Actel Announces Record Quarterly Revenues and Profits

Business Wire, July 25, 2000

Business Editors/High-Tech Writers

SUNNYVALE, Calif.--(BUSINESS WIRE)--July 25, 2000

Actel Corporation (Nasdaq:ACTL) today announced record financial results for the second quarter of 2000.

For the second quarter of 2000, revenues were a record $55.5 million, compared with $50.7 million for the prior quarter and $41.6 million for the second quarter a year ago. This represents an increase of 10 percent from the prior quarter and 33 percent from the second quarter a year ago. The sequential sales growth of 10 percent included gains of 26 percent in Europe, 6 percent in North America, and 5 percent in Pan Asia. New product revenue increased by 17 percent over the prior quarter and represented 37 percent of the total quarterly revenue.

Net income in the second quarter, excluding IPR&D from the Prosys acquisition, goodwill amortization, and gains from the sale of Chartered Semiconductor common stock, was a record $10.5 million, or 40 cents per share. This compares with $9.1 million, or 36 cents per share, in the prior quarter and $3.5 million, or 16 cents per share, in the second quarter a year ago. This represents an increase in net income of 16 percent from the prior quarter and 198 percent from the second quarter a year ago.

Including IPR&D, goodwill amortization, and gains from the stock sale, net income in the second quarter was a record $20.1 million, or 77 cents per share. This compares with $8.1 million, or 32 cents per share, in the prior quarter and $1.9 million, or 9 cents per share, in the second quarter a year ago. This represents an increase in net income of 148 percent from the prior quarter and 944 percent from the second quarter a year ago. The sale of Chartered Semiconductor common stock in the second quarter of 2000 resulted in a contribution of $16.7 million to net income, or 64 cents per share.

Gross margin improved in the second quarter to a record 62.3 percent, representing a 20 basis point improvement from the prior quarter. Before the effects of IPR&D and goodwill amortization, operating income in the second quarter was $13.9 million, or 25 percent of revenue. This represents a 20 percent increase in operating income from the prior quarter and a 215 percent increase from the second quarter a year ago.

Highlights for Actel during the quarter included the following:

-- Completion of the acquisition of Prosys Technology, an embedded

FPGA intellectual property (IP) innovator.

-- Agreement to acquire GateField Corporation, a Flash FPGA

company.

John East, president and CEO, stated, "We're pleased to have double-digit sequential revenue growth for the second consecutive quarter, as strength in all product families continued. Margin improvement and expense controls, coupled with the sales growth, is allowing us to continue to grow net income at a rate higher than sales growth. We're also very excited about the Prosys acquisition and having come to a definitive agreement to acquire GateField. Both of these acquisitions will strengthen our position as we head into the embedded arena."

Actel designs, develops, and markets FPGAs (field programmable gate arrays) 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 has introduced the ProASIC family of reprogrammable FPGAs based on flash technology. The company also offers system-level design, prototyping, and consulting services through its Protocol Design Services Group. Actel's strategy is to be The Programmable ASIC Solutions Company, a complete solution provider for programmable ASIC (application specific integrated circuit) systems. The company is traded on the Nasdaq National Market under the symbol ACTL and is located at 955 East Arques Avenue, Sunnyvale, Calif., 94086-4533. Telephone: 888-99-ACTEL (992-2835). Internet: http://www.actel.com.

Actel's operating results are subject to a multitude of risks that could cause actual results to differ materially from past or projected performance, including general economic conditions and a variety of risks specific to Actel or characteristic of the semiconductor industry, such as fluctuating demand, intense competition, rapid technological change and related intellectual property and international trade issues, wafer and other supply shortages, and booking and shipment uncertainties. For a discussion of these and other factors that could have a materially adverse effect on Actel's operating results, please see "Risk Factors" in Actel's most recent Forms 10-K and 10-Q, which will be provided to you free of charge upon request.

Note to Editors: The Actel name and logo are registered trademarks of Actel Corporation. All other trademarks and servicemarks are the property of their respective owners.

                          ACTEL CORPORATION

                   CONSOLIDATED STATEMENTS OF INCOME
          (unaudited, in thousands except per share amounts)

