##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006ORo

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
    incorporation or organization)

(I.R.S. Employer
    Identification No.)2061 Stierlin Court
    Mountain View, California(Address of principal
    executive offices)

94043-4655(Zip Code)   (650) 318-4200
 (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
 Preferred Stock Purchase Rights
 (Title of class)
      o þ
  o þ
    o þ
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 Large accelerated
    filer o     Accelerated
    filer þNon-accelerated
    filer o
  Rule 12b-2 o þ
  $337,300,407
    26,496,497
      In this Annual Report on
    Form 10-K,
    Actel Corporation and its consolidated subsidiaries are referred
    to as we, us, our, or
    Actel. You should read the information in this
    Annual Report with the Risk Factors in Item 1A. Unless
    otherwise indicated, the information in this Annual Report is
    given as of January 21, 2008, and we undertake no
    obligation to update any of the information, including
    forward-looking statements. All forward-looking statements are
    made under the safe harbor provisions of the Private Securities
    Litigation Reform Act of 1995. Statements containing words such
    as anticipates, believes,
    estimates, expects, intends,
    plans, seeks, and variations of such
    words and similar expressions are intended to identify the
    forward-looking statements. Actual results could differ
    materially from those projected in the forward-looking
    statements due to the risks identified in the Risk Factors or
    for other reasons.




---





TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 1B. UNRESOLVED STAFF COMMENTSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR THE REGISTRANTS COMMON STOCK, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONPART IIIITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE GOVERNANCEITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESPART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULESEXHIBIT 10.12EXHIBIT 21.1EXHIBIT 23EXHIBIT 24EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32    Table of Contents  Explanatory
    Note Regarding Restatements
  Form 10-K Form 10-K),
  Form 10-K, Form 10-Q, Form 8-K Form 10-K Form 10-Q Form 8-K
  Stock
    Option Reviews, Investigation, and Findings
    1996-2001; 1996-2001
  2002-2004,
 1




---



##### Table of Contents



Restatement
       2




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##### Table of Contents



Adjustment to











OtherStock-Based











DeferredCompensation








Subtotal


Revenue


OtherExpense


Other


Adjustment to


Stock-Based


Adjustments


Adjustments-


Adjustment toAssociated


Adjustments


Payroll


Compensation


Associated


-Other


Income


Totalwith


to Stock-Based


Tax


Expense and


with


Income and


Tax


RestatementRemeasured


Compensation


Expense


Payroll


European


Expense


Expense


ExpenseFiscal Year

Grants


Expense


(Benefit)


Taxes


Distributor


Charges(1)


(Benefit)


(Benefit)1994

$



$
60


$



$
60


$



$



$
(24
)

$
361995


205



27







232











(73
)


1591996


539



42



6



587











(175
)


4121997


823



32



23



878











(262
)


6161998


937



35



18



990











(307
)


6831999


814



12



105



931











(242
)


6892000


2,574



92



347



3,013



(1,528
)






(436
)


1,0492001


5,455



485



88



6,028



(100
)


(17
)


(2,111
)


3,8002002


2,810



(73
)


93



2,830



203



(31
)


(953
)


2,0492003


2,155



1,687



181



4,023







20



(1,370
)


2,673Cumulative through January 4, 2004


16,312



2,399



861



19,572



(1,425
)


(28
)


(5,953
)


12,1662004


950



(604
)


(312
)


34



100



(463
)


(51
)


(380
)2005


186



(431
)


(91
)


(336
)


338



12



(14
)


Total

$
17,448


$
1,364


$
458


$
19,270


$
(987
)

$
(479
)

$
(6,018
)

$
11,786     (1)
    
    Reflects mark to market adjustments relating to
    $1.0 million of awards originally charged to stock-based
    compensation which were subsequently classified as liability
    awards following the termination of employment. 3




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##### Table of Contents



PART I
 
  ITEM 1.
    BUSINESS      Form 10-K, Form 10-Q, Form 8-K,
  Industry
    Overview
          Technology
  live-at-power-up,
   Single
    Chip
  power-up.
 4




