations" of the 1999
Annual Report is incorporated herein by this reference.
ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information appearing under the caption "Market Risk" under the
main caption "Management's Discussion and Analysis of Financial Conditions and
Results of Operations" in the 1999 Annual Report is incorporated herein by this
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information appearing under the captions "Consolidated Balance
Sheets," "Consolidated Statements of Income," "Consolidated Statements of
Shareholders' Equity," "Consolidated Statements of Cash Flows," "Notes to
Consolidated Financial Statements," and "Report of Ernst & Young LLP,
Independent Auditors" in the 1999 Annual Report is incorporated herein by this
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Except for the information specifically incorporated by reference from
Actel's definitive Proxy Statement for the Annual Meeting of Shareholders to be
held on May 19, 2000, as filed on or about April 4, 2000, with the Securities
and Exchange Commission (the "2000 Proxy Statement") in Part III of this Annual
Report on Form 10-K, the 2000 Proxy Statement shall not be deemed to be filed as
part of this Report. Without limiting the foregoing, the information under the
captions "Compensation Committee Report" and "Company Stock Performance" under
the main caption "OTHER INFORMATION" in the 2000 Proxy Statement are not
incorporated by reference in this Annual Report on Form 10-K.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information regarding the identification and business experience of
Actel's directors under the caption "Nominees" under the main caption "PROPOSAL
NO. 1 -- ELECTION OF DIRECTORS" in the 2000 Proxy Statement and the information
under the main caption "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE
ACT OF 1934" in the 2000 Proxy Statement are incorporated herein by this
reference. For information regarding the identification and business experience
of Actel's executive officers, see "Executive Officers of the Registrant" at the
end of Item 1 in Part I of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information under the caption "Director Compensation" under the
main caption "PROPOSAL NO. 1 -- ELECTION OF DIRECTORS" in the 2000 Proxy
Statement and the information under the caption "Executive Compensation" under
the main caption "OTHER INFORMATION" in the 2000 Proxy Statement are
incorporated herein by this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the caption "Share Ownership" under the main
caption "INFORMATION CONCERNING SOLICITATION AND VOTING" in the 2000 Proxy
Statement and the information under the caption "Security Ownership of
Management" under the main caption "OTHER INFORMATION" in the 2000 Proxy
Statement are incorporated herein by this reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption "Certain Transactions" under the main
caption "OTHER INFORMATION" in the 2000 Proxy Statement is incorporated herein
by this reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Annual Report on
Form 10-K:
(1) Financial Statements. The following consolidated financial
statements of Actel Corporation included in the 1999 Annual Report are
incorporated by reference in Item 8 of this Annual Report on Form 10-K:
Consolidated balance sheets at December 31, 1999
and 1998
Consolidated statements of income for each of the
three years in the period ended December 31, 1999
Consolidated statements of shareholders' equity
for each of the three years in the period ended
December 31, 1999
Consolidated statements of cash flows for each of
the three years in the period ended December 31,
1999
Notes to consolidated financial statements
(2) Financial Statement Schedule. The financial statement
schedule listed under 14(d) hereof is filed with this Annual Report on
Form 10-K.
(3) Exhibits. The exhibits listed under Item 14(c) hereof are
filed with, or incorporated by reference into, this Annual Report on
Form 10-K.
(b) Reports on Form 8-K. Actel filed no reports on Form 8-K during the
quarter ended January 2, 2000.
(c) Exhibits. The following exhibits are filed as part of, or
incorporated by reference into, this Report on Form 10-K:
Exhibit Number Description
- ----------------------- -------------------------------------------------------
3.1 Restated Articles of Incorporation (filed as Exhibit
3.2 to the Registrant's Registration Statement on Form
S-1 (File No. 33-64704), declared effective on August
2, 1993).
3.2 Restated Bylaws of the Registrant (filed as Exhibit 3.3
to the Registrant's Registration Statement on Form S-1
(File No. 33-64704), declared effective on August 2,
1993).
