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<SEC-DOCUMENT>0000907687-01-500026.txt : 20010409
<SEC-HEADER>0000907687-01-500026.hdr.sgml : 20010409
ACCESSION NUMBER: 0000907687-01-500026
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 7
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20010402

FILER:

COMPANY DATA:
COMPANY CONFORMED NAME: ACTEL CORP
CENTRAL INDEX KEY: 0000907687
STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674]
IRS NUMBER: 770097724
STATE OF INCORPORATION: CA
FISCAL YEAR END: 0102

FILING VALUES:
FORM TYPE: 10-K405
SEC ACT:
SEC FILE NUMBER: 000-21970
FILM NUMBER: 1590894

BUSINESS ADDRESS:
STREET 1: 955 EAST ARQUES AVE
CITY: SUNNYVALE
STATE: CA
ZIP: 94086
BUSINESS PHONE: 4087391010

MAIL ADDRESS:
STREET 1: 955 EAST ARQUES AVE
STREET 2: 955 EAST ARQUES AVE
CITY: SUNNYVALE
STATE: CA
ZIP: 94086
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>annualreport.txt
<DESCRIPTION>ANNUAL REPORT FOR YEAR ENDED DECEMBER 31, 2000
<TEXT>

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 December 31, 2000

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. X

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, 2001, as reported by the National Market System of the
National Association of Securities Dealers Automated Quotation System, was
approximately $320,361,000. 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 purpose.

Number of shares of Common Stock outstanding as of March 31, 2001:
23,565,643.

--------------------------------------

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 December 31, 2000 (Parts II
and IV), and (ii) portions of Registrant's proxy statement for its annual
meeting of shareholders to be held on May 18, 2001 (Part III).

<PAGE>

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,
2001, and Actel 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, industrial,
space, and other electronic systems to differentiate products and get them to
market faster. Actel is the leading supplier of FPGAs based on antifuse
technology, and has introduced FPGAs based on flash technology and embedded
programmable gate array (EPGA) intellectual property (IP) cores based on static
random access memory (SRAM) technology. Actel's strategy is to be The
Programmable ASIC Solutions Company, a provider of complete programmable
solutions for application specific integrated circuit (ASIC) and application
specific standard product (ASSP) system designers and manufacturers.

Actel shipped its first products in 1988 and thousands of its development
systems are in the hands of customers, including Alcatel; Cabletron Systems, Inc
(Cabletron); General Electric Company (GE); Honeywell International Inc.
(Honeywell); Hughes Electronics Corporation (Hughes); Lockheed Martin
Corporation (Lockheed Martin); Lucent Technologies, Inc. (Lucent); Marconi
Corporation plc (Marconi); Nortel Networks Corporation (Nortel); Rockwell
International Corporation (Rockwell); and Siemens AG (Siemens). Actel derived
11% of its net revenues for 2000 from Nortel. Actel has foundry relationships
with Chartered Semiconductor Manufacturing Pte Ltd (Chartered) in Singapore;
Infineon Technologies AG (Infineon) in Germany; Lockheed Martin Space
Electronics & Communications (LMSEC) in the United States; Matsushita
Electronics Company (MEC) in Japan; United Microelectronics Corporation (UMC) in
Taiwan; and Winbond Electronics Corp. (Winbond) in Taiwan.

Actel's product line consists of twelve families of FPGAs, one based on
flash technology and the rest based on antifuse technology; Designer Series,
DeskTOP, and ASICmaster PRO development systems; CoreACT and VariCore EPGA IP
cores; Activator and Silicon Sculptor programming hardware; Silicon Explorer
debugging and diagnostic tools; and sockets. Actel also offers system-level
design, prototyping, and consulting services through its Protocol Design
Services Group and programming services.

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, and ambient temperature tolerances. Designers can use Actel's
DeskTOP integrated suite of design tools or third-party software for circuit
design and then translate the design into a programmed FPGA using Actel's highly
automated Designer Series development system and Activator or Silicon Sculptor
programmers. CoreACT IP 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." Sockets permit designers to replace an FPGA without damaging the board.

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.

On May 11, 2000, Actel signed a letter of intent to acquire GateField
Corporation (GateField). On November 15, 2000, Actel completed its acquisition
of GateField in a transaction accounted for using the purchase method of
accounting. For accounting purposes, the total purchase price was approximately
$45.7 million. As a result of the acquisition, Actel procured all rights to the
ProASIC family of non-volatile, single-chip, low-power, "live-at-power-up"
family of reprogrammable gate arrays. The product family, which currently
consists of four devices with capacities ranging up to 473,000 gates, is
manufactured on a mainstream, 0.25-micron embedded flash process at Infineon
(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, and can be seamlessly migrated to
standard ASIC designs. 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 (P&R) 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.

In June 2000, Actel announced its strategy to enable embedded FPGA
designs in ASICs and ASSPs. Actel seeks to position itself as a significant
force in this rapidly developing market segment, which some analysts estimate
will grow to $2.4 billion by 2004. Actel's plan is to bring together all of the
elements required to successfully support ASSP manufacturers and system
designers served by the leading ASIC providers. Actel's goal is to include
technology, products, design tools, methodologies, and key EDA and ASIC
partnerships as part of the embedded FPGA solution it offers to designers.

In a move to initiate the embedded strategy, Actel acquired Prosys
Technologies, Inc. (Prosys), an embedded FPGA IP innovator, on June 2, 2000.
Prosys had developed a high-density embedded FPGA core well suited for
general-purpose applications. Prosys had also created a robust set of software
tools, following standard ASIC design methodologies and design flows, to
integrate its cores into standard cell designs. This acquisition enhanced
Actel's core competencies and complemented its agreement to acquire GateField,
which may have been the first programmable logic company to embrace the embedded
logic IP business model. Actel expected these acquisitions to help it create the
first solution by an established FPGA provider in this new market segment.

In September 2000, Actel introduced the eX family of programmable ASIC
products aimed at the e-appliance market of internet-related consumer
electronics. This market includes products such as MP3 internet
recorders/players, digital cameras, cable and xDSL modems, personal digital
assistants, and digital set-top boxes. The eX family's streamlined feature set,
including a sleep mode to conserve battery power, is differentiated for consumer
and e-appliance applications. By featuring low cost, low power, a small
footprint, and an easy design process, the eX family is expected by Actel to
extend the success it has experienced in the e-appliance market.

In December 2000, Actel announced the availability of the 48,000
system-gate member of its new RTSX-S family of radiation-tolerant FPGAs, the
first family developed by Actel specifically for space applications. Based on
Actel's 0.25-micron antifuse SX-A family, the architecture of the RTSX-S family
was modified and optimized to meet the stringent requirements of space
applications, including added capability in the input and output (I/O) modules
and the device core sequential logic. More specifically, RTSX-S devices contain
hardened registers, which provide unprecedented levels of single event upset
(SEU) tolerance and permit designers to use all available logic. In addition,
RTSX-S devices offer a high degree of interface flexibility, making them
compatible with other system components using established or emerging interface
standards.

In February 2001, Actel introduced its new VariCore EPGA star IP cores
for ASIC and ASSP systems on a chip (SoCs). The VariCore EPGA cores are the
first available commercial embeddable and reconfigurable "soft hardware" IP
products broadly offered to the ASIC and ASSP market. VariCore EPGA products,
which were built from the ground up to be embedded in SoC silicon, support the
standard ASIC design methodology and flow and are supported at several major
independent silicon foundries, which should simplify adoption and use of the
cores by both ASIC and ASSP providers.

Actel markets its products through a worldwide, multi-tiered sales and
distribution network. In 2000, 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 (Arrow) worldwide. In 2000, Arrow,
Pioneer, and Unique accounted for 17%, 13%, and 15%, respectively, of Actel's
net revenues. In addition to the three major industrial distributors, the North
American sales network includes 25 sales offices and 20 sales representative
firms. The European network includes five sales offices and 12 distributors. The
Pan-Asia network includes four sales offices and seven distributors. Three
additional distributors serve the remaining international markets in which Actel
offers its products. In 2000, sales to customers outside the United States
accounted for 32% of Actel's net revenues, compared with 29% for 1999 and 33%
for 1998.

Actel was incorporated in California in 1985 and has been authorized by
shareholders to reincorporate as a Nevada corporation. Actel'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. Actel's World Wide Web address is http://www.actel.com. As used
in this Annual Report on Form 10-K, "Actel" means Actel Corporation and its
consolidated subsidiaries; and, unless otherwise indicated, "gate" or "gates"
means "PLD gates" when used in reference to ACT 1, ACT 2, ACT 3, XL, DX, and
RadTolerant FPGAs and "system gates" when used in reference to MX, SX, SX-A, eX,
RadHard, and ProASIC FPGAs.

"Actel," "ASICmaster," "ProASIC," and the Actel logo are registered
trademarks of Actel. This Annual Report on Form 10-K also includes unregistered
trademarks of Actel 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, Actel's FPGAs offer the benefits
of both ASICs and programmable devices:

* Like ASICs, Actel's FPGA devices provide non-volatile,
"live-at-power-up," low-power, single-chip solutions at low prices
in volume production. Like other programmable devices, Actel'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 Actel'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, Actel
can provide programming services, making the offering a "virtual
ASIC" from the customer's point of view.

For customers requiring SoC solutions, Actel's SRAM-based EPGA logic
cores will enable the integration of reprogrammable logic with predefined
functions on a single chip using a standard process.

For customers requiring either discrete or SoC solutions, Actel'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

Actel's product line consists of twelve families of FPGAs, one based on
flash technology and the rest based on antifuse technology; Designer Series,
DeskTOP, and ASICmaster PRO development systems; CoreACT and VariCore EPGA IP
cores; Activator and Silicon Sculptor programming hardware; Silicon Explorer
debugging and diagnostic tools; and sockets. In 2000, Actel introduced the eX
and RTSX-S families of antifuse FPGAs, as well as 0.22-micron SX-A devices.
Actel also offers system-level design, prototyping, and consulting services
through its Protocol Design Services Group and programming services.

FPGAs

To meet the diverse customer requirements in the broad programmable logic
market, all Actel FPGAs (except the two members of the RadHard family) are
offered in a variety of speed grades, package types, and/or ambient temperature
tolerances. 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. The plastic package types offered are plastic ball grid
array (BG), fine pitch plastic ball grid array (FG), chip scale package (CS),
plastic j-leaded chip carrier (PL), plastic quad flat pack (PQ), plastic power
quad flat pack (RQ), thin quad flat pack (TQ), and very thin quad flat pack
(VQ).

RadHard devices are offered in ceramic packages and certified with Class
VQ (QML) qualification. All other devices offered in ceramic packages are
certified for commercial or military temperature ranges or with Class B
(MIL-STD-883) or Class E (extended flow/space) qualification. The ceramic
package types offered are ceramic quad flat pack (CQ) and ceramic pin grid array
(PG).

Speed options include standard, approximately 15% faster than standard
(-1), approximately 25% faster than standard (-2), approximately 35% faster than
standard (-3), and approximately 40% slower than standard (-F). The -F speed
grade is offered for commercial devices only. The -2 and -3 speed grades are not
offered for military, Class B, or Class E devices. RadHard and ProASIC devices
are offered only at standard speed.

ACT 1

The ACT 1 family of FPGAs consists of two products: the 2,000-gate
A1010, which was first shipped for revenue in 1988; and the 4,000-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. Actel offers 5.0- and 3.3-volt versions of both ACT 1
products, which can be ordered in approximately 125 speed, packaging, and
temperature variations.

ACT 2

The ACT 2 family of FPGAs consists of three products: the
9,000-gate A1240 and the 16,000-gate A1280, which were first shipped for
revenue in 1991; and the 6,000-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. Actel offers 5.0- and
3.3-volt versions of all three ACT 2 products, which can be ordered in
approximately 95 speed, packaging, and temperature variations.

ACT 3

The ACT 3 family of FPGAs consists of five products: the
6,000-gate A1425 and the 11,000-gate A1460, which were first shipped for
revenue in 1993; and the 3,000-gate A1415, the 9,000-gate A1440, and the
20,000-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 I/Os. The ACT 3 family was introduced at 0.8 micron and is
manufactured using 0.6-micron design rules. Actel offers 5.0- and
3.3-volt versions of all five ACT 3 products, which can be ordered in
approximately 235 speed, packaging, and temperature variations.

The 1200XL family of FPGAs, which was first shipped for revenue in
1995, consists of three products: the 6,000-gate A1225XL, the 9,000-gate
A1240XL, and the 16,000-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. Actel offers 5.0- and 3.3-volt
versions of all three members of the 1200XL family, which can be ordered
in approximately 130 speed, packaging, and temperature variations.

The 3200DX family of FPGAs consists of five products: the
12,000-gate A3265DX, which was first shipped for revenue in 1995; the
24,000-gate A32140DX and the 36,000-gate A32200DX, which were first
shipped for revenue in 1996; and the 20,000-gate A32100DX and the
52,000-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 complex PLDs (CPLDs), and the fast dual-port SRAM
typically used for high-speed buffering. Supported by Actel'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. Actel 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 185 speed, packaging,
and temperature variations.

The MX family of FPGAs consists of six products: the 6,000-gate
A40MX04 and the 24,000-gate A42MX16, which were first shipped for revenue
in 1997; and the 3,000-gate A40MX02, the 14,000-gate A42MX09, the
36,000-gate A42MX24, and the 54,000-gate A42MX36, which were first
shipped for revenue in 1998. The MX family includes the best features
from Actel'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 300 speed, packaging, and temperature variations.

As Actel's first line of low-cost, single-chip ASIC alternatives,
the MX family ramped to volume faster than any other product in Actel's
history. In April 2000, Actel announced that it had shipped more than one
million units of the MX family in two consecutive quarters. 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. The MX family is currently positioned
as a line of low-cost, single-chip, mixed-voltage ASIC-alternative FPGAs
for 5.0-volt applications.

The SX family of FPGAs consists of four products, all of which
were first shipped for revenue in 1998: the 12,000-gate A54SX08, the
24,000-gate A54SX16 and A54SX16P, and the 48,000-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, and
temperature variations.

SX was the first family to be built on Actel'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 reduced die size (regardless of capacity),
increased device performance, and reduced cost.

The SX family's performance and density allow designers to combine
multiple high-performance CPLDs into a single FPGA, thereby cutting power
consumption, saving board space, and reducing costs. 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, consists of four products: the 12,000-gate A54SX08A, the
24,000-gate A54SX16A, the 48,000-gate A54SX32A, and the 108,000-gate
A54SX72A. The SX-A family can be ordered in more than 200 speed,
packaging, and temperature variations.

The family's fine-grained "sea-of-modules" antifuse architecture
and small process geometry permit Actel to offer fast, low-power FPGAs at
competitive prices, delivering "performance without penalty": designers
can achieve their system performance specifications without paying the
power penalty common when using SRAM-based FPGAs. 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, 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.

The SX-A was initially manufactured using 0.25-micron design
rules. In March 2000, Actel announced that it had successfully developed
a 0.22-micron antifuse process technology at UMC. This new process
reduced die size by approximately 20% and improved performance by
approximately 10% compared with Actel's 0.25-micron SX-A devices.

The eX family consists of three devices: the 3,000-gate eX64, the
6,000-gate eX128, and the 12,000-gate eX256. As single-chip solutions, eX
devices are priced to compete with the alternatives: multiple CPLDs,
low-density ASICs, and two-chip FPGAs. The new family is fabricated using
0.25-micron design rules and can be ordered in approximately 45 speed,
packaging, and temperature variations.

The eX family's streamlined feature set, including a sleep mode to
conserve battery power, is differentiated for consumer and e-appliance
applications. The eX line also offers the benefits of high design
security and a small, single-chip form factor. The combination of eX and
Actel's software tools make it straightforward to achieve performance
specifications during the design process, enabling faster design turns
and more rapid time to market. By featuring low cost, low power, a small
footprint, and an easy design process, the eX family is expected by Actel
to extend the success it has experienced in the e-appliance market.

RadTolerant

The RadTolerant family of FPGAs consists of eight products: the
4,000-gate RT1020, the 6,000-gate RT1425A, the 11,000-gate RT1460A, the
16,000-gate RT1280A, the 20,000-gate RT14100A, the 24,000 system-gate
RT54SX16, and the 48,000 system-gate RT54SX32 and RT54SX32S. RadTolerant
FPGAs are offered in ceramic packages and certified with either Class B
or Class E qualification. Complete total dose radiation test reports are
also provided on each lot of devices.

RadTolerant FPGAs are designed to meet the logic requirements for
all types of space applications, including satellites and deep-space
probes. They 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 addition, RadTolerant devices have
design- and pin-compatible commercial versions for easy and inexpensive
prototyping.

In November 1999, Actel announced a plan to expand its line of
RadTolerant FPGAs with a new family developed specifically for space
applications based on 0.25-micron antifuse SX-A devices. To determine the
appropriate device specifications and feature set, Actel consulted with
customers, including NASA's Goddard Space Flight Center. As a result of
these extensive discussions, Actel modified and optimized its
architecture to meet the stringent requirements of aerospace
applications, including added capability in the I/O modules and the
device core sequential logic.

In July 2000, Actel announced that it had implemented the concept
of triple module redundancy (TMR) in silicon. Prior to that time, no FPGA
device register was considered immune from SEU caused by space-borne
heavy ion bombardment. Users of Actel's RadTolerant FPGAs had the option
of making registers SEU immune by implementing TMR using three registers
and a "majority voting" module. However, this method of using four logic
elements to implement a single register severely limited the amount of
logic (or capacity) that was available for the user's design. These
manually created TMR registers are also often susceptible to glitches. By
"hardwiring" an internal self-refreshing TMR register into the silicon
design, Actel customers no longer need to worry about implementing TMR
registers in their design or trading off between SEU immunity and the
device's logic capacity. In addition, since these registers are built
into the device and are not implemented using placement or routing of
user gates, they are not prone to glitches.

In December 2000, Actel announced the availability of the first
member of its RTSX-S family, the 48,000 system-gate RT54SX32S FPGA. The
second member of the family, the 108,000 system-gate RT54SX72S FPGA, is
expected to be available in 2001. In addition to hardened registers,
which provide unprecedented levels of SEU tolerance and permit designers
to use all available logic in RTSX-S devices, the I/O modules were also
specifically designed for the requirements of high-reliability space
applications. These specifications included increased noise margins,
decreased power, and provision for control of the I/O signals during the
power-on and power-off transients. In addition, RTSX-S devices offer a
high degree of interface flexibility. The family supports 2.5-, 3.3-, and
5-volt input signals; configurable I/O for 3.3- and 5-volt peripheral
component interface (PCI) and transistor-transistor logic (TTL) levels in
any combination; and the 33 MHz, 32-bit PCI bus. This range of interface
support makes the RTSX-S family compatible with other system components
using either established or emerging interface standards.

RadHard

The RadHard family of FPGAs consists of two products: the
16,000-gate RH1280, which was first shipped for revenue in 1996; and the
4,000-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 LMSEC at its
Qualified Manufacturers Listing (QML) facility in Manassas, Virginia,
using a high-reliability, radiation-hardened 0.8-micron process. Actel
and LMSEC jointly developed the RadHard family to meet the demands of
applications requiring guaranteed levels of performance and radiation
survivability. Applications for RadHard FPGAs include military and
civilian satellites, deep space probes and planetary missions, and
ground-based military applications in which radiation survivability is
required.

ProASIC

The ProASIC family of FPGAs, which was first shipped for revenue
in 1999, consists of four products: the 98,000-gate A500K050, the
287,000-gate A500K130, the 369,000-gate A500K180, and the 473,000-gate
A500K270. The family is currently manufactured on a 0.25-micron embedded
flash process at Infineon in Germany. Each device is offered in PQ and BG
packages and certified for commercial or industrial temperature ranges.

Flash-based ProASIC products offer benefits over other PLDs
available on the market today, which are either volatile or
non-reprogrammable. ProASIC devices are non-volatile and reprogrammable.
ProASIC devices also operate at very low power, using only a fraction of
the power consumed by SRAM FPGAs and other PLDs based on look-up tables
(LUTs). In addition, ProASIC is a single-chip solution, making it "live
at power up" and simplifying board design, conserving board area, and
eliminating the need for the boot device (e.g., serial PROM) associated
with SRAM FPGAs. Furthermore, ProASIC devices exhibit a high level of
portability between PLD and ASIC design flows. ASIC designers can use
their standard design flow with ProASIC devices, so there are no new
design methodologies to learn, and ProASIC devices can be seamlessly
migrated to standard ASIC designs. The design methodology also enables
designers to use IP cores from proprietary and third-party sources,
eliminating much of the architecture-specific re-engineering required by
other PLDs. On the other hand, ProASIC devices reduce time to market and
minimize design risk and investment, like other PLDs. In short, the
ProASIC family of non-volatile, single-chip, low-power,
"live-at-power-up" reprogrammable gate arrays brings the benefits of
ASICs and PLDs to designers of high-density logic.

Development Systems

A key element of Actel's strategy is to support designers' 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, Actel has established the Actel Industry
Alliance, which Actel 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, Actel 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 includes all major EDA vendors supporting high-level design for both
VHDL and Verilog. Actel provides comprehensive HDL support for the EDA
environments of Aldec, Inc.; Cadence Design Systems, Inc. (Cadence); Innoveda,
Inc. (Innoveda); Mentor Graphics Corp. (Mentor Graphics); Synopsys, Inc.
(Synopsys); and Synplcity, Inc. (Synplicity).

Designer Series

The Designer Series tool set is a software suite built on an
object-oriented database that helps optimize and simplify FPGA circuit
design, implementation, and testing. Actel believes Designer Series is
among the easiest to use and most complete sets of high-level design
tools available for FPGA devices. Designer is available on the personal
computer (PC) running Windows 95/98/NT4.0 or better and on workstations
running Sun Solaris 2.6/2.7 or better or HPUX 10.2/11 or better.

The Designer*Advantage and Designer*Workstation development
systems are for customers who already own front-end design software. Both
systems include Actel's standard P&R, DirectTime P&R, ACTmap VHDL
synthesis, ACTgen macro builder, timing analysis, Verilog and VITAL
simulation libraries, and program file generation. They do not include
schematic entry or simulation. Designer*Workstation includes support for
Cadence Concept, Cadence Composer, Cadence, RapidSim, Mentor Graphics
Design Architect, and Innoveda PowerDraw schematic capture packages; and
Cadence Verilog-XL, Cadence Leapfrog, Mentor Graphics QuickSim II, and
Innoveda PowerSim simulators.

Designer*Synplify is a complete original equipment manufacturer
(OEM) version of Synplify for Actel, a premier FGPA synthesis tool for PC
configurations. It includes Designer*Advantage and Synplicity's scope
functionality and timing constraints editor. Synplify's HDL Analyser is
available separately from Synplicity. The Designer*Synopsys development
system is for customers who already own Synopsys's Design Compiler or
FPGA Compiler. It includes Designer*Workstation as well as Actel's
synthesis and DesignWare libraries.

In August 2000, Actel announced the R1-2000 release of its
Designer Series software, which included support for new Actel FPGA
families and packages as well as a series of performance enhancements.
These new features benefit users by making Designer Series software
easier to learn and use and faster to design and perform debugging
operations. By making routing improvements to the software, Actel was
able to reduce a design's power consumption by up to 35%, making Actel
antifuse FPGA devices even more attractive for portable, low-power
applications. In addition, a new graphical user interface (GUI) web
portal was added for downloading Actel software updates, advisories,
design tips, and application notes. The portal feature is expected to
improve Actel's service and response capabilities and to increase the
level of interaction between Actel and its users.

Designer Series version R1-2000 also included timing and editing
tools to speed FPGA design and timing verification. Timer, the Designer
Series static timing verification and analysis engine, was enhanced with
a back-annotated schematic viewer that displays critical paths in the
design. As a result, it is now easier and faster to trace the cause of
any timing problem in the design. This engine is more flexible and user
friendly than previous versions and has been designed to accept greater
functionality in subsequent releases. Using Pin Edit, Designer Series'
enhanced I/O pin attribute editor, engineers can now specify I/O
attributes, such as slew rate, power-up state, and voltage levels, for
individual signal pins. In addition, the engineer can specify individual
pin capacitance to fine tune line termination, thereby minimizing the
transmission line effects prevalent in high-speed designs.

DeskTOP

The DeskTOP development system is for customers designing Actel
FPGAs of 32,000 gates or less who want a complete, low-cost PC-based
design system for Windows. It includes Designer*Advantage, Synplicity
synthesis, and VeriBest schematic capture and VHDL simulation software.
The VeriBest software is now owned by Mentor Graphics. DeskTOP is offered
free of charge for a 60-day evaluation period and licensed for less than
$1,000 a year. DeskTOP Pro is for power users designing system-level
devices who want a complete, reasonably-priced design system. It offers
the same functionality as DeskTOP 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. Except for synthesis, it offers the same functionality
as DeskTOP Pro. DeskTOP Open also provides easy integrated support for
Synplicity's Synplify and Synopsys's FPGA Express synthesis software.

ASICmaster Pro

ASICmaster Pro is the design suite for Actel's ProASIC flash
devices. It includes standard P&R, timing-driven P&R, Memory Master for
memory macro generation, Power Calculator for power estimation, and
Layout Viewer for identifying and optimizing critical paths. ASICmaster
Pro was designed to support both ASIC and FPGA design flows.
Consequently, 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 to use their existing tools and scripts,
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. The
achievement of timing convergence using standard ASIC tools was one of
the key technical challenges resolved in the development of ProASIC.
Perhaps 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.

I P Cores

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 CoreACT IP models, Actel 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.

With the advent of SoC design methodologies came a corresponding increase
in the level of time and complexity required to complete these ASIC designs. The
embedded FPGA is an emerging market segment brought about by the desire of OEMs
to minimize market risks by means of in-system field reprogrammability. Some of
those risks include evolving standards and changing product features;
lengthening design cycles; the growing complexity and number of mask sets of
ASIC designs; and the rising expense of non-recurring engineering (NRE) respins.
All of these factors significantly impact design complexity and time to market,
ultimately affecting the ability of OEMs to compete in their markets. If
reprogrammable FPGA IP cores were embedded in a portion of the die on large
SoCs, OEMs could avoid the risks and costs associated with "fixed silicon" ASIC
designs and also reduce the SoC's time to market.

In June 2000, Actel announced its strategy to enable embedded FPGA
designs in ASICs and ASSPs. The strategy is to provide the industry with a
framework for the first complete embeddable FPGA solution. It included the
formation of a new organization within Actel tasked with acquiring key
technology, generating partner relationships, and coordinating the adoption of
standard methodologies and design flows. In addition, this group will define,
develop, and market Actel IP products for this emerging market sector. However,
the ultimate goal is to provide high-value, critical-need "star IP" to enable
this market. Actel plans to add increasing flexibility to its embedded FPGA
solution so that it will eventually include IP cores of varying technologies,
functionality, and performance, supported by the leading ASIC EDA software
providers, in popular process geometries at all of the major independent
foundries worldwide.

CoreACT IP Models

In November 2000, Actel announced the availability of five new
high-performance IP cores for communications, networking, and telecom
applications. The five new solutions were Core 8b/10b (8 bit/10 bit
encoder/decoder interface); CoreARBITER (PCI arbiter); CoreCRC (cyclic
redundancy code generator/checker); CoreSDRAM (SDRAM controller
interface); and CoreUART (serial communication controller). When
implemented in high-performance Actel SX-A or eX devices, these cores
offer designers the benefits of faster time-to-market, reduced design
cost, and increased performance.