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 Low
    Power
     Live
    At
    Power-Up
  power-up
   Security
  ®
   Firm
    Error Immunity
  failure-in-time
  Strategy
     Value-Based
    Market
   5




---



##### Table of Contents



 Programmable
    System Chip (PSC) Market
     System-Critical
    Market
    Products
        and/or
   6




---



##### Table of Contents



 Actel
    Fusion PSC
              Automotive

Engine control units
    GPS navigation systems
    In-cab entertainment
    Safety systemsCommunications

Handheld radios
    Telecom and networking line-card management
    Wireless base stationsConsumer

Digital cameras
    Home networking
    Multimedia entertainment systems
    Plasma displays
    Set-top boxes
    Smart handsetsIndustrial

Instrumentation and test equipment
    Medical instrumentation systems
    Point of sale
    RFID infrastructure
    Surveillance and automation systems    Actel
    IGLOO FPGAs
      tm
 7




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##### Table of Contents



Automotive

Personal occupancy detection systems (PODS)
    Rear- and side-view cameras
    Space- and power-constrained safety systems
    TelematicsCommunications

Handheld radios
    PC card-based wideband solutions (UMTS, 3G, EDO)
    Wireless access pointsConsumer

Digital cameras
    GPS devices
    Multimedia entertainment systems
    PDAs
    Portable gaming
    Smart phonesIndustrial

Portable medical instruments
    Portable test equipment    ProASIC
    3/E FPGAs
          Sample
    ProASIC 3/E applications:
  Automotive

Engine control units
    GPS navigation systems
    In-cab entertainment
    Safety systemsCommunications

Handheld radios
    Telecom and networking line-card management
    Wireless base stationsConsumer

Digital cameras
    Gaming
    Home networking
    Multimedia entertainment systems
    Plasma displays
    Set-top boxes
    Smart handsetsIndustrial

Instrumentation and test equipment
    Medical instrumentation systems
    Point of sale
    RFID infrastructure
    Surveillance and automation systems    RTAX-S
    FPGAs
   8




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##### Table of Contents



Aerospace and Military

Attitude and orbit control
    Camera electronics
    Command and data handling
    Instrumentation
    Management of spacecraft power and environmental controls
    Propulsion system electronics
    Radio communication
    Sensor control
    Sensor data processing
    TelemetryMedical

Imaging equipment with high exposure to radiation   Supporting
    Products and Services
     Design
    and Development Software and Tools
  best-in-class
   IP
    Cores
  ®
   Programming
    Hardware
   9




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 Starter
    Kits
     Services
    and Support
    Markets
    and Applications
     Military
    and Aerospace
     10




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##### Table of Contents



 Industrial
         Communications
       Consumer
    and Computer
   11




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##### Table of Contents



 Automotive
  back-up
      Sales and
    Distribution
   12




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##### Table of Contents



Backlog
    Customer
    Service and Support
      Manufacturing
    and Assembly
    
    Chartered in Singapore using 0.45- and 0.35-micron design rules; 13




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
    Infineon in Germany using 0.25- and 0.13-micron design rules;
    Matsushita in Japan using 1.0-, 0.9and 0.8 micron design rules;
    UMC in Taiwan using 0.25/ 0.22- and 0.15-micron design
    rules; and
    Winbond in Taiwan using 0.8- and 0.45-micron design rules.  and/or
    Strategic
    Relationships
     Aldec
     ARM
     Gaisler
    Research
   14




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##### Table of Contents



 MicroBladetm,
    Inc.
     Signal
    Stream Technologies
     Synplicity
  ® ® ®
   UMC
  e-Flash
  Research
    and Development
      Competition
    and/or
 15




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Patents
    and Licenses
             16




