_
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended July 6, 2003
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-21970
--------------------------------------
ACTEL CORPORATION
(Exact name of Registrant as specified in its charter)
California 77-0097724
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
955 East Arques Avenue
Sunnyvale, California 94086-4533
(Address of principal executive offices) (Zip Code)
(408) 739-1010
(Registrant's telephone number, including area code)
--------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes X No
Number of shares of Common Stock outstanding as of August 12, 2003:
24,927,622.
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
ACTEL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(unaudited, in thousands, except per share amounts)
Three Months Ended Six Months Ended
-------------------------------------- ------------------------
Jul. 6, Jul. 7, Apr. 6, Jul. 6, Jul. 7,
2003 2002 2003 2003 2002
---------- ---------- ---------- ---------- ----------
Net revenues................................... $ 36,609 $ 34,293 $ 34,341 $ 70,950 $ 67,353
Costs and expenses:
Cost of revenues............................ 14,584 12,956 14,729 29,313 25,740
Research and development.................... 9,851 9,902 9,513 19,364 19,639
Selling, general, and administrative........ 11,070 11,036 11,032 22,102 21,747
Amortization of acquisition-related
intangibles............................... 663 681 681 1,344 1,362
---------- ---------- ---------- ---------- ----------
Total costs and expenses.............. 36,168 34,575 35,955 72,123 68,488
---------- ---------- ---------- ---------- ----------
Income (loss) from operations.................. 441 (282) (1,614) (1,173) (1,135)
Interest income and other, net of expense...... 724 1,813 992 1,716 3,301
Gain (loss) on sales and write-downs of equity
investments................................. 91 (1,010) - 91 (1,133)
---------- ---------- ---------- ---------- ----------
Income (loss) before tax (benefit) provision... 1,256 521 (622) 634 1,033
Tax (benefit) provision........................ (130) 117 (853) (983) 234
---------- ---------- ---------- ---------- ----------
Net income..................................... $ 1,386 $ 404 $ 231 $ 1,617 $ 799
========== ========== ========== ========== ==========
Net income per share:
Basic....................................... $ 0.06 $ 0.02 $ 0.01 $ 0.07 $ 0.03
========== ========== ========== ========== ==========
Diluted..................................... $ 0.05 $ 0.02 $ 0.01 $ 0.06 $ 0.03
========== ========== ========== ========== ==========
Shares used in computing net income per share:
Basic....................................... 24,550 24,382 24,338 24,444 24,276
========== ========== ========== ========== ==========
Diluted..................................... 25,776 26,036 25,087 25,453 25,676
========== ========== ========== ========== ==========
See Notes to Unaudited Consolidated Condensed Financial Statements
ACTEL CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited, in thousands)
Jul. 6, Jan. 5,
2003 2003*
------------ ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents........................................................... $ 13,257 $ 18,207
Short-term investments.............................................................. 128,391 115,622
Accounts receivable, net............................................................ 21,178 17,615
Inventories, net.................................................................... 31,443 34,591
Deferred income taxes............................................................... 23,783 28,054
Prepaid expenses and other current assets........................................... 3,225 4,968
------------ ------------
Total current assets.......................................................... 221,277 219,057
Property and equipment, net............................................................ 16,924 16,204
Goodwill, net.......................................................................... 32,142 32,142
Other assets, net...................................................................... 25,907 25,918
------------ ------------
$ 296,250 $ 293,321
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................................... $ 9,030 $ 11,500
Accrued salaries and employee benefits.............................................. 5,611 7,280
Other accrued liabilities........................................................... 3,717 3,879
Deferred income on shipments to distributors........................................ 26,284 26,459
------------ ------------
Total current liabilities..................................................... 44,642 49,118
Deferred compensation plan liability................................................... 2,267 1,889
------------ ------------
Total liabilities............................................................. 46,909 51,007
Commitments and contingencies
Shareholders' equity:
Common stock........................................................................ 25 24
Additional paid-in capital.......................................................... 173,850 168,428
Retained earnings .................................................................. 74,908 73,290
Unearned compensation cost ......................................................... (112) (179)
Accumulated other comprehensive income ............................................. 670 751
------------ ------------
Total shareholders' equity.................................................... 249,341 242,314
------------ ------------
$ 296,250 $ 293,321
============ ============
- ----------------------------------------
* Derived from the consolidated audited financial statements included in our
report on Form 10-K for the fiscal year ended January 5, 2003.
See Notes to Unaudited Consolidated Condensed Financial Statements
ACTEL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Six Months Ended
------------------------
Jul. 6, Jul. 7,
2003 2002
---------- ----------
Operating activities:
Net income......................................................................... $ 1,617 $ 799
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization................................................... 5,103 5,040
Amortization of deferred compensation........................................... 67 68
Changes in operating assets and liabilities:
Accounts receivable.......................................................... (3,563) (2,540)
Inventories.................................................................. 3,148 (169)
Deferred income taxes........................................................ 4,951 59
Prepaid expenses and other current assets.................................... 1,152 (693)
Accounts payable, accrued salaries and employee benefits, and other accrued
liabilities.............................................................. (5,436) (932)
Deferred income on shipments to distributors................................. (175) 1,319
---------- ----------
Net cash provided by operating activities.......................................... 6,864 2,951
Investing activities:
Purchases of property and equipment................................................ (4,479) (3,704)
Purchases of available-for-sale securities......................................... (89,620) (100,546)
Sales and maturities of available for sale securities.............................. 76,717 103,833
Changes in other long term assets.................................................. 144 262
---------- ----------
Net cash used in investing activities.............................................. (17,238) (155)
Financing activities:
Common stock issuance under employee stock plans................................... 5,424 5,092
---------- ----------
Net cash provided by financing activities.......................................... 5,424 5,092
Net increase (decrease) in cash and cash equivalents................................... (4,950) 7,888
---------- ----------
Cash and cash equivalents, beginning of period......................................... 18,207 7,912
---------- ----------
Cash and cash equivalents, end of period............................................... $ 13,257 $ 15,800
========== ==========
Supplemental disclosures of cash flow information and non-cash investing and
financing activities:
Cash received during the period for taxes.............................................. $ (4,777) $ (361)
See Notes to Unaudited Consolidated Condensed Financial Statements
ACTEL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation and Summary of Significant Accounting Policies
The accompanying unaudited consolidated condensed financial statements of
Actel Corporation have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these
financial statements do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included.