Actel's 8b/10b encoder/decoder enables the physical coding
sublayer used in gigabit ethernet and fibre channel. The encoder/decoder
supports data rates in excess of 125 MHz, appropriate for the high-speed
data services required by emerging communications and telecom systems,
and has advanced technical features such as disparity and illegal code
error checking. The cyclic redundancy code (CRC) generator validates data
frames and ensures that data corruption during transmission is detected.
The CRC supports operating speeds of up to 270 MHz as well as various
communications standards.

Actel's CoreACT IP portfolio also includes CoreASYNC (PCI
asynchronous backend interface) and CorePCI. Actel's CorePCI Version 5.2
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, Actel provides designers with a flexible,
cost-effective solution for design reuse, as well as a low-cost migration
path to ASICs and next-generation process technologies. Actel also offers
a CorePCI evaluation board, which enables designers to conduct real-time
evaluation of functionality and performance in an SX device. In addition,
a connector is provided to allow easy access to Silicon Explorer so that
internal functionality and delays can be investigated.

Unlike many other core suppliers, Actel provides its cores as
source RTL code, making the cores both portable and low-cost. RTL code
provides a great degree of flexibility, enabling designers of complex
systems to quickly make changes that may be required for specific
applications. The cores are written in HDL code and supplied to customers
in either Verilog or VHDL. Each core includes comprehensive documentation
and testbenches, enabling designers to get started quickly and, if
necessary, make modifications to suit their specific needs.

Actel also makes available to its customers twelve cores developed
by Inicore AG, a Swiss IP provider, which are available only in VHDL
source code; and eight cores developed by Inventra, a division of Mentor
Graphics, which are available as optimized netlists over the internet. In
general, these cores are targeted to telecommunications and industrial
control applications.

VariCore EPGAs

In February 2001, Actel introduced its new VariCore EPGA star IP
cores for ASIC and ASSP SoCs. The VariCore EPGA cores are the first
available commercial embeddable and reconfigurable "soft hardware" IP
products broadly offered to the ASIC and ASSP market. The new cores
benefited from technology and expertise acquired from Prosys and
GateField, both of which Actel purchased in 2000.

VariCore EPGA cores increase SoC design flexibility and help
reduce design time and costs. These cores have application whenever time
to market and version variants of the same product are advantageous.
VariCore EPGA cores will help get SoC products to market sooner and keep
them there longer, thereby helping ASIC and ASSP providers gain or retain
their competitive edge. Pricing for VariCore EPGA cores will vary and
follow the "star IP" sliding-scale model of license plus royalties.

VariCore EPGA logic is a versatile and efficient embedded FPGA
core architecture that provides scaleable reprogrammability for ASICs and
ASSPs. These EPGA blocks have been designed in 0.18 micron SRAM
technology. Additional cores are being developed for the next generations
of smaller process geometries. EPGA cores are targeted at customer-owned
tool users from the ASSP world using independent silicon foundries as
well as at ASIC suppliers for use in their own IP portfolios. VariCore
programmable logic is proven in silicon and three of the world's leading
wafer foundries are supporting EPGA reprogrammable cores: UMC and TSMC in
Taiwan and Chartered in Singapore.

VariCore EPGA blocks are, in essence, reprogrammable "soft
hardware" core tiles. VariCore EPGA cores are based on a three-input LUT
structure. PEGs, consisting of 2,500 ASIC gates, are the "primary
embedded gate" blocks of EPGAs. These PEG blocks are scaleable and
configurable in VariCore's ".18um family" from a 2x1 EPGA of 5,000 ASIC
gates up to a 4x4 EPGA core of 40,000 ASIC gates. In addition, the
family's 4x4 and 4x2 members offer eight optional, cascadable RAM modules
with aspect ratios of 1k*9 or 512*18. VariCore EPGAs can also be
partitioned where needed in any ASIC or ASSP design. In a 4x4 EPGA core
utilized at 80%, VariCore EPGA cores can handle system clock speeds of up
to 100MHz while maintaining 100-200mW power consumption, depending on
core performance.

VariCore P&R is performed by the efficient, high-speed VariCore
Compiler design tool available in Windows NT or UNIX versions. VariCore
EPGA blocks can be tested and verified after being embedded within the
complete SoC design. VariCore EPGAs also are observable and controllable
with built-in self-test features, pin-fixing capability, and up to 1,280
I/O ports per core. VariCore Compiler supports design entry in VHDL and
Verilog RTL-based design flows. VariCore Compiler is also supported by
industry leading third-party design entry, verification, and test tools.
Synthesis support is provided by Synopsys Design. In the area of
front-end design verification, VariCore Compiler supports VHDL, Verilog,
and VITAL simulations and is also compatible with Synopsys's PrimeTime
and PrimePower performance and power simulation tools. For physical
design, files output in hard GDSII IP flows compatible with Cadence's
Virtuoso and Avant! Corporation's (Avant's) Apollo. For physical design
verification, layout versus schematic, and design rule checks, Compiler
supports Cadence's Dracula and Avant!'s Hercules II. To enable
verification of the EPGA core within the complete SoC environment,
VariCore Compiler generates "enhanced" EPGA netlists and models that
permit the complete EPGA function, including control interfaces and
internal scan chains, to be verified within the SoC.

A VariCore EPGA Developer's Kit is available for evaluation of
proof of silicon, design compatibility, and EPGA performance as well as
for the debug and test of user designs incorporating VariCore EPGA cores.
The Kit includes an emulation board, 0.18 micron VariCore EPGA test chip,
and user's guide.

Programming Hardware

Actel's FPGAs can be programmed by Activator or Silicon Sculptor
programmers. Actel also supports programmers that are offered by third parties,
including BP Microsystems Inc.; Data I/O Corporation; and System General
Corporation. Programmers execute instructions included in fuse files, which are
obtained from Actel's Designer Series development system software, to program
Actel FPGAs.

Activator

There are two Activator programmers: Activator 2S, which programs
one FPGA at a time; and Activator 2, which programs up to four FPGAs at a
time. The Activator programmers run on workstations; support the ACT 1,
ACT 2, ACT 3, XL, DX, MX, and SX families of antifuse FPGAs; and execute
all programming, verification, and debugging functions. Customized
programming adapters for each device type permit different packages to be
programmed by switching adapters.

Silicon Sculptor

Actel offers single- and six-site versions of the Silicon Sculptor
programmer. The compact size of the Silicon Sculptor permits designers to
program Actel FPGAs from their desktop PC rather than in a lab. Up to 12
Actel devices can be concurrently programmed from a single PC by daisy
chaining two six-site Silicon Sculptors together with an expansion cable.
A single adapter module can be used to program all Actel antifuse or
flash devices within a package type, regardless of pinout.

Design Diagnostics and Debugging Tools

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 February 2000, Actel 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 Actel'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 the eighteen channels to analyze signals internal to
the FPGA. "Action Probe," a function available only with Actel'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.

Sockets

Sockets for Actel's FPGAs are available in prototype quantities from
Actel 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 line of sockets accommodates Actel FPGAs in BG, FG,
CQ, CS, PQ, RQ, TQ, and VQ packages.

Protocol Design Services

Actel's Protocol Design Services Group is a leading provider of FPGA,
ASIC, software, and electronic system design solutions. With Actel'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 Actel'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
a twelve-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 SoC
design, turnkey FPGA and ASIC design and verification, software development, and
circuit card design.

In February 2000, Actel 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.

In August 2000, Kentron Technologies, Inc. (Kentron), a leader in
next-generation memory architectures, announced that it had chosen Actel's
Protocol Design Services Group to create the first memory subsystem that
interfaces with Kentron's Quad Band Memory (QBM). QBM is a technology that uses
standard double data rate (DDR) memory along with Kentron's patented use of
field effect transistor switches on a module to double the bandwidth of DDR from
200MHz to 400MHz data rate. According to Kentron, the QBM technology will
increase the bandwidth of the DDR module solution from 1.6GB/sec to 3.2GB/sec, a
dramatic improvement over the capabilities of other non-compatible, more
expensive memory technologies. QBM operates at 100MHz clock achieving
400Mbit/sec data transfer rates during reads/writes. The new QBM subsystem will
utilize Actel's SX-A high-speed FPGAs to reduce the cost of development and
provide chipset designers with the valuable data to aid with the implementation
of QBM ASIC controller(s). Migration to a next-generation Actel device family in
2001 is expected to provide a faster controller design that allows running
current QBM designs at 133MHz clock and 532Mbit/sec data rates.

Programming Services

Actel programs significant volumes of FPGAs each month for its customers.
This makes Actel's devices "virtual ASICs" from the customer's point of view.
Production programming charges are based on the type of device and quantity per
order. The minimum order is 500 units and full tube/tray quantities are
required. The programming yield for Actel devices normally averages 98-99%.
However, the yield can show a lot-to-lot spread, which generally ranges from 95%
to 100%.

Market and Applications

In 2000, FPGAs accounted for 98% of Actel's net revenues, virtually all
of which was derived from antifuse FPGAs. FPGAs can be used in a broad range of
applications across nearly all electronic system market segments. Most customers
use Actel's antifuse FPGAs in low to medium volumes in the final production form
of their products. Some high-volume electronic system manufacturers use Actel'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 expensive, 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, and eX families, Actel believes that its
antifuse FPGAs will be used increasingly in high volume production.

Communications

In 2000, communications accounted for an estimated 56% of Actel's net
revenues. 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 Actel in the communications market include:
3Com Corporation; ADC Telecommunications, Inc. (ADC); Advanced Fibre
Communications, Inc.; Alcatel; Cabletron; Cisco Systems, Inc.; Ericsson, Hughes;
Lucent; Marconi; Motorola, Inc.; Nokia Corporation; and Nortel. Actel derived
11% of its net revenues for 2000 from Nortel.

Space

In 2000, aerospace and military accounted for an estimated 23% of Actel's
net revenues. Rigorous quality and reliability standards, stringent volume
requirements, and the need for design security are characteristics of the
military and aerospace market. Actel's antifuse FPGAs have high quality and
reliability and are virtually impossible to reverse engineer, making them
appropriate for many military and aerospace applications. Actel'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, Actel is the world's leading supplier of military,
radiation-tolerant, and radiation-hardened FPGAs.

Actel's antifuse FPGAs were first designed into a space mission in 1992.
Since then, thousands of Actel's programmable logic circuits have performed
aboard manned space vehicles, earth observation satellites, and deep-space
probes. Actel's FPGAs often perform mission-critical functions on important
scientific missions in space. They have, for example, been aboard numerous Mars
missions, were included in the controlling electronics for the Mars Pathfinder
Rover, and are performing functions on the repaired Hubbell Space Telescope.
Actel 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, Actel's success has not been limited to the United States. Today,
Actel's FPGAs can be found on board the International Space Station and in
spacecraft launched by virtually every civilian space agency around the world,
including the European Space Agency and the Japanese National Space Development
Agency.

Representative customers of Actel in the space market include: The Boeing
Company; Harris Corporation; Honeywell; JPL; Lockheed Martin; Loral Space &
Communications, Ltd.; Marconi; National Aeronautics Space Administration (NASA);
Northrup Grumman Corporation; Olin Corporation; Raytheon Systems Company; SCI
Systems, Inc.; and TRW, Inc.

Industrial

In 2000, industrial control and instrumentation applications accounted
for an estimated 13% of Actel's net revenues. 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 Actel in the industrial market include:
Agilent Technologies, Inc.; Eastman Kodak Company; GE; Hewlett-Packard Company
(HP); Rockwell; Siemens: and Varian Medical Systems, Inc.

Computer

In 2000, computer systems and peripherals accounted for an estimated 5%
of Actel's net revenues. 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 Actel in the computer market include: Compaq
Computer Corporation; HP; Hypercom Corporation; and International Business
Machines Corporation.

Consumer

In 2000, consumer and e-appliance applications accounted for an estimated
3% of Actel's net revenues. 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 Actel in the consumer market include: ADC;
Motorola; NEC Corporation; NuCam Corporation; and SONICblue Incorporated.

In May 2000, Actel announced that it had shipped more than one million
FPGAs for use in MP3 internet digital audio player/recorder applications. MP3
player/recorders are small, battery-powered devices that digitally record high
quality music and audio off of the internet and allow users to play it back much
as they would with a portable CD player. With InStat Research estimating that
750,000 MP3 player/recorders were sold in 1999, the volume of Actel shipments
substantiates the claim that Actel FPGAs are included in the majority of MP3
internet audio player/recorder products in the hands of consumers worldwide. MP3
is an abbreviation of the Motion Picture Expert Group industry organization's
Layer 3 third-generation audio/video standard.

In May 2000, Actel also announced low-cost speed-grade options for its MX
and SX-A families to serve the high-volume internet-related consumer e-appliance
market. For applications not requiring extremely high performance, the new "-F"
speed grades offer up to 30% reduced pricing from standard speed grades in
Actel's two most popular product families. High-volume applications, including
those for the consumer e-appliance market, traditionally used ASICs to achieve
cost savings. However, the -F speed grades of Actel's ASIC-like MX and SX-A
FPGAs approach cost parity with ASICs, especially when taking into account the
significant NRE commonly charged for ASICs. Actel FPGAs also provide the added
benefit of rapid design and verification, enabling much faster time to market.

In November 2000, Actel announced that Tescina, Inc. (Tescina) had
introduced the DataGet BCD cartridge, the first gauge interface for the
HandSpring Visor and the first gauge multiplexer for any Palm operating system
device. The HandSpring Visor is the most expandable handheld platform on the
market and second only to Palm in sales. The main benefits of the DataGet BCD
cartridge over existing DataGet ports are faster data collection times and
better ergonomics. The DataGet BCD cartridge utilizes the SpringBoard
architecture to bring gauge connectivity to the platform. To utilize the power
of the SpringBoard slot, Tescina used Actel's new eX64 FPGA. Aimed at the
growing e-appliance market, Actel's eX family of FPGAs enables designers to use
single-chip programmable logic instead of ASICs for their low-density
requirements, eliminating the long lead times and costly NRE charges. Designing
with the eX64 FPGA permitted Tescina to deliver the precise features, low power,
and small package DataGet customers need without compromising cost or
performance.

Sales and Distribution

Actel maintains a worldwide, multi-tiered selling organization that
includes a direct sales force, independent sales representatives, and
electronics distributors. Actel's North American sales force consists of 52
sales and administrative personnel and field application engineers (FAEs)
operating from 25 sales offices located in major metropolitan areas. Direct
sales personnel call on target accounts and support direct OEMs. Besides
overseeing the activities of direct sales personnel, Actel's sales managers also
oversee the activities of 20 sales representative firms that operate from
approximately 55 office locations. The sales representatives concentrate on
selling to major industrial companies in North America. To service smaller,
geographically dispersed accounts in North America, Actel has distributor
agreements with Arrow, Pioneer, and Unique. Arrow, Pioneer, and Unique have
approximately 39, 39, and 32 offices in North America, respectively.

Actel generates a significant portion of its revenues from international
sales. Sales to customers outside the United States accounted for 32%, 29%, and
33% of net revenues for 2000, 1999, and 1998, respectively. Sales to European
customers accounted for 19%, 17%, and 19% of net revenues 2000, 1999, and 1998,
respectively. Actel's European sales organization consists of 20 employees
operating from five sales offices and 12 distributors and sales representatives
having approximately 33 offices (including Arrow and Unique, which have nine and
seven offices in Europe, respectively). Sales to Japan and other international
customers accounted for 13%, 12%, and 14% of net revenues 2000, 1999, and 1998,
respectively. Actel's Pan-Asia sales organization consists of 11 employees
operating from four sales offices and seven distributors having approximately 16
offices (including Unique, which has nine offices in Pan-Asia). Three additional
distributors serve the remaining international markets in which Actel offers its
products.

Actel'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 Actel'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 Actel's headquarters.

In 2000, sales made through distributors accounted for an estimated 58%
of Actel's net revenues. As is common in the semiconductor industry, Actel
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. Actel also generally grants distributors limited rights to return
products. To date, product returns under this policy have not been material.
Actel maintains reserves against which these credits and returns are charged.
Because of its price protection and return policies, Actel does not recognize
revenue on products sold to distributors until the products are resold to end
customers.

Backlog

At December 31, 2000, Actel's backlog was approximately $44.4 million,
compared with approximately $49.6 million at December 31, 1999. Actel 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.
Actel sells standard products that may be shipped from inventory within a short
time after receipt of an order. Actel'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, Actel's backlog may be cancelled or rescheduled by the
customer on short notice without significant penalty. As a result, Actel's
backlog may not be indicative of actual sales and therefore should not be used
as a measure of future revenues.

Customer Service and Support

Actel believes that superior customer service and technical support are
essential for success in the FPGA market. Actel 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. Actel's customer service organization
emphasizes prompt, accurate responses to questions about product delivery and
order status.

Actel's FAEs located in Canada, England, France, Germany, Italy, Japan,
Korea, and the United States provide technical support to customers in North
America, Europe, and Asia. This network of experts is augmented by FAEs working
for Actel's sales representatives and distributors throughout the world.
Customers in any stage of design can also obtain assistance from Actel's
technical support hotline or web-based technical support database called "Guru."
In addition, Actel offers technical seminars on its products and comprehensive
training classes on its software.

Actel generally warrants that its FPGAs will be free from defects in
material and workmanship for one year, and that its software will conform to
Actel's published specifications for 90 days. To date, Actel has not experienced
significant warranty returns.

Manufacturing and Assembly

Actel'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 Actel's FPGAs are manufactured by
Chartered in Singapore; by Infineon in Germany; by LMSEC in Manassas, Virginia;
by MEC in Japan; by UMC in Taiwan; and by Winbond in Taiwan. Actel's FPGAs in
production are manufactured by Chartered using 0.6, 0.45, and 0.35 micron design
rules; by Infineon using 0.25 micron design rules; by LMSEC using 0.8 micron
design rules; by MEC using 1.0, 0.8, and 0.25 micron design rules; by UMC using
0.22 and .018 micron design rules; and by Winbond using 0.8 and 0.6 micron
design rules.

In March 2000, Actel announced that it had successfully developed a
0.22-micron antifuse process technology at UMC. The new 0.22-micron process was
developed more quickly than any previous Actel antifuse process. Before that,
the 0.25-micron process had, in partnership with MEC, also been developed in
record time. 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.

Wafers purchased by Actel from its suppliers are assembled, tested,
marked, and inspected by Actel and/or a subcontractor of Actel before shipment
to customers. Actel 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.

Actel is ISO 9002 certified for the manufacturing and testing of its
FPGAs. The certification was granted by the Defense Supply Center, Columbus,
Ohio (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 Actel 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.

Actel has also been awarded Full Certification to QML status. This
certification confirms that Actel 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 also granted by DSCC, qualifies
processes and materials rather than individual products or production lots.
Actel has even received complete 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, Actel 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 Actel of the requirements in the "STACK Purchase Specification --
General Requirements for Integrated Circuits." Registration is the first step in
acquiring full STACK certification.

In April 2000, Actel announced that it had been qualified by PURE, which
stands for PEDs (plastic encapsulated devices) Used in Rugged Environments. PURE
is an association of European equipment makers dedicated to quality and
reliability: Thomson-CSF; Ericsson; SAAB Bofors Dynamics AB; Ericsson SAAB
Avionics AB; Bofors Missiles AB; and SaabTech. Members have committed to sharing
data and results among themselves related to plastic components used in rugged
environments. The association is also supported by the French and Swedish
Ministries of Defense. The qualification is for PQ packages. This accreditation
further confirms that Actel's quality and reliability systems conform to
internationally recognized standards and requirements. It also underscores
Actel's long-term commitment to quality, reliability, and continuous improvement
in products, processes, and systems.

Strategic Relationships

In addition to ongoing strategic relationships that Actel enjoys with its
foundries, suppliers, assembly houses, distributors, sales representatives, and
OEM customers, Actel entered into the following strategic relationships during
the past year:

Mentor Graphics

In March and November 2000, Mentor announced the availability of Inventra
IP cores for use with Actel's SX-A family of high-performance FPGAs. The
partnership with Actel was the first strike in Mentor's IP strategy to make
cores for the surging FPGA market. According to Mentor, FPGAs are moving into
the traditional ASIC space of high density and high performance, without the
ASIC drawbacks of large NRE costs and up-front volume commitments. Recognizing
this, Mentor' Inventra IP division entered this market, with renewed focus,
through an internet approach. The online strategy gives FPGA designers
unprecedented convenience to access desired IP for evaluation and licensing.

Available risk-free over the worldwide web, the Inventra IP cores
targeted to Actel SX-A FPGAs are optimized for use in Mentor's FPGA Advantage
design flow. FPGA Advantage is a complete HDL design solution tailored to meet
the needs of high-end FPGA designers. Netlists of these cores enable easy
integration into system designs in applications that include telecommunications
infrastructure, networking, and e-appliances. The combination of speed and low
cost found in Actel's SX-A FPGA family opens the door to next-generation designs
that could not previously be implemented in programmable logic.

UMC

In February 2001, Actel announced that it had joined UMC's Gold IPSM
program with Actel's VariCore EPGA star IP cores. Concurrently, Actel taped out
a VariCore EPGA IP test chip in UMC's 0.18-micron fab in Taiwan. VariCore IP is
the first complete (front end to back end), commercially available product of
its kind in 0.18 micron technology. Actel's embeddable reprogrammable EPGA logic
cores are based on SRAM technology. See "BUSINESS -- Products and Services -- IP
Core -- VariCore EPGAs." Actel will license VariCore EPGA cores directly to UMC
customers.

Research and Development

In 2000, 1999, and 1998, Actel spent $36.6 million, $32.3 million, and
$31.2 million, respectively, on research and development, which represented 16%,
19%, and 20%, of net revenues, respectively, for such periods. Actel'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, Actel'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. Actel's software research and development
activities include enhancing the functionality, usability, and availability of
high-level computer-aided engineering tools and IP cores in a complete and
automated desktop design environment on popular PC and workstation platforms.

Actel publicly disclosed in 2000 that it was working on next generation
antifuse, flash, and embedded SRAM products, but provided no details regarding
those research and development projects.

Competition

The FPGA market is highly competitive, and Actel expects that competition
will continue to increase as the market grows. Actel's competitors include
suppliers of standard TTLs and custom-designed ASICs, including conventional
gate arrays, standard cells, CPLDs, and FPGAs. Of these, Actel 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.
Actel 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 Actel's products and
then convert to conventional gate arrays or standard cells to achieve lower
costs for volume production. For this reason, Actel also faces competition from
companies that specialize in converting CPLDs and FPGAs, including Actel
products, into conventional gate arrays or standard cells.

Actel also competes with suppliers of CPLDs. Suppliers of these devices
include Altera Corporation (Altera) and Lattice-Vantis Semiconductor Corporation
(Lattice). The circuit architecture of CPLDs may give them a performance
advantage in certain lower capacity applications, although Actel believes that
its MX, SX, and SX-A, and eX families compete favorably with CPLDs. However,
Altera and Lattice have larger installed bases of development systems than
Actel. 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 Actel will be able to overcome these competitive
disadvantages.

Actel competes most directly with established FPGA suppliers, such as
Xilinx, Inc. (Xilinx), Lucent (which is a licensed second source of some Xilinx
products), and Altera. While Actel believes its products and technology are
superior to those of Xilinx in many applications requiring greater speed, lower
cost, and/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.

Actel's antifuse FPGAs are manufactured using customized steps that are
added to otherwise standard manufacturing processes of independent wafer
suppliers. As a result, Actel's products typically have been fabricated using
processes one or two generations behind the processes used by competing
products. As a consequence, Actel generally has not fully realized the price,
performance, and power benefits of its antifuse technology. Actel is attempting
to accelerate the rate at which its products are migrated to finer process
geometries and is working with its wafer suppliers to obtain earlier access to
advanced processes, but no assurance can be given that Actel will be able to
overcome this competitive disadvantage.

Several companies have marketed antifuse-based FPGAs, including
QuickLogic Corporation (QuickLogic). In 1995, Actel 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 Actel'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 Actel's patents. See "BUSINESS -- Patents and
Licenses."

Actel 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; reprogrammability; strength of
sales organization and channels; adaptability of products to specific
applications and IP; ease, speed, cost, and consistency of programming; length
of development cycle (including reductions to finer micron design rules); number
of I/Os; reliability; wafer fabrication and assembly capacity; availability of
packages, adapters, sockets, programmers, and IP; utilization of intellectual
property laws; and technical service and support. Failure of Actel 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, 2001, Actel had 192 United States patents and
applications pending for an additional 56 United States patents. Actel also had
50 foreign patents and applications pending for 122 patents outside the United
States. Actel's patents cover, among other things, Actel's basic circuit
architecture, antifuse structure, and programming method. Actel expects to
continue filing patent applications as appropriate to protect its proprietary
technologies. Actel believes that patents, along with such factors as
innovation, technological expertise, and experienced personnel, will become
increasingly important.

Actel 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 Actel 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
(Court), against Actel seeking monetary damages and injunctive relief. The
summons and complaint were served on Actel on April 10, 2000. The complaint
alleges that Actel has infringed and is currently infringing four United States
patents that belong to plaintiff: U.S. Patent No. 4,442,507, issued April 10,
1984; U.S. Patent No. 5,296,722, issued March 22, 1994; U.S. Patent No.
5,407,851, issued April 18, 1995; and U.S. Patent No. 5,496,763, issued March 5,
1996. On May 15, 2000, Unisys served its Initial Disclosure of Asserted Claims,
identifying the SX and SX-A family of FPGAs as the specific Actel products being
accused of infringement, and identifying the specific claims of each of the
patents in suit alleged to be infringed by those products. On September 25,
2000, Actel filed its First Amended Answer to the Complaint, denying that it has
infringed or is infringing any of the patents in suit, and alleging, among other
things, that each of those patents is invalid for failure to meet the statutory
requirements for patentability. With its amended answer, Actel also filed a
counterclaim against Unisys seeking a judicial declaration that each of the
Unisys patents in suit is invalid, unenforceable, and not infringed by Actel. On
October 26, 2000, the Court entered its Order for Pretrial Preparation, which
established various deadlines in the case and set the case for trial on March
25, 2002. The case is in its early stages and, as of March 30, 2001, no
depositions or other substantial discovery had yet been conducted. Actel
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, Actel does not believe that the ultimate outcome of
case will have a materially adverse effect on Actel's business, financial
condition, or results of operations, although no assurance can be given to that
effect. 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, Actel and
Xilinx entered into a Patent Cross License Agreement (Xilinx 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 Actel 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 February 2001, Actel introduced its new SRAM-based VariCore EPGA IP cores.
Under the Xilinx Agreement, Actel did not receive sublicense rights under any
Xilinx patents.

In 1995, Actel and BTR, Inc. (BTR) entered into a License Agreement
pursuant to which BTR licensed its proprietary technology to Actel for
development and use in FPGAs and certain multichip modules. As partial
consideration for the grant of the license, Actel pays to BTR non-refundable
advance royalties. Actel 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, Actel 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, Actel also entered into a patent litigation settlement agreement with the
Lemelson Medical, Education & Research Foundation.

Employees

At the end of 2000, Actel had 484 full-time employees, including 132 in
marketing, sales, and customer support; 154 in research and development; 144 in
operations; 18 in Protocol Design Services; and 36 in administration and
finance. This compares with 449 full-time employees at the end of 1999, an
increase of 8%. As a result of the acquisitions of GateField and Prosys during
2000, 26 employees were added. Net revenues per employee were approximately
$468,000 for 2000, compared with approximately $382,000 for 1999, which
represents an increase of 23%. None of Actel's employees is represented by a
labor union nor does Actel have employment agreements with any of its employees.
Actel has not experienced any work stoppages and believes that its employee
relations are satisfactory.