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Employees
    ITEM 1A.
    RISK
    FACTORS  Before deciding to purchase, hold, or sell our Common Stock,
    you should carefully consider the risks described below in
    addition to the other cautionary statements and risks described
    elsewhere, and the other information contained, in this Annual
    Report on
    Form 10-K
    and subsequent reports on
    Forms 10-Q
    and 8-K. The
    risks and uncertainties described below are not the only ones we
    face. Additional risks and uncertainties not presently known to
    us or that we currently deem immaterial may also affect our
    business. If any of these known or unknown risks or
    uncertainties actually occurs with material adverse effects on
    us, our business, financial condition, and results of operations
    could be seriously harmed. In that event, the market price for
    our Common Stock will likely decline and you may lose all or
    part of your investment.
  Risks
    Related to the Investigation of Past Stock Option Practices and
    the Related Restatement of our Prior Financial Results
  1996-2001; 1996-2001 2002-2004,
  Our
    historical stock option granting practices and the restatement
    of our financial statements have exposed us to civil litigation
    claims and regulatory proceedings, and may expose us to future
    civil litigation claims, regulatory proceedings, government
    inquiries, and enforcement actions, that could burden Actel and
    have a materially adverse effect on our financial condition,
    business, results of operations, and/or cash
    flows.
   17




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and/or
  and/or
  We
    have not been in compliance with The Nasdaq Stock Markets
    continued listing requirements and remain subject to the risk of
    our stock being delisted from The Nasdaq Global Select Market,
    which would have a materially adverse effect on us and our
    shareholders.
  Form 10-Q Form 10-K Form 10-Q Form 10-Q Form 10-Q Form 10-Q Form 10-Q Form 10-Q
  The
    process of restating our financial statements, making the
    associated disclosures, and complying with SEC requirements are
    subject to uncertainty and evolving requirements.
   18




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A
    number of our current and former executive officers and
    Directors have been named as parties to a derivative action
    lawsuit related to our historical stock option grant practices,
    and there is a possibility of additional civil litigation
    claims, regulatory proceedings, government inquiries, and
    enforcement actions, any of which could result in significant
    legal expenses.
    Risks
    Related to Our Failure to Meet Expectations
    We
    derive a large percentage of our quarterly revenues from
    bookings received during the quarter, making quarterly revenues
    difficult to predict.
    We
    derive a significant percentage of our quarterly revenues from
    shipments made in the final weeks of the quarter, making
    quarterly revenues difficult to predict.
    Our
    military and aerospace shipments tend to be large and are
    subject to complex scheduling uncertainties, making quarterly
    revenues difficult to predict.
   19




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We
    derive a majority of our quarterly revenues from products resold
    by our distributors, making quarterly revenues difficult to
    predict.
  and/or
  An
    unanticipated shortage of products available for sale may cause
    our quarterly revenues and/or operating results to fall short of
    expectations.
    Unanticipated
    increases, or the failure to achieve anticipated reductions, in
    the cost of our products may cause our quarterly operating
    results to fall short of expectations.
    Unanticipated
    reductions in the average selling prices of our products may
    cause our quarterly revenues and operating results to fall short
    of expectations.
   20




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and/or
  In
    preparing our financial statements, we make good faith estimates
    and judgments that may change or turn out to be
    erroneous.
    Our
    gross margin may decline as we increasingly compete with
    hard-wired ASICs and serve the
    value-based
    market.
    We may
    not win sufficient designs, or the designs we win may not
    generate sufficient revenues, for us to maintain or expand our
    business.
  and/or
  Risks
    Related to Defective Product
   21




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##### Table of Contents



device-hours, device-hours.
  Any
    error or defect in our products could have a material adverse
    effect on our business, financial condition, and operating
    results.
  and/or
  Any
    product liability claim could pose a significant risk to our
    business, financial condition, and operating
    results.
  and/or
  Risks
    Related to New Products
  and/or
  
    We announced our intention to develop SRAM-based FPGA products
    in 1996 and abandoned the development in 1999 principally
    because the product would no longer have been competitive. 22