Actel Corporation and its consolidated subsidiaries are referred to as
"we," "us," or "our." Management's Discussion and Analysis of Financial
Condition and Results of Operations is based upon our unaudited consolidated
condensed financial statements, which have been prepared in accordance with
accounting principles for interim financial statements generally accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues, and expenses and the related disclosure of contingent assets and
liabilities. The United States Securities and Exchange Commission (SEC) has
defined the most critical accounting policies as the ones that are most
important to the portrayal of an issuer's financial condition and results of
operations and require management to make the most difficult and subjective
judgments, often as a result of the need to make estimates of matters that are
inherently uncertain. Based upon this definition, our most critical policies
include: inventories; intangible assets and goodwill; income taxes; and legal
matters. We base our estimates on historical experience and on various other
assumptions that we believe are reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results
may differ materially from these estimates. We also have other key accounting
policies, such as policies for revenue recognition and accounts receivable.
These other policies either do not generally require us to make estimates and
judgments that are as difficult or as subjective, or are less likely to have a
material impact on our financial condition or results of operations for a given
period. For further information regarding all of these policies, as well as the
estimates and judgments involved, see our Annual Report on Form 10-K for the
year ended January 5, 2003 (2002 Form 10-K). We no longer consider impairment of
investments in other companies a critical accounting policy because our
remaining investments in other companies are not material. There were no other
significant changes to critical accounting policies or to the related estimates
and judgments involved in applying these policies.
The unaudited consolidated condensed financial statements include our
accounts and our wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated on consolidation. The interim
financial statements should be read in conjunction with the audited financial
statements included in our 2002 Form 10-K. The results of operations for the
quarter or six months ended July 6, 2003, are not necessarily indicative of
results that may be expected for the entire fiscal year, which ends January 4,
2004.
Income Taxes
We account for income taxes in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," which
requires that deferred tax assets and liabilities be recognized using enacted
tax rates for the effect of temporary differences between the book and tax bases
of recorded assets and liabilities. SFAS No. 109 also requires that deferred tax
assets be reduced by a valuation allowance if it is more likely than not that
some or all of the deferred tax assets will not be realized. We evaluate
annually the realizability of our deferred tax assets by assessing our valuation
allowance and, if necessary, we adjust the amount of such allowance. The factors
used to assess the likelihood of realization are our forecast of future taxable
income and available tax planning strategies that could be implemented to
realize the net deferred tax assets.
ACTEL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
At July 6, 2003, we had a net deferred tax asset of $39.1 million after
consideration of deferred tax liabilities and a valuation allowance. In order to
fully utilize the $39.1 million of deferred tax assets, taxable income in the
amount of approximately $130 million must be earned in future periods. For
proper valuation of deferred tax assets under SFAS No. 109 in situations where a
company has incurred a three-year cumulative loss before taxes, significant
negative evidence is considered to exist in the evaluation of the company's
ability to generate future taxable income. In evaluating available positive
evidence, expectations of future taxable income on an extended time horizon are
rarely sufficient to overcome the negative evidence of recent cumulative losses.
Failure to achieve positive taxable income in 2003 would result in a cumulative
three year loss before tax, which would result in significant negative evidence
under SFAS No. 109 regarding the realizability of our net deferred tax assets.
This would probably result in additional tax expense being recorded on the
income statement in 2003, thereby reducing net income. Factors that may affect
our ability to achieve sufficient forecasted taxable income include, but are not
limited to, increased competition, a decline in sales or margins, loss of market
share, delays in product availability, and technological obsolescence.
Product Warranty
Our product warranty accrual includes specific accruals for known product
issues and an accrual for an estimate of incurred but unidentified product
issues based on historical activity. Due to effective product testing and the
short time between product shipment and the detection and correction of product
failures, the warranty accrual based on historical activity and the related
expense for known product issues were not significant as of the second quarter
of 2003 and for the six month period then ended.
Stock Based Compensation
In December 2002, the Financial Accounting Standards Board (FASB) issued
SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure an Amendment of FASB Statement No. 123." SFAS No. 148 provides
alternative methods of transition for companies making a voluntary change to
fair value-based accounting for stock-based employee compensation. We continue
to account for our stock option plans under the intrinsic value recognition and
measurement principles of Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees," and related FASB Interpretations
(FINs). Effective for interim periods beginning after December 15, 2002, SFAS
No. 148 also requires disclosure of pro-forma results on a quarterly basis as if
the company had applied the fair value recognition provisions of SFAS No. 123.
As the exercise price of all options granted under our stock option plans
was equal to the market price of the underlying common stock on the grant date,
no stock-based employee compensation cost, other than acquisition-related
compensation, is recognized in net income. The following table illustrates the
effect on net income and earnings per share if we had applied the fair value
recognition provisions of SFAS No. 123, as amended, to options granted under our
stock option plans and Employee Stock Purchase Plan, collectively called
"options." For purposes of this pro-forma disclosure, the estimated value of the
options is amortized ratably to expense over the options' vesting periods.