In July 2000, Actel announced the appointment of Barbara McArthur as Vice
President of Human Resources. In this role, Ms. McArthur is responsible for
managing all of Actel's strategic staffing and human resources programs.

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:

"Blank Check" Preferred Stock; Change in Control Arrangements

Actel'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 Actel'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
Actel. In addition, such issuance could adversely affect the market price of the
Common Stock. Although Actel 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.

Actel 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 Actel. Payment is contingent upon the employee remaining
with Actel for six months after the change of control. Actel 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.
Actel's existing competitors include suppliers of conventional gate arrays,
standard cells, CPLDs, and FPGAs. Actel'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. Actel 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. In addition, Actel's antifuse and, to a lesser extent, flash FPGAS
are manufactured using customized steps that are added to otherwise standard
manufacturing processes of independent wafer suppliers. As a result, Actel's
products typically have been fabricated using processes one or two generations
behind the processes used by competing products. No assurance can be given that
Actel will be able to overcome these competitive disadvantages.

Actel 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 Actel'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 Actel, including the capability to manufacture their own wafers.
Additional competition could adversely affect Actel's business, financial
condition, or results of operations.

Actel may also face competition from suppliers of logic products based on
new or emerging technologies. Actel seeks to monitor developments in existing
and emerging technologies. No assurance can be given that Actel 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 Actel's
technologies will remain competitive.

Customer Concentration

A small number of customers are responsible for a significant portion
Actel's net revenues. Actel has experienced periods in which sales to its major
customers fluctuated as a percentage of net revenues due to push-outs or
cancellations of orders, or delays or failures to place expected orders. Nortel
accounted for 11% of Actel's net revenues for 2000. Actel believes that sales to
a limited number of customers will continue to account for a substantial portion
of net revenues in future periods. The loss of a major customer, or decreases or
delays in shipments to major customers, could have a materially adverse effect
on Actel's business, financial condition, or results of operations.

Dependence on Communications Customers

Although Actel is unable to determine with certainty the ultimate uses of
its products, Actel estimates that sales of its products to customers in the
communications market accounted for 56% of net revenues for 2000. The
communications market has experienced economic downturns at various times,
characterized by diminished product demand, accelerated erosion of average
selling prices, and production overcapacity. In the past few years, the
communications market has grown rapidly, but it is currently enduring a
significant slowdown, which may become more severe and could be prolonged. Actel
is experiencing, and may again in the future experience, substantial
period-to-period fluctuations in operating results due to conditions in the
communications market or the general economy.

Dependence on Customized Manufacturing Processes

Actel'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, Actel generally 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, Actel's products
typically have been fabricated using processes one or two generations behind the
processes used by competing products. As a consequence, Actel generally has not
fully realized the price, performance, and power benefits of its antifuse
technology. Actel 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 Actel to sell an FPGA to a customer, the customer must
incorporate the FPGA into the customer's product in the design phase. Actel
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 Actel's FPGAs into new or updated products. These
efforts usually precede by many months (and often a year or more) the generation
of FPGA sales, if any, by Actel. 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 Actel will win sufficient designs or that any design
win will result in significant revenues. Actel's design win efforts in 2000 were
hindered by availability constraints on its ProASIC and new eX product families.

Dependence on Independent Assembly Subcontractors

Actel 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. Actel 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. Actel has no long-term
contracts with its subcontractors and certain of those subcontractors sometimes
operate at or near full capacity. There can be no assurance that these
subcontractors will continue to be able and willing to meet Actel's requirements
for 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 Actel'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 development
systems, IP cores, debugging and verification tools, device programmers, and
sockets. Actel'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. No assurance can be given
that Actel'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 Actel'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 Actel's business, financial condition, or results of
operations.

Dependence on Independent Wafer Manufacturers

Actel does not manufacture any of the wafers used in the production of
its FPGAs. Such wafers are manufactured by Chartered in Singapore, LMSEC in the
United States, MEC in Japan, UMC in Taiwan, and Winbond in Taiwan. Actel'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.

Actel 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 Actel has
supply agreements with several of its wafer manufacturers, a shortage of raw
materials or production capacity could lead any of Actel's wafer suppliers to
allocate available capacity to customers other than Actel, or to internal uses,
which could interrupt Actel's capability to meet its product delivery
obligations. Any inability or unwillingness of Actel'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 Actel's business, financial condition, or results
of operations.

If Actel's current independent wafer manufacturers were unable or
unwilling to manufacture Actel's products as required, Actel 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 Actel'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, Actel 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 Actel's business, financial condition, or results of
operations.

Dependence on International Operations

Actel 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 Actel's business, financial condition, or results of operations.

In order to expand international sales and service, Actel 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 managerial attention and
financial resources and could adversely affect Actel's financial condition and
operating results. No assurance can be given that Actel 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 Actel is dependent in large part on the continued service
of its key managerial, engineering, marketing, sales, and support employees.
Competition for qualified personnel is intense in the semiconductor industry,
and the loss of Actel's key employees, or the inability of Actel to attract
other qualified personnel, could have a materially adverse effect on Actel.
Actel does not have employment agreements with any of its key employees.

Dependence on Military and Aerospace Customers

Although Actel 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 23% of net revenues for
2000. In general, Actel believes that the military and aerospace industries have
accounted for a significantly greater percentage of Actel'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. Actel 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 Actel'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 Actel'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 Actel'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 significant delays in the shipment of some
of Actel's FPGAs. Actel 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

Actel has never declared or paid any cash dividends on its capital stock.
Actel 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

Actel'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 Actel's business,
financial condition, or results of operations, and they make it difficult to
accurately project quarterly revenues and other operating results.

Booking and Shipment Uncertainties

Actel 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 project quarterly
revenues. Actel'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 Actel 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, Actel has shipped a disproportionately large
percentage of its quarterly revenues in the final weeks of the quarter.
Any failure by Actel to effect scheduled shipments by the end of the
quarter can have a materially adverse effect on revenues for such
quarter. Since Actel 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 Actel's distributors. When there is a shortfall in revenues,
operating results are likely to be adversely affected because most of
Actel'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, Actel's independent
wafer suppliers from time to time experience lower than anticipated
yields of usable die. To the extent yields of usable die decrease, the
average cost to Actel 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 Actel's products and
create inventory shortages and dissatisfied customers. No assurance can
be given that Actel will not experience wafer supply problems in the
future.

In addition, Actel 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,
Actel and GateField have struggled for more than two years to achieve
acceptable yields on the flash process for ProASIC devices at Infineon.
Although Actel believes it 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 have declined significantly over the
life of each product. While Actel 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 new products more quickly than such cost
reductions can be achieved. In addition, Actel sometimes approves price
reductions on specific sales to meet competition. Declines in the average
selling prices of Actel'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 Actel'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.

Force Majeure

The performance of Actel and each of its foundries, suppliers,
subcontractors, distributors, agents, and customers 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,
earthquakes, 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. Actel's foundry partners in Japan and
Taiwan and its operations in California are centered in areas that have been
seismically active in the recent past. In addition, the countries outside of the
United States in which Actel's foundry partners and assembly and other
subcontractors are located have unpredictable and potentially volatile economic,
social, or political conditions, including the risk of conflict between Taiwan
and the People's Republic of China. The occurrence of any of these circumstances
could disrupt Actel's operations and may have a materially adverse effect on
Actel's business, financial condition, or results of operations.

Actel's corporate offices are located in California, which is currently
susceptible to power outages and shortages as well as increased energy costs,
which will increase Actel's operating expenses. More extensive power shortages
in the state could disrupt Actel's operations and interrupt its research and
development activities.

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,"
"projects," "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 acquisitions; amortization
of goodwill and other acquisition-related expenses; average selling prices;
competition and competitive factors; customer service and technical support;
distributors; dividends and retention of earnings; embedded logic strategy;
employee relations and hiring; expansion and growth; export licensing;
facilities; financial condition and liquidity; gross margin; hardware and
software availability and features; intellectual property protection and claims;
issuance and repurchase of securities and dilution; litigation and dispute;
markets, including the e-appliance, embedded logic, and space markets; process
development; product availability and delivery; research and development
expenditures; revenues, including international sales; selling, general, and
administrative expenditures; useful life estimates; and wafer yields. All
forward-looking statements are based on current expectations and projections
about the semiconductor industry and programmable logic market, and assumptions
made by Actel's management that reflect its best judgment based on other factors
currently known by management, but they are not guarantees of future
performance. Thus, actual events and results may differ materially from those
expressed or forecast in the forward-looking statements due to the risk factors
identified herein or for other reasons. Actel undertakes no obligation to update
any forward-looking statement contained or incorporated by reference in this
Annual Report on Form 10-K.

Future Capital Needs

Actel must continue to make significant investments in research and
development as well as capital equipment and expansion of facilities. Actel'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. Wafer manufacturers are
increasingly demanding financial support from customers in the form of equity
investments and advance purchase price deposits, which in some cases are
substantial. Should Actel require additional capacity, it may be required to
incur significant expenditures to secure such capacity.

To the extent that existing resources and future earnings are
insufficient to fund Actel'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 Actel'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 Actel
and its shareholders. If adequate funds are not available, Actel may be required
to delay, limit, or eliminate some or all of its proposed operations.

Gross Margin

Actel'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 Actel
can charge for a product is constrained principally by its competitors. While
competition has always been intense, Actel 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 or between a programmable and a masked silicon
device. These competitive pressures may cause Actel to reduce the prices of its
products more quickly than it can achieve cost reductions, which would reduce
Actel's gross margin and may have a materially adverse effect on its operating
results.

One of the most important variables affecting the cost of Actel's
products is manufacturing yields. With its customized antifuse and flash
manufacturing process requirements, Actel almost invariably experiences
difficulties and delays in achieving satisfactory, sustainable yields on new
processes or at new foundries. Actel 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 Actel'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 Actel's operating results.

Management of Growth

Actel 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, Actel will need to continue to hire, train, motivate, and manage a
growing number of employees. The future success of Actel 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, Actel expects to experience difficulty in filling
its needs for qualified engineers and other personnel. No assurance can be given
that Actel 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

Actel depends upon its independent wafer suppliers to produce wafers with
acceptable yields and to deliver them to Actel in a timely manner. Currently,
substantially all of Actel's revenues are derived from products based on Actel's
proprietary antifuse process technologies. Successful implementation of antifuse
process technology requires a high degree of coordination between Actel and its
foundry. Therefore, significant lead-time is required to reach volume production
on new processes and at new foundries. Accordingly, no assurance can be given
that volume production on Actel's new or next-generation families will be
achieved in the near term or at all.

Actel introduced the 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 a technology less familiar to Actel. In addition,
it is generally more difficult to bring up an advanced flash process than it is
to bring up an advanced antifuse process. Actel 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 Actel believes that it 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 Actel's mature product families, which could have a
materially adverse effect on operating results.

The fabrication of antifuse or 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, Actel 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 Actel's business, financial condition, or
results of operations.

One-Time Programmability and In-System Reprogrammability

The nonvolatility of Actel's antifuse FPGAs is necessary or desirable in
some applications, but all other things being equal, logic designers generally
would prefer to prototype with a reprogrammable logic device. 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 Actel decided to offer
reprogrammable ProASIC devices. No assurance can be given that Actel will be
able to overcome this competitive disadvantage.

While Actel's ProASIC flash FPGAs are reprogrammable, designers and
end-users desire the ability to reprogram PLDs after they have been placed on a
printed circuit board. Currently, ProASIC does not generally support in-system
reprogrammability. No assurance can be given that Actel will be able to overcome
this competitive disadvantage.

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 Actel
seeking monetary damages and injunctive relief based on Actel's alleged
infringement of four patents held by Unisys. Actel 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, Actel 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, Actel has been and expects
to be notified from time to time of claims that it may be infringing patents
owned by others. During 2000, Actel 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, Actel may
obtain licenses under patents that it is alleged to infringe. 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 Actel. Failure to obtain a license for technology allegedly used
by Actel could result in litigation. All litigation, whether or not determined
in favor of Actel, can result in significant expense to Actel and can divert the
efforts of Actel's technical and management personnel from productive tasks.
While Actel 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, Actel's evaluation of the
probable impact of these pending disputes could change based upon new
information learned by Actel. Subject to the foregoing, Actel does not believe
that any pending patent dispute is likely to have a materially adverse effect on
Actel's financial condition, results of operations, or liquidity.

Actel 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, Actel 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, Actel 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. Actel 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 Actel, Actel's failure
to develop or license a substitute technology on commercially reasonable terms
could have a materially adverse effect on Actel's business, financial condition,
and results of operations.

In February 2001, Actel introduced its new SRAM-based VariCore EPGA IP
cores. Under the Xilinx Agreement, Actel did not receive sublicense rights under
any Xilinx patents.

Potential Acquisitions

In pursuing its business strategy, Actel may acquire products,
technologies, or businesses from third parties. Identifying and negotiating
these acquisitions may divert substantial management time away from Actel's
operations. An acquisition could absorb substantial cash resources, require
Actel 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 Actel'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 Actel's management to integrate the acquired entity into Actel's
operations, may require Actel 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
Actel. The occurrence of any of these circumstances could disrupt Actel's
operations and may have a materially adverse effect on Actel's business,
financial condition, or results of operations.

Protection of Intellectual Property

Actel 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. Actel 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 Actel will be adequate to protect its proprietary
rights. In addition, the laws of certain territories in which Actel'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 Actel 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 2000, a majority of Actel's sales were made through distributors.
Three of Actel's distributors, Arrow, Pioneer, and Unique, accounted for 17%,
13%, and 15%, respectively, of Actel's net revenues in 2000. No assurance can be
given that future sales by these or other distributors will continue at current
levels or that Actel will be able to retain its current distributors on terms
that are acceptable to Actel.

Actel'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 Actel's
products. In addition, Actel's agreements with its distributors are generally
terminable at the distributor's option. A reduction in sales efforts by one or
more of Actel's current distributors or a termination of any distributor's
relationship with Actel could have a materially adverse effect on Actel's
business, financial condition, or results of operations.

Actel defers recognition of revenue on shipments to distributors until
the product is resold by the distributor to the end user. Actel'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 Actel'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 Actel
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 Actel'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 Actel's business, financial condition, or results of
operations.

Reliance on International Sales

Sales to customers outside the United States accounted for 32%, 29%, and
33% of Actel's net revenues for 2000, 1999, and 1998, respectively. Of these
export sales, the largest portion was derived from European customers. Actel
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 exchange risks, currency
restrictions, tariffs, trade barriers, taxes, export license requirements, and
the impact of recessionary environments in economies outside the United States.
All of Actel'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 Actel'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.
Beginning in the fourth quarter of fiscal 2000, Actel and the semiconductor
industry in general experienced reduced bookings and backlog cancellations,
resulting in slower revenue growth, due to excess inventories at communications,
computer, and consumer equipment manufacturers and a general softening in the
overall economy. The downturn in sales may become more severe, could be
prolonged, and will have a disproportionate effect on Actel's profitability.
Actel 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 Actel'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. Actel'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,
Actel 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 Actel's
business, financial condition, or results of operation.

No assurance can be given that Actel's design and introduction schedules
for new products or the supporting software or hardware will be met, that any
new products will gain market acceptance, or that Actel will respond effectively
to new technological changes or new product announcements by others. Any failure
of Actel to successfully define, develop, market, manufacture, assemble, test,
or program 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 Actel'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.

Actel must also continue to make significant investments in research and
development to develop new products and achieve market acceptance for such
products. Actel conducts most of its research and development activities at
facilities operated by its foundries. Although Actel 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 Actel'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 Actel's financial results or the
financial results of other semiconductor companies, or general conditions in the
semiconductor industry, financial markets, or economy. 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 technology companies, at times for reasons unrelated to the
operating performance of the specific companies.

Executive Officers of the Registrant

The following table identifies each executive officer of Actel as of
March 31, 2001:

Name Age Position
- -------------------- ----- -----------------------------------------------------

John C. East........ 56 President and Chief Executive Officer
Henry L. Perret..... 55 Vice President of Finance and Chief Financial Officer
Esmat Z. Hamdy...... 51 Senior Vice President of Technology & Operations
Anthony Farinaro.... 38 Vice President & General Manager of Design Services
Paul V. Indaco...... 50 Vice President of Worldwide Sales
Dennis G. Kish...... 37 Vice President of Marketing
Fares N. Mubarak.... 39 Vice President of Engineering
David L. Van De Hey. 45 Vice President & General Counsel and Secretary

Mr. East has served as President and Chief Executive Officer of Actel
since December 1988. From April 1979 until joining Actel, 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 Actel in January 1996 as Controller and has been Vice
President of Finance and Chief Financial Officer since June 1997. From April
1992 until joining Actel, 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 Actel, 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 Actel'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. Farinaro joined Actel in August 1998 as Vice President & General
Manager of Design Services. From February 1990 until joining Actel, 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 Actel in March 1999 as Vice President of Worldwide
Sales. From January 1996 until joining Actel, he served as Vice President of
Sales for Chip Express, a semiconductor manufacturer. From January September
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 Actel in December 1999 as Vice President of Strategic
Product Marketing and became Vice President of Marketing in July 2000. Prior to
joining Actel, 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 Actel 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 Actel, 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 Actel 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 Actel'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 Actel 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), Houston, Los Angeles, Milan (Italy),
Minneapolis/St. Paul, Munich (Germany), New York, Orlando, Paris (France),
Ottawa (Ontario), Philadelphia, Raleigh, Seattle, Seoul (Korea), Stockholm
(Sweden), Tokyo (Japan), and Washington D.C., as well as the facilities of the
Design Services Group in Mt. Arlington, New Jersey, and the facility formerly
occupied by GateField in Fremont, California. Actel believes its facilities will
be adequate for its needs in 2001.

ITEM 3. LEGAL PROCEEDINGS

Except as described below, there are no pending legal proceedings of a
material nature to which Actel is a party or of which any of its property is the
subject. There are no such legal proceedings known by Actel 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 Actel
seeking monetary damages and injunctive relief. The summons and complaint were
served on Actel on April 10, 2000. The complaint alleges that Actel has
infringed and is currently infringing four United States patents that belong to
plaintiff: U.S. Patent No. 4,442,507, issued April 10, 1984; U.S. Patent No.
5,296,722, issued March 22, 1994; U.S. Patent No. 5,407,851, issued April 18,
1995; and U.S. Patent No. 5,496,763, issued March 5, 1996. On May 15, 2000,
Unisys served its Initial Disclosure of Asserted Claims, identifying the SX and
SX-A family of FPGAs as the specific Actel products being accused of
infringement, and identifying the specific claims of each of the patents in suit
alleged to be infringed by those products. On September 25, 2000, Actel filed
its First Amended Answer to the Complaint, denying that it has infringed or is
infringing any of the patents in suit, and alleging, among other things, that
each of those patents is invalid for failure to meet the statutory requirements
for patentability. With its amended answer, Actel also filed a counterclaim
against Unisys seeking a judicial declaration that each of the Unisys patents in
suit is invalid, unenforceable, and not infringed by Actel. On October 26, 2000,
the Court entered its Order for Pretrial Preparation, which established various
deadlines in the case and set the case for trial on March 25, 2002. The case is
in its early stages and, as of March 30, 2001, no depositions or other
substantial discovery had yet been conducted. Actel 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, Actel does not believe that the ultimate outcome of case will
have a materially adverse effect on Actel's business, financial condition, or
results of operations, although no assurance can be given to that effect. 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

ITEM5. 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
December 31, 2000 (2000 Annual Report), is incorporated herein by this
reference.

On March 30, 1998, Actel and Crosspoint Solutions, Inc. (Crosspoint)
entered into a Patent Sale and Purchase Agreement, pursuant to which Actel
purchased from Crosspoint its patents and patent applications in consideration
of 25,000 shares of Actel'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 Actel.

On December 21, 1999, Actel acquired AutoGate Logic, Inc. (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 Actel or were represented by a qualified
"purchaser representative" under Regulation D.

On June 2, 2000, Actel acquired Prosys by merger. The purchase price of
$24.5 million included the issuance of 220,518 shares of Actel common stock and
the assumption of options to purchase 294,000 shares of Actel Common Stock. The
shares issued and delivered to Prosys shareholders were exempt from registration
pursuant to Section 4(2) of the Securities Act because such shares were sold to
accredited investors who had access to financial and other relevant data
concerning Actel.

ITEM 6. SELECTED FINANCIAL DATA

The information appearing under the caption "Selected Consolidated
Financial Data" in the 2000 Annual Report is incorporated herein by this
reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The information appearing under the caption "Management's Discussion and
Analysis of Financial Conditions and Results of Operations" of the 2000 Annual
Report is incorporated herein by this reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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 2000 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 2000 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 18, 2001, as filed on or about April 7, 2001, with the Securities
and Exchange Commission (2001 Proxy Statement) in Part III of this Annual Report
on Form 10-K, the 2001 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," "Audit Committee Report," and "Company
Stock Performance" under the main caption "OTHER INFORMATION" in the 2001 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 2001 Proxy Statement and the information
under the main caption "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE
ACT OF 1934" in the 2001 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 2001 Proxy Statement
and the information under the caption "Executive Compensation" under the main
caption "OTHER INFORMATION" in the 2001 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 2001 Proxy
Statement and the information under the caption "Security Ownership of
Management" under the main caption "OTHER INFORMATION" in the 2001 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 2001 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 2000 Annual
Report are incorporated by reference in Item 8 of this
Annual Report on Form 10-K:

Consolidated balance sheets at December 31, 2000 and 1999

Consolidated statements of income for each of the three
years in the period ended December 31, 2000

Consolidated statements of shareholders' equity for each of
the three years in the period ended December 31, 2000

Consolidated statements of cash flows for each of the three
years in the period ended December 31, 2000

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. On November 30, 2000, Actel filed a Current
Report on Form 8-K regarding the completion of Actel's acquisition
of GateField on November 15, 2000. On January 29, 2001, Actel
filed Amendment No. 1 to the Current Report on Form 8-K, which
included the required financial statements of the business
acquired and the required pro forma financial information.

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).

Exhibit Number Description
-------------- -----------------------------------------------------------

10.2(2) 1986 Incentive Stock Option Plan, as amended and restated
(filed as Exhibit 10.2 to the Registrant's Annual Report on
Form 10-K (File No. 0-21970) for the fiscal year ended January
2, 2000).

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(2) Employee Retention Plan, as amended and restated.

10.7(2) Deferred Compensation Plan, as amended and restated.

10.8 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).

10.9(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).

10.10 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).

10.11 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).

10.12(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).

10.13(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).

Exhibit Number Description
-------------- -----------------------------------------------------------

10.14 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).

10.15(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).

10.16 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).

10.17(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).

10.18 Amended And Restated Agreement and Plan of Merger by and among
Actel Corporation, GateField Acquisition Corporation, and
GateField Corporation dated as of May 31, 2000 (filed as Annex
I to GateField Corporation's Definitive Proxy Statement on
Schedule 14A (File No. 0-13244) on June 9, 2000, and
incorporated herein by this reference).

10.19 Agreement and Plan of Reorganization by and between Actel
Corporation and Prosys Technology, Inc., Jung-Cheun "Frank"
Lien, Sheng "Jason" Feng, Chung Sun, Eddy Huang, and Nan Horng
Yeh dated as of June 2, 2000 (filed as Exhibit 10.1 to the
Registrant's Current Report on Form 8-K (File No. 0-21970) on
June 16, 2000, and incorporated herein by this reference).

13 Portions of Registrant's Annual Report to Shareholders for the
fiscal year ended December 31, 2000, incorporated by reference
into this Report on Form 10-K.

21 Subsidiaries of Registrant (see page 52)

23 Consent of Ernst & Young LLP, Independent Auditors (see page
50)

24 Power of Attorney (see page 49)

- ------------------------

(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 51

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, 2001 By: /s/ John C. East
---------------------------------------
John C. East
President and Chief Executive Officer

<PAGE>

SCHEDULE II

ACTEL CORPORATION

--------------------------------------

Valuation and Qualifying Accounts
(in thousands)

<TABLE>
<CAPTION>
Balance at Balance at
beginning end of
of period Provisions Write-Offs period
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended December 31, 1998........................... $ 1,632 $ 5 $ 83 $ 1,554
Year ended December 31, 1999........................... 1,554 -- 475 1,079
Year ended December 31, 2000........................... 1,079 91 100 1,070
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>employeeretentionplan.txt
<DESCRIPTION>EXHIBIT 10.6 EMPLOYEE RETENTION PLAN
<TEXT>

ACTEL CORPORATION

AMENDED AND RESTATED

EMPLOYEE RETENTION PLAN

JULY 21, 2000

Introduction

It is expected that Actel Corporation from time to time will consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to employees and can cause such employees to
consider alternative employment opportunities. The Board has determined that it
is in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication and objectivity of these employees,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.

The Board believes that it is in the best interests of the Company and
its shareholders to provide these employees with an incentive to continue their
employment and to motivate these employees to maximize the value of the Company
upon a Change of Control for the benefit of its shareholders.

The Board believes that it is imperative to provide these employees with
certain benefits upon continued employment following a Change of Control, which
provides these employees with enhanced financial security and provides efficient
incentive and encouragement to these employees to remain with the Company
notwithstanding the possibility or occurrence of a Change of Control.

Accordingly, the following plan has been developed and adopted.

ARTICLE I.

ESTABLISHMENT OF PLAN

1. Establishment of Plan.
As of the Effective Date, the Company hereby establishes an employee
retention plan to be known as the "Employee Retention Plan" (the "Plan"), as set
forth in this document. The purposes of the Plan are set forth in the
Introduction.

2. Contractual Right to Benefits.
This Plan establishes and vests in each Participant a contractual right
to the benefits to which he or she is entitled hereunder, enforceable by the
Participant against the Company.

ARTICLE II.

DEFINITIONS AND CONSTRUCTION

1. Definitions.
Whenever used in the Plan, the following terms shall have the meanings
set forth below and, when the meaning is intended, the initial letter of the
term is capitalized.

(a) Cause. "Cause" shall mean (i) any act of personal dishonesty taken by the
Participant in connection with his responsibilities as an employee and
intended to result in substantial personal enrichment of the Participant,
(ii) the conviction of a felony, (iii) a willful act by the Participant
which constitutes gross misconduct and which is injurious to the Company,
and (iv) continued substantial violations by the Participant of the
Participant's employment duties which are demonstrably willful and
deliberate on the Participant's part after there has been delivered to
the Participant a written demand for performance from the Company which
specifically sets forth the factual basis for the Company's belief that
the Participant has not substantially performed his duties.

(b) Change of Control. "Change of Control" shall mean the occurrence of any
of the following events:

(i) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing
30% or more of the total voting power represented by the Company's
then outstanding voting securities; or

(ii) A change in the composition of the Board of Directors of the
Company occurring within a two-year period, as a result of which
fewer than a majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (A) are
directors of the Company as of the date hereof, or (B) are
elected, or nominated for election, to the Board of Directors of
the Company with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination
(but shall not include an individual whose election or nomination
is in connection with an actual or threatened proxy contest
relating to the election of directors to the Company); or

(iii) The date of the consummation of a merger or consolidation of the
Company with any other corporation that has been approved by the
shareholders of the Company, other than a merger or consolidation
which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least fifty percent (50%)
of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the shareholders of the Company
approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.

(c) Change of Control Price. "Change of Control Price" shall mean the closing
sales price of Company common stock on the NASDAQ Stock Market on the
last trading day prior to the day upon which a change of control occurs.