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##### Table of Contents




    We introduced our VariCore embeddable reprogrammable gate array
    (EPGA) logic core based on SRAM technology in 2001. Revenues
    from VariCore EPGAs did not materialize and the development of a
    more advanced VariCore EPGA was cancelled. In this case, a
    market that we believed would develop did not emerge.
    In 2001, we also launched our BridgeFPGA initiative to address
    the I/O problems created within the high-speed communications
    market by the proliferation of interface standards. We
    introduced the antifuse-based Axcelerator FPGA, which has
    dedicated I/O circuits that can support multiple interface
    standards, in 2002. However, the development of subsequent
    BridgeFPGA products was postponed in 2002 due principally to the
    prolonged downturn in the high-speed communications market. The
    development was cancelled in 2003 primarily because the
    subsequent BridgeFPGA products would no longer have been
    competitive.    Our
    introduction of the Actel Fusion PSC presents numerous
    significant challenges.
  and/or
  Numerous
    factors can cause the development or introduction of new
    products to fail or be delayed.
    
    anticipate future customer demand and the technology that will
    be available to meet the demand;
    define the product and its architecture, including the
    technology, silicon, programmer, IP, software, and packaging
    specifications;
    obtain access to advanced manufacturing process technologies;
    design and verify the silicon;
    develop and release evaluation software;
    layout the FPGA and other functional blocks along with the
    circuitry required for programming;
    integrate the FPGA block with the other functional blocks;
    simulate (i.e., test) the design of the product;
    tapeout the product (i.e., compile a database containing the
    design information about the product for use in the preparation
    of photomasks);
    generate photomasks for use in manufacturing the product and
    evaluate the software;
    manufacture the product at the foundry;
    verify the product; and
    qualify the process, characterize the product, and release
    production software. 23




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##### Table of Contents



and/or
  New
    products are subject to greater design and operational
    risks.
  and/or
  New
    products are subject to greater technology risks.
  and/or
  New
    products generally have lower gross margins.
    Risks
    Related to Competitive Disadvantages
    Many
    of our current and potential competitors are larger and have
    more resources.
   24




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##### Table of Contents



Our
    antifuse technology is not reprogrammable, which is a
    competitive disadvantage in most cases.
    Our
    Flash and antifuse technologies are not manufactured on standard
    processes, which is a competitive disadvantage.
    Risks
    Related to Events Beyond Our Control
  and/or
  Our
    operations and those of our partners are located in areas
    subject to volatile natural, economic, social, and political
    conditions.
   25




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##### Table of Contents



and/or
  We
    have only limited insurance coverage.
  and/or
  Risks
    Related to Dependence on Third Parties
    Our
    independent wafer manufacturers may be unable or unwilling to
    satisfy our needs in a timely manner, which could harm our
    business.
  and/or
  Our
    limited volume and customized process requirements generally
    make us less attractive to independent wafer
    manufacturers.
  and/or
  Identifying
    and qualifying new independent wafer manufacturers is difficult
    and might be unsuccessful.
  and/or
  Our
    independent assembly subcontractors may be unable or unwilling
    to meet our requirements, which could delay product shipments
    and result in the loss of customers or revenues.
   26




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##### Table of Contents



and/or
  Our
    independent software and hardware developers and suppliers may
    be unable or unwilling to satisfy our needs in a timely manner,
    which could impair the introduction of new products or the
    support of existing products.
  and/or and/or and/or
  Our
    future performance will depend in part on the effectiveness of
    our independent distributors in marketing, selling, and
    supporting our products.
  and/or
  Distributor
    contracts generally can be terminated on short
    notice.
  and/or
  Fluctuations
    in inventory levels at our distributors can affect our operating
    results.
   27




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##### Table of Contents



Risk
    Related to the Conduct of International Business
  and/or and/or
  We
    depend on international operations for almost all of our
    products.
  and/or
  We
    depend on international sales for a substantial portion of our
    revenues.
  and/or
  Risk
    Related to Economic and Market Fluctuations
    Our
    revenues and operating results may be adversely affected by
    future downturns in the semiconductor industry.
  and/or
 28




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Our
    revenues and operating results may be adversely affected by
    future downturns in the military and aerospace
    market.
  and/or
  Our
    revenues and operating results may be adversely affected by
    changes in the military and aerospace market.
  and/or and/or
  Our
    revenues and/or operating results may be adversely affected by
    future downturns at any of our major customers.
  and/or
  Any
    acquisition we make may harm our business, financial condition,
    and/or operating results.
    