10.1 (2) Form of Indemnification Agreement for directors
and officers (filed as Exhibit 10.1 to the Registrant's
Registration Statement on Form S-1 (File No. 33-64704)
, declared effective on August 2, 1993).
10.2 (2) 1986 Incentive Stock Option Plan, as amended and
restated.
10.3 (2) 1993 Directors' Stock Option Plan, as amended and
restated (filed as Exhibit 10.3 to the Registrant's
Annual Report on Form 10-K (File No. 0-21970) for
the fiscal year ended December 28, 1997).
10.4 (2) 1993 Employee Stock Purchase Plan, as amended and
restated (filed as Exhibit 10.4 to the Registrant's
Annual Report on Form 10-K (File No. 0-21970) for
the fiscal year ended December 28, 1997).
10.5 (2) 1995 Employee and Consultant Stock Plan, as amended
and restated (filed as Exhibit 10.5 to the
Registrant's Annual Report on Form 10-K (File No.
0-21970) for the fiscal year ended December 29, 1996).
10.6 Form of Distribution Agreement (filed as Exhibit 10.13
to the Registrant's Registration Statement on Form S-1
(File No. 33-64704), declared effective on August 2,
1993).
10.7 (1) Patent Cross License Agreement dated April 22, 1993
between the Registrant and Xilinx, Inc. (filed as
Exhibit 10.14 to the Registrant's Registration
Statement on Form S-1 (File No. 33-64704), declared
effective on August 2, 1993).
10.8 Subscription and Participation Agreement dated February
3, 1994 between the Registrant, Singapore Technologies
Ventures Pte Ltd and Chartered Semiconductor
Manufacturing Pte Ltd (filed as Exhibit 10.16 to the
Registrant's Annual Report on Form 10-K (File No.
0-21970) for the fiscal year ended January 2, 1994).
10.9 Manufacturing Agreement dated February 3, 1994
between the Registrant and Chartered Semiconductor
Manufacturing Pte Ltd (filed as Exhibit 10.17 to the
Registrant's Annual Report on Form 10-K (File No.
0-21970) for the fiscal year ended January 2, 1994).
10.10 Distribution Agreement dated June 1, 1994, between the
Registrant and Arrow Electronics, Inc. (filed as
Exhibit 10.18 to the Registrant's Quarterly Report on
Form 10-Q (File No.
0-21970) for the quarterly period ended July 3, 1994).
10.11 (1) Product Development and Marketing Agreement dated
August 1, 1994, between the Registrant and Loral
Federal Systems Company (filed as Exhibit 10.19 to the
Registrant's Quarterly Report on Form 10-Q (File No.
0-21970) for the quarterly period ended October 2,
1994).
10.12 (1) Foundry Agreement dated as of June 29, 1995, between
the Registrant and Matsushita Electric Industrial Co.,
Ltd and Matsushita Electronics Corporation (filed as
Exhibit 10.25 to the Registrant's Quarterly Report on
Form 10-Q (File No. 0-21970) for the quarterly
period ended July 2, 1995).
10.13 Lease Agreement for the Registrant's offices in
Sunnyvale, California, dated May 10, 1995 (filed as
Exhibit 10.19 to the Registrant's Annual Report on Form
10-K (File No.
0-21970) for the fiscal year ended December 31, 1995).
10.14 (1) License Agreement dated as of March 6, 1995, between
the Registrant and BTR, Inc. (filed as Exhibit 10.20 to
the Registrant's Annual Report on Form 10-K (File No.
0-21970) for the fiscal year ended December 29,
1996).
10.15 Asset Purchase Agreement dated August 14, 1998, between
GateField Corporation and Actel Corporation (filed as
Exhibit 2.1 to GateField Corporation's Current Report
on Form 8-K (File No. 0-13244) on August 14, 1998, and
incorporated herein by this reference).