(d) Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.

(e) Company. "Company" shall mean Actel Corporation, a California
corporation, and any successor entities as provided in Article VI hereof.

(f) Disability. "Disability" shall mean that the Participant has been unable
to perform his duties as an Employee as the result of his incapacity due
to physical or mental illness, and such inability, at least 26 weeks
after its commencement, is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Participant or the Participant's legal representative (such agreement as
to acceptability not to be unreasonably withheld). Termination resulting
from Disability may only be effected after at least 30 days' written
notice by the Company of its intention to terminate the Participant's
employment. In the event that the Participant resumes the performance of
substantially all of his duties hereunder before the termination of his
employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.

(g) Effective Date. "Effective Date" shall mean October 6, 1995.

(h) Employee. "Employee" shall mean a Participant, with reference to the
period of his or her employment with the Company.

(i) ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.

(j) Option. "Option shall mean an outstanding stock option under a Stock
Option Plan.

(k) Participant. "Participant" shall mean an individual who meets the
eligibility requirements of Article III.

(l) Plan. "Plan" shall mean this Actel Corporation Employee Retention Plan.

(m) Retention Payment. "Retention Payment" shall mean the payment of
retention compensation as provided in Article IV hereof.

(n) Spread. "Spread" shall mean, for each Option, the dollar amount
determined by subtracting the exercise price from the Change of Control
Price and multiplying the resultant number by the number of shares
subject to such Option.

(o) Stock Option Plan. "Stock Option Plan" shall mean the Company's 1986
Incentive Stock Option Plan or 1995 Employee and Consultant Stock Plan.

(p) Termination Date. "Termination Date" shall mean (i) if a Participant's
employment is terminated by the Company for Disability, thirty (30) days
after notice of termination is given to the Participant (provided that
the Participant shall not have returned to the performance of the
Participant's duties on a full-time basis during such thirty (30) day
period), (ii) if the Participant's employment is terminated by the
Company for any other reason, the date on which a notice of termination
is given, or (iii) if the employment is terminated by the Participant,
the date on which the Participant delivers the notice of termination to
the Company.

ARTICLE III.

ELIGIBILITY

Each employee of the Company who, as of the date of any Change of
Control, holds unvested stock options (the vesting of which does not accelerate
as a result of such Change of Control) under a Stock Option Plan shall be a
Participant in the Plan. A Participant entitled to payment of a Retention
Payment shall remain a Participant in the Plan until the full amount of the
Retention Payment has been paid to the Participant.

ARTICLE IV.

RETENTION PAYMENTS

1. Right to Retention Payments.
Payments hereunder shall be made in cash, common stock of the Company or
its acquirer, or a combination thereof, unless such payment would subject a
participant to liability under Section 16 of the Exchange Act, in which case the
payment shall be made in cash.

(a) Termination Following A Change of Control. If a Participant's
employment terminates at any time within six (6) months after a
Change of Control, then, subject to subsection IV.2. hereof, the
Participant shall be entitled to receive payments as follows:

(i) Involuntary Termination. If the Participant's employment is
terminated as a result of involuntary termination other
than for Cause, then the Participant shall be entitled to
receive retention pay which has a fair market value, on the
date of payment, equal one-third of the Spread of such
Participant's Stock Options which are unvested as of the
date of a Change of Control. Any payments to which a
Participant is entitled pursuant to this subsection
IV.1.(a)(i) shall be paid by the Company within ten (10)
business days after the Termination Date.

(ii) Voluntary Resignation; Termination For Cause. If the
Participant's employment terminates by reason of the
Participant's voluntary resignation, or if the Participant
is terminated for Cause, then the Participant shall not be
entitled to receive benefits under this Plan.

(iii) Disability; Death. If the Company terminates the
Participant's employment as a result of the Participant's
Disability, or such Participant's employment is terminated
due to the death of the Participant, then the Participant
shall not be entitled to receive severance or other
benefits except for those (if any) as may then be
established under the Company's then existing severance and
benefits plans and policies or pursuant to individual
agreements with the Company at the time of such Disability
or death.

(b) Termination Apart from Change of Control. In the event a
Participant's employment is terminated for any reason,
either prior to the occurrence of a Change of Control or
after the six (6)-month period following a Change of
Control, then the Employee shall be entitled to receive
severance and any other benefits only as may then be
established under the Company's existing severance and
benefit plans and policies or pursuant to individual
agreements with the Company other than this Plan.

2. Limitation on Severance Payment.
In the event that the Severance Payment under this Plan, when aggregated
with any other payments or benefits received by a Participant, would (i)
constitute "parachute payments" within the meaning of Section 280G of the Code
and (ii) but for this Section, would be subject to the excise tax imposed by
Section 4999 of the Code, then the Participant's Severance Payment under
subsection IV.1. shall be reduced to such lesser amount that would result in no
portion of such severance benefits being subject to excise tax under Section
4999 of the Code. Unless the Company and the Participant otherwise agree in
writing, any determination required under this subsection IV.2. shall be made in
writing by the Company's independent public accountants immediately prior to
Change of Control (the "Accountants"), whose determination shall be conclusive
and binding upon the Participant and the Company for all purposes. For purposes
of making the calculations required by this subsection IV.2., the Accountants
may make reasonable assumptions and approximations concerning applicable taxes
and may rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code. The Company and the
Participant shall furnish to the Accountants such information and documents as
the Accountants may reasonably request in order to make a determination under
this Section. The Company shall bear all costs the Accountants may reasonably
incur in connection with any calculations contemplated by this subsection IV.2.

ARTICLE V.

OTHER RIGHTS AND BENEFITS NOT AFFECTED

1. Other Benefits.

Neither the provisions of this Plan nor the Severance Payment provided
for hereunder shall reduce any amounts otherwise payable, or in any way diminish
the Participant's rights as an Employee, whether existing now or hereafter,
under any benefit, incentive, retirement, stock option, stock bonus, stock
purchase plan, or any employment agreement or other plan, agreement or
arrangement.

2. Employment Status.

This Plan does not constitute a contract of employment or impose on the
Participant or the Company any obligation to retain the Participant as an
Employee, to change the status of the Participant's employment, or to change the
Company's policies regarding termination of employment. The Participant's
employment is and shall continue to be at-will, as defined under applicable law.
If the Participant's employment with the Company or a successor entity
terminates for any reason, including (without limitation) any termination prior
to a Change of Control, the Participant shall not be entitled to any payments,
benefits, damages, awards or compensation other than as provided by this Plan,
or as may otherwise be available in accordance with the Company's established
employee plans and practices or other agreements with the Company.

3. Taxation of Plan Payments.

All Severance Payments paid pursuant to this Plan shall be subject to
regular withholding taxes.

ARTICLE VI.

SUCCESSORS TO COMPANY AND PARTICIPANTS

1. Company's Successors.
Any successor to the Company (whether direct or indirect and whether by
purchase, lease, merger, consolidation, liquidation or otherwise) to all or
substantially all of the Company's business and/or assets shall assume the
obligations under this Plan and agree expressly to perform the obligations under
this Plan. For all purposes under this Plan, the term "Company" shall include
any successor to the Company's business and/or assets which executes and
delivers the assumption agreement described in this subsection (a) or which
becomes bound by the terms of this Plan by operation of law.

2. Participant's Successors.
All rights of the Participant hereunder shall inure to the benefit of,
and be enforceable by, the Participant's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.

ARTICLE VII.

DURATION, AMENDMENT AND TERMINATION

1. Duration.
This Plan shall terminate upon the earlier of (i) the date that all
obligations of the Company or successor entities hereunder have been satisfied,
or (ii) six (6) months after a Change of Control, unless sooner terminated as
provided in Section VII.2. A termination of this Plan pursuant to the preceding
sentence shall be effective for all purposes, except that such termination shall
not affect the payment or provision of compensation or benefits on account of a
termination of employment occurring prior to the termination of this Plan.

2. Amendment and Termination.
The Board of Directors of the Company shall have the discretionary
authority to amend the Plan in any respect by resolution adopted by a two-thirds
or greater majority of the Board of Directors of the Company, unless a Change of
Control has previously occurred. The Plan may be terminated by resolution
adopted by a two-thirds or greater majority of the Board of Directors, provided
that written notice is furnished to all Participants at least sixty (60) days
prior to such termination, unless a Change of Control has previously occurred.
If a Change of Control occurs, the Plan and Exhibits A and B thereto shall no
longer be subject to amendment, change, substitution, deletion, revocation or
termination in any respect whatsoever.

3. Form of Amendment.
The form of any proper amendment or termination of the Plan shall be a
written instrument signed by a duly authorized officer or officers of the
Company, certifying that the amendment or termination has been approved by the
Board of Directors. A proper amendment of the Plan automatically shall effect a
corresponding amendment to all Participants' rights hereunder. A proper
termination of the Plan automatically shall effect a termination of all
Participants' rights and benefits hereunder.

ARTICLE VIII.

PLAN ADMINISTRATION

1. Appeal.
A Participant or former Participant who disagrees with their allotment of
benefits under this Plan may file a written appeal with the designated Human
Resources representative. Any claim relating to this Plan shall be subject to
this appeal process. The written appeal must be filed within sixty (60) days of
the employee's Termination Date.

The appeal must state the reasons the Participant or former Participant
believes he or she is entitled to different benefits under the Plan. The
designated Human Resources representative shall review the claim. If the claim
is wholly or partially denied, the designated Human Resources representative
shall provide the Participant or former Participant a written notice of the
denial, specifying the reasons the claim was denied. Such notice shall be
provided within ninety (90) days of receiving the written appeal.

If the claim is denied, in whole or in part, the Participant may request
a review of the denial at any time within 90 days following the date the
Participant received written notice of the denial of his or her claim. For
purposes of this subsection, any action required or authorized to be taken by
the Participant may be taken by a representative authorized in writing by the
Participant to represent him or her. The designated Human Resources
representative shall afford the Participant a full and fair review of the
decision denying the claim and, if so requested, shall:

(a) Permit the Participant to review any documents that are pertinent
to the claim;

(b) Permit the Participant to submit to the designated Human Resources
representative issues and comments in writing; and

(c) The decision on review by the designated Human Resources
representative shall be in writing and shall be issued within 60
days following receipt of the request for review. The decision on
review shall include specific reasons for the decision and
specific references to the pertinent Plan provisions on which the
decision of the designated Human Resources representative is
based.

2. Arbitration.
If the appeal of a Participant or former Participant is denied, or if the
outcome of said appeal is unsatisfactory to the Participant or former
Participant, the sole remedy hereunder shall be arbitration as set forth below.
Any dispute or controversy arising under or in connection with the Plan shall be
settled by arbitration in accordance with the rules of the American Arbitration
Association then in effect, conducted before a panel of three arbitrators
sitting in a location selected by the employee within fifty (50) miles from the
location of his or her job with the Company. In consideration for the
Participant's or former Participant's waiver of their right to litigate any such
dispute or controversy in a court of law, and notwithstanding any contrary
provisions of California law regarding allocation of attorney fees, costs and
expenses in arbitration proceedings, the Company agrees to pay, on a monthly
basis, the reasonable attorney fees, costs and expenses (as determined by the
arbitrator) incurred in good faith by the Participant or former Participant in
connection with any such arbitration regardless of the outcome of the
arbitration. Judgment may be entered on the arbitrator's award in any court
having jurisdiction. Punitive damages shall not be awarded.

ARTICLE IX.

NOTICE

1. General.
Notices and all other communications contemplated by this Plan shall be
in writing and shall be deemed to have been duly given when personally delivered
or when mailed by U.S. registered or certified mail, return receipt requested
and postage prepaid. In the case of the Participant, mailed notices shall be
addressed to him at the home address that he most recently communicated to the
Company in writing. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be directed to
the attention of its Secretary.

2. Notice of Termination.
Any termination by the Company for Cause or by the Participant as a
result of a voluntary resignation or an Involuntary Termination shall be
communicated by a notice of termination to the other party hereto given in
accordance with Article II of this Plan. Such notice shall indicate the specific
termination provision in the Plan relied upon, shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
under the provision so indicated, and shall specify the Termination Date. The
failure by the Participant to include in the notice any fact or circumstance
which contributes to a showing of Involuntary Termination shall not waive any
right of the Participant hereunder or preclude the Participant from asserting
such fact or circumstance in enforcing his rights hereunder.

ARTICLE X.

MISCELLANEOUS PROVISIONS

1. No Duty to Mitigate.
The Participant shall not be required to mitigate the amount of any
payment contemplated by this Plan, nor shall any such payment be reduced by any
earnings that the Participant may receive from any other source.

2. Severability.
The invalidity or unenforceability of any provision or provisions of this
Plan shall not affect the validity or enforceability of any other provision
hereof, which shall remain in full force and effect.

3. No Assignment of Benefits.
The rights of any person to payments or benefits under this Plan shall
not be made subject to option or assignment, either by voluntary or involuntary
assignment or by operation of law, including (without limitation) bankruptcy,
garnishment, attachment or other creditor's process, and any action in violation
of this subsection shall be void.

4. Assignment by Company.
The Company may assign its rights under this Plan to an affiliate, and an
affiliate may assign its rights under this Plan to another affiliate of the
Company or to the Company; provided, however, that no assignment shall be made
if the net worth of the assignee is less than the net worth of the Company at
the time of assignment. In the case of any such assignment, the term "Company"
when used in a section of this Plan shall mean the corporation that actually
employs the Participant.

ARTICLE XI.

ERISA REQUIRED INFORMATION

1. Plan Sponsor.
The Plan sponsor and administrator is:

Actel Corporation
955 East Arques Avenue
Sunnyvale, CA 94086
(408) 739-1010

2. Designated Agent.
Designated agent for service of process:

Secretary
955 East Arques Avenue
Sunnyvale, CA 94086
(408) 739-1010

3. Plan Records.
Plan records are kept on a fiscal year basis.

4. Funding.
The Plan shall be funded solely from the Company's general assets.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>deferredcompplan.txt
<DESCRIPTION>EXHIBIT 10.7 DEFERRED COMPENSATION PLAN
<TEXT>

ACTEL CORPORATION

DEFERRED COMPENSATION PLAN

<PAGE>

TABLE OF CONTENTS
Page

ARTICLE I DEFINITIONS........................................................1

1.1 "Board of Directors".......................................1
1.2 "Committee"................................................1
1.3 "Compensation".............................................1
1.4 "Credited Investment Return (Loss)"........................1
1.5 "Deferral Account".........................................1
1.6 "Deferral Amount"..........................................1
1.7 "Deferral Election"........................................1
1.8 "Disability"...............................................1
1.9 "Earnings Indices".........................................1
1.10 "Effective Date"...........................................2
1.11 "Employee".................................................2
1.12 "Hardship".................................................2
1.13 "Year".....................................................2
1.14 "Plan".....................................................2
1.15 "Plan Year"................................................2
1.16 "Supplemental Employee Benefits"...........................2

ARTICLE II ELIGIBILITY.......................................................2

2.1 Eligible Persons...........................................2
2.2 Commencement of Participation..............................3
2.3 Termination of Participation...............................3

ARTICLE III STOCK OPTION GAIN DEFERRALS......................................3

3.1 Stock Option Gain Deferrals................................3
3.2 Compensation Deferrals
3.3 No Withdrawal..............................................4

ARTICLE IV CREDITED INVESTMENT RETURN (LOSS) ON DEFERRAL ACCOUNTS............4

4.1 Deferral Accounts..........................................4
4.2 Credited Investment Return (Loss)..........................5

ARTICLE V BENEFITS...........................................................5

5.1 Distribution of Benefits...................................5
5.2 Change of Distribution Election............................5
5.3 Payment After Death........................................5
5.4 Early Withdrawals..........................................6
5.5 Disability
5.6 Automatic Lump-Sum Distribution for Accounts below $25,000.6
5.7 Tax Withholding............................................7

ARTICLE VI OBLIGATION TO PAY SUPPLEMENTAL EMPLOYEE BENEFITS..................7

6.1 Benefits Paid From General Corporate Assets; Payment in
Cash or Stock............................................7
6.2 No Secured Interest........................................7

ARTICLE VII ADMINISTRATION...................................................7

7.1 Administration of the Plan.................................7
7.2 Indemnification............................................7

ARTICLE VIII MISCELLANEOUS...................................................7

8.1 Nontransferaility..........................................7
8.2 Binding Effect.............................................7
8.3 No Rights as Employee......................................7
8.4 Reimbursement of Costs.....................................8
8.5 Arbitration................................................8
8.6 Applicable Law.............................................8
8.7 Entire Agreement...........................................8
8.8 Termination or Amendment of Plan...........................8

<PAGE>

ACTEL CORPORATION

DEFERRED COMPENSATION PLAN

This Actel Corporation Deferred Compensation Plan is adopted effective
July 21, 2000. Throughout the Plan, the term "Company" shall mean Actel
Corporation, but shall also include wherever applicable (with such applicability
determined solely in the discretion of the Committee) any entity that is
directly or indirectly controlled by the Company or any entity in which the
Company has a significant equity or investment interest.

ARTICLE I

DEFINITIONS

Whenever used herein, the masculine pronoun shall be deemed to include
the feminine, and the singular to include the plural, unless the context dearly
indicates otherwise, and the following definitions shall govern the Plan:

1.1 "Board of Directors" or "Board" means the Board of Directors of
Actel Corporation.

1.2 "Compensation" means the salary, bonus and commissions payable to
an Employee during the Plan Year and considered to be "wages" for
purposes of federal income tax withholding, before reduction for
amounts deferred under this Plan, salary reduction contributions
under IRC Section 401(k), or amounts deferred under any other
deferral arrangements. Compensation does not include expense
reimbursements, severance pay, any form of noncash compensation or
benefits, group life insurance premiums, income from the exercise
of stock options or other receipt of company stock, or any other
payments or benefits other than salary, bonus, or commissions.

1.3 "Committee" means an independent Committee appointed by the Board
to administer this Plan and to take such other actions as may be
specified herein.

1.4 "Credited Investment Return (Loss)" means the hypothetical
investment return which shall be credited to Employee's Deferral
Accounts pursuant to Article IV.

1.5 "Deferral Account" means the two book entry accounts established
under the Plan for each Employee to which shall be separately
credited (or debited) the Employee's Stock Option Deferral Amounts
and Compensation Deferral Amounts made pursuant to Article III and
Employee's Credited Investment Return (Loss) determined under
Article IV and which shall be reduced by any distributions made to
Employee and any charges which may be imposed on such Deferral
Accounts pursuant to the terms of the Plan.

1.6 "Deferral Amount" means the Stock Option Deferral Amount and
Compensation Deferral Amount which Employee elects to contribute
for Supplemental Employee Benefits pursuant to Article III.

1.7 "Deferral Election" means the form of Stock Option Deferral
Election and/or Compensation Deferral Election as prescribed by
the Committee, as modified from time to time.

1.8 "Disability" means the Employee qualifies for a disability benefit
under the Company's Long Term Disability Plan.

1.9 "Earnings Indices" means the portfolios or funds selected by the
Committee to be used in calculating the Credited Investment Return
(Loss) to be credited (debited) to the Compensation Deferral
Account under Article IV.

1.10 "Effective Date" means July 21, 2000.

1.11 "Employee" means a highly compensated or key management employee
who has been designated by the Committee as eligible to
participate in this Plan.

1.12 "Hardship" means a severe financial hardship to the Employee
resulting from:

(a) Sudden or unexpected illness or accident of either the
Employee or dependent of same, or

(b) Loss of the Employee's property due to casualty or other
extraordinary and unforeseeable circumstances beyond the
control of the Employee.

A severe financial hardship shall not constitute a Hardship under
the Plan to the extent that it is, or may be, relieved by:

(i) Reimbursement or compensation, by insurance or
otherwise;

(ii) Liquidation of the Employee's assets to the extent
that the liquidation of such assets would not itself
cause severe financial hardship.

A Hardship under the Plan does not include:

(iii) Sending a child to college; or

(iv) Purchasing a home, per IRS Rev. Proc. 95-64.

1.13 "Year" means the Company's fiscal year unless otherwise noted.

1.14 "Plan" shall mean this Actel Corporation Deferred Compensation
Plan, as it may be amended from time to time.

1.15 "Plan Year" means the 12-month period commencing on January 1 and
ending on December 31.

1.16 "Supplemental Employee Benefits" means the benefits payable to
Employee under this Plan.

ARTICLE II

ELIGIBILITY

2.1 Eligible Persons. Eligibility for participation in the Plan shall
be limited to employees of the Company on its U.S. payroll who, at
all times, have a base salary of at least $150,000 per annum and
who are designated as eligible by the Committee, in its sole
discretion, to participate in the Plan. Individuals who are
eligible shall be notified by the Company as to their eligibility
to participate in the Plan.

2.2 Commencement of Participation. An Employee may begin participation
in the Plan immediately following the date he or she is notified
of eligibility to participate, subject to the submission of a
Deferral Election at such time period prior to the exercise of a
stock option or payment of Compensation as the Committee shall
designate.

2.3 Termination of Participation. Active participation in the Plan
shall end when an Employee's employment terminates for any reason.
No contributions to the Plan shall be made with respect to stock
options exercised after such termination date or Compensation
payable after such termination date, and any election to defer
stock option gain or Compensation under the Plan that was made
prior to such termination of employment shall be without further
force and effect. Upon termination of employment, an Employee
shall remain an inactive participant in the Plan until all of the
benefits to which he or she is entitled thereunder have been paid
in full.

ARTICLE III

STOCK OPTION GAIN DEFERRALS AND COMPENSATION DEFERRALS

3.1 Stock Option Gain Deferrals.

(a) Upon submitting a Stock Option Gain Deferral Election with
the Company, Employee agrees to irrevocably exercise a
nonstatutory stock option at a specified time in the
future, with the minimum length of such time set by the
Committee, using for such exercise Company stock that has
been held by Employee for at least six months. Instead of
receiving shares of Company stock upon such option
exercise, Employee's Deferral Account under this Plan shall
be credited with an amount equal to the difference between
the closing sales price of the Company's common stock on
the date of exercise minus the per share exercise price
multiplied by the total number of shares exercised (the
"Stock Option Deferral Amount"). The Employee agrees to
satisfy the Company's employment tax withholding
obligations arising from the option exercise separately, by
check, payroll withholding or such other means as the
Committee, in its sole discretion, provides.

(b) Employee's Deferral Election shall be irrevocable unless
Employee terminates employment with the Company prior to
the date of exercise, in which case the Deferral Election
shall be without further force and effect.

3.2 Compensation Deferrals.

(a) Employee may elect to defer Compensation by submitting a
Compensation Deferral Election with the Company. Such
deferred Compensation shall be credited to the
Participant's Compensation Deferral Account as the
corresponding Compensation becomes or would have become
payable. Any withholding of taxes or other amounts which is
required by state, federal or local law with respect to
deferred Compensation shall be withheld from the Employee's
nondeferred Compensation to the maximum extent possible
with any excess reducing the amount deferred. A
Compensation Deferral Election shall allow for the deferral
of salary, bonus, and/or commissions as follows:

(i) Salary Deferral Election. A Salary Deferral Election
shall be related to the salary payable by the
Company to the Employee during the Plan Year to
which the election relates. The amount of salary to
be deferred shall be stated as a percentage, as a
flat dollar amount, or in such other form as allowed
by the Committee.

(ii) Bonus Deferral Election. A Bonus Deferral Election
shall be related to the bonus payable to the
Employee during the Plan Year to which the election
relates. The amount to be deferred shall be stated
as a percentage of such bonus, as a flat dollar
amount, or in such other form as allowed by the
Committee.

(iii) Commission Deferral Election. A Commission Deferral
Election shall be related to the commissions payable
to the Employee during the Plan Year to which the
election relates. The amount to be deferred shall be
stated as a percentage of such commissions, as a
flat dollar amount, or in such other form as allowed
by the Committee.

(b) Limitations on Compensation Deferral Elections. The
following limits shall apply to Compensation Deferral
Elections:

(i) Minimum. The minimum cumulative deferral amount for
a Salary, Bonus and Commission Deferral Election is
$5,000 per Plan Year.

(ii) Maximum. The maximum deferral amounts for Salary
Deferral Elections shall be fifty percent (50%). The
maximum deferral amounts for Bonus and Commission
Deferral Elections shall be one hundred percent
(100%). Bonus and Commission Deferral elections of
100% shall be adjusted as necessary to reflect any
required or elective withholdings from the
Employee's bonus or commission payments.

(iii) Changes in Minimum or Maximum. The Committee may
amend the plan to change the minimum or maximum
deferral amounts from time to time by giving written
notice to all Employees of such change. No such
change may affect a Deferral Election made prior to
the Committee's action.

(c) Allocation of Accounts. An Employee shall allocate the
Compensation Deferral Account among the Earning Indices
selected by the Committee. The Committee may change the
Earnings Indices at any time. The Compensation Deferral
Account shall be treated as if invested in the Earnings
Indices chosen by the Employee. The Employee's initial
Account allocation shall be set forth in the Compensation
Deferral Election. A change in allocation among Earning
Indices will be allowed once each day and will be effective
the day after notice of the change is received by the
Committee.

(d) Revocation or Reduction of Compensation Deferral Election.
Upon application of an Employee, the Committee may, in its
discretion, allow an Employee to prospectively reduce or
revoke a Salary, Bonus, or Commission Deferral Election. In
the event an Employee is granted a Hardship Distribution
under Section 5.4(b) the Employee's current Compensation
Deferral Election shall be revoked for the remainder of the
Plan Year. In the event that the Committee grants an
Employee's application to revoke a current Compensation
Deferral Election for reasons other than Hardship, the
Employee shall not be allowed to defer Compensation until
the following Plan Year.

3.3 No Withdrawal. Except as provided in Section 5.4 below, the
Deferral Amounts may not be withdrawn by Employee and shall be
paid only in accordance with the provisions of this Plan.

ARTICLE IV

CREDITED INVESTMENT RETURN (LOSS) ON DEFERRAL ACCOUNTS

4.1 Deferral Accounts. Two separate Deferral Accounts, a Stock Option
Deferral Account and a Compensation Deferral Account, shall be
established and maintained for each Employee. The Employee's Stock
Option Deferral Amounts shall be credited (debited) to the
Employee's Stock Option Deferral Account. The Employee's
Compensation Deferral Amounts shall be credited to the Employee's
Compensation Deferral Account. Each account shall be credited
(debited) with the Account's Credited Investment Return (Loss) as
determined under this Article IV. The Employee's Deferral Accounts
shall be charged with the amount of any distributions made from
the Accounts pursuant to the Plan.

4.2 Credited Investment Return (Loss). Each Employee's Deferral
Accounts shall be credited (debited) with the Credited Investment
Return (Loss) as follows:

(a) Stock Option Deferral Account. The Employee's Stock Option
Deferral Account shall be credited (debited) monthly with
the Credited Investment Return (Loss) attributable to his
or her Stock Option Deferral Account. The Credited
Investment Return (Loss) attributable to the Stock Option
Deferral Account is the amount which the Employee's Stock
Option Deferral Account would have earned if the amounts
credited to the Stock Option Deferral Account had, in fact,
been invested in the Company Stock, purchased at the
closing sales price on the date of option exercise, and
assuming reinvestment of all dividends back into such
Company Stock at the Company Stock closing sales price on
the date of the dividend distribution.