Because the estimated value is determined as of the date of grant, the actual
value ultimately realized by the employee may be significantly different. The
pro forma information is as follows:
ACTEL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three Months Ended Six Months Ended
-------------------------------------- ------------------------
Jul. 6, Jul. 7, Apr. 6, Jul. 6, Jul. 7,
2003 2002 2003 2003 2002
---------- ---------- ---------- ---------- ----------
(unaudited, in thousands except per share amounts)
Reported amounts under intrinsic value method:
Stock based employee compensation cost, net of
related tax, included in net income $ 0 $ 0 $ 0 $ 0 $ 0
Net income.................................. $ 1,386 $ 404 $ 231 $ 1,617 $ 799
Earnings per share:
Basic.................................... $ 0.06 $ 0.02 $ 0.01 $ 0.07 $ 0.03
Diluted.................................. $ 0.05 $ 0.02 $ 0.01 $ 0.06 $ 0.03
Pro Forma amounts under fair value method:
Pro Forma stock based employee compensation
cost, net of related tax................. $ 4,091 $ 4,558 $ 3,865 $ 7,956 $ 9,886
Pro forma net income (loss)................. $ (2,705) $ (4,154) $ (3,634) $ (6,339) $ (9,087)
Pro forma earnings per share:
Basic.................................... $ (0.11) $ (0.17) $ (0.15) $ (0.26) $ (0.37)
Diluted.................................. $ (0.11) $ (0.17) $ (0.15) $ (0.26) $ (0.37)
SFAS No. 123 requires the use of option pricing models that were not
developed for use in valuing employee stock options. The Black-Scholes
option-pricing model was developed for use in estimating the fair value of
short-lived exchange traded options that have no vesting restrictions and are
fully transferable. In addition, option-pricing models require the input of
highly subjective assumptions, including the option's expected life and the
price volatility of the underlying stock. Because our employee stock options
have characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in our opinion the existing models do not necessarily
provide a reliable single measure of the fair value of employee stock options.
2. Impact of Recently Issued Accounting Standards
In January 2003, the FASB issued FIN No. 46 (FIN 46), "Consolidation of
Variable Interest Entities," an interpretation of Accounting Research Bulletin
(ARB) No. 51, "Consolidated Financial Statements." FIN 46 establishes accounting
guidance for consolidation of a variable interest entity (VIE). A VIE is an
entity in which the equity investors do not have a controlling interest or the
equity investment at risk is insufficient to finance the entity's activities
without receiving additional subordinated financial support from the other
parties. FIN 46 applies to any business enterprise, either public or private,
that has a controlling interest, contractual relationship, or other business
relationship with a VIE. FIN 46 provides guidance for determining when an
entity, the Primary Beneficiary, should consolidate another entity, a VIE, that
functions to support the activities of the Primary Beneficiary. By the third
quarter of 2003, corporations must fully consolidate assets and liabilities
covered by FIN 46 in their financial statements. Full disclosure, as well as
consolidation, if applicable, of any newly created agreements after January 31,
2003, must begin immediately. We believe that we do not currently have any
contractual relationship or other business relationship with a VIE and therefore
the adoption of FIN 46 will not have any effect on our consolidated financial
position or results of operations.
ACTEL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Goodwill and Other Acquisition-Related Intangibles
During 1999 and 2000, we completed the acquisitions of AutoGate Logic,
Inc., Prosys Technology, Inc., and GateField Corporation, resulting in a
significant amount of goodwill and identified intangible assets. At July 6 and
January 5, 2003, we had $32.1 million of net goodwill. At the beginning of 2002,
we adopted SFAS No. 142, "Accounting for the Impairment of Disposal of
Long-Lived Assets," which addresses the financial accounting and reporting
standards for goodwill and other intangible assets subsequent to their
acquisition. This standard requires that goodwill no longer be amortized, and
instead be tested for impairment annually or more frequently if certain events
or changes in circumstances indicate that the carrying value may not be
recoverable. We completed our annual goodwill impairments tests as of January 5,
2003, and noted no impairment. Our next annual impairment test will be performed
in the fourth quarter of 2003. No indicators of impairment have arisen during
the three or six months ended July 6, 2003.
At July 6, 2003, we have definite lived intangible assets arising from
prior business acquisitions with a net book value of $5.9 million, which are
being amortized on a straight line basis over their estimated lives. In
accordance with SFAS No. 144, we recognize impairment losses on long-lived
assets when indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the net book value of
those assets. The impairment loss, if any, is measured by comparing the fair
value of the asset to its carrying value. Fair value is based on discounted cash
flows using present value techniques identified in SFAS No. 144. Currently,
there are no indicators of impairment that indicate that fair value is less than
the carrying value and would require us to write the asset down to its fair
value.
We made no acquisitions of intangible assets during the second quarter of
2003. Identified intangible assets as of July 6, 2003, consisted of the
following:
Gross Accumulated
Assets Amortization Net
------------ ------------ ------------
(unaudited, in thousands)
Acquisition-related developed technology................................ $ 11,454 $ (6,398) $ 5,056
Other acquisition-related intangibles................................... 2,600 (1,847) 753
Acquired patents........................................................ 516 (426) 90
------------ ------------ ------------
Total identified intangible assets............................. $ 14,570 $ (8,671) $ 5,899
============ ============ ============
Identified intangible assets as of January 5, 2003, consisted of the following:
Gross Accumulated
Assets Amortization Net
------------ ------------ ------------
(unaudited, in thousands)
Acquisition-related developed technology................................ $ 11,454 $ (5,253) $ 6,201
Other acquisition-related intangibles................................... 2,600 (1,681) 919
Acquired patents........................................................ 516 (392) 124
------------ ------------ ------------
Total identified intangible assets............................. $ 14,570 $ (7,326) $ 7,244
============ ============ ============
ACTEL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All of our identified intangible assets are subject to amortization.
Amortization of identified intangibles included the following:
Three Months Ended Six Months Ended
-------------------------------------- ------------------------
Jul. 6, Jul. 7, Apr. 6, Jul. 6, Jul. 7,
2003 2002 2003 2003 2002
---------- ---------- ---------- ---------- ----------
(unaudited, in thousands)
Acquisition-related developed technology.... $ 573 $ 572 $ 572 $ 1,145 $ 1,144
Other acquisition-related intangibles....... 83 83 83 166 166
Acquired patents............................ 7 26 26 33 52
---------- ---------- ---------- ---------- ----------
Total amortization expense......... $ 663 $ 681 $ 681 $ 1,344 $ 1,362
========== ========== ========== ========== ==========
Based on the carrying value of identified intangible assets recorded at July 6,
2003, and assuming no subsequent impairment of the underlying assets, the annual
amortization expense is expected to be $2.7 million for 2003, $2.7 million for
2004, $1.9 million for 2005, and none thereafter.