    In 1999, we acquired AGL for consideration valued at
    $7.2 million. We acquired AGL for technology used in the
    unsuccessful development of an SRAM-based FPGA.
    In 2000, we acquired Prosys Technology, Inc. (Prosys) for
    consideration valued at $26.2 million. We acquired Prosys
    for technology used in our VariCore FPGA logic core, which was
    introduced in 2001 but for which no market emerged.
    Also in 2000, we completed our acquisition of GateField for
    consideration valued at $45.7 million. We acquired
    GateField for its Flash technology and ProASIC FPGA family. We
    introduced the second-generation ProASIC PLUS product family in
    2002 and the third-generation ProASIC3/E families in 2005. We
    also introduced the Flash-based Actel Fusion PSC in 2005. Actel
    is currently the only company offering FPGAs with a nonvolatile,
    reprogrammable architecture.  and/or
 29




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##### Table of Contents



and/or
  Risks
    Related to Changing Rules and Practices
  and/or
  Changes
    in accounting for equity compensation adversely affected our
    operating results and may adversely affect our ability to
    attract and retain employees.
    and/or
  Compliance
    with the Sarbanes-Oxley Act of 2002 and related corporate
    governance and public disclosure requirements have resulted in
    significant additional expense.
     30




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##### Table of Contents



We may
    face significant business and financial risk from claims of
    intellectual property infringement asserted against us, and we
    may be unable to adequately enforce our intellectual property
    rights.
  and/or
  and/or and/or
  and/or
  We may
    be unable to attract or retain the personnel necessary to
    successfully develop our technologies, design our products, or
    operate, manage, or grow our business.
  and/or and/or
 31




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##### Table of Contents



We
    have some arrangements that may not be neutral toward a
    potential change of control and our Board of Directors could
    adopt others.
        Our
    stock price may decline significantly, possibly for reasons
    unrelated to our operating performance.
    
    quarterly fluctuations in our financial results or the financial
    results of our competitors or other semiconductor companies;
    changes in the expectations of analysts regarding our financial
    results or the financial results of our competitors or other
    semiconductor companies;
    announcements of new products or technical innovations by Actel
    or by our competitors; or
    general conditions in the semiconductor industry, financial
    markets, or economy.  If our
    stock price declines sufficiently, we would write down our
    goodwill, which may have a materially adverse affect on our
    operating results.
   32




---



##### Table of Contents



ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS   
  ITEM 2.
    PROPERTIES   
  ITEM 3.
    LEGAL
    PROCEEDINGS  Legal
    Proceedings Related to Stock Options
  In re
    Actel Derivative Litigation, 5:06-cv-05352-JW
  Frank Brozovich v. John
    C. East, et al., Section 10(b)/Rule 10b-5 Samir Younan v. John C. East, et al., Younan In
    re Actel Derivative Litigation Younan Brozovich
  SEC
    Informal Inquiry
   33




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##### Table of Contents



The
    Nasdaq Stock Market Proceedings, Docket NQ
    5272N-06
  Form 10-Q
  Form 10-K
  Form 10-Q Form 10-Q
  Form 10-Q Form 10-K
 
  ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   
  PART II
 
  ITEM 5.
    MARKET
    FOR THE REGISTRANTS COMMON STOCK, RELATED SHAREHOLDER
    MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES   34




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##### Table of Contents



2006


2005High


Low


High


LowFirst Quarter

$
15.95


$
12.64


$
18.64


$
14.78Second Quarter


17.53



13.20



15.54



13.65Third Quarter


16.40



12.40



15.98



13.35Fourth Quarter


19.36



15.00



15.25



12.52      
  ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K. Form 10-K Form 10-K, Form 10-K Form 10-Q Form 10-K,
 35