(b) Compensation Deferral Account. The Employee's Compensation
Deferral Account shall be credited (debited) daily with the
Credited Investment Return (Loss) attributable to his or
her Compensation Deferral Account. The Credited Investment
Return (Loss) attributable to the Compensation Deferral
Account is the amount which the Employee's Compensation
Deferral Account would have earned if the amounts credited
to the Compensation Deferral Account had, in fact, been
invested in the Earnings Indices, purchased at the closing
sale price on the date of deferral, and assuming
reinvestment of all dividends and capital gains back into
such Earnings Indices at the closing sales price on the
date of the distribution of dividends and capital gains.

ARTICLE V

BENEFITS

5.1 Distribution of Benefits. Benefits shall be distributed in
accordance with the elections specified within an Employee's Stock
Option Deferral Election and Compensation Deferral Election.

5.2 Change of Distribution Election. The Employee may file an amended
election to change the distribution election at any time which is
more than one (1) year prior to the applicable specified fixed
date at which elections must commence. For example, if an Employee
elects to have distributions commence at the earlier of
termination of employment or three years following the date of the
Deferral Election, the Employee may file an amended election at
any time prior to two years following the date of the Deferral
Election. Such amended election may either (i) increase the
duration of the specified fixed period at which elections may
commence (e.g., from three to five years) or the distribution
period (e.g. from 20 to 40 quarterly installments). Any amended
election which is filed within one (1) year of the applicable
specified date at which elections shall commence shall be void and
without effect and the most recently effective election shall
control instead.

5.3 Payments after Death

(a) Stock Option Deferral Account. In the event Employee dies
after installment payments from Employee's Stock Option
Deferral Account have begun but before all of the
installments are paid, the undistributed installments shall
be paid to his or her estate as they become due.

(b) Compensation Deferral Account.

(i) In the event Employee dies while employed by the
Company, the Company shall pay to the Employee's
Beneficiary, as indicated by the Employee on his or
her most recent Compensation Deferral Election the
balance in the Compensation Deferral Account in the
form elected by the Employee in the most recently
filed Compensation Deferral Election. Investment
Earnings (Losses) shall continue to be credited
(debited) to the Compensation Deferral Account
during the payment period on the unpaid portion of
the Account.

(ii) In the event Employee dies after installment
payments from Employee's Compensation Deferral
Account have begun but before all of the
installments are paid, the undistributed
installments shall be paid to Employee's
Beneficiary, as indicated by Employee on his or her
most recent Compensation Deferral Election. Such
Beneficiary shall receive the remaining balance in
the Employee's Compensation Deferral Account in the
same manner as the Employee was being paid prior to
Employee's death, provided however that any benefits
payable hereunder to a trust or estate shall be paid
in a lump sum. Investment Earnings (Losses) shall
continue to be credited (debited) to the Accounts
during the payment period on the unpaid portion of
the Account.

5.4 Early Withdrawals.

(a) Notwithstanding any other provision of this Plan, Employee
may, upon thirty (30) days prior written notice, withdraw
up to ninety-two percent (92%) of the vested amount
credited to his or her Stock Option Deferral Account and/or
Compensation Deferral Account determined at the time of
such withdrawal. Upon such withdrawal, eight percent (8%)
of the amount requested from Employee's Deferral Account
shall be forfeited and Employee shall have no further right
thereto. If the Employee withdraws some or all of the Stock
Option Deferral Account under this section, Employee shall
be prohibited from making any further stock option gain
deferrals pursuant to this Plan for the remainder of the
Plan Year in which the withdrawal occurred and for the
following Plan Year. If the Employee withdraws some or all
of the Compensation Deferral Account under this section,
Employee shall be prohibited from making any further
Compensation deferrals pursuant to this Plan for the
remainder of the Plan Year in which the withdrawal occurred
and for the following Plan Year. An Employee may only make
a maximum of two early withdrawals pursuant to this Section
5.4(a).

(b) Notwithstanding any other provision of this Plan, Employee
may request to withdraw any or all of the vested amount
credited to his or her Deferral Accounts in the event of a
Hardship. The determination of whether such a withdrawal
request shall be approved shall be made by the Committee in
its sole discretion. Employee shall be required to
demonstrate to the Committee's satisfaction that the
financial burden imposed by the Hardship cannot reasonably
be satisfied out of Employee's other financial resources.
Withdrawals pursuant to a Hardship request shall only be
permitted, if at all, to the extent reasonably required to
satisfy Employee's need.

5.5 Disability. In the event that the Employee suffers a Disability
under the terms of the Company's long term disability plan, the
Employee shall receive payment of his or her Compensation Deferral
Account at such time as the Employee's employment is terminated
pursuant to terms of such plan. Payment of the Account will be in
accordance with the elections specified in the Employee's
Compensation Deferral Election.

5.6 Automatic Lump-Sum Distribution for Accounts below $25,000.
Notwithstanding any other provisions of this Plan or the
provisions of an Employee's deferral election, in the event that
an Employee has less than twenty-five thousand dollars ($25,000)
credited to his or her Stock Option Deferral Account or
Compensation Deferral Account as of the date of his or her
termination of employment with the Company, 100% of such Deferral
Account(s)shall be distributed to him or her in a single lump-sum
payment within a reasonable amount of time following the date of
such termination of employment.

5.7 Tax Withholding. All payments under this Plan shall be subject to
all applicable withholding for state and federal income tax and to
any other federal, state or local tax which may be applicable
thereto.

ARTICLE VI

OBLIGATION TO PAY SUPPLEMENTAL EMPLOYEE BENEFITS

6.1 Benefits Paid From General Corporate Assets; Payment in Cash or
Stock. All benefits payable to Employee hereunder shall be paid by
the Company out of its general corporate assets. Payment of
benefits from the Stock Option Deferral Account hereunder shall be
made in shares of Company common stock. Payment of benefits from
the Compensation Deferral Account hereunder shall be made in cash.

6.2 No Secured Interest. Deferral Accounts shall be subject to the
claims of creditors of the Company. Employee is a general
unsecured creditor of the Company with respect to the promises of
the Company made herein.

ARTICLE VII

ADMINISTRATION

7.1 Administration of the Plan. The Plan shall be administered by the
Committee. The Committee shall have full power and discretionary
authority to administer, construe and interpret the Plan, to
establish procedures for administering the Plan, to prescribe
forms, and take any and all necessary or desirable actions in
connection with the Plan. The Committee's interpretation and
construction of the Plan shall be conclusive and binding on all
persons. The Committee may appoint a plan administrator or any
other agent and delegate to them such powers and duties in
connection with the administration of the Plan as the Committee
may from time to time prescribe.

7.2 Indemnification. The Committee and each of its members are
indemnified by the Company against any and all liabilities
incurred by reason of any action taken in good faith pursuant to
the provisions of the Plan.

ARTICLE VIII

MISCELLANEOUS

8.1 Nontransferaility. The right of Employee or any other person to
the payment of any benefits under this Plan shall not be assigned,
transferred, pledged or encumbered.

8.2 Binding Effect. This Plan shall be binding upon and inure to the
benefit of the Company, its successors and assigns and Employee
and his heirs, executors, administrators and legal
representatives.

8.3 No Rights as Employee. Nothing contained herein shall be construed
as conferring upon any Employee the right to continue in the
employ of the Company as an employee.

8.4 Reimbursement of Costs. If the Company, Employee or a successor in
interest to either of the foregoing, brings legal action to
enforce any of the provisions of this Plan, the prevailing party
in such legal action shall be reimbursed by the other party, the
prevailing party's costs of such legal action including, without
limitation, reasonable fees of attorneys, accountants and similar
advisors and expert witnesses.

8.5 Arbitration. Any dispute or claim relating to or arising out of
this Plan shall be fully and finally resolved by binding
arbitration conducted by the American Arbitration Association in
Santa Clara County, California.

8.6 Applicable Law. This Plan shall be construed in accordance with
and governed by the laws of the State of California.

8.7 Entire Agreement. This Plan and any applicable deferral election
forms constitute the entire understanding and agreement with
respect to the Plan, and there are no agreements, understandings,
restrictions, representations or warranties among Employee and the
Company other than those as set forth or provided for therein.

8.8 Termination or Amendment of Plan.

(a) This Plan may be amended by the Company at any time in its
sole discretion by resolution by its Board; provided,
however, that no amendment may be made which would alter
the irrevocable nature of a Stock Option Deferral Election,
reduce the amount credited to an Employee's Deferral
Account on the date of such amendment, or change the form
of the distribution specified in the Employee's Deferral
Election.

(b) Notwithstanding the foregoing paragraph or any other
provision in this Plan to the contrary, the Company
reserves the right to terminate the Plan in its entirety at
any time upon fifteen (15) days notice to Employees. If the
Plan is terminated, all benefits shall be paid in
accordance with the elections specified in the Employee's
Deferral Election.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>4
<FILENAME>shareholderreport.txt
<DESCRIPTION>PORTIONS OF ANNUAL REPORT TO SHAREHOLDERS
<TEXT>

ACTEL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)

<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------------------------------
2000 1999 1998 1997 1996
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Consolidated Statements of Income Data:
Net revenues................................ $ 226,419 $ 171,661 $ 154,427 $ 155,858 $ 148,779
Costs and expenses:
Cost of revenues......................... 84,680 66,387 61,642 64,244 64,420
Research and development................. 36,599 32,338 31,220 26,465 23,934
Selling, general, and administrative..... 47,960 45,903 40,558 40,317 37,518
Amortization of goodwill and other
acquisition-related intangibles........ 8,056 2,226 1,185 877 877
Restructuring charge (1)................. -- 1,963 -- -- --
Purchased in-process research and
development (2)........................ 10,646 600 -- -- --
------------ ------------ ------------ ------------ ------------
Total costs and expenses........... 187,941 149,417 134,605 131,903 126,749
------------ ------------ ------------ ------------ ------------
Income from operations...................... 38,478 22,244 19,822 23,955 22,030
Interest income and other, net of expense... 8,310 3,642 2,380 1,842 1,055
Gain on sale of Chartered Semiconductor
stock (3)................................ 28,329 -- -- -- --
------------ ------------ ------------ ------------ ------------
Income before tax provision and equity in net
(loss) of equity method investee......... 75,117 25,886 22,202 25,797 23,085
Equity in net (loss) of equity method
investee (4)............................. (2,445) (193) -- -- --
Tax provision............................... 31,227 8,055 7,215 9,029 8,147
------------ ------------ ------------ ------------ ------------
Net income.................................. $ 41,445 $ 17,638 $ 14,987 $ 16,768 $ 14,938
============ ============ ============ ============ ============
Net income per share:
Basic (5)................................ $ 1.77 $ 0.81 $ 0.71 $ 0.82 $ 0.84
============ ============ ============ ============ ============
Diluted (5).............................. $ 1.58 $ 0.76 $ 0.68 $ 0.76 $ 0.70
============ ============ ============ ============ ============
Shares used in computing net income per share:
Basic.................................... 23,447 21,664 21,251 20,370 17,826
============ ============ ============ ============ ============
Diluted.................................. 26,233 23,058 21,921 21,968 21,485
============ ============ ============ ============ ============
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
ACTEL CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA (Continued)
(in thousands, except per share data)

As of December 31,
--------------------------------------------------------------------
2000 1999 1998 1997 1996
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
Working capital............................ $ 146,952 $ 108,818 $ 85,858 $ 76,279 $ 55,397
Total assets............................... 312,434 259,211 179,708 159,994 136,712
Redeemable convertible preferred Stock (6). -- -- -- -- 18,147
Total shareholders' equity................. 230,101 178,630 127,054 109,010 69,357
</TABLE>
- ------------------------------------------------------------

(1) During the second quarter of 1999, Actel completed a restructuring plan
that resulted in a reduction in force along with the elimination of certain
projects and non-critical activities. See Note 6 of Notes to Consolidated
Financial Statements for further discussion of components of this charge.

(2) The 1999 expense represents a charge for in-process research and
development incurred in the fourth quarter of 1999 in connection with
Actel's acquisition of AutoGate Logic, Inc. The 2000 expenses represent
charges for in-process research and development arising from Actel's
acquisitions of Prosys Technology, Inc. and GateField Corporation. See Note
5 of Notes to Consolidated Financial Statements for further discussion of
these charges.

(3) During the second quarter of 2000, Actel sold all of its shares of
Chartered Semiconductor common stock for proceeds of $39.0 million,
resulting in a one-time gain of $28.3 million before tax. See Note 4 of
Notes to Consolidated Financial Statements for further discussion of this
gain.

(4) Represents Actel's equity share of net losses of GateField Corporation in
accordance with the equity method of accounting prior to the purchase
acquisition completed on November 15, 2000.

(5) The earnings per share amounts prior to 1997 have been restated as required
to comply with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share." See Note 15 of Notes to Consolidated Financial
Statements for further discussion of earnings per share.

(6) Represents redeemable convertible preferred stock issued to Texas
Instruments, Inc. (TI) in connection with Actel's acquisition of TI's field
programmable gate array business. On March 12, 1997, TI converted the
Series A preferred stock into 2,631,578 shares of common stock.

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Actel Corporation ("Actel") is the world's leading supplier of
antifuse-based field programmable gate arrays ("FPGAs") and associated software
development tools. FPGAs are used by designers of communication, computer,
industrial control, military/aerospace, and other electronic systems to
differentiate their products and get them to market faster.

Business Developments

GateField Acquisition

On November 15, 2000, Actel completed its acquisition of GateField
Corporation ("GateField"), a developer of flash based FPGA products, in a
transaction accounted for using the purchase method of accounting. The $45.7
million purchase price included cash consideration, the cost of Actel
investments in GateField made prior to the acquisition, acquisition expenses,
and the value of all outstanding GateField employee stock options that were
assumed by Actel in the acquisition.

In accordance with the provisions of Accounting Principles Board (APB)
Opinion No. 16, "Business Combinations," all identifiable assets and liabilities
were assigned a portion of the total consideration on the basis of their
respective fair values as of November 15, 2000. The consideration was allocated,
based on the valuation report of an independent valuation specialist, as follows
(in thousands):

Net tangible assets (liabilities) of GateField............ $ (1,083)
In-process research and development....................... 5,088
Acquired work-force....................................... 476
Developed technology...................................... 5,808
Core Technology........................................... 2,896
Tradename................................................. 326
Patents................................................... 976
Goodwill.................................................. 26,680
Unearned compensation costs............................... 922
Deferred tax asset, net of deferred tax liability......... 3,647
-----------
$ 45,736
===========

The purchase price allocation is preliminary and subject to change
pending finalization of tax planning strategies intended to utilize net
operating losses acquired in the GateField acquisition. Upon completion of this
study, there could be material subsequent adjustments to goodwill and other
non-current intangible assets from the GateField acquisition, when these
acquired net operating losses become realizable.

The In-process research and development (IPRD) was valued at $5.1
million and charged to operating expense upon the closing of the acquisition on
November 15, 2000. The values assigned to the other identified intangible assets
were accounted for on the balance sheet and are being amortized over their
respective useful lives. See Note 5 of Notes to Consolidated Financial
Statements for further discussion of the GateField acquisition.

Prosys Acquisition

On June 2, 2000, Actel acquired Prosys Technology, Inc. (Prosys), a
developer of SRAM-based embedded FPGA Intellectual Property cores (IP), in a
transaction accounted for as a purchase. The $24.5 million purchase price
included $6.9 million in cash, 220,518 shares of Actel common stock, acquisition
costs, and the value of all outstanding Prosys employee stock options that were
assumed by Actel in the acquisition.

In accordance with the provisions of APB Opinion No. 16, all
identifiable assets and liabilities were assigned a portion of the total
consideration on the basis of their respective fair values. The consideration
was allocated, based on the valuation report of an independent valuation
specialist, as follows (in thousands):

In-process research and development....................... $ 5,558
Acquired work-force....................................... 273
Patent applications....................................... 349
Cash and other current assets............................. 57
Deferred tax liability.................................... (249)
Goodwill.................................................. 18,534
-----------
$ 24,522
===========

The IPRD was valued at $5.6 million and charged to operating expense
upon the closing of the acquisition on June 2, 2000. The values assigned to the
other identified intangible assets were placed on the balance sheet and are
being amortized over their respective useful lives. See Note 5 of Notes to
Consolidated Financial Statements for further discussion of the Prosys
acquisition.

Results of Operations

The following table sets forth certain financial data from the
Consolidated Statements of Income expressed as a percentage of net revenues:

<TABLE>
<CAPTION>
Years Ended December 31,
2000 1999 1998
--------- --------- ---------
<S> <C> <C> <C>
Net revenues............................................................ 100.0% 100.0% 100.0%
Cost of revenues........................................................ 37.4 38.7 39.9
--------- --------- ---------
Gross margin............................................................ 62.6 61.3 60.1
Research and development................................................ 16.2 18.8 20.2
Selling, general, and administrative.................................... 21.2 26.7 26.3
Amortization of goodwill and other acquisition-related intangibles...... 3.6 1.3 0.7
Restructuring charge.................................................... -- 1.2 --
Purchased in-process research and development........................... 4.6 0.3 --
--------- --------- ---------
Income from operations.................................................. 17.0 13.0 12.9
Interest income and other, net of expense............................... 3.7 2.1 1.5
Gain on sale of Chartered Semiconductor stock........................... 12.5 -- --
--------- --------- ---------
Income before tax provision and equity in net (loss) of equity method
investee............................................................ 33.2 15.1 14.4
Equity in net (loss) of equity method investee.......................... (1.1) (0.1) --
Tax provision........................................................... 13.8 4.7 4.7
--------- --------- ---------
Net income.............................................................. 18.3% 10.3% 9.7%
========= ========= =========
</TABLE>

Actel's fiscal year ends on the first Sunday after December 30th.
Fiscal 2000, 1999 and 1998 ended on December 31, 2000, January 2, 2000, and
January 3, 1999, respectively. Fiscal 1998 was a fifty-three week fiscal year,
rather than a normal fifty-two week fiscal year. For ease of presentation,
December 31 has been indicated as the fiscal year-end for all years.

Net Revenues

Net revenues for 2000 were $226.4 million, an increase of 32% from
1999. This compares with an increase in net revenues of 11% for 1999 from 1998.
Actel derives its revenues primarily from the sale of FPGAs, which accounted for
96% of the net revenues for 2000, compared with 96% for 1999 and 97% for 1998.
Non-FPGA revenues are derived primarily from Actel's Protocol Design Services
Group, which was acquired from GateField in 1998. Actel also derives revenues
from royalties and the sale of software, hardware and maintenance.

Net revenues from the sale of FPGAs for 2000 increased 34% from 1999.
This compares with an increase of 10% for 1999 from 1998. The increase in net
revenues for 2000 compared with 1999 was due to an increase of 12% in the
overall average selling prices (ASP) of FPGAs and an increase of 18% in unit
shipments. The increase in net revenues from the sale of FPGAs for 1999 compared
with 1998 was due to an increase of 21% in FPGA unit sales, which was offset by
a 10% decline in the overall ASP of FPGAs. The decline in the overall ASP of
FPGAs for 1999 compared with 1998, and the increases in unit sales for both 2000
and 1999, resulted primarily from higher percentage shipments of MX product.
Revenues were also favorably impacted for both 2000 and 1999 by increased sales
to Nortel Networks Corporation (Nortel Networks), which accounted for 11% of
sales in 2000, 9% in 1999, and 3% in 1998.

Actel generates a majority of its revenues from the sale of its
products through distributors. Actel's principal distributors are Unique
Technologies, Inc. (Unique) and Pioneer-Standard Electronics, Inc. (Pioneer) in
North America and Arrow Electronics, Inc. and Zeus Electronics (Arrow)
worldwide. Unique replaced Wyle Electronics Marketing Group (Wyle) as an Actel
distributor in the second half of 1998. Unique and Wyle are both part of the
worldwide Veba Electronics Group. The following table sets forth, for each of
the last three years, the percentage of revenues derived from all customers
accounting for 10% or more of net revenues in any of such years:

2000 1999 1998
------ ------ ------
Arrow.............................. 17% 16% 14%
Wyle/Unique........................ 15% 13% 14%
Pioneer............................ 13% 12% 9%
Nortel Networks.................... 11% 9% 3%

Actel does not recognize revenue on product shipped to a distributor
until the distributor resells the product to its customer.

Sales to customers outside the United States accounted for 32%, 29%,
and 33% of net revenues for 2000, 1999, and 1998, respectively. Of these export
sales, the largest portion was derived from European customers, which accounted
for 19%, 17%, and 19% of net revenues for 2000, 1999, and 1998, respectively.

Gross Margin

Gross margin for 2000 was 63% of net revenues, compared with 61% for
1999 and 60% for 1998. The improved gross margin resulted primarily from an
increase in ASP (12% for 2000 compared with 1999), improved sort yields
(especially on newer products) and better utilization of manufacturing capacity.
For 1999, these improvements were offset by the unfavorable impact of a
strengthening yen against the dollar, in which some of Actel's wafer purchases
are denominated.

Actel seeks to reduce costs by improving wafer yields, negotiating
price reductions with suppliers, increasing the level and efficiency of its
testing and packaging operations, achieving economies of scale by means of
higher production levels, and increasing the number of die produced per wafer,
principally, by shrinking the die size of its products. No assurance can be
given that these efforts will be successful. The capability of Actel to shrink
the die size of its FPGAs is dependent on the availability of more advanced
manufacturing processes. Due to the custom steps involved in manufacturing
antifuse FPGAs, Actel typically obtains access to new manufacturing processes
later than its competitors using standard manufacturing processes.

Research and Development

Research and development expenditures for 2000 were $36.6 million or
16% of net revenues, compared with $32.3 million, or 19% of net revenues, for
1999 and $31.2 million, or 20% of net revenues, for 1998. Research and
development expenditures for 2000 increased by 13% compared with 1999, but
decreased as a percentage of net revenues. The increase in expenditures for 2000
was due in part to increased headcount following Actel's acquisition of Prosys
and GateField. Additionally, expenditures increased in both 2000 and 1999, as a
result of Actel's effort to accelerate the introduction of new products. Despite
the growth in terms of absolute spending in each of the last two years, research
and development expenditures as a percentage of net revenues decreased each year
due to net revenue growth of 32% in 2000, and 11% growth in 1999.

Actel's research and development consists of circuit design, software
development, and process technology activities. Actel believes that continued
substantial investment in research and development is critical to maintaining a
strong technological position in the industry. Since Actel's antifuse FPGAs are
manufactured using a customized process, Actel's research and development
expenditures will probably always be higher as a percentage of net revenues than
that of its major competitors.

Selling, General, and Administrative

Selling, general, and administrative expenses for 2000 were $48.0
million, or 21% of net revenues, compared with $45.9 million, or 27% of net
revenues for 1999 and $40.6 million, or 26% of net revenues, for 1998. Selling,
general, and administrative expenses for 2000 increased by 4% compared with
1999, while Actel's net revenues increased by 32%. Selling expenses increased in
2000 due to the increase in net revenues. Selling, general, and administrative
expenses for 1999 increased by 13% in absolute dollars compared with 1998, while
Actel's net revenues increased by 11%. Selling, general, and administrative
expenses increased in 1999 principally because of an accrual of estimated
settlement costs of claims for alleged patent infringement, more fully described
in Note 14 of Notes to Consolidated Financial Statements, an increased level of
sales and marketing activities in support of new products, and expenses related
to the termination of a distributor.

Amortization of Goodwill and Other Acquisition-Related Intangibles

Amortization of goodwill and other acquisition-related intangibles for
2000 was $8.1 million, compared with $2.2 million for 1999 and $1.2 million for
1998. The increase in 2000 resulted principally from $2.4 million in
amortization charges through November 15, 2000 related to Actel's equity
investment in GateField (acquired in 2000 and previous years), $2.5 million in
charges related to Actel's acquisition of Prosys completed on June 2, 2000, and
$1.2 million in amortization charges subsequent to November 15, 2000 related to
Actel's purchase acquisition of GateField completed November 15, 2000. The
increase in 1999 resulted principally from a $0.9 million charge related to the
equity investment in GateField. Amortization charges are expected to increase in
2001 and subsequent years as goodwill and other acquisition-related intangibles
related to the GateField and Prosys acquisitions are amortized over a full
fiscal year.

Restructuring Charges

During the second quarter of fiscal 1999, Actel completed a
restructuring plan that resulted in a reduction in force as well as the
elimination of certain projects and non-critical activities. The total pretax
restructuring charges for these activities amounted to $2.0 million. These
measures were taken to reduce spending and sharpen Actel's focus on new product
development. As of December 31, 1999, all restructuring reserves had been fully
utilized. See Note 6 of Notes to Consolidated Financial Statements for further
discussion of the restructuring charges.

Acquired In-Process Research and Development Expenses

GateField

In November 2000, Actel completed its acquisition of GateField in a
transaction accounted for as a purchase. The in-process research and development
(IPRD) expense associated with this purchase resulted in a one-time charge of
$5.1 million during the fourth quarter of 2000.

IPRD was identified and valued through extensive interviews and
analysis of data provided by GateField concerning developmental products, their
stage of development, the time, cost, and resources needed to complete them, and
associated risks. The income approach, which bases the value of an asset on its
future earnings capacity, was utilized in valuing the IPRD. This approach values
an asset based on the future cash flows projected to be generated by the asset
over its estimated useful life. To estimate the value of the IPRD, the future
cash flows were discounted to their present value utilizing a discount rate
(25%) that would provide sufficient return to a potential investor. At the date
of acquisition, the in-process technology had no alternative future use and was
not ready for commercial production.

The fair value of the estimated discounted cash flows of the next
generation of ProASIC based product was calculated to be $5.1 million on
November 15, 2000. The fair value calculation was based on future cash flows
anticipated in the years 2001 through 2005, with associated gross margin and
expense levels as a percentage of revenues gradually improving to current Actel
operating levels by 2003.

GateField commenced development efforts on the next generation of
ProASIC product beginning in 2000. The development efforts included adding
features, such as increased input/output speed, an improved programming
mechanism, and increasing the number of routing tracks and the number of
available gates, and migrating the ProASIC technology from 0.25 micron to 0.22
micron. GateField had invested significant time and effort in developing this
product family but, at the time of acquisition, it had not yet reached the
silicon stage. At the time of the acquisition, GateField estimated the project
was approximately 50% complete and would be complete in the first quarter of
2001. The percentage was based on GateField having expended 11.7 man-years prior
to the acquisition and the need to expend an estimated 11.5 man-years following
the acquisition to complete the product. Given that there is significant
technological risk relating to the development of the next generation of ProASIC
based product and that not even the first-generation ProASIC product had
generated any revenue, this product family met the definition of in-process
technology and was classified as such.

Actel believes that the next-generation ProASIC products will be
introduced during the second half of 2001. Since the project will not be
completed in a timely manner, the value of the final products based on this
technology will be diminished due to the rapid pace of technological
advancements in the programmable logic market, which would increase the risk of
obsolescence of the new products. In addition, there can be no assurance that
Actel will be successful in the migration of the product to a 0.22 micron
process.

Prosys

In June 2000, Actel announced and completed its acquisition of Prosys
in a transaction accounted for as a purchase. The IPRD expense associated with
this purchase resulted in a one-time charge of $5.6 million during the second
quarter of 2000.

IPRD was identified and valued through extensive interviews and
analysis of data provided by Prosys concerning developmental products, their
stage of development, the time, cost and resources needed to complete them, and
associated risks. The income approach, as discussed above, was utilized in
valuing the IPRD. At the date of acquisition, the in-process technology had no
alternative future use and had not reached technological feasibility.