4. Inventories
Inventories consist of the following:
Jul. 6, Jul. 7,
2003 2002
---------- ----------
(unaudited, in thousands)
Inventories:
Purchased parts and raw materials................................................... $ 3,225 $ 4,066
Work-in-process..................................................................... 23,923 26,484
Finished goods...................................................................... 4,295 4,041
---------- ----------
$ 31,443 $ 34,591
========== ==========
Inventory is stated at the lower of cost (first-in, first-out) or market (net
realizable value). We believe that a certain level of inventory must be carried
to maintain an adequate supply of product for customers. This inventory level
may vary based upon orders received from customers or internal forecasts of
demand for products. Other considerations in determining inventory levels
include the stage of products in the product life cycle, design win activity,
manufacturing lead times, customer demand, strategic relationships with
foundries, and competitive situations in the marketplace. Should any of these
factors have a result other than anticipated, inventory levels may be adversely
affected.
ACTEL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We write down our inventory for estimated obsolescence or unmarketable
inventory equal to the difference between the cost of inventory and the
estimated realizable value based upon assumptions about future demand and market
conditions. To address this difficult, subjective, and complex area of judgment,
we apply a methodology that includes assumptions and estimates to arrive at the
net realizable value. First, we identify any inventory that has been previously
reserved in prior periods. This inventory remains reserved until sold,
destroyed, or otherwise dispositioned. Second, our quality assurance personnel
examine inventory line items that may have some form of obsolescence due to
non-conformance with electrical or mechanical standards. Third, we assess the
inventory not otherwise identified to be reserved against product history and
forecasted demand, typically six months. Finally, the result of this methodology
is analyzed by us in light of the product life cycle, design win activity, and
competitive situations in the marketplace to derive an outlook for consumption
of the inventory and the appropriateness of the resulting inventory levels. If
actual future demand or market conditions are less favorable than those we have
projected, additional inventory write-downs may be required.
5. Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share in accordance with SFAS No. 128, "Earnings per Share":
Three Months Ended Six Months Ended
-------------------------------------- ------------------------
Jul. 6, Jul. 7, Apr. 6, Jul. 6, Jul. 7,
2003 2002 2003 2003 2002
---------- ---------- ---------- ---------- ----------
(unaudited, in thousands except per share amounts)
Basic:
Average common shares outstanding............. 24,550 24,382 24,338 24,444 24,276
Shares used in computing net income per share. 24,550 24,382 24,338 24,444 24,276
========== ========== ========== ========== ==========
Net income.................................... $ 1,386 $ 404 $ 231 $ 1,617 $ 799
========== ========== ========== ========== ==========
Net income per share.......................... $ 0.06 $ 0.02 $ 0.01 $ 0.07 $ 0.03
========== ========== ========== ========== ==========
Diluted:
Average common shares outstanding............. 24,550 24,382 24,338 24,444 24,276
Net effect of dilutive stock options - based
on the treasury stock method............... 1,226 1,654 749 1,009 1,400
---------- ---------- ---------- ---------- ----------
Shares used in computing net income per share. 25,776 26,036 25,087 25,453 25,676
========== ========== ========== ========== ==========
Net income.................................... $ 1,386 $ 404 $ 231 $ 1,617 $ 799
========== ========== ========== ========== ==========
Net income per share.......................... $ 0.05 $ 0.02 $ 0.01 $ 0.06 $ 0.03
========== ========== ========== ========== ==========
ACTEL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Comprehensive Income (Loss)
The components of comprehensive income (loss), net of tax, are as follows:
Three Months Ended Six Months Ended
-------------------------------------- ------------------------
Jul. 6, Jul. 7, Apr. 6, Jul. 6, Jul. 7,
2003 2002 2003 2003 2002
---------- ---------- ---------- ---------- ----------
(unaudited, in thousands)
Net income.................................. $ 1,386 $ 404 $ 231 $ 1,617 $ 799
Unrealized gain (loss) on available-for-sale
securities............................... 173 383 78 251 (23)
Less reclassification adjustment for gains
included in net income (loss)............ (165) 2 (167) (332) (13)
---------- ---------- ---------- ---------- ----------
Other comprehensive income (loss)........... 8 385 (89) (81) (36)
---------- ---------- ---------- ---------- ----------
Total comprehensive income.................. $ 1,394 $ 789 $ 142 $ 1,536 $ 763
========== ========== ========== ========== ==========
Accumulated other comprehensive income is presented on the accompanying
consolidated condensed balance sheets and consists of the accumulated net
unrealized gain (loss) on available-for-sale securities. During the second
quarter of 2003, we sold the remaining portion of an investment in a publicly
traded equity security, which resulted in a realized gain of $0.1 million.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Actel Corporation and its consolidated subsidiaries are referred to as
"we," "us," or "our." You should read the information in this Quarterly Report
on Form 10-Q with the Risk Factors at the end of Part I of our Annual Report on
Form 10-K for the year ended January 5, 2003 (2002 Form 10-K). Unless otherwise
indicated, the information in this Quarterly Report is given as of August 13,
2003, and we undertake no obligation to update any of the information, including
forward-looking statements. {Forward-looking statements made under the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995 are
bracketed.} The Risk Factors could cause actual results to differ materially
from those projected in the forward-looking statements.
Critical Accounting Policies
The following discussion and analysis of our financial condition and
results of operations is based upon our unaudited consolidated condensed
financial statements, which have been prepared in accordance with accounting
principles for interim financial statements generally accepted in the United
States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues, and expenses and the related disclosure of contingent assets and
liabilities. The United States Securities and Exchange Commission (SEC) has
defined the most critical accounting policies as the ones that are most
important to the portrayal of an issuer's financial condition and results of
operations and require management to make the most difficult and subjective
judgments, often as a result of the need to make estimates of matters that are
inherently uncertain. Based upon this definition, our most critical policies
include: inventories; intangible assets and goodwill; income taxes; and legal
matters. We base our estimates on historical experience and on various other
assumptions that we believe are reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results
may differ materially from these estimates. We also have other key accounting
policies, such as policies for revenue recognition and accounts receivable.