---



##### Table of Contents



ACTEL
    CORPORATION
    SELECTED CONSOLIDATED FINANCIAL DATA
  Years EndedDec. 31, 2006


Jan. 1, 2006


Jan. 2, 2005


Jan. 4, 2004


Jan. 5, 2003Restated(1)


Restated(1)


Restated(1)


Restated(1)(In thousands, except per share data)Consolidated Statements of Operations Data:Net revenues

$
191,499


$
178,947


$
165,402


$
149,910


$
134,096Costs and expenses:Total cost of revenues(2)(4)


75,618



73,282



70,404



59,867



53,011Research and development(4)


56,926



48,242



45,701



41,720



40,798Selling, general, and administrative(4)(5)(6)


67,959



49,649



47,975



46,422



44,269Amortization of acquisition-related intangibles(3)


15



1,908



2,651



2,670



2,724Total costs and expenses


200,518



173,081



166,731



150,679



140,802Income (loss) from operations


(9,019
)


5,866



(1,329
)


(769
)


(6,706
)Interest income and other, net of expense


7,128



3,912



3,398



3,190



5,561Gain (loss) on sales and write-downs of equity investments














91



(3,707
)Income (loss) before tax provision (benefit)


(1,891
)


9,778



2,069



2,512



(4,852
)Tax provision (benefit)


264



2,742



(705
)


(1,043
)


(2,878
)Net income (loss)

$
(2,155
)

$
7,036


$
2,774


$
3,555


$
(1,974
)Net income (loss) per share:Basic

$
(0.08
)

$
0.28


$
0.11


$
0.14


$
(0.08
)Diluted

$
(0.08
)

$
0.28


$
0.11


$
0.14


$
(0.08
)Shares used in computing net income (loss) per share:Basic


26,106



25,277



25,584



24,808



24,302Diluted


26,106



25,545



26,381



26,190



24,302   As ofDec. 31, 2006


Jan. 1, 2006


Jan. 2, 2005


Jan. 4, 2004


Jan. 5, 2003Restated(1)


Restated(1)


Restated(1)


Restated(1)(In thousands)Consolidated Balance Sheet Data:Working capital

$
191,278


$
177,491


$
194,613


$
190,545


$
170,632Total assets


368,922



343,196



318,171



319,637



295,101Total shareholders equity


290,616



276,057



267,816



266,780



244,787     (1)
    
    See the Explanatory Note immediately preceding
    Part I, Item 1 and Note 2, Restatement of
    Consolidated Financial Statements, in the Notes to
    Consolidated Financial Statements of this
    Form 10-K,
    and Item 7, Managements Discussion and Analysis
    of Financial Condition and Results of Operations. We
    recorded after-tax, stock-based compensation expense of
    ($0.2) million, ($0.5) million, $2.7 million, and
    $1.9 million in 2005, 2004, 2003 and 2002, respectively, as
    a result of improper measurement dates, equity awards to
    consultants, 36




---



##### Table of Contents



equity award modifications and related payroll and income tax
    impact. As part of the restatement, for the years ended
    January 1, 2006, January 2, 2005 and January 4,
    2004 we recorded additional non-cash adjustments that were
    previously identified and considered not to be material to our
    consolidated financial statements, relating primarily to errors
    associated with the recognition of deferred income at our
    European distributors. These deferred income adjustments
    decreased net income by $0.2 million, $0.1 million and
    $0.1 million, respectively, in fiscal 2005, 2004 and 2002.(2)
    
    During the fourth quarter of 2004 we incurred incremental
    charges included in cost of revenues of $3.2 million for
    expenses associated with the testing of the RTSX-S space
    qualified FPGAs and the write down of RTSX-S inventory from the
    original manufacturer. During the fourth quarter of fiscal 2006
    we recorded charges of $2.2 million in connection with the
    write-down of certain excess inventory.(3)
    
    Beginning in 2002, we ceased to amortize goodwill in accordance
    with SFAS No. 142, Goodwill and Other Intangible
    Assets. Instead, goodwill is subject to annual impairment
    tests and written down only when identified as impaired.
    Non-goodwill intangible assets with definite lives continue to
    be amortized under SFAS No. 141 and 142. See
    Notes 1 and 3 of Notes to Consolidated Financial Statements
    for further information.(4)
    