As of the valuation date, Prosys had no developed products in the
marketplace and was in the process of developing a 4x4 embedded block SRAM-based
FPGA core and a 8x8 embedded block SRAM-based FPGA core. These intellectual
property cores will be marketed and licensed as cores to allow other
semiconductor companies to embed functional blocks of programmable logic into
their silicon designs. Prosys indicated that the 4x4 embedded block was expected
to be completed in late 2000, following the development of key software
features. The 4x4 embedded block core was introduced in February 2001 as the
VariCore TM Embedded Programmable Gate Array (EPGA) product. The 8x8 embedded
block core, which was (and still is) expected to be introduced in 2001, will
leverage technology from the 4x4 embedded block core. As of the valuation date,
Prosys had incurred development costs of approximately $3.1 million related to
the 4x4 embedded block core and estimated that an additional $1.3 million of
research and development was required to complete the development of this
product. Thus, the in-process 4x4 embedded block core was estimated to be
approximately 70% complete, an amount that approximated the relative efforts and
complexities completed. Since the 8x8 embedded block core will leverage
technology from the 4x4 embedded block core in process, the 8x8 embedded block
core was estimated to be 35% complete in its development. These products were in
development at the time of acquisition and there was significant technological
risk at that time related to completing development of these products.
Accordingly, the 4x4 embedded block core and the 8x8 embedded block core were
classified as in-process technology.

The fair value of the estimated discounted cash flows of the Prosys
in-process technology was calculated to be $5.6 million on June 2, 2000. The
fair value calculation was based on future cash flows anticipated in the years
2000 through 2005, with associated gross margin and expense levels as a
percentage of revenues gradually improving to current Actel operating levels by
2002.

Actel does not believe that the delay in the completion of the 4x4
embedded block core will have a materially adverse financial impact. There can
be no assurance that Actel will be successful in completing of the 8x8 embedded
block core. If not completed in a timely manner, revenues from the licensing of
such SRAM-based cores would be delayed

Interest Income and Other, Net of Expense

Interest and other income for 2000, 1999, and 1998 were $8.3 million,
$3.6 million, and $2.4 million, respectively. The increase in interest and other
income in both 2000 and 1999 was due primarily to increased cash, cash
equivalents, and short-term investments available for investing by Actel during
the year. The combined balance of cash and short-term investments at the end of
2000 was $140.8 million compared to $107.1 million at the end of 1999. However,
the combined cash and short-term investments balances held during 2000 was
significantly higher than the ending balance due to cash usage in the fourth
quarter for the GateField purchase ($24.0 million) and stock repurchases ($21.0
million).

Gain on Sale of Chartered Semiconductor Common Stock

During the second quarter of 2000, Actel sold all 515,000 shares of
Chartered Semiconductor Manufacturing Ltd. (Chartered Semiconductor) common
stock that Actel owned for a one-time gain of $28.3 million.

Equity in Net Loss of Equity Method Investee

Prior to Actel's acquisition of GateField on November 15, 2000, Actel
accounted for its investments in and agreements with GateField under the equity
method of accounting. Actel began accounting for its equity interest in
GateField under the equity method of accounting during the third quarter of
1999. Actel incurred a charge of $2.4 million in 2000 for its equity in the net
loss of GateField, compared with $0.2 million in 1999. The increase in 2000 was
due to increased losses by GateField and the inclusion of losses for almost a
full year (January through November) compared with only six months in 1999. The
charge was also higher due to an increase in Actel's ownership of GateField
common stock from 4.1% in 1999 to 26.3% at the time of the acquisition.

Tax Provision

Excluding the effect of certain, non-recurring acquisition-related
charges and investment gains, Actel's effective tax rates for 2000, 1999, and
1998 were 31.3%, 31.4%, and 32.5%, respectively. Significant components
affecting this effective tax rate include federal research and development
credits, income from tax exempt securities, the state composite rate, and
recognition of certain deferred tax assets subject to valuation allowances as of
December 31, 1999, December 31, 1998, and December 31, 1997, respectively. The
effective tax rate including non-recurring acquisition-related charges and
investment gains was 43.0% for 2000.

Financial Condition, Liquidity, and Capital Resources

Actel's total assets were $312.4 million at the end of 2000, compared
with $253.1 million at the end of 1999. The increase in total assets was
attributable principally to increases in cash, cash equivalents, short-term
investments, accounts receivable, and goodwill. The following table sets forth
certain financial data from the consolidated balance sheets:

Percentage Change
From 1999 to 2000
-------------------
Cash, cash equivalents, and short-term investments.......... 31.4%
Accounts receivable, net.................................... 28.6
Inventories................................................. 0.7
Property and equipment, net................................. (3.4)
Investment in Chartered Semiconductor....................... (100.0)
Goodwill.................................................... 632.9
Other assets (primarily non-goodwill purchased
intangible assets)........................................ 26.8
Total assets................................................ 23.4
Total current liabilities................................... 19.2
Shareholders' equity........................................ 28.8

Cash, Cash Equivalents, and Short-Term Investments

Actel's cash, cash equivalents, and short-term investments were $140.8
million at the end of 2000, compared with $107.1 million at the end of 1999. The
amount of cash, cash equivalents, and short-term investments increased as a
result of $50.2 million of cash provided by operations, which was offset by
$12.3 million of cash used in investing activities and $5.0 million of cash used
in financing activities. Cash provided by operations included net income of
$41.4 million and amortization and depreciation of $15.5 million. The major
investing activities included $39.0 million of proceeds from the sale of Actel's
investment in Chartered stock which was offset by $30.9 million of cash used in
the GateField and Prosys acquisitions, a $7.0 million loan made to GateField
prior to acquisition, and $6.2 million of property and equipment purchases. Cash
used in financing activities included $21.0 million of cash used in a stock
repurchase program which was offset by $16.4 million of cash received from
employee stock plan activities.

Actel has a line of credit with a bank that provides for borrowings not
to exceed $5.0 million. The agreement contains covenants that require Actel to
maintain certain financial ratios and levels of net worth. At December 31, 2000,
Actel was in compliance with the covenants for the line of credit. Borrowings
against the line of credit bear interest at the bank's prime rate. There were no
borrowings against the line of credit at December 31, 2000. The line of credit
expires in May 2001.

Actel believes that existing cash, cash equivalents, and short-term
investments, together with cash generated from operations, will be sufficient to
meet its cash requirements for 2001. A portion of available cash may be used for
investment in or acquisition of complementary businesses, products, or
technologies.

Wafer manufacturers are increasingly demanding financial support from
customers in the form of equity investments and advance purchase price deposits,
which in some cases are substantial. Should Actel require additional capacity,
it may be required to incur significant expenditures to secure such capacity.

Actel believes that the availability of adequate financial resources is
a substantial competitive factor. To take advantage of opportunities as they
arise, or to withstand adverse business conditions should they occur, it may
become prudent or necessary for Actel to raise additional capital. Actel
monitors the availability and cost of potential capital resources, including
equity, debt, and off-balance sheet financing arrangements, with a view toward
raising additional capital on terms that are acceptable to Actel. No assurance
can be given that additional capital will become available on acceptable terms.

Accounts Receivable

Actel's net accounts receivable were $29.3 million at the end of 2000,
compared with $22.8 million at the end of 1999. This increase was due primarily
to higher sales. Accounts receivable for 2000 increased by 29% compared with
1999, while Actel's net revenues increased by 32%. Days sales outstanding (DSOs)
were 41 days at the end of 2000, compared with 43 days at the end of 1999.

Inventories

Actel's inventories were $25.5 million at the end of 2000, compared
with $25.3 million at the end of 1999. Inventory declined from 132 days to a
record low 105 days. The decline in days of inventory was due to the higher
level of sales in 2000. Since Actel's FPGAs are manufactured using customized
steps that are added to the standard manufacturing processes of its independent
wafer suppliers, Actel's manufacturing cycle is longer and hence more difficult
to adjust in response to changing demands or delivery schedules. Accordingly,
Actel's inventory model (120 days) will probably always be higher than that of
its major competitors using standard processes.

Property and Equipment

Actel's net property and equipment was $12.1 million at the end of
2000, compared with $12.6 million at the end of 1999. Actel invested $6.2
million in property and equipment in 2000, compared with $6.4 million in 1999.
$0.8 million of value was assigned to property and equipment acquired in the
purchase of GateField. Depreciation of property and equipment was $7.4 million
in 2000, compared with $8.1 million for 1999. Capital expenditures during the
past two years have been primarily for engineering, manufacturing, and office
equipment.

Investment in Chartered Semiconductor

During the second quarter of 2000, Actel sold all 515,000 shares of
Chartered Semiconductor common stock that Actel owned for a one-time gain of
$28.3 million.

Goodwill

Actel's net goodwill increased to $47.5 million at the end of 2000,
compared with $6.5 million at the end of 1999. The increase was due to Actel's
acquisitions of GateField ($26.7 million in goodwill) and Prosys ($18.5 million
in goodwill) during 2000, which were offset by current year amortization.

Other Assets

Actel's other assets increased to $23.5 million at the end of 2000,
compared with $18.6 million at the end of 1999. This increase was attributable
primarily to the establishment of a non-current deferred tax asset related to
future tax benefits Actel will receive by deducting GateField net operating
losses carried forward from prior years.

Current Liabilities

Actel's total current liabilities were $82.3 million at the end of
2000, compared with $69.1 million at the end of 1999. The increase was due
principally to increases of $5.0 million in deferred revenue arising from
Actel's additional inventories at distributors to support increased sell-through
and $10.3 million in accrued salaries and employee benefits arising from
additional headcount, primarily as a result of the Prosys and GateField
acquisitions, as well as higher bonuses resulting from the improved operating
performance of Actel in 2000.

Shareholders' Equity

Shareholders' equity was $230.1 million at the end of 2000, compared
with $178.6 million at the end of 1999. The increase included $41.4 million of
net income, proceeds of $16.4 million from the sale of common stock under
employee stock plans, $17.4 million from the issuance of common stock for the
acquisition of Prosys, $10.1 million from the tax benefit arising from employee
stock plans, and $2.9 million for the assumption of GateField stock options in
connection with its acquisition (including unearned compensation expense for
those options). These increases were offset by a decline of $15.3 million in
unrealized gain on investments, largely due to the sale of Chartered
Semiconductor stock, and $21.0 million used to repurchase Actel common stock.

Employees

At the end of 2000, Actel had 484 full-time employees, including 132 in
marketing, sales, and customer support; 154 in research and development; 144 in
operations; 18 in Protocol Design Services; and 36 in administration and
finance. This compares with 449 full-time employees at the end of 1999, an
increase of 8%. The acquisition of GateField and Prosys during the year
contributed 26 employees to the increase. Net revenues per employee were
approximately $468,000 for 2000, compared with approximately $382,000 for 1999,
which represents an increase of 23%.

Impact of Recently Issued Accounting Standards

In March 2000, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation (FIN) No. 44, "Accounting for Certain Transactions Involving
Stock Compensation." FIN 44 clarifies the application of Accounting Principals
Board Opinion No. 25 with respect to the definition of employee for purposes of
applying Opinion No. 25, the criteria for determining whether a plan qualifies
as a noncompensatory plan, the accounting consequences of various modifications
to the terms of a previously fixed stock option or award, and the accounting for
an exchange of stock compensation awards in a business combination. The adoption
of FIN 44, which became effective July 1, 2000, resulted in a $0.9 million
charge to unearned compensation cost relating to employee stock options assumed
during the purchase acquisition of GateField Corporation. See Note 5 of Notes to
Consolidated Financial Statements for further discussion.

In December 1999, the Securities and Exchange Commission (SEC) issued
SEC Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
Actel has adopted SAB 101, which did not have a material effect on Actel's
financial position, operating results, or cash flow.

In June 1998, FASB issued Statement of Financial Accounting Standards
(SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
which is required to be adopted in years beginning after June 15, 2000. SFAS 133
requires that all derivatives be recognized on the balance sheet at fair market
value. Under SFAS 133, changes in the derivatives' fair value must be recognized
currently in earnings unless specific hedge accounting criteria are met and a
company must formally document, designate, and assess the effectiveness of
transactions that receive hedge accounting. Actel will adopt SFAS 133 in the
first quarter of 2001 and does not expect the adoption of SFAS 133 to have a
significant impact on Actel's financial position, operating results, or cash
flow.

Market Risk

As of December 31, 2000, Actel's investment portfolio consisted
primarily of corporate bonds, floating rate notes, and federal and municipal
obligations. The principal objectives of Actel's investment activities are to
preserve principal, meet liquidity needs, and maximize yields. To meet these
objectives, Actel invests only in high credit quality debt securities with
average maturities of less than two years. Actel also limits the percentage of
total investments that may be invested in any one issuer. Corporate investments
as a group are also limited to a maximum percentage of Actel's investment
portfolio.

Actel's investments are subject to interest rate risk. An increase in
interest rates could subject Actel to a decline in the market value of its
investments. These risks are mitigated by the ability of Actel to hold these
investments to maturity. A hypothetical 100 basis point increase in interest
rates would result in a reduction of approximately $1.6 million in the fair
value of Actel's available-for-sale securities held at December 31, 2000.

Actel purchases a portion of the wafers it uses in production from
Japanese suppliers, which are denominated in Japanese yen. An adverse change in
the foreign exchange rate would affect the price Actel pays for a portion of the
wafers used in production over the long term. Actel attempts to mitigate its
exposure to risks from foreign currency fluctuations by purchasing forward
foreign exchange contracts to hedge firm purchase commitments denominated in
foreign currencies. Forward exchange contracts are short term and do not hedge
purchases that will be made for anticipated longer-term wafer needs. An adverse
change of 10% in exchange rates would result in a reduction in income before
taxes of approximately $1.1 million based on projected yen denominated wafer
purchases for the next year.

All of the potential changes noted above are based upon sensitivity
analysis performed on Actel's financial position and expected operating levels
at December 31, 2000. Actual results may differ materially.

Other Risks

Actel's operating results are subject to general economic conditions
and a variety of risks characteristic of the semiconductor industry (including
booking and shipment uncertainties, wafer supply fluctuations, and price
erosion) or specific to Actel, any of which could cause Actel's operating
results to differ materially from past results. For a discussion of such risks,
see "Risk Factors" in Part I of Actel's Annual Report on Form 10-K for 2000,
which is incorporated herein by this reference.

On March 29, 2000, Unisys Corporation (Unisys) brought suit in the
United States District Court for the Northern District of California, San Jose
Division (Court), against Actel seeking monetary damages and injunctive relief.
The summons and complaint were served on Actel on April 10, 2000. The complaint
alleges that Actel has infringed and is currently infringing four United States
patents that belong to plaintiff: U.S. Patent No. 4,442,507 issued April 10,
1984; U.S. Patent No. 5,296,722 issued March 22, 1994; U.S. Patent No. 5,407,851
issued April 18, 1995; and U.S. Patent No. 5,496,763 issued March 5, 1996. On
May 15, 2000, Unisys served its Initial Disclosure of Asserted Claims,
identifying the SX and SX-A family of FPGAs as the specific Actel products being
accused of infringement, and identifying the specific claims of each of the
patents in suit alleged to be infringed by those products. On September 25,
2000, Actel filed its First Amended Answer to the Complaint, denying that it has
infringed or is infringing any of the patents in suit, and alleging, among other
things, that each of those patents is invalid for failure to meet the statutory
requirements for patentability. With its amended answer, Actel also filed a
counterclaim against Unisys seeking a judicial declaration that each of the
Unisys patents in suit is invalid, unenforceable, and not infringed by Actel. On
October 26, 2000, the Court entered its Order for Pretrial Preparation
establishing various deadlines in the case, and setting the case for trial on
March 25, 2002. The case is in its early stages and, as of March 30, 2001, no
depositions or other substantial discovery has yet been conducted. Actel
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, Actel 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 can be given to that
effect. While management believes that a reasonable resolution will occur, there
can be no assurance that this case will be resolved, or that the resolution of
this case will not have a materially adverse effect on future results of
operations or cash flows, or require changes in the Company's products or
processes. 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.

<PAGE>

Quarterly Information

The following table presents certain unaudited quarterly results for
each of the eight quarters in the period ended December 31, 2000. In the opinion
of management, this information has been presented on the same basis as the
audited consolidated financial statements appearing elsewhere in this Annual
Report and all necessary adjustments (consisting only of normal recurring
accruals) have been included in the amounts stated below to present fairly the
unaudited quarterly results when read in conjunction with the audited
consolidated financial statements of Actel and notes thereto. However, these
quarterly operating results are not indicative of the results for any future
period.

<TABLE>
<CAPTION>
Three Months Ended
=============================================================================
Dec. 31, Oct. 1, Jul. 2, Apr. 2, Jan. 2, Oct. 3, Jul. 4, Apr. 4,
2000 2000 2000 2000 2000 1999 1999 1999
======= ======= ======= ======= ======= ======= ======= =======
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statements of Income Data:
Net revenues ................................. $60,129 $60,080 $55,544 $50,666 $46,042 $43,162 $41,619 $40,838
Gross profit ................................. 38,060 37,626 34,595 31,458 28,546 26,503 25,381 24,844
Income from operations ....................... 7,497 13,648 6,778 10,555 7,175 7,492 2,111 5,466
Net income ................................... $ 3,455 $ 9,779 $20,112 $ 8,099 $ 5,823 $ 5,668 $ 1,926 $ 4,221
Net income per share:
Basic ..................................... $ 0.14 $ 0.41 $ 0.86 $ 0.36 $ 0.26 $ 0.26 $ 0.09 $ 0.20
======= ======= ======= ======= ======= ======= ======= =======
Diluted ................................... $ 0.13 $ 0.36 $ 0.77 $ 0.32 $ 0.24 $ 0.25 $ 0.09 $ 0.19
======= ======= ======= ======= ======= ======= ======= =======
Shares used in computing net income per share:
Basic ..................................... 23,890 23,869 23,263 22,767 22,048 21,748 21,511 21,347
======= ======= ======= ======= ======= ======= ======= =======
Diluted ................................... 26,107 26,999 26,186 25,467 24,015 23,003 22,454 22,673
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>

</TABLE>

<PAGE>

ACTEL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

December 31,
--------------------------
2000 1999
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents..................... $ 9,266 $ 4,939
Short-term investments........................ 131,544 102,201
Accounts receivable, net...................... 29,256 22,753
Inventories, net.............................. 25,503 25,324
Deferred income taxes......................... 26,118 20,622
Prepaid expenses and other current assets..... 7,598 2,045
------------ ------------
Total current assets.................... 229,285 177,884
Property and equipment, net...................... 12,137 12,564
Investment in Chartered Semiconductor............ -- 37,619
Goodwill, net.................................... 47,470 6,477
Other assets, net................................ 23,542 18,567
------------ ------------
$ 312,434 $ 253,111
============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................. $ 14,921 $ 15,374
Accrued salaries and employee benefits........ 17,200 6,884
Other accrued liabilities..................... 5,354 2,887
Income taxes payable.......................... -- 4,025
Deferred income............................... 44,858 39,896
------------ ------------
Total current liabilities............... 82,333 69,066
Deferred tax liability........................ -- 5,415
------------ ------------
Total liabilities................................ 82,333 74,481
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.001 par value; 5,000,000
shares authorized; 1,000,000 issued and
converted to common stock, and none
outstanding................................. -- --
Common stock, $.001 par value; 55,000,000
shares authorized; 23,331,162 and 22,422,418
shares issued and outstanding at
December 31, 2000 and 1999, respectively ... 23 22
Additional paid-in capital.................... 150,709 110,146
Retained earnings ............................ 79,908 52,401
Note receivable from officer ................. (368) --
Unearned compensation cost ................... (922) --
Accumulated other comprehensive income ....... 751 16,061
------------ ------------
Total shareholders' equity.............. 230,101 178,630
------------ ------------
$ 312,434 $ 253,111
============ ============

- --------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.

<PAGE>

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

Years Ended December 31,
----------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Net revenues............................................................ $ 226,419 $ 171,661 $ 154,427
Costs and expenses:
Cost of revenues..................................................... 84,680 66,387 61,642
Research and development............................................. 36,599 32,338 31,220
Selling, general, and administrative................................. 47,960 45,903 40,558
Amortization of goodwill and other acquisition-related intangibles .. 8,056 2,226 1,185
Restructuring charge................................................. -- 1,963 --
Purchased in-process research and development........................ 10,646 600 --
------------ ------------ ------------
Total costs and expenses....................................... 187,941 149,417 134,605
------------ ------------ ------------
Income from operations.................................................. 38,478 22,244 19,822
Interest income and other, net of expense............................... 8,310 3,642 2,380
Gain on the sale of Chartered Semiconductor stock....................... 28,329 -- --
------------ ------------ ------------
Income before tax provision and equity in net (loss) of equity method
investee............................................................. 75,117 25,886 22,202
Equity in net (loss) of equity method investee.......................... (2,445) (193) --
Tax provision........................................................... 31,227 8,055 7,215
------------ ------------ ------------
Net income.............................................................. $ 41,445 $ 17,638 $ 14,987
============ ============ ============
Net income per share:
Basic................................................................ $ 1.77 $ 0.81 $ 0.71
============ ============ ============
Diluted.............................................................. $ 1.58 $ 0.76 $ 0.68
============ ============ ============
Shares used in computing net income per share:
Basic................................................................ 23,447 21,664 21,251
============ ============ ============
Diluted.............................................................. 26,233 23,058 21,921
============ ============ ============
</TABLE>

- --------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.

<PAGE>

ACTEL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND OTHER COMPREHENSIVE INCOME
(in thousands, except share amounts)
Accumu-
Notes lated
Receivable Other Total
Additional From Unearned Compre- Share-
Common Paid-In Retained Share- Compensa- hensive holders'
Stock Capital Earnings -holders tion cost Income Equity
-------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 ............. $ 21 $ 85,965 $ 22,973 $ -- $ -- $ 51 $ 109,010
======== ========= ========= ========= ========= ========= =========

Net income ............................... -- -- 14,987 -- -- -- 14,987
Other comprehensive income:
Change in unrealized gain on investments -- -- -- -- -- 127 127
---------
Comprehensive income ..................... 15,114
Issuance of 785,036 shares of common stock
under employee stock plans ............ 1 7,599 -- -- -- -- 7,600
Issuance of 25,000 shares of common stock
for patent acquisition ............... -- 366 -- -- -- -- 366
Tax benefit from exercise of stock options -- 1,097 -- -- -- -- 1,097
Repurchase of common stock ............... (1) (2,935) (3,197) -- -- -- (6,133)
-------- --------- --------- --------- --------- --------- ---------
Balance at December 31, 1998 ............. $ 21 $ 92,092 $ 34,763 $ -- $ -- $ 178 $ 127,054
======== ========= ========= ========= ========= ========= =========

Net income ............................... -- -- 17,638 -- -- -- 17,638
Other comprehensive income:
Change in unrealized gain on investments . -- -- -- -- -- 15,883 15,883
---------
Comprehensive income ..................... 33,521
Issuance of 954,569 shares of common
stock under employee stock plans ...... 1 9,003 -- -- -- -- 9,004
Issuance of 285,943 shares of common stock
for purchase of AutoGate Logic ........ -- 6,858 -- -- -- -- 6,858
Tax benefit from exercise of stock options -- 2,193 -- -- -- -- 2,193
-------- --------- --------- --------- --------- --------- ---------
Balance at December 31, 1999 ............. $ 22 $ 110,146 $ 52,401 $ -- $ -- $ 16,061 $ 178,630
======== ========= ========= ========= ========= ========= =========
</TABLE>

- --------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
<PAGE>

ACTEL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND OTHER COMPREHENSIVE INCOME (Continued)
(in thousands, except share amounts)
Accumu-
Notes lated
Receivable Other Total
Additional From Unearned Compre- Share-
Common Paid-In Retained Share- Compensa- hensive holders'
Stock Capital Earnings -holders tion cost Income Equity
-------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999.............. $ 22 $ 110,146 $ 52,401 $ -- $ -- $ 16,061 $ 178,630
======== ========= ========= ========= ========= ========= =========

Net income................................ -- -- 41,445 -- -- -- 41,445
Other comprehensive income:
Change in unrealized gain on investments -- -- -- -- -- (15,310) (15,310)
---------
Comprehensive income...................... 26,135
Issuance of 1,574,334 shares of common
stock under employee stock plans....... 2 16,363 -- (368) -- -- 15,997
Repurchase of common stock................ (1) (7,077) (13,938) -- -- -- (21,016)
Issuance of 220,518 shares of common stock
for purchase of Prosys................. -- 7,525 -- -- -- -- 7,525
Assumption of stock options in connection
with acquisitions of GateField and
Prosys including unearned compensation
expense for those options.............. -- 13,665 -- -- (922) -- 12,743
Tax benefit from exercise of stock options -- 10,087 -- -- -- -- 10,087
-------- --------- --------- --------- --------- --------- ---------
Balance at December 31, 2000.............. $ 23 $ 150,709 $ 79,908 $ (368) $ (922) $ 751 $ 230,101
======== ========= ========= ========= ========= ========= =========
</TABLE>

- --------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.

ACTEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Years Ended December 31,
--------------------------------------
2000 1999 1998
---------- ---------- ----------
<S> <C> <C> <C>
Operating activities:
Net income.......................................................... $ 41,445 $ 17,638 $ 14,987
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.................................... 15,463 10,294 9,320
Non-cash portion of restructuring and other charges.............. -- 2,695 --
Gain on sale of Chartered Semiconductor stock.................... (28,329) -- --
Purchased in-process research and development.................... 10,646 600 --
Equity in net loss of equity method investee..................... 2,445 193 --
Loss on disposal of fixed assets................................. -- 136 --
Changes in operating assets and liabilities:
Accounts receivable........................................... (6,609) (1,933) 4,315
Inventories................................................... (179) 345 (5,197)
Deferred income taxes......................................... (384) (3,775) 2,613
Prepaid expenses and other current assets..................... (5,466) 429 (1,619)
Accounts payable, accrued salaries and employee benefits,
income taxes payable and other accrued liabilities........ 6,573 9,769 1,724
Tax benefits from exercise of stock options................... 10,087 2,193 1,097
Deferred income............................................... 4,464 7,925 1,043
---------- ---------- ----------
Net cash provided by operating activities........................... 50,156 46,509 28,283
Investing activities:
Purchases of property and equipment................................. (6,173) (6,407) (7,646)
Purchases of available-for-sale securities.......................... (396,325) (178,616) (134,630)
Sales and maturities of available for sale securities............... 367,835 132,342 129,580
Cash paid in business acquisitions.................................. (30,853) 281 (10,000)
Issuance of notes receivable from GateField prior to acquisition ... (7,000) (8,000) --
Cash received from sale of Chartered Semiconductor stock............ 39,009 -- --
Other assets........................................................ (7,303) (1,928) 227
---------- ---------- ----------
Net cash used in investing activities............................... (40,810) (62,328) (22,469)
Financing activities:
Sale of common stock................................................ 15,997 6,811 6,503
Repurchase of common stock.......................................... (21,016) -- (6,133)
---------- ---------- ----------
Net cash provided by financing activities........................... (5,019) 6,811 370
Net increase (decrease) in cash and cash equivalents.................... 4,327 (9,008) 6,184
Cash and cash equivalents, beginning of year............................ 4,939 13,947 7,763
---------- ---------- ----------
Cash and cash equivalents, end of year.................................. $ 9,266 $ 4,939 $ 13,947
========== ========== ==========

</TABLE>
- --------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.

ACTEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(in thousands)

Years Ended December 31,
--------------------------------------
2000 1999 1998
---------- ---------- ----------
<S> <C> <C> <C>
Supplemental disclosures of cash flow information and non-cash investing and
financing activities:
Cash paid during the year for taxes................................. $ 32,989 $ 10,195 $ 2,207
Issuance of common stock for patent acquisition..................... -- -- 366
Issuance of common stock for acquisitions........................... 17,389 6,858 --
Receipt of note receivable from officer............................. 368 -- --

</TABLE>

- --------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
<PAGE>

ACTEL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

Actel Corporation (Actel) was incorporated under the laws of California
on October 16, 1985. Actel designs, develops, and markets field programmable
gate arrays (FPGAs) and associated development system software and programming
hardware. Actel also provides design services, including FPGA, application
specific integrated circuit (ASIC), and system design, software development and
implementation, and development of prototypes, first articles, and production
units. Net revenues from the sale of FPGAs accounted for 96% of Actel's net
revenues for 2000, compared with 96% for 1999 and 97% for 1998. Protocol Design
Services, which Actel acquired from GateField Corporation ("GateField") in the
third quarter of 1998, accounted for 2% of Actel's net revenues for 2000 and
1999 and 1% for 1998. Royalties and sales of FPGA programming software and
hardware made up the remaining 2% of revenues for 2000, 1999, and 1998.

FPGAs are logic integrated circuits that adapt the processing and
memory capabilities of electronic systems to specific applications. FPGAs are
used by designers of communication, computer, industrial control,
military/aerospace, and other electronic systems to differentiate their products
and get them to market faster. See Note 13 for information on Actel's sales by
geographic area.

Advertising and Promotion Costs

Actel's policy is to expense advertising and promotion costs as they
are incurred. Actel's advertising and promotion expenses were approximately $3.9
million, $3.3 million, and $3.5 million for 2000, 1999, and 1998 respectively.

Basis of Presentation

The consolidated financial statements include the accounts of Actel and
its wholly owned subsidiaries. Actel uses the U.S. dollar as functional currency
in its foreign operations. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Actel's fiscal year ends on the first Sunday after December 30th.
Fiscal 2000, 1999, and 1998 ended on December 31, 2000, January 2, 2000, and
January 3, 1999, respectively. Fiscal 1998 was a fifty-three week fiscal year,
rather than a normal fifty-two week fiscal year. For ease of presentation,
December 31 has been indicated as the fiscal year end for all years. Certain
prior year balances have been reclassified to conform to current year
presentation.

Cash Equivalents and Short-Term Investments

For financial statement purposes, Actel considers all highly liquid
debt instruments with insignificant interest rate risk and with a maturity of
three months or less when purchased to be cash equivalents. Cash equivalents
consist primarily of cash deposits in money market funds that are available for
withdrawal without restriction. Short-term investments consist principally of
federal, state, and local municipal obligations.

<PAGE>

ACTEL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Actel accounts for its investments in accordance with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." Management determines the
appropriate classification of debt securities at the time of purchase and
re-evaluates such designation as of each balance sheet date. At December 31,
2000, all debt securities are designated as available-for-sale. Actel also makes
equity investments for the promotion of business and strategic objectives. The
marketable portion of these strategic investments is included in short-term
investments and designated as available-for-sale. Non-marketable equity
investments are included in other assets and are valued at the lower of cost or
market.

Available-for-sale securities are carried at fair value, with the
unrealized gains and losses reported as a component of comprehensive income in
shareholders' equity. The amortized cost of debt securities in this category is
adjusted for amortization of premiums and accretion of discounts to maturity.
Such amortization is included in interest and other income. Realized gains and
losses and declines in value judged to be other than temporary on
available-for-sale securities are included in interest income and other. The
cost of securities sold is based on the specific identification method. Interest
and dividends on securities classified as available-for-sale are included in
interest income and other.

Concentration of Credit Risk

Financial instruments that potentially subject Actel to concentrations
of credit risk consist principally of cash investments and trade receivables.
Actel limits its exposure to credit risk by only investing in securities of A,
A1, or P1 grade. Actel is exposed to credit risks in the event of default by the
financial institutions or issuers of investments to the extent of amounts
recorded on the balance sheet.

Actel sells its products to customers in diversified industries. Actel
is exposed to credit risks in the event of non-payment by customers to the
extent of amounts recorded on the balance sheet. Actel limits its exposure to
credit risk by performing ongoing credit evaluations of its customers' financial
condition but generally requires no collateral. Actel is exposed to credit risks
in the event of insolvency by its customers and limits its exposure to
accounting losses by limiting the amount of credit extended whenever deemed
necessary. Three of Actel's distributors accounted for approximately 45% of
Actel's net revenues for 2000. The same three distributors accounted in the
aggregate for approximately 41% of Actel's net revenues for 1999 and 37% for
1998. One of Actel's direct customers accounted for 11% of Actel's net revenues
for 2000, compared with 9% and 3% of net revenues for 1999 and 1998,
respectively. The loss of any one of these customers could have a materially
adverse effect on Actel's results of operations and financial position. See Note
13 for further information regarding these customers.

Fair Value of Financial Instruments

The following methods and assumptions were used by Actel in estimating
its fair value disclosures for financial instruments:

Accounts Payable. The carrying amount reported in the balance
sheets for accounts payable approximates fair value.

Cash and Cash Equivalents. The carrying amounts reported in
the balance sheets for cash and cash equivalents approximate fair
value.

Investment Securities. The fair values for marketable debt and
equity securities are based on quoted market prices. Strategic equity
investments in non-public companies with no readily available market
value are carried on the balance sheet at cost as adjusted for
potential impairment

Foreign Currency Exchange Contracts. The fair value of Actel's
foreign currency exchange forward contracts are estimated based on
quoted market prices of comparable contracts.

Goodwill and other Acquisition-Related Intangibles

Goodwill is recorded when the consideration paid in an acquisition
exceeds the fair value of the net tangible and intangible assets acquired.
Goodwill and other acquisition-related intangibles are amortized on a
straight-line basis over their useful lives. In accordance with SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of," the Company recognizes 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 assets' carrying
amounts. The impairment loss is measured by comparing the fair value of the
asset to its carrying amount. Fair value is estimated based on discounted future
cash flows. Reviews are regularly performed to determine whether facts or
circumstances exist which indicate that the carrying value of assets are
impaired. No impairment has been indicated to date.

Impact of Recently Issued Accounting Standards

In March 2000, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation (FIN) No. 44, "Accounting for Certain Transactions Involving
Stock Compensation." FIN 44 clarifies the application of Accounting Principals
Board (APB) Opinion No. 25 with respect to the definition of employee for
purposes of applying Opinion No. 25, the criteria for determining whether a plan
qualifies as a noncompensatory plan, the accounting consequences of various
modifications to the terms of a previously fixed stock option or award, and the
accounting for an exchange of stock compensation awards in a business
combination. The adoption of FIN 44, which became effective July 1, 2000,
resulted in a $0.9 million charge to unearned compensation cost relating to
employee stock options assumed during the purchase acquisition of GateField
Corporation. See Note 5 of Notes to Consolidated Financial Statements for
further discussion.

In December 1999, the Securities and Exchange Commission (SEC) issued
SEC Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
The adoption of SAB 101 by Actel did not have a material effect on Actel's
financial position, operating results, or cash flow.

In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is required to be adopted in years
beginning after June 15, 2000. SFAS 133 requires that all derivatives be
recognized on the balance sheet at fair market value. Under SFAS 133, changes in
the derivatives' fair value must be recognized currently in earnings unless
specific hedge accounting criteria are met, and a company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting. Actel will adopt SFAS 133 in the first quarter of 2001 and
does not expect the adoption of SFAS 133 to have a material impact on Actel's
financial position, operating results, or cash flow.

Income Taxes

Actel accounts for income taxes in accordance with the provisions of
SFAS No. 109, "Accounting for Income Taxes." Under SFAS 109, the liability
method is used in accounting for income taxes. Deferred tax assets and
liabilities are determined based on the differences between financial reporting
and the tax basis of assets and liabilities, and are measured using the enacted
tax rates and laws that will be in effect when the differences are expected to
reverse.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or
market (net realizable value). Given the volatility of the market for Actel's
products, Actel makes inventory provisions for potentially excess and obsolete
inventory based on backlog and forecast demand. However, such backlog demand is
subject to revisions, cancellations, and rescheduling. Actual demand inevitably
differs from such backlog and forecast demand, and such differences may be
material to the financial statements.

Off-Balance-Sheet Risk

Actel enters into foreign exchange contracts to hedge firm purchase
commitments denominated in foreign currencies. Actel does not use forward
foreign exchange contracts for speculative or trading purposes. Actel's
accounting policies for these instruments are based on Actel's designation of
such instruments as hedging transactions. The criteria Actel uses for
designating an instrument as a hedge includes its effectiveness in exposure
reduction and one-to-one matching of the derivative financial instrument with
the underlying transaction being hedged. Gains and losses on these contracts are
recognized upon usage of the contracts and are included in cost of sales along
with the offsetting gain or loss on the underlying transactions being hedged. If
the criteria for designation of these instruments as hedging transactions are
not met, then the instruments would be marked to market, with gains and losses
recognized in that period. During fiscal 2000, 1999, and 1998, all foreign
exchange contracts entered into by Actel met the criteria for designation as
hedges and were not marked to market during the period. There were no net gains
or losses as a result of hedging activity during 2000, 1999, or 1998. At
December 31, 2000 and 1999, Actel had no forward foreign exchange contracts
outstanding.

Property and Equipment

Property and equipment are carried at cost less accumulated
depreciation and amortization (see Note 2). Depreciation and amortization have
been provided on a straight-line basis over the following estimated useful
lives:

Equipment...................... 2 to 5 years
Furniture and fixtures......... 3 to 5 years
Leasehold improvements......... Estimated useful life or lease term,
whichever is shorter

Revenue Recognition

In accordance with SAB No. 101, revenue is recognized when there is
evidence of an arrangement, delivery has occurred or services have been
completed, the price is fixed or determinable, and collectability is assured.
Revenue from product shipped to end customers is recorded when risk of loss and
title passes to the customer. Revenue related to products shipped subject to
customers' evaluation is recognized upon final acceptance. Shipments to
distributors are made under agreements allowing certain rights of return and
price protection on unsold merchandise. For that reason, Actel defers
recognition of revenues and related cost of revenues on sales of products to
distributors until such products are sold by the distributor and title transfers
to the end user. Royalty income is recognized upon the sale by others of
products subject to royalties. Protocol Design Services revenues are recognized
as the services are performed.

Research and Development

Research and development expenditures are charged to expense as
incurred. SFAS No. 86, "Accounting for the Costs of Computer Software to Be
Sold, Leased or Otherwise Marketed," requires the capitalization of certain
software development costs subsequent to the establishment of technological
feasibility. Through December 31, 2000, software development has been completed
concurrently with the establishment of technological feasibility and, as a
result, Actel has charged all costs to research and development expense in the
periods incurred.

Stock-Based Compensation

Actel accounts for stock-based awards to employees using the intrinsic
value method in accordance with APB Opinion No. 25, "Accounting for Stock Issued
to Employees." Accordingly, no compensation cost has been recognized for its
fixed-cost stock option plans or its stock purchase plan. In Note 10, Actel
provides additional pro forma disclosures as required under SFAS No. 123,
"Accounting for Stock Based Compensation."

Use of Estimates

The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ materially from those estimates.

2 Balance Sheet Detail

December 31,
--------------------------
2000 1999
------------ ------------
(in thousands)
Accounts receivable:
Trade accounts receivable.................... $ 28,773 $ 23,648
Interest receivable.......................... 2,411 1,042
Allowance for doubtful accounts.............. (1,928) (1,937)
------------ ------------
$ 29,256 $ 22,753
============ ============
Inventories:
Purchased parts and raw materials............ $ 5,334 $ 3,363
Work-in-process.............................. 11,443 8,366
Finished goods............................... 8,726 13,595
------------ ------------
$ 25,503 $ 25,324
============ ============
Property and equipment:
Equipment.................................... $ 50,190 $ 43,971
Furniture and fixtures....................... 2,371 2,298
Leasehold improvements....................... 5,593 5,050
------------ ------------
58,154 51,319
Accumulated depreciation and amortization.... (46,017) (38,755)
------------ ------------
$ 12,137 $ 12,564
============ ============

Depreciation expense was approximately $7.4 million, $8.1 million, and
$8.1 million for 2000, 1999, and 1998, respectively, and is included with
amortization expense in the Consolidated Statement of Cash Flows.

December 31,
--------------------------
2000 1999
------------ ------------
(in thousands)
Goodwill:
Goodwill....................................... $ 52,211 $ 10,946
Less accumulated amortization.................. (4,741) (4,469)
------------ ------------
47,470 6,477
============ ============
Other Assets:
GateField product marketing agreement.......... $ -- 6,000
GateField preferred and common stock........... -- 2,612
GateField note receivable...................... -- 8,000
AutoGate Logic identifiable intangible assets.. 2,300 2,300
Prosys identifiable intangible assets.......... 273 --
GateField identifiable intangible assets....... 9,505 --
Acquired patents............................... 1,692 --
Strategic equity investments................... 2,198 --
Non-current deferred tax asset (net of
related deferred tax liability of $5,420)...... 8,441 --
Other.......................................... 669 710
Accumulated amortization expenses.............. (1,536) (1,055)
------------ ------------
$ 23,542 $ 18,567
============ ============

Amortization expense for goodwill and other acquisition related
intangibles was approximately $8.1 million, $2.2 million, and $1.2 million for
2000, 1999, and 1998, respectively. Beginning in the third quarter of 1999 and
through November 15, 2000, Actel held certain investments in GateField that were
accounted for under the equity method of accounting. Amortization expenses
related to equity accounting for those investments in GateField from January 1,
2000 through November 15, 2000 was $2.4 million. On November 15, 2000, Actel
acquired GateField and accounted for the transaction as a purchase. As a result,
these previous investments in GateField were eliminated from Other Assets and
included in the purchase price. Amortization expense from goodwill acquired in
connection with the GateField, Prosys, and AutoGate Logic acquisitions was $4.2
million in 2000. The goodwill associated with the acquisition of assets from
Texas Instruments Incorporated (TI) in 1995 was fully amortized as of December
31, 1999, and the related balances for cost and accumulated amortization ($4.0
million) was eliminated during 2000. Amortization expense from other
acquisition-related intangible assets was $1.5 million in 2000. See Note 5 for
further discussion of intangible assets acquired in connection with the
GateField, Prosys, and AutoGate Logic acquisitions.

3. Available-for-Sale Securities

The following is a summary of available-for-sale securities at December
31, 2000 and 1999:

<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Estimated
Cost Gains Losses Fair Values
------------ ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C>
December 31, 2000
Corporate bonds........................................ $ 54,139 $ 600 $ -- $ 54,739
U.S. government securities............................. 18,160 210 -- 18,370
Floating rate notes.................................... 10,600 -- -- 10,600
Municipal obligations.................................. 44,156 215 (4) 44,367
Weekly floater......................................... 3,000 -- -- 3,000
------------ ------------ ------------ ------------
Total available-for-sale securities.................... 130,055 1,025 (4) 131,076
Less amounts classified as cash equivalents............. -- -- -- --
------------ ------------ ------------ ------------
Total short-term available-for-sale debt securities....... 130,055 1,025 (4) 131,076

Short-term marketable strategic equity investments...... 385 83 -- 468
------------ ------------ ------------ ------------
Total available-for-sale securities....................... $ 130,440 $ 1,108 $ (4) $ 131,544
============ ============ ============ ============
</TABLE>

Actel also makes private equity investments for the promotion of
business and strategic objectives. Non-marketable private equity investments are
included in other assets and are valued at cost.

<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Estimated
Cost Gains Losses Fair Values
------------ ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C>
December 31, 1999
Auction Market Preferred............................... $ 1,900 $ -- $ -- $ 1,900
Corporate bonds........................................ 13,619 4 (45) 13,578
Commercial paper....................................... 1,265 -- -- 1,265
U.S. government securities............................. 6,970 -- (61) 6,909
Floating rate notes.................................... 17,146 4 -- 17,150
Municipal obligations.................................. 58,584 9 (194) 58,399
Weekly floater......................................... 3,000 -- -- 3,000
------------ ------------ ------------ ------------
Total available-for-sale securities.................... 102,484 17 (300) 102,201
Less amounts classified as cash equivalents............. -- -- -- --
------------ ------------ ------------ ------------
Total short-term available-for-sale debt securities....... 102,484 17 (300) 102,201

Long-term marketable strategic investment in Chartered
Semiconductor........................................ 10,680 26,939 -- 37,619
------------ ------------ ------------ ------------
Total available-for-sale securities....................... $ 113,164 $ 26,956 $ (300) $ 139,820
============ ============ ============ =============
</TABLE>

The adjustments to net unrealized gains and (losses) on investments
included as a separate component of shareholders' equity totaled approximately
($15.3 million), $15.9 million, and $0.1 million for the years ended December
31, 2000, 1999, and 1998, respectively. The $15.3 million reduction to
shareholders' equity during 2000 was due to the liquidation of Actel's
investment in Chartered Semiconductor. Actel realized a gain of $28.3 million
from the sale of this investment during the year ended December 31, 2000.
Realized gains and losses during 1999 and 1998 were not material.

See Note 1 for discussion of Actel's policy on accounting for
investments and the manner in which fair values were determined. See Note 11 for
discussion of Other Comprehensive Income.

The expected maturities of Actel's investments at December 31, 2000,
are shown below. Expected maturities may differ from contractual maturities
because the issuers of the securities may have the right to prepay obligations
without prepayment penalties.

Available-for-sale debt securities (in thousands):
Due in less than one year................................ $ 28,276
Due in one to five years................................. 79,493
Due after five years..................................... 23,307
------------
$ 131,076
============

A portion of Actel's securities represent investments in floating rate
municipal bonds with contractual maturities greater than ten years. However, the
interest rates on these debt securities generally reset every ninety days, at
which time Actel has the option to sell the security or roll over the investment
at the new interest rate. Since it is not Actel's intention to hold these
securities until their contractual maturities, these amounts have been
classified as short-term investments.

4. Investment in Chartered Semiconductor

At December 31, 1999, Actel held an equity investment in Chartered
Semiconductor Manufacturing Ltd. (Chartered Semiconductor), a semiconductor
company located in Singapore that completed an initial public offering in the
fourth quarter of 1999. Actel's investment in Chartered Semiconductor was less
than 1% of the total equity of Chartered Semiconductor and held as an
available-for-sale investment. The Chartered Semiconductor investment was valued
at its market value of $37.6 million at the end of 1999. During the second
quarter of 2000, Actel sold all of its shares of Chartered Semiconductor common
stock for a one-time gain of $28.3 million.

5. Business Acquisitions

GateField

During 1998, Actel entered into a product marketing rights agreement
with GateField Corporation (GateField) and made investments in GateField common
stock and GateField convertible preferred stock, which were valued at cost.
During 1999, Actel made additional investments in GateField, which resulted in
Actel accounting for its investments in GateField under the equity method
commencing July 1, 1999. From July 1, 1999 through December 31, 1999, the impact
of this was a $1.1 million charge to Actel's pre-tax income ($0.9 million
included in amortization of goodwill and $0.2 million included in equity in net
losses of equity method investee).

On May 31, 2000, GateField and Actel announced the signing of a
definitive agreement to merge. On November 15, 2000, the acquisition was
completed and Actel paid cash consideration of $5.25 for each share of GateField
common stock not already owned by Actel. From January 1, 2000, to November 15,
2000, the Company recorded charges of $4.8 million to pre-tax income under the
equity method of accounting ($2.4 million included in amortization of goodwill
and $2.4 million included in equity in net losses of equity method investee).
GateField's results of operations are included in Actel's income statement for
the period from November 15, 2000 to December 31, 2000.

The GateField acquisition was accounted for using the purchase method
of accounting and the total purchase price was approximately $45.7 million.
Actel paid total cash consideration of $24.0 million, or $5.25 per share, for
the 4.6 million shares of GateField Common Stock not already owned by Actel. The
net book value of Actel investments in GateField at November 15, 2000, are also
included in the purchase price. These investments included 1.6 million shares of
GateField Common stock that Actel already owned, which had a book value of $5.4
million; outstanding notes receivable from GateField, which had a book value of
$6.5 million; and the capitalized value of Actel's product marketing agreement
with GateField, which had a book value of $6.0 million. Actel also incurred $0.1
million of acquisition expenses, including financial advisory and direct
transaction costs, which are included as a component of the purchase price.

In accordance with FIN 44, all vested and unvested GateField employee
stock options assumed by Actel are included in the purchase price for accounting
purposes based on their fair value of $3.8 million as of the announcement date.
The portion of the intrinsic value of the unvested options that will be deemed
to be earned over the remaining vesting period (total value of $0.9 million) is
allocated as part of the purchase price to unearned compensation and will be
amortized to operating expenses over the remaining vesting period. The fair
value of the options assumed was calculated based on the Black-Scholes option
pricing model.

In accordance with the provisions of APB Opinion No. 16, "Business
Combinations," all identifiable assets and liabilities were assigned a portion
of the total consideration on the basis of their respective fair values as of
November 15, 2000. The consideration was allocated, based on the valuation
report of an independent valuation specialist, as follows (in thousands):

Net tangible assets (liabilities) of GateField................ $ (1,083)
In-process research and development........................... 5,088
Acquired work-force........................................... 476
Developed technology.......................................... 5,808
Core Technology............................................... 2,896
Tradename..................................................... 326
Patents....................................................... 976
Goodwill...................................................... 26,680
Unearned compensation costs................................... 922
Net deferred tax asset........................................ 3,647
-----------
$ 45,736
===========

The value of the assembled workforce was estimated using a cost
approach. This approach identifies the employees that would require significant
cost to replace and train. This analysis then estimates the fully burdened costs
(locating, interviewing, and hiring) attributed to each employee. These costs
are aggregated and tax-effected to estimate the value of the acquired workforce.
The value assigned to the acquired workforce was $0.5 million, which Actel
expects to amortize on a straight-line basis over the estimated useful life of
six months.

The amounts attributed to developed technology and core technology were
valued using the income approach described above with discount rates of 15% for
developed technology and 20% for core technology. The value of core technology
represents technology from previously discontinued products that can be applied
to future revenue generating products. The value assigned to developed
technology is based on technology that has achieved technological feasibility.
The amounts assigned to developed and core technology, $5.8 million and $2.9
million, will be amortized on a straight-line basis over an estimated useful
life of five years.

The value assigned to tradename represents the value attributed to the
ProASIC tradename owned by GateField. The relief from royalty methodology was
utilized to value the tradename. This methodology assumes that the value of the
asset equals the amount a third party would pay for the asset. Therefore, a
revenue stream for the asset is estimated, and then an appropriate royalty rate
is applied to the forecasted revenue to estimate the pre-tax income associated
with the asset. The pre-tax income is then tax-effected to estimate the
after-tax net income associated with the asset. Finally, the after-tax net
income is discounted to the present value using an appropriate rate of return
(20%) that considers both the risk of the asset and the associated cash flow
estimates. Actel expects to amortize the $0.3 million value assigned to the
tradename on a straight-line basis over an estimated useful life of five years.

To value the patent applications, the relief from royalty methodology
described above was utilized using a 25% rate of return for present value
discounting. Actel expects to amortize the $1.0 million value assigned to the
patent applications on a straight-line basis over an estimated useful life of
five years.

$26.7 million of goodwill, which represents the excess of the purchase
price of GateField over the fair value of the underlying net identifiable
assets, will be amortized on a straight-line basis over its estimated useful
life of five years.

Deferred tax assets and liabilities have been recorded to reflect the
future benefits and obligations associated with the deductibility of GateField
net operating loss carryforwards and the non-deductibility of amortization
related to acquired goodwill and intangible assets. Approximately $3.7 million
of net deferred tax assets were recorded as part of the purchase price.

Prosys

On June 2, 2000, Actel announced and completed the acquisition of
Prosys Technology, Inc. (Prosys), a developer of embedded FPGA cores, in a
transaction accounted for as a purchase. Total consideration for the Prosys
acquisition was $24.5 million. In connection with the acquisition, Actel paid
$6.9 million in cash and issued 220,518 shares of Actel common stock, at a value
of $34.13 per share, for all outstanding shares of Prosys stock. The price per
share of common stock was based on an average of five days closing market prices
for Actel common stock during the period of June 1, 2000, through June 7, 2000.
Actel assumed $0.1 million of liabilities and incurred $0.1 million of
acquisition costs. Actel also assumed all outstanding Prosys options, all of
which were vested. The outstanding options were estimated to have a fair value
equal to $9.9 million (using the Black-Scholes option pricing model) and are
included in the purchase price. Prosys's results of operations are included in
Actel's income statement for the period from June 2, 2000 to December 31, 2000.

In-process research and development........................... $ 5,558
Acquired work-force........................................... 273
Patent applications........................................... 349
Cash & other current assets................................... 57
Deferred tax liability........................................ (249)
Goodwill...................................................... 18,534
-----------
$ 24,522
===========

As of the valuation date, Prosys had no developed products in the
marketplace and was in the process of developing a 4x4 embedded block SRAM-based
FPGA core and a 8x8 embedded block SRAM-based FPGA core. These intellectual
property cores will be marketed and licensed as cores to allow other
semiconductor companies to embed functional blocks of programmable logic into
their silicon designs. Prosys indicated that the 4x4 embedded block was expected
to be completed in late 2000, following the development of key software
features. The 4x4 embedded block core was introduced in February 2001 as the
VariCoreTM Embedded Programmable Gate Array (EPGA) product. The 8x8 embedded
block core, which was (and still is) expected to be introduced in 2001, will
leverage technology from the 4x4 embedded block core. As of the valuation date,
Prosys had incurred development costs of approximately $3.1 million related to
the 4x4 embedded block core and estimated that an additional $1.3 million of
research and development was required to complete the development of this
product. Thus, the in-process 4x4 embedded block core was estimated to be
approximately 70% complete, an amount that approximated the relative efforts and
complexities completed. Since the 8x8 embedded block core will leverage
technology from the 4x4 embedded block core in process, the 8x8 embedded block
core was estimated to be 35% complete in its development. These products were in
development at the time of acquisition and there was significant technological
risk at that time related to completing development of these products.
Accordingly, the 4x4 embedded block core and the 8x8 embedded block core were
classified as in-process technology.

The value of the assembled workforce was estimated using a cost
approach. Actel amortized the $0.3 million value assigned to the acquired
workforce on a straight-line basis over the estimated useful life of six months.

To value the patent applications, the relief from royalty methodology
was utilized with a discount rate of 25%. Actel expects to amortize the $0.3
million value assigned to the patent applications on a straight-line basis over
an estimated useful life of five years.

$18.5 million of goodwill, which represents the excess of the purchase
price of Prosys over the fair value of the underlying net identifiable assets,
will be amortized on a straight-line basis over its estimated useful life of
five years. Additional consideration of up to 159,795 shares of Common Stock may
be issued by Actel in connection with its acquisition of Prosys following the
achievement of certain milestones during a period of 18 months following the
closing of the acquisition. Upon achievement of the milestones, the additional
shares will be issued to all selling shareholders based on their relative equity
interests at the time of the acquisition, and will be reflected as additional
purchase price at the time of issuance.

AGL

On December 21, 1999, Actel completed the 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. In connection with the acquisition, Actel issued 285,943 shares of
common stock valued at $18.29 per share and assumed options exercisable for
89,057 shares of Actel common stock. The price per share of common stock was
based on an average of five days closing market prices for Actel common stock
during the period of October 1, 1999, through October 7, 1999, when the
Agreement to acquire AGL was announced. Amounts prepaid by Actel for a source
code license and accounts receivable held by AGL from Actel were netted to
arrive at a total purchase price of $7.2 million.