These other policies either do not generally require us to make estimates and
judgments that are as difficult or as subjective, or are less likely to have a
material impact on our financial condition or results of operations for a given
period. For further information regarding all of these policies, as well as the
estimates and judgments involved, see our 2002 Form 10-K. We no longer consider
impairment of investments in other companies a critical accounting policy
because our remaining investments in other companies are not material. There
were no other significant changes to critical accounting policies or to the
related estimates and judgments involved in applying these policies.
Results of Operations
Net Revenues
Net revenues were $36.6 million for the second quarter of 2003, a 7%
increase from the first quarter of 2003 and a 7% increase from the second
quarter of 2002. Quarterly net revenues increased sequentially due to a 5%
increase in the overall average selling price (ASP) of field programmable gate
arrays (FPGAs) coupled with a 3% increase in unit shipments of FPGAs. Quarterly
net revenues increased from a year ago due to a 13% increase in ASP, which was
partially offset by a 5% decrease in unit shipments. Unit volumes and ASP levels
fluctuate principally because of changes in the mix of products sold. Actel's
product portfolio includes products ranging from devices with lower ASPs, which
typically sell in higher volumes, to devices with higher ASPs, which typically
sell in lower volumes. The increase in overall ASP for the second quarter of
2003 compared with the first quarter of 2003 and the second quarter of 2002 was
driven primarily by increased sales of radiation-tolerant (Rad) products, which
have higher ASPs. Unit shipments were lower for the second quarter of 2003
compared with the second quarter of 2002 primarily because we shipped fewer of
our lowest ASP products which typically ship in high unit volumes.
Net revenues were $71.0 million for the first six months of fiscal 2003, an
increase of 5% from the first six months of fiscal 2002. Six-month net revenues
increased from a year ago due to a 5% increase in unit shipments and a 1%
increase in overall ASP. Unit shipments increased across most product families.
Gross Margin
Gross margin was 60.2% of net revenues for the second quarter of 2003
compared with 57.1% for the first quarter of 2003 and 62.2% for the second
quarter of 2002. Gross margin was 58.7% of net revenues for the first six months
of 2003, compared with 61.8% of net revenues for the first six months of 2002.
Gross margin for the second quarter of 2003 increased sequentially due to a
higher percentage of Rad shipments, which generally carry higher margins. Gross
margin for the second quarter of 2003 was also affected by offsetting inventory
valuation adjustments, which are material when viewed individually. These
adjustments include the favorable effect of $1.1 million for sell through of
inventory that was reserved in previous periods which was offset by the
unfavorable effect of $1.3 million related to revision of inventory standard
costs. Gross margin for the second quarter and first six months of 2003
decreased compared with the second quarter and first six months of 2002 because
the second quarter of 2002 included the reversal of an accrual for disputed
contractual obligations that was settled for less than originally estimated,
which resulted in $0.6 million of additional gross margin. Without the reversal,
gross margin for the second quarter of 2002 would have been 1.6% lower. Gross
margin for the first six months of 2003 was also affected by increased revenue
from new products, which generally carry lower margins than more mature
products. Typically, new products are introduced at competitive selling prices
and the margins on those products increase over time as costs are reduced.
Actel seeks to reduce costs by improving wafer yields, negotiating price
reductions with suppliers, increasing the level and efficiency of our testing
and packaging operations, achieving economies of scale by means of higher
production levels, and increasing the number of die produced per wafer,
principally by shrinking the die size of our products. No assurance can be given
that these efforts will continue to be successful. Our capability to shrink the
die size of our FPGAs is dependent on the availability of more advanced
manufacturing processes. Due to the custom steps involved in manufacturing
antifuse and (to a lesser extent) flash FPGAs, we typically obtain access to new
manufacturing processes later than our competitors using standard manufacturing
processes.
Research and Development (R&D)
R&D expenditures were $9.8 million, or 27% of net revenues, for the second
quarter of 2003 compared with $9.5 million, or 28% of net revenues, for the
first quarter of 2003 and $9.9 million, or 29% of revenues, for the second
quarter of 2002. R&D expenditures were $19.4 million, or 27% of net revenues,
for the first six months of 2003 compared with $19.6 million, or 29% of net
revenues, for the first six months of 2002. R&D spending for the second quarter
of 2003 increased sequentially due to an increase in expenses for consultants
working on new product development and expenses related to patent registration.
R&D spending for the first six months of 2003 decreased from 2002 because R&D
spending on the development of the BridgeFPGA product was placed on hold during
the third quarter of 2002 and has not resumed.
Selling, General, and Administrative (SG&A)
SG&A expenses were $11.1 million, or 30% of net revenues, for the second
quarter of 2003 compared with $11.0 million, or 32% of net revenues, for the
first quarter of 2003 and $11.0 million, or 32% of net revenues, for the second
quarter of 2002. SG&A expenses were $22.1 million, or 31% of net revenues, for
the first six months of 2003 compared with $21.7 million, or 32% of net
revenues, for the first six months of fiscal 2002. SG&A spending for the second
quarter and first six months of 2003 was higher than previous periods because of
increased selling expenses associated with increased revenue, spending related
to a special meeting of shareholders during the second quarter of 2003, and
spending related to documentation of compliance with the requirements of the
Sarbanes-Oxley Act of 2002.
Amortization of Acquisition-Related Intangibles and Expenses
Amortization of acquisition-related intangibles and expenses was $0.7
million for all periods presented. Due to the implementation of Statement of
Financial Accounting Standards (SFAS) No. 142 in the first quarter of 2002, the
amortization of goodwill was eliminated. See Note 3 of Notes to Unaudited
Consolidated Condensed Financial Statements for further discussion of SFAS Nos.
142 and 144.