    On January 2, 2006, we adopted SFAS No. 123R,
    Share-Based Payment, which requires us to measure
    all employee stock-based compensation awards using a fair value
    method and record such expense in our consolidated financial
    statements. As a result, we recorded pre-tax, stock based
    compensation expense of $11.0 million for fiscal 2006 under
    SFAS No. 123R.(5)
    
    During fiscal 2006 we recorded charges of $10.0 million and
    $0.4 million in connection with the settlement of certain
    patent and license infringement claims. See Note 14 to
    Consolidated Financial Statements for further information.(6)
    
    During fiscal 2006 we incurred $2.0 million of legal and
    accounting costs in connection with the Companys stock
    options investigation that was initiated during the fourth
    quarter of fiscal 2006. 37




---



##### Table of Contents



Consolidated
    Statements of Operations Data (in thousands, except per share
    data):
  Year Ended January 1, 2006


Year Ended January 2, 2005As Previously








As PreviouslyReported


Adjustments


As Restated


Reported


Adjustments


As RestatedNet revenues

$
179,397


$
(450
)

$
178,947


$
165,536


$
(134
)

$
165,402Costs and expenses:Cost of revenues


73,392



(110
)


73,282



70,451



(47
)


70,404Research and development


48,173



69



48,242



45,360



341



45,701Selling, general, and administrative


50,056



(407
)


49,649



48,269



(294
)


47,975Amortization of acquisition-related intangibles


1,908







1,908



2,651







2,651Total costs and expenses


173,529



(448
)


173,081



166,731







166,731Income (loss) from operations


5,868



(2
)


5,866



(1,195
)


(134
)


(1,329
)Interest income and other, net of expense


3,924



(12
)


3,912



2,935



463



3,398Income before tax provision (benefit)


9,792



(14
)


9,778



1,740



329



2,069Tax provision (benefit)


2,756



(14
)


2,742



(654
)


(51
)


(705
)Net income

$
7,036


$



$
7,036


$
2,394


$
380


$
2,774Net income per share:Basic

$
0.28


$
0.00


$
0.28


$
0.09


$
0.01


$
0.11Diluted

$
0.28


$
0.00


$
0.28


$
0.09


$
0.01


$
0.11Shares used in computing net income per share:Basic


25,277







25,277



25,584







25,584Diluted


25,556



(11
)


25,545



26,421



(40
)


26,381   38




---



##### Table of Contents



Year Ended January 4, 2004


Year Ended January 5, 2003As Previously








As PreviouslyReported


Adjustments


As Restated


Reported


Adjustments


As RestatedNet revenues

$
149,910


$



$
149,910


$
134,368


$
(272
)

$
134,096Costs and expenses:Cost of revenues


59,734



133



59,867



52,935



76



53,011Research and development


39,602



2,118



41,720



39,349



1,449



40,798Selling, general, and administrative


44,650



1,772



46,422



43,033



1,236



44,269Amortization of acquisition-related intangibles


2,670







2,670



2,724







2,724Total costs and expenses


146,656



4,023



150,679



138,041



2,761



140,802Income (loss) from operations


3,254



(4,023
)


(769
)


(3,673
)


(3,033
)


(6,706
)Interest income and other, net of expense


3,210



(20
)


3,190



5,530



31



5,561Gain (loss) on sales and write-downs of equity investments


91







91



(3,707
)






(3,707
)Income (loss) before tax provision (benefit)


6,555



(4,043
)


2,512



(1,850
)


(3,002
)


(4,852
)Tax provision (benefit)


327



(1,370
)


(1,043
)


(1,925
)


(953
)


(2,878
)Net income (loss)

$
6,228


$
(2,673
)

$
3,555


$
75


$
(2,049
)

$
(1,974
)Net income (loss) per share:Basic

$
0.25


$
(0.11
)

$
0.14


$
0.00


$
(0.08
)