In accordance with provisions of APB Opinion No. 16, all identifiable
assets and liabilities were assigned a portion of the total consideration on the
basis of their respective fair values. The consideration was allocated, based on
the valuation report of an independent valuation specialist, as follows (in
thousands):

In-process research and development........................... $ 600
Completed technology.......................................... 2,100
Assembled work force.......................................... 200
Cash.......................................................... 281
Deferred tax liability........................................ (920)
Goodwill...................................................... 4,938
-----------
$ 7,199
===========

A portion of the purchase price was allocated to developed technology
and acquired IPRD. Completed technology and IPRD were identified and valued
through extensive interviews and analysis of data provided by AGL concerning
developmental products, their stage of development, the time and resources
needed to complete them, and associated risks. The cost approach, which
establishes value based on the cost of reproducing or replacing the assets, less
depreciation for functional or economic obsolescence, was the primary technique
utilized in valuing the completed technology and IPRD.

Where development projects had reached technological feasibility, they
were classified as completed technology and the value assigned to completed
technology was capitalized. Where the development projects had not reached
technological feasibility and had no future alternative uses, they were
classified as IPRD and charged to expense upon the closing of the merger. The
nature of the efforts required to develop the IPRD into completed products
related principally to the completion of all planning, designing, prototyping,
verification, and testing activities necessary to establish that the products
meet their design specifications, including functions, features, and
technological performance requirements. Associated risks included the inherent
difficulties and uncertainties in completing each project and thereby achieving
technological feasibility, anticipated levels of market acceptance and
penetration, market growth rates, and the impact of potential changes in target
markets.

The acquired completed technology, comprised of products that were
already technologically feasible upon acquisition, includes product neutral
software tools for place and route and architecture evaluation. Actel expects to
amortize the acquired completed technology of approximately $2.1 million on a
straight-line basis over an average estimated useful life of five years.

The acquired assembled workforce consisted of employees from AGL's
engineering group. Actel amortized the value assigned to the assembled workforce
of approximately $0.2 million on a straight-line basis over the estimated useful
life of six months.

Goodwill, which represents the excess of the purchase price of AGL over
the fair value of the underlying net identifiable assets, is being amortized on
a straight-line basis over its estimated life of five years.

Pro Forma Results

The following unaudited pro forma results of operations for the fiscal
years ending 2000 and 1999 are presented as if the acquisitions of Prosys and
GateField had occurred as of the beginning of each year, and include certain
estimated adjustments, including amortization of intangibles. The pro forma
results exclude the one-time write-offs of IPRD and the tax effect of such
charges. The pro-forma information has been prepared for comparative purposes
only and does not purport to be indicative of what operating results would have
been if the acquisitions had actually taken place at the beginning of such years
or of future operating results.

Years Ended December 31,
-------------------------
2000 1999
----------- -----------
(in thousands, except per
share amounts)
Net revenues.................................... $ 227,512 $ 173,648
Net income...................................... 33,083 (9,484)
Diluted earnings per share...................... $ 1.25 $ (0.40)

6. Restructuring Charges

During the second quarter of 1999, the Company completed a
restructuring plan that resulted in a reduction in force along with the
elimination of certain projects and non-critical activities. The total pretax
restructuring charge for these activities amounted to $2.0 million. These
measures were taken to reduce spending and sharpen the Company's focus on new
product development.

<TABLE>
<CAPTION>
Restruc- Balance at
Cash/ turing December
Description Non-Cash Charge Activity 31, 1999
- ---------------------------------------------------------- ---------- ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C>
Employee severance and outplacement....................... Cash $ 586 $ 586 $ --
Write-off of prepaid license.............................. Non-cash 734 734 --
Abandoned capital assets.................................. Non-cash 643 643 --
------------ ------------ ------------
$ 1,963 $ 1,963 $ --
============ ============ ============
</TABLE>

Employee Severance and Outplacement Expenses were comprised primarily
of severance packages for 31 employees across all functions who were terminated
as part of a reduction in force. The severance was computed based upon severance
compensation, benefits, and related employer payroll taxes.

Write-Off of Prepaid License was associated with the cancellation of a
certain product and related development project. The product was eliminated from
the Company's future revenue stream and therefore the license for the product
had no future economic benefit to the Company.

Abandoned Capital Assets consisted of the write-off of capitalized
costs associated with a new building project that was abandoned and fixed assets
no longer utilized by the Company that were scrapped. The abandonment of the
building project and scrapping of the fixed assets were a direct result of the
reduction in force and elimination of certain non-critical activities.

7. Line of Credit

Actel has a line of credit with a bank that provides for borrowings not
to exceed $5 million. The agreement contains covenants that require Actel to
maintain certain financial ratios and levels of net worth. At December 31, 2000,
Actel was in compliance with the covenants for the line of credit. Borrowings
against the line of credit bear interest at the bank's prime rate. There were no
borrowings against the line of credit at December 31, 2000, 1999, or 1998. The
line of credit expires in May 2001.

8. Commitments

Actel leases its facilities and certain equipment under non-cancellable
lease agreements. The current facilities lease agreement expires in June 2003,
with a five-year renewal option. Actel's facilities and equipment leases are
accounted for as operating leases. The equipment lease terms expire at various
dates through September 2001. All of these leases require Actel to pay property
taxes, insurance, and maintenance and repair costs. At December 31, 2000,
Actel's capital lease obligations were not material. At December 31, 1999, Actel
had no capital lease obligations.

Future minimum lease payments under all non-cancellable leases are as
follows:

Operating Leases
------------
(in thousands)
2001........................................................... $ 3,612
2002........................................................... 3,115
2003........................................................... 1,568
2004 and thereafter............................................ --
------------
Total minimum lease payments................................... $ 8,295
============

Rental expense under operating leases was approximately $4.3 million,
$4.2 million, and $3.3 million for 2000, 1999, and 1998, respectively.

9. Retirement Plan

Effective December 10, 1987, Actel adopted a tax deferred savings plan
for the benefit of qualified employees. The plan is designed to provide
employees with an accumulation of funds at retirement. Employees may elect at
any time to have salary reduction contributions made to the plan.

Actel may make contributions to the plan at the discretion of the Board
of Directors. Actel made contributions to the plan of $0.5 million, $0.4
million, and $0.4 million for the 2000, 1999, and 1998 years, respectively.
Contributions were based on net revenues and net income for the fiscal years.
The contributions vest annually, retroactively from an eligible employee's date
of hire, at the rate of 25% per year. In addition, contributions become fully
vested upon retirement from Actel at age 65. There is no guarantee Actel will
make any contributions to the plan in the future, regardless of its financial
performance. If Actel, in its discretion, chooses to make a contribution again
in the future, the amount could be higher or lower.

10. Shareholders' Equity

Stock Repurchase

Actel authorized a stock repurchase program in September 1998 whereby
up to 1,000,000 shares of Actel's common stock may be purchased from time to
time in the open market at the discretion of management. An additional 1,000,000
shares was authorized for repurchase in 1999. During 2000, Actel repurchased
886,108 shares of common stock for $21.0 million. Actel made no stock
repurchases in 1999. During 1998, Actel repurchased 675,000 shares of common
stock for $6.1 million. Actel reissues repurchased shares through its employee
stock option and purchase plans.

Stock Option Plans

Actel has adopted stock option plans under which officers, employees,
and consultants may be granted incentive stock options or nonqualified options
to purchase shares of Actel's common stock. In connection with the acquisition
of Prosys and GateField, Actel assumed the stock option plans of Prosys and
GateField and the related options are incorporated in the amounts below. At
December 31, 2000, 11,716,912 shares of common stock were reserved for issuance
under these plans, of which 40,462 were available for grant. Actel did not grant
options to consultants in 2000, 1999, or 1998.

Actel has also adopted a Directors' Stock Option Plan, under which
directors who are not employees of Actel may be granted nonqualified options to
purchase shares of Actel's common stock. At December 31, 2000, 257,500 shares of
common stock were reserved for issuance under such plan, of which 65,000 were
available for grant.

Actel grants stock options under its plans at a price equal to the fair
value of Actel's common stock on the date of grant. Subject to continued
service, options generally vest over a period of four years and expire ten years
from the date of grant.

The following table summarizes Actel's stock option activity and
related information for the three years ended December 31, 2000:

<TABLE>
<CAPTION>
2000 1999 1998
---------------------------- ---------------------------- ----------------------------
Weighted Weighted Weighted
Average Average Average
Number of Exercise Number of Exercise Number of Exercise
Shares Price Shares Price Shares Price
-------------- ------------ -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January 1...... 5,862,933 $ 12.62 5,051,840 $ 11.41 4,252,115 $ 13.98
Granted....................... 3,264,468 26.44 2,339,561 14.34 3,626,060 11.44
Exercised..................... (1,189,898) 10.49 (620,226) 9.94 (495,997) 9.50
Cancelled..................... (1,096,512) 15.72 (908,242) 12.14 (2,330,338) 16.57
-------------- -------------- --------------
Outstanding at December 31.... 6,840,991 $ 19.08 5,862,933 $ 12.62 5,051,840 $ 11.41
============== ============== ==============

</TABLE>

The following table summarizes information about stock options outstanding at
December 31, 2000:
<TABLE>
<CAPTION>
December 31, 2000
------------------------------------------------------------------------
Options Outstanding Options Exercisable
------------------------------------------ -------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Number of Contract Exercise Number of Exercise
Range of Exercise Prices Shares Life Price Shares Price
- -------------------------------------------- ------------- ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
$ 0.07 - $ 10.06.................... 938,727 6.55 years $ 7.65 385,528 $ 6.43
10.25 - 10.63.................... 352,270 4.57 10.61 337,270 10.62
10.88 - 11.75.................... 805,654 6.25 11.66 423,993 11.69
11.88 - 13.56.................... 1,025,274 8.32 13.29 203,453 13.07
13.63 - 17.13.................... 670,685 7.37 15.32 275,989 15.21
17.94 - 23.81.................... 671,525 9.34 21.36 72,598 21.56
23.94 - 27.13.................... 455,501 9.74 24.83 1,734 27.13
27.50 - 27.50.................... 911,523 9.13 27.50 40,696 27.50
28.13 - 34.50.................... 673,583 9.35 32.83 19,443 31.23
35.50 - 104.71.................... 336,249 9.56 39.98 1,285 42.69
------------- ----------
0.07 - 104.71.................... 6,840,991 8.02 $ 19.08 1,761,989 $ 12.08
============= ==========
</TABLE>

Employee Stock Purchase Plan

Actel has adopted an Employee Stock Purchase Plan (ESPP), under which
eligible employees may designate not more than 15% of their cash compensation to
be deducted each pay period for the purchase of common stock (up to a maximum of
$25,000 worth of common stock in any year). At December 31, 2000, 3,019,680
shares of common stock were authorized for issuance under the ESPP. The ESPP is
administered in consecutive, overlapping offering periods of up to 24 months
each, with each offering period divided into four consecutive six-month purchase
periods beginning August 1 and February 1 of each year. On the last business day
of each purchase period, shares of common stock are purchased with employees'
payroll deductions accumulated during the prior six months at a price per share
equal to 85% of the market price of the common stock on the first day of the
applicable offering period or the last day of the purchase period, whichever is
lower. There were 384,436 and 364,163 shares issued under the ESPP in 2000 and
1999, respectively, and 1,216,904 shares remained available for issuance at
December 31, 2000. The weighted-average fair value of employee stock purchase
rights granted during 2000, 1999, and 1998 were $6.64, $5.76, and $5.52,
respectively.

Pro Forma Disclosures

Pro forma information regarding net income and net income per share is
required by SFAS 123, which also requires that the information be determined as
if Actel had accounted for its stock-based awards to employees granted
subsequent to December 31, 1994, under the fair value method. The stock based
awards consist of options and employee stock purchase rights. The fair value for
these stock-based awards to employees was estimated at the date of grant using
the Black-Scholes pricing model with the following weighted-average assumptions
for 2000, 1999, and 1998: risk-free interest rates of 6.13%, 5.55%, and 5.34%,
respectively; no dividend yield; volatility factor of the expected market price
of Actel's common stock of 65%, 54%, and 51%, respectively; and a weighted
average expected life for the options and employee stock purchase rights of four
years and two years, respectively. At December 31, 1999, 1,701,538 outstanding
options were exercisable; and at December 31, 1998, 1,306,424 outstanding
options were exercisable. The weighted-average fair value of options granted
during 2000, 1999, and 1998 were $15.07, $7.17, and $4.69, respectively.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options, which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Because Actel's stock-based awards to employees 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
management's opinion the existing models do not necessarily provide a reliable
single measure of the fair value of its stock-based awards to employees.

For purposes of pro forma disclosures, the estimated fair value of
Actel's stock-based awards to employees is amortized to expense over the
options' vesting period for options and expensed during the periods awarded for
employee stock purchase rights. Actel's pro forma information is as follows:

Years Ended December 31,
----------------------------------------
2000 1999 1998
------------ ------------ ------------
(in thousands, except per share amounts)

Pro forma net income............ $ 31,597 $ 9,186 $ 5,117
Pro forma earnings per share:
Basic........................ $ 1.35 $ 0.42 $ 0.24
Diluted...................... $ 1.22 $ 0.41 $ 0.24

The effects on pro forma disclosures of applying SFAS 123 are not likely to be
representative of the effects on pro forma disclosures in future years.

11. Comprehensive Income

The components of comprehensive income, net of tax, are as follows:

<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------
2000 1999 1998
------------ ------------ ------------
(in thousands)
<S> <C> <C> <C>
Net Income.............................................................. $ 41,445 $ 17,638 $ 14,987
Change in gain on available-for-sale securities, net of tax of $172 in
2000 and $10,595 in 1999................................................ 853 15,892 178
Less reclassification adjustment for gains included in net income....... (16,163) (9) (51)
------------ ------------ ------------
Other Comprehensive Income (Loss)....................................... (15,310) 15,883 127
------------ ------------ ------------
Total Comprehensive Income.............................................. $ 26,135 $ 33,521 $ 15,114
============ ============ ============
</TABLE>

Accumulated other comprehensive income for 2000, 1999, and 1998 is presented in
the accompanying consolidated condensed balance sheets, and consists of the
accumulated net unrealized gain on available-for-sale securities.

12. Tax Provision

The tax provision consists of:

<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------
2000 1999 1998
------------ ------------ ------------
(in thousands)
<S> <C> <C> <C>
Federal - current....................................................... $ 31,554 $ 11,709 $ 3,565
Federal - deferred...................................................... (5,402) (5,073) 1,416
State - current......................................................... 5,078 1,720 592
State - deferred........................................................ (299) (591) 1,197
Foreign - current....................................................... 296 290 445
------------ ------------ ------------
$ 31,227 $ 8,055 $ 7,215
============ ============ ============
</TABLE>

The tax provision reconciles to the amount computed by multiplying income before
tax by the U.S. statutory rate as follows:

<TABLE>
<CAPTION>
December 31,
----------------------------------------
2000 1999 1998
------------ ------------ ------------
(in thousands)
<S> <C> <C> <C>
Provision at federal statutory rate..................................... $ 25,435 $ 8,993 $ 7,771
Change in valuation allowance........................................... (440) (440) (440)
Tax exempt interest income.............................................. (1,050) (770) (875)
Federal research credits................................................ (1,600) (1,031) (856)
State taxes, net of federal benefit..................................... 3,106 734 1,163
Non-deductible impact of amortization of intangibles/investments........ 3,183 341 --
Non-deductible impact of in-process research and development............ 3,726 210 --
Other................................................................... (1,133) 18 452
------------ ------------ ------------
Tax provision........................................................... $ 31,227 $ 8,055 $ 7,215
============ ============ ============
</TABLE>

Significant components of Actel's deferred tax assets and liabilities
for federal and state income taxes are as follows:

<TABLE>
<CAPTION>
December 31,
--------------------------
2000 1999
------------ ------------
(in thousands)
Deferred tax assets:
<S> <C> <C>
Depreciation................................................................... $ 1,968 $ 2,297
Deferred income................................................................ 17,159 15,574
Intangible assets.............................................................. 4,994 5,664
Inventories.................................................................... 3,802 1,950
Net operating losses of acquired companies..................................... 34,714 --
Other, net..................................................................... 5,785 2,963
------------ ------------
68,442 28,448
Valuation allowance............................................................ (28,443) (1,726)
------------ ------------
Net deferred tax assets................................................ $ 39,979 $ 26,722
============ ============

Deferred tax liabilities:
Intangible assets............................................................. $ 5,067 $ 920
Unrealized gain on investments................................................ 353 10,595
------------ ------------
Deferred tax liability................................................. $ 5,420 $ 11,515
============ ============
</TABLE>

The valuation allowance declined by approximately $0.4 million during
1999 and 1998. Approximately $27.2 million of the December 31, 2000, valuation
reserve will be allocated to reduce goodwill or other non-current intangible
assets from the acquisition of GateField when realized.

Actel has a net operating loss carryforward as a result of the
GateField acquisition of approximately $90 million, which will expire at various
times beginning in the year ended December 31, 2006, and ending in the year
ended December 31, 2020. Pre-tax income from foreign subsidiaries is considered
to be immaterial.

13. Segment Disclosures

Actel operates in a single operating segment: designing, developing,
and marketing FPGAs. FPGA sales accounted for 96%, 96%, and 97%, of net revenues
for the years ended December 31, 2000, 1999, and 1998, respectively. Actel also
derives revenues from the sale of software and hardware systems, which are used
to design and program FPGAs. In addition, Actel derives revenues from the
performance of design services, including FPGA, ASIC, and system design;
software development and implementation; and development of prototypes, first
articles and production units. Protocol Design Services, which Actel acquired
from GateField in the third quarter of 1998, accounted for 2% of Actel's net
revenue in 2000 and 1999 and 1% in 1998.

The Chief Executive Officer has been identified as the Chief Operating
Decision Maker because he has final authority over resource allocation decisions
and performance assessment.

Actel markets its products in the United States and in foreign
countries through its sales personnel, independent sales representatives, and
distributors. Actel's geographic sales are as follows:

Years Ended December 31,
------------------------------------------------------------------------------
2000 1999 1998
---------------------- ---------------------- ----------------------
(in thousands, except percentages)
<S> <C> <C> <C> <C> <C> <C>
United States................. $ 153,847 68% $ 121,819 71% $ 102,817 67%
Export:
Europe................... 43,282 19 29,010 17 29,675 19
Japan.................... 16,561 7 9,562 6 10,658 7
Other international...... 12,729 6 11,270 6 11,277 7
------------ ------ ------------ ------ ------------ ------
$ 226,419 100% $ 171,661 100% $ 154,427 100%
============ ====== ============ ====== ============ ======
</TABLE>

As is common in the semiconductor industry, Actel generates significant
revenues from the sales of its products through distributors. Actel's principal
distributors are Unique Technologies, Inc. (Unique) and Pioneer-Standard
Electronics, Inc. (Pioneer) in North America and Arrow Electronics, Inc. and
Zeus Electronics (Arrow) worldwide. The following table sets forth, for each of
the last three years, the percentage of revenues derived from all customers
accounting for 10% or more of net revenues in any of such years:

2000 1999 1998
--------- --------- ---------
Arrow................................. 17% 16% 14%
Wyle/Unique........................... 15% 13% 14%
Pioneer............................... 13% 12% 9%
Nortel Networks....................... 11% 9% 3%

14. Patent Infringement

On March 29, 2000, Unisys Corporation (Unisys) brought suit in the
United States District Court for the Northern District of California, San Jose
Division (Court), against Actel seeking monetary damages and injunctive relief.
The summons and complaint were served on Actel on April 10, 2000. The complaint
alleges that Actel has infringed and is currently infringing four United States
patents that belong to plaintiff: U.S. Patent No. 4,442,507 issued April 10,
1984; U.S. Patent No. 5,296,722 issued March 22, 1994; U.S. Patent No. 5,407,851
issued April 18, 1995; and U.S. Patent No. 5,496,763 issued March 5, 1996. On
May 15, 2000, Unisys served its Initial Disclosure of Asserted Claims,
identifying the SX and SX-A family of FPGAs as the specific Actel products being
accused of infringement, and identifying the specific claims of each of the
patents in suit alleged to be infringed by those products. On September 25,
2000, Actel filed its First Amended Answer to the Complaint, denying that it has
infringed or is infringing any of the patents in suit, and alleging, among other
things, that each of those patents is invalid for failure to meet the statutory
requirements for patentability. With its amended answer, Actel also filed a
counterclaim against Unisys seeking a judicial declaration that each of the
Unisys patents in suit is invalid, unenforceable, and not infringed by Actel. On
October 26, 2000, the Court entered its Order for Pretrial Preparation
establishing various deadlines in the case, and setting the case for trial on
March 25, 2002. The case is in its early stages and, as of March 30, 2001, no
depositions or other substantial discovery has yet been conducted. Actel
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, Actel 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 can be given to that
effect. While management believes that a reasonable resolution will occur, there
can be no assurance that this case will be resolved, or that the resolution of
this case will not have a materially adverse effect on future results of
operations or cash flows.

As is typical in the semiconductor industry, Actel has been and expects
to be notified from time to time of claims that it may be infringing patents
owned by others. During 2000, Actel 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, Actel may
obtain licenses under patents that it is alleged to infringe. When probable and
reasonably estimable, Actel has made provision for the estimated settlement
costs of claims for alleged infringement prior to the balance sheet date. While
Actel 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, Actel's evaluation of the probable impact
of these pending disputes could change based upon new information learned by
Actel. Subject to the foregoing, Actel does not believe that any pending
disputes, including those described above, are likely to have a materially
adverse effect on Actel's financial condition, results of operations, or
liquidity.

15. Earnings Per Share

The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>

Years Ended December 31,
----------------------------------------
2000 1999 1998
------------ ------------ ------------
(in thousands, except per share amounts)
<S> <C> <C> <C>
Basic:
Weighted-average common shares outstanding.............................. 23,447 21,664 21,251
------------ ------------ ------------
Shares used in computing net income per share........................... 23,447 21,664 21,251
============ ============ ============
Net income.............................................................. $ 41,445 $ 17,638 $ 14,987
============ ============ ============
Net income per share.................................................... $ 1.77 $ 0.81 $ 0.71
============ ============ ============
Diluted:
Weighted-average common shares outstanding.............................. 23,447 21,664 21,251
Net effect of dilutive stock options, warrants, and convertible preferred
stock - based on the treasury stock method........................... 2,786 1,394 670
------------ ------------ ------------
Shares used in computing net income per share........................... 26,233 23,058 21,921
============ ============ ============
Net income.............................................................. $ 41,445 $ 17,638 $ 14,987
============ ============ ============
Net income per share.................................................... $ 1.58 $ 0.76 $ 0.68
============ ============ ============
</TABLE>

Options outstanding under Actel's stock option plans to purchase
approximately 361,000, 218,000, and 1,096,000 shares of Actel common stock were
not included in the calculation to derive diluted income per share for the years
2000, 1999, and 1998, respectively, as their inclusion would have had an
anti-dilutive effect.

<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

THE BOARD OF DIRECTORS AND SHAREHOLDERS

ACTEL CORPORATION

We have audited the accompanying consolidated balance sheets of Actel
Corporation as of December 31, 2000 and 1999, and the related consolidated
statements of income, cash flows, and shareholders' equity and other
comprehensive income for each of the three years in the period ended December
31, 2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Actel
Corporation at December 31, 2000 and 1999 and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.

/s/ ERNST & YOUNG LLP

San Jose, California
January 22, 2001

<PAGE>

STOCK LISTING

Actel's common stock has been traded on the Nasdaq Stock Market under the
symbol "ACTL" since the Company's initial public offering (IPO) on August 2,
1993. The Company has never paid cash dividends on its common stock and has no
present plans to do so.

On March 19, 2000, there were 238 shareholders of record. Since many
shareholders have their shares held of record in the names of their brokerage
firm, the actual number of shareholders is estimated by the Company to be about
6,600.

During the last two years, the quarterly high and low sales prices for the
common stock were:

2000 High Low
- ------------------------------------- ----------------- -----------------
First Quarter 36 1/2 21 5/8
Second Quarter 46 7/8 22 -
Third Quarter 55 3/8 29 5/8
Fourth Quarter 39 - 20 -

1999 High Low
- ------------------------------------- ----------------- -----------------
First Quarter 22 5/8 12 1/2
Second Quarter 20 5/16 11 -
Third Quarter 20 - 13 -
Fourth Quarter 24 1/2 16 -
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>5
<FILENAME>exhibit21.txt
<DESCRIPTION>SUBSIDIARIES OF REGISTRANT
<TEXT>

EXHIBIT 21

ACTEL CORPORATION

--------------------------------------

Subsidiaries

Actel Europe, Ltd., a U.K. corporation

Actel Europe SARL, a French corporation

Actel GmbH, a German corporation

Actel Pan-Asia Corporation, a Nevada corporation

Actel Pan-Asia, Hong Kong Ltd., a Hong Kong corporation

Actel Japan, KK, a Japanese corporation
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>6
<FILENAME>exhibit23.txt
<DESCRIPTION>CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
<TEXT>

EXHIBIT 23

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in this Annual Report
(Form 10-K) of Actel Corporation of our report dated January 22, 2001, included
in the 2000 Annual Report to Shareholders of Actel Corporation.

Our audits also included the financial statement schedule of Actel
Corporation listed in Item 14(a). This schedule is the responsibility of Actel's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, the financial statement schedule referred to above, when considered
in relation to the basic financial statements as a whole, presents fairly in all
material respects the information set forth therein.

We also consent to the incorporation by reference in the Registration
Statements (Form S-8 Nos. 33-74492, 333-3398, 333-71627, 333-36222, 333-43274,
and 333-54652) of our report dated January 22, 2001, with respect to the
consolidated financial statements of Actel Corporation incorporated by reference
in its Annual Report (Form 10-K) for the year ended December 31, 2000, and our
report included in the preceding paragraph with respect to the financial
statement schedule included in this Annual Report (Form 10-K) of Actel
Corporation.

/S/ ERNST & YOUNG LLP

San Jose, California
April 2, 2001
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-24
<SEQUENCE>7
<FILENAME>exhibit24.txt
<DESCRIPTION>POWER OF ATTORNEY
<TEXT>

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints John C. East, Henry L. Perret, and
David L. Van De Hey, and each of them acting individually, as his
attorney-in-fact, each with full power of substitution, for him in any and all
capacities, to sign any and all amendments to this Annual Report on Form 10-K
and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report on Form 10-K has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.

Signature Title Date
- --------------------------- ------------------------------------------------ --------------

<S> <C> <C>
/s/ John C. East President and Chief Executive Officer (Principal March 31, 2001
- --------------------------- Executive Officer) and Director
(John C. East)

/s/ Henry L. Perret Vice President of Finance and Chief Financial March 31, 2001
- --------------------------- Officer (Principal Financial and Accounting
(Henry L. Perret) Officer)

/s/ James R. Fiebig Director March 31, 2001
- ---------------------------
(James R. Fiebiger)

/s/ Jos C. Henkens Director March 31, 2001
- ---------------------------
(Jos C. Henkens)

/s/ Jacob S. Jacobsson Director March 31, 2001
- ---------------------------
(Jacob S. Jacobsson)

/s/ Frederic N. Schwettmann Director March 31, 2001
- ---------------------------
(Frederic N. Schwettmann)

/s/ Robert G. Spencer Director March 31, 2001
- ---------------------------
(Robert G. Spencer)

</TABLE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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