Interest Income and Other, Net
Interest income and other, net was $0.7 million for the second quarter of
2003 compared with $1.0 million for the first quarter of 2003 and $1.8 million
for the second quarter of 2002. Interest income and other, net was $1.8 million
for the first six months of 2003 compared with $3.3 million for the first six
months of 2002. The quarterly and six-month decreases were due to lower interest
rates available in the market and lower gains realized on our short-term
investments.
Losses on Sales and Write-Downs of Equity Investments
We sold our remaining investment in a publicly traded equity security for a
gain of $0.1 million during the second quarter of 2003, compared with no losses
on sales and write-downs of equity investments for the first quarter of 2003 and
$1.0 million of losses on sales and write-downs for the second quarter of 2002.
At July 6, 2003, we had $0.1 million of strategic investments in other
companies.
Tax (Benefit) Provision
The tax benefit was $0.1 million for the second quarter of 2003 compared
with $0.9 million for the first quarter of 2003 and a tax provision of $0.2
million for the second quarter of 2002. The change in position from tax
provision to tax benefit during these periods was primarily due to taxable
income and R&D tax credits. For the second quarter of 2003, the $0.1 million tax
benefit was comprised of tax credits generated by R&D spending during the
quarter that more than offset the tax expense associated with a pre-tax profit
of $1.2 million. For the first quarter of 2003, the tax benefit was comprised of
tax credits generated by R&D spending combined with the tax benefit associated a
pre-tax loss of $0.6 million. The tax provision recorded for the second quarter
of 2002 was based on the expectation of higher taxable income for the full year
than was actually achieved. During the third quarter of 2002, the expectation
for annual results was revised and a cumulative adjustment was recorded to bring
the net tax position for that year to date into a credit position.
Our tax position is based on the estimated annual tax rate in compliance
with SFAS No. 109, "Accounting for Income Taxes." Significant components
affecting the effective tax rate include federal R&D credits, income from
tax-exempt securities, the state composite rate, and recognition of certain
deferred tax assets subject to valuation allowances.
Liquidity and Capital Resources
Actel's cash, cash equivalents, and short-term investments were $141.6
million at the end of the second quarter of 2003 compared with $133.8 million at
the beginning of the year.
Cash provided by operating activities was $6.9 million for the first six
months of 2003 compared with $3.0 million provided for the first six months of
2002. The increase in cash provided by operations resulted primarily from an
income tax refund of $5.0 million for taxes paid in prior years based on a carry
back of net operating losses generated in 2001. Net income for the first six
months of 2003 also provided $0.8 more cash from operations than for the first
six months of 2002. These increases in cash generated from operations were
offset by higher cash used for reduction of our accounts payable, accrued
salaries and employee benefits, and other accrued liabilities during the first
six months of 2003 compared with the first six months of 2002.
Capital expenditures were $4.5 million for the first six months of 2003
compared with $3.7 million for the first six months of 2002. Sales of common
stock under employee stock plans provided $5.4 million of cash for the first six
months of 2003 compared with $5.1 million for the first six months of 2002.
We meet all of our funding needs for ongoing operations with internally
generated cash flows from operations and with existing cash and short-term
investment balances. {We believe that existing cash, cash equivalents, and
short-term investments, together with cash generated from operations, will be
sufficient to meet our cash requirements for the next four quarters.} A portion
of available cash may be used for investment in or acquisition of complementary
businesses, products, or technologies. Wafer manufacturers have at times
demanded financial support from customers in the form of equity investments and
advance purchase price deposits, which in some cases have been substantial.
Should we require additional capacity, we may be required to incur significant
expenditures to secure such capacity.
We believe that the availability of adequate financial resources is a
substantial competitive factor. To take advantage of opportunities as they
arise, or to withstand adverse business conditions when they occur, it may
become prudent or necessary for us to raise additional capital. We monitor the
availability and cost of potential capital resources, including equity and debt,
with a view toward raising additional capital on terms that are acceptable to
us. No assurance can be given that additional capital would become available on
acceptable terms if needed.
Factors Affecting Future Operating Results
Our operating results are subject to general economic conditions and a
variety of risks characteristic of the semiconductor industry (including booking
and shipment uncertainties, wafer supply fluctuations, and price erosion) or
specific to us, any of which could cause our operating results to differ
materially from past results. See the Risk Factors set forth at the end of Part
I of our 2002 Annual Report, which are incorporated herein by this reference.
We account for income taxes in accordance with SFAS No. 109, "Accounting
for Income Taxes," which requires that deferred tax assets and liabilities be
recognized using enacted tax rates for the effect of temporary differences
between the book and tax bases of recorded assets and liabilities. SFAS No. 109
also requires that deferred tax assets be reduced by a valuation allowance if it
is more likely than not that some or all of the deferred tax assets will not be
realized. We evaluate annually the realizability of our deferred tax assets by
assessing our valuation allowance and, if necessary, we adjust the amount of
such allowance. The factors used to assess the likelihood of realization are our
forecast of future taxable income and available tax planning strategies that
could be implemented to realize the net deferred tax assets.
At July 6, 2003, we had a net deferred tax asset of $39.1 million after
consideration of deferred tax liabilities and a valuation allowance. In order to
fully utilize the $39.1 million of deferred tax assets, taxable income in the
amount of approximately $130 million must be earned in future periods. For
proper valuation of deferred tax assets under SFAS No. 109 in situations where a
company has incurred a three-year cumulative loss before taxes in recent years,
significant negative evidence is considered to exist in the evaluation of the
company's ability to generate future taxable income. In evaluating positive
evidence available, expectations of future taxable income on an extended time
horizon are rarely sufficient to overcome the negative evidence of recent
cumulative losses. Failure to achieve positive taxable income in 2003 would
result in a cumulative three year loss before tax, which would result in
significant negative evidence under SFAS No. 109 regarding the realizability of
our of net deferred tax assets. This would probably result in additional tax
provisions being recorded on the income statement in 2003, thereby reducing net
income. Factors that may affect our ability to achieve sufficient forecasted
taxable income include, but are not limited to, increased competition, a decline
in sales or margins, loss of market share, delays in product availability, and
technological obsolescence.