10.16 Series C Preferred Stock Purchase Agreement dated
August 14, 1998 between GateField Corporation and
Actel Corporation (filed as Exhibit 4.1 to GateField
Corporation's Current Report on Form 8-K/A (File No.
0-13244) on August 31, 1998, and incorporated herein by
this reference).
10.17 Product Marketing Agreement dated August 14, 1998,
between the GateField Corporation and Actel Corporation
(filed as Exhibit 10.24 to GateField Corporation's
Quarterly Report on Form 10-Q (File No. 0-13244) on
November 19, 1998, and incorporated herein by this
reference.)
10.18 License Agreement dated August 14, 1998, between
GateField Corporation and Actel Corporation (filed as
Exhibit 10.25 to GateField Corporation's Quarterly
Report on Form 10-Q (File No. 0-13244) on November 19,
1998, and incorporated herein by this reference.)
10.19 (1) Patent Cross License Agreement dated August 25,
1998, between Actel Corporation and QuickLogic
Corporation. (filed as Exhibit 10.19 to the
Registrant's Annual Report on Form 10-K (File No.
0-21970) for the fiscal year ended January 3, 1999).
10.20 Convertible Promissory Note dated May 25, 1999, in the
aggregate principle amount of $8.0 million issued to
Actel Corporation (filed as Exhibit 4.1 to GateField
Corporation's Current Report on Form 8-K (File No.
0-13244) on May 28, 1999, and incorporated herein by
this reference).
10.21 Security Agreement dated May 25, 1999, between
GateField Corporation and Actel Corporation (filed as
Exhibit 10.1 to GateField Corporation's Current Report
on Form 8-K (File No. 0-13244) on May 28, 1999, and
incorporated herein by this reference).
10.22 Amendment No. 1 to the Series C Preferred Stock
Purchase Agreement dated May 25, 1999, between
GateField Corporation and Actel Corporation (filed as
Exhibit 10.2 to GateField Corporation's Current Report
on Form 8-K (File No. 0-13244) on May 28, 1999, and
incorporated herein by this reference).
10.23 Amendment No. 1 to the Registration Rights Agreement
dated May 25, 1999, between GateField Corporation and
Actel Corporation (filed as Exhibit 10.3 to GateField
Corporation's Current Report on Form 8-K (File No.
0-13244) on May 28, 1999, and incorporated herein by
this reference).
13 Portions of Registrant's Annual Report to Shareholders
for the fiscal year ended January 2, 2000, incorporated
by reference into this Report on Form 10-K.
21 Subsidiaries of Registrant (see page --)
23 Consent of Ernst & Young LLP, Independent Auditors (see
page --)
24 Power of Attorney (see page --)
- -------------------------
(1) Confidential treatment requested as to a portion of this Exhibit.
(2) This Exhibit is a management contract or compensatory plan or
arrangement.
(d) Financial Statement Schedule. The following financial statement
schedule of Actel Corporation is filed as part of this Report on Form 10-K and
should be read in conjunction with the Consolidated Financial Statements of
Actel Corporation, including the notes thereto, and the Report of Independent
Auditors with respect thereto:
Schedule Description Page
- -------- ------------------------------------------------------- ------
II Valuation and qualifying accounts --
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and therefore have
been omitted.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
March 31, 2000 By: By: /s/ John C. East
------------------------------
John C. East
President and Chief Executive Officer
SCHEDULE II
ACTEL CORPORATION
--------------------------------------
Valuation and Qualifying Accounts
(in thousands)
Balance at Balance at
beginning end of
of period Provisions Write-Offs period
------------ ------------ ------------ ------------
Allowance for doubtful accounts:
Year ended December 31, 1997........................... $ 633 $ 1,611 $ 612 $ 1,632
Year ended December 31, 1998........................... 1,632 5 83 1,554
Year ended December 31, 1999........................... 1,554 -- 475 1,079