                             Three Months Ended      Six Months Ended
                         -------------------------   ----------------
                         Jul. 2,  Jul. 4,  Apr. 2,   Jul. 2,  Jul. 4,
                          2000     1999     2000      2000     1999
                        -------- -------- --------  -------- --------
Net revenues            $ 55,544   41,619 $ 50,666  $106,210 $ 82,457
Costs and
 expenses:
 Cost of
  revenues                20,949   16,238   19,208    40,157   32,232
 Research and
  development              8,888    8,064    8,351    17,239   16,511
 Selling,
  general, and
  administrative          11,827   12,904   11,529    23,356   23,345
 Amortization of
  goodwill
  and other
  acquisition-
  related
  intangibles              1,544      339    1,023     2,567      829
 Restructure and
  other charges               --    1,963       --        --    1,963
 Purchased
  in-process
  research and
  development              5,558       --       --     5,558       --
                        -------- -------- --------  -------- --------
     Total costs
      and expenses        48,766   39,508   40,111    88,877   74,880
                        -------- -------- --------  -------- --------
Income from
 operations                6,778    2,111   10,555    17,333    7,577
Interest income
 and other, net            1,503      721    1,182     2,685    1,462
Gain on sale of
 Chartered stock          28,329       --       --    28,329       --
                        -------- -------- --------  -------- --------
Income before
 tax provision            36,610    2,832   11,737    48,347    9,039
Tax provision             16,498      906    3,638    20,136    2,892
                        -------- -------- --------  -------- --------
Net income              $ 20,112 $  1,926 $  8,099  $ 28,211 $  6,147
                        ======== ======== ========  ======== ========
Net income
 per share:
 Basic                  $   0.86 $   0.09 $   0.36  $   1.23 $   0.29
                        ======== ======== ========  ======== ========
 Diluted                $   0.77 $   0.09 $   0.32  $   1.09 $   0.27
                        ======== ======== ========  ======== ========
Shares used in
 computation:
 Basic                    23,263   21,511   22,767    23,015   21,480
                        ======== ======== ========  ======== ========
 Diluted                  26,186   22,454   25,467    25,907   22,620
                        ======== ======== ========  ======== ========

                           ACTEL CORPORATION

                         PRO-FORMA INFORMATION
                  EXCLUDING GOODWILL AMORTIZATION AND
         ACQUISITION-RELATED, RESTRUCTURING, AND OTHER CHARGES
                (in thousands except per share amounts)

      The following Pro-Forma supplemental information adjusts for the
effect of amortization of goodwill and other acquisition-related
charges (including in-process research and development), restructuring
and other charges and gains from the sale of Chartered Semiconductor
Common Stock. Not all goodwill amortization and acquisition-related
charges are deductible for income tax purposes. The tax implications
of these items have been included in the determination of the pro
forma net income. This pro forma information is not prepared in
accordance with generally accepted accounting principles.

                                                Three Months Ended
                                               --------------------
                                            Jul. 2,   Jul. 4,  Apr. 2,
                                             2000      1999      2000
                                           --------  -------- --------
Operating costs and expenses               $ 20,715  $ 20,968 $ 19,880

Operating income                           $ 13,880  $  4,413 $ 11,578

Net income excluding amortization
 of goodwill and other acquisition-
  related intangibles, purchased in-
   process research and development,
    restructuring and other charges,
     and gain from sale of Chartered
      stock                                $ 10,500  $  3,523 $  9,084


Basic earnings per share excluding
 amortization of goodwill and other
  acquisition-related intangibles,
   purchased in-process research and
    development, restructuring and other
     charges, and gain from sale of
      Chartered stock                      $  0.45   $   0.16 $   0.40

Diluted earnings per share excluding
 amortization of goodwill and other
  acquisition-related intangibles,
   purchased in-process research and
    development, restructuring and other
     charges, and gain from sale of
      Chartered stock                      $  0.40   $   0.16 $   0.36

      NOTE: Certain prior amounts have been reclassified to conform with
the current presentation.

                           ACTEL CORPORATION

                      CONSOLIDATED BALANCE SHEETS
                       (unaudited, in thousands)

                                                Jul. 2,      Jan. 2,
ASSETS                                            2000         2000
                                              ---------    ---------
Current assets:
 Cash and cash equivalents                    $  27,644    $   4,939
 Short-term investments                         143,239      102,201
 Accounts receivable, net                        27,896       22,753
 Inventories                                     26,761       25,324
 Deferred income taxes
  and other current assets                       23,623       22,667
                                              ---------    ---------
   Total current assets                         249,163      177,884
Property and equipment, net                      10,762       12,564
Investment in foundry                                --       37,619
Other assets                                     48,184       31,144
                                              ---------    ---------
                                              $ 308,109    $ 259,211

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Accounts payable                             $  17,169    $  15,374
 Accrued salaries and employee benefits           9,265        6,884
 Other accrued liabilities                       17,635        6,912
 Deferred income                                 45,695       39,896
                                              ---------    ---------
  Total current liabilities                   $  89,764    $  69,066
 Deferred tax liability                           1,057       11,515
                                              ---------    ---------
  Total liabilities                              90,821       80,581
Shareholders' equity                            217,288      178,630
                                              ---------    ---------
                                              $ 308,109    $ 259,211