Additional Quarterly Information
The following table presents certain unaudited quarterly results for each
of the eight quarters in the period ended July 6, 2003. In our opinion, all
necessary adjustments (consisting only of normal recurring accruals) have been
included in the amounts stated below to present fairly the unaudited quarterly
results when read in conjunction with our audited consolidated condensed
financial statements and notes thereto included in our 2002 Form 10-K. However,
these quarterly operating results are not indicative of the results for any
future period.
Three Months Ended
---------------------------------------------------------------------------------------------
Jul. 6, Apr. 6, Jan. 5, Oct. 6, Jul. 7, Apr. 7, Jan. 6, Sep. 30,
2003 2003 2003 2002 2002 2002 2002 2001
--------- --------- --------- --------- --------- --------- --------- ---------
(unaudited, in thousands except per share amounts)
Statements of Operations Data:
Net revenues.................... $ 36,609 $ 34,341 $ 34,103 $ 32,912 $ 34,293 $ 33,060 $ 32,059 $ 32,006
Gross profit.................... 22,025 19,612 20,591 19,229 21,337 20,276 19,567 16,734
Income (loss) from operations... 441 (1,614) (951) (1,587) (282) (853) (4,086) (6,188)
Net income (loss)............... 1,386 231 (1,831) 1,107 404 395 (2,531) (2,334)
Net income (loss) per share:
Basic........................ $ 0.06 $ 0.01 $ (0.08) $ 0.05 $ 0.02 $ 0.02 $ (0.11) $ (0.10)
========= ========= ========= ======== ========= ========= ========= ========
Diluted...................... $ 0.05 $ 0.01 $ (0.08) $ 0.04 $ 0.02 $ 0.02 $ (0.11) $ (0.10)
========= ========= ========= ======== ========= ========= ========= ========
Shares used in computing net
income (loss) per share:
Basic........................ 24,550 24,338 24,126 24,531 24,382 24,170 23,987 23,852
========= ========= ========= ======== ========= ========= ========= ========
Diluted...................... 25,776 25,087 24,126 24,959 26,036 25,388 23,987 23,852
========= ========= ========= ======== ========= ========= ========= ========
Three Months Ended
---------------------------------------------------------------------------------------------
Jul. 6, Apr. 6, Jan. 5, Oct. 6, Jul. 7, Apr. 7, Jan. 6, Sep. 30,
2003 2003 2003 2002 2002 2002 2002 2001
--------- --------- --------- --------- --------- --------- --------- ---------
As a Percentage of Net Revenues:
Net revenues.................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit.................... 60.2 57.1 60.4 58.4 62.2 61.3 61.0 52.3
Income (loss) from operations... 1.2 (4.7) (2.8) (4.8) (0.8) (2.6) (12.7) (19.3)
Net income (loss)............... 3.8 0.7 (5.4) 3.4 1.2 1.2 (7.9) (7.3)
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of July 6, 2003, our investment portfolio (other than strategic
investments) consisted primarily of corporate bonds, floating rate notes, and
federal and municipal obligations. The principal objectives of our investment
activities are to preserve principal, meet liquidity needs, and maximize yields.
To meet these objectives, we only invest in high credit quality debt securities
with average maturities of less than two years. We also limit the percentage of
total investments that may be invested in any one issuer. Corporate investments
as a group are also limited to a maximum percentage of our investment portfolio.
We are exposed to financial market risks, including changes in interest
rates and marketable equity security prices. All of the potential changes noted
below are based on sensitivity analysis performed on our financial position and
expected operating levels at July 6, 2003. Actual results may differ materially.
Our investments are subject to interest rate risk. An increase in interest
rates could subject us to a decline in the market value of our investments.
These risks are mitigated by our ability to hold these investments to maturity.
A hypothetical 100 basis point increase in interest rates would result in a
reduction of approximately $1.2 million in the fair value of our
available-for-sale securities held at July 6, 2003.
Item 4. Controls and Procedures
Quarterly Evaluation of Our Disclosure Controls and Internal Controls
Our management evaluated, with the participation of our Chief Executive
Officer (CEO) and our Chief Financial Officer (CFO), the effectiveness of our
"disclosure controls and procedures" (Disclosure Controls) and our "internal
control over financial reporting" (Internal Control) as of the end of the period
covered by this Quarterly Report on Form 10-Q. Based on this evaluation (the
Controls Evaluation), our CEO and our CFO have concluded that our disclosure
controls and procedures are effective to ensure that information we are required
to disclose in reports that we file or submit under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission (SEC) rules and forms.
CEO and CFO Certifications
There are "Certifications" of the CEO and the CFO filed as Exhibit 31 to
this Quarterly Report on Form 10-Q. The Certifications (Rule 13a-14
Certifications) are required in accordance with Rule 13a-14 of the Securities
Exchange Act of 1934 (Exchange Act). This Controls and Procedures section of the
Quarterly Report includes the information concerning the Controls Evaluation
referred to in the Rule 13a-14 Certifications and it should be read in
conjunction with the Rule 13a-14 Certifications for a more complete
understanding of the topics presented.
Disclosure Controls and Internal Controls
Disclosure Controls are procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act, such as
this Quarterly Report, is recorded, processed, summarized, and reported within
the time periods specified in the SEC's rules and forms. Disclosure Controls are
also designed to ensure that such information is accumulated and communicated to
our management, including the CEO and CFO, as appropriate to allow timely
decisions regarding required disclosure. Internal Controls are procedures
designed to provide reasonable assurance that (1) our transactions are properly
authorized; (2) our assets are safeguarded against unauthorized or improper use;
and (3) our transactions are properly recorded and reported, all to permit the
preparation of our financial statements in conformity with generally accepted
accounting principles.
Limitations on the Effectiveness of Controls
A control system, no matter how well designed and operated, can provide
only reasonable, not absolute, assurance that the control system's objectives
will be met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Controls can also be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management override of
the controls. The design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions. Over time, controls may become inadequate because of changes
in conditions or deterioration in the degree of compliance with its policies or
procedures. Because of the inherent limitations in a cost-effective control
system, our management, including the CEO and CFO, does not expect that our
Disclosure Controls and our Internal Controls will prevent or detect all
potential errors and fraud. Accordingly, misstatements due to error or fraud may
occur and not be detected.
Scope of the Controls Evaluation
The evaluation of our Disclosure Controls and our Internal Controls
included a review of the controls' objectives and design, our implementation of
the controls, and the effect of the controls on the information generated for
use in this Quarterly Report. In the course of the Controls Evaluation, we
sought to identify data errors, controls problems, or acts of fraud and confirm
that appropriate corrective actions, including process improvements, were being
undertaken. This type of evaluation is performed on a quarterly basis so that
the conclusions of management, including the CEO and CFO, concerning controls
effectiveness can be reported in our Quarterly Reports on Form 10-Q and Annual
Report on Form 10-K. Our Internal Controls are also evaluated on an ongoing
basis by personnel in our Finance organization, as well as by our independent
auditors, who evaluate our Internal Controls in connection with determining
their auditing procedures related to their report on our annual financial
statements and not to provide assurance on our Internal Controls. The overall
goals of these various evaluation activities are to monitor our Disclosure
Controls and our Internal Controls, and to modify them as necessary; our intent
is to maintain the Disclosure Controls and the Internal Controls as dynamic
systems that change as conditions warrant.
Among other matters, we sought in our evaluation to determine whether there
were any "significant deficiencies" or "material weaknesses" in our Internal
Controls, and whether we had identified any acts of fraud involving personnel
with a significant role in our Internal Controls. This information was important
both for the Controls Evaluation generally, and because items 5 and 6 in the
Rule 13a-14 Certifications of the CEO and CFO require that the CEO and CFO
disclose that information to our Board's Audit Committee and our independent
auditors, and report on related matters in this section of the Quarterly Report.
In professional auditing literature, "significant deficiencies" are referred to
as "reportable conditions," which are control issues that could have a
significant adverse effect on the ability to record, process, summarize, and
report financial data in the financial statements. Auditing literature defines
"material weakness" as a particularly serious reportable condition where the
internal control does not reduce to a relatively low level the risk that
misstatements caused by error or fraud may occur in amounts that would be
material in relation to the financial statements and the risk that such
misstatements would not be detected within a timely period by employees in the
normal course of performing their assigned functions. We also sought to deal
with other controls matters in the Controls Evaluation, and in each case if a
problem was identified, we considered what revision, improvement, and/or
correction to make in accordance with our ongoing procedures.
There was no change in our Internal Controls that occurred during the
period covered by this Quarterly Report on Form 10-Q that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
Conclusions
Based upon the Controls Evaluation, our CEO and CFO have concluded that,
subject to the limitations noted above, our Disclosure Controls are effective to
ensure that material information relating to Actel Corporation and its
consolidated subsidiaries is made known to management, including the CEO and
CFO, particularly during the period when our periodic reports are being
prepared, and that our Internal Controls are effective to provide reasonable
assurance that our financial statements are fairly presented in conformity with
generally accepted accounting principles.
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The 2003 Annual Meeting of Shareholders of Actel was held on May 23, 2003.
At the Annual Meeting, Actel shareholders (i) elected directors to serve until
the next Annual Meeting of Shareholders and until their successors are elected,
(ii) approved Actel's Amended and Restated 1993 Employee Stock Purchase Plan,
and (iii) ratified the appointment of Ernst & Young LLP as Actel's independent
auditors for the fiscal year ending January 4, 2004. Shareholders did not
approve Actel's Amended and Restated 1993 Directors' Stock Option Plan.
The vote on election of directors was as follows:
Nominee For Withheld
- ---------------------------- ------------------------ ----------------------
John C. East................ 21,543,935 1,495,250
James R. Fiebiger........... 22,585,358 453,827
Jos C. Henkens.............. 21,610,317 1,428,868
Jacob S. Jacobsson.......... 21,648,667 1,390,518
Henry L. Perret............. 21,510,201 1,528,984
Robert G. Spencer........... 22,624,458 414,727
The vote on approval of Actel's Amended and Restated 1993 Employee Stock
Purchase Plan was as follows:
For Against Abstain Broker Non-Vote
- --------------- --------------- --------------- ---------------
18,129,430 2,338,207 14,187 2,557,361
The vote on approval of Actel's Amended and Restated 1993 Directors' Stock
Option Plan was as follows:
For Against Abstain Broker Non-Vote
- --------------- --------------- --------------- ---------------
9,252,030 11,195,513 34,281 2,557,361
The vote on ratification of the appointment of Ernst & Young LLP was as follows:
For Against Abstain
- --------------- --------------- ----------------
22,215,900 814,341 8,944
At a meeting held immediately after the 2003 Annual Meeting of
Shareholders, our Board of Directors approved the 2003 Director Stock Option
Plan and called a Special Meeting of Shareholders to seek approval of the Plan.
The 2003 Director Stock Option Plan included several material changes to the
Amended and Restated 1993 Directors' Stock Option Plan (which had not been
approved by shareholders at the 2003 Annual Meeting) intended to make the 2003
Director Plan acceptable to more shareholders. The Special Meeting was held on
June 27, 2003. At the Special Meeting, Actel shareholders approved the 2003
Director Stock Option Plan. The vote on approval of Actel's 2003 Director Stock
Option Plan was as follows:
For Against Abstain
- --------------- --------------- ----------------
11,441,629 10,890,250 21,582
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Number Description
- ----------------- ------------------------------------------------------------
31 Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Rule 13a-14(a) (17 CFR 240.13a-14(a)),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
32 Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
On July 23, 2003, we announced our financial results for the quarter ended
July 6, 2003. The full text of the press release issued in connection with the
announcement was attached as Exhibit 99.1 to our Current Report on Form 8-K
filed with the SEC on July 23, 2003.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACTEL CORPORATION
Date: August 13, 2003 /s/ Jon A. Anderson
-------------------------------------
Jon A. Anderson
Vice President of Finance
and Chief Financial Officer
(as principal financial officer
and on behalf of Registrant)