$
(0.08
)Diluted

$
0.24


$
(0.10
)

$
0.14


$
0.00


$
(0.08
)

$
(0.08
)Shares used in computing net income (loss) per share:Basic


24,808







24,808



24,302







24,302Diluted


26,300



(110
)


26,190



25,252



(950
)


24,302   Consolidated
    Balance Sheet Data (in thousands):
  Year Ended January 1, 2006


Year Ended January 2, 2005As Previously








As PreviouslyReported


Adjustments


As Restated


Reported


Adjustments


As RestatedWorking capital(1)

$
176,961


$
530


$
177,491


$
194,472


$
141


$
194,613Total assets


340,389



2,807



343,196



315,290



2,881



318,171Total shareholders equity


272,721



3,336



276,057



264,793



3,023



267,816     (1)
    
    Working capital balance As Previously Reported for the year
    ended January 1, 2006 includes a reclassification of
    $1.6 million of previously reported long-term investments
    to short-term to conform to current presentation.  Year Ended January 4, 2004


Year Ended January 5, 2003As Previously








As PreviouslyReported


Adjustments


As Restated


Reported


Adjustments


As RestatedWorking capital

$
191,078


$
(533
)

$
190,545


$
169,939


$
693


$
170,632Total assets


316,757



2,880



319,637



293,321



1,780



295,101Total shareholders equity


264,433



2,347



266,780



242,314



2,473



244,787  39




---



##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  You should read the following discussion of our financial
    condition and results of operations in conjunction with our
    Consolidated Financial Statements and the related Notes to
    Consolidated Financial Statements, and Financial
    Statement Schedules and Supplementary Financial
    Data included in this Annual Report on
    Form 10-K.
    This Annual Report on
    Form 10-K,
    including the Managements Discussion and Analysis of
    Financial Condition and Results of Operations, contains
    forward-looking statements regarding future events and the
    future results of our Company that are based on current
    expectations, estimates, forecasts, and projections about the
    industry in which we operate and the beliefs and assumptions of
    our management. Words such as expects,
    anticipates, targets, goals,
    projects, intends, plans,
    believes, seeks, estimates,
    variations of such words, and similar expressions are intended
    to identify such forward-looking statements. These
    forward-looking statements are only predictions and are subject
    to risks, uncertainties and assumptions that are difficult to
    predict. Therefore, actual results may differ materially and
    adversely from those expressed in any forward-looking
    statements. Factors that might cause or contribute to such
    differences include, but are not limited to, those discussed in
    this Report under the section entitled Risk Factors
    in Item 1A of Part I and elsewhere, and in other
    reports we file with the Securities and Exchange Commission
    (SEC), specifically the most recent reports on
    Form 10-Q.
    We undertake no obligation to revise or update publicly any
    forward-looking statements for any reason.
  Restatement
    of Previously-Issued Financial Statements
  Form 10-K Form 10-K),
  Form 10-K, Form 10-Q, Form 8-K Form 10-K Form 10-Q Form 8-K
  Stock
    Option Reviews, Investigation, and Informal
    Inquiry
   40




---



##### Table of Contents




    A regular process of making monthly grants of
    new-hire, promotion, merit-adjustment, and patent-award options
    (and, in 2005 and 2006, annual replenishment awards to
    continuing employees known as Evergreen options) on
    the first Friday of each month. We have made a monthly grant of
    options on the first Friday of almost every month since
    September 1994. Primarily because our monthly grant process uses
    stock option grant dates that are fixed in advance, the Special
    Committee concluded that it is a reliable process with respect
    to the risk of stock option backdating (even though there is
    still a risk that the grants may not have been determined with
    finality on the stated grant date, requiring a measurement date
    for accounting purposes that is different than the stated grant
    date). Other factors that support our conclusion that the
    monthly grant process is reliable include the following:  
    The parameters of the new-hire, promotion, merit-adjustment, and
    patent-award options included in monthly grants are pre-approved
    by the Compensation Committee as part of the annual stock option
    budget.
    The events giving rise to the new-hire, promotion,
    merit-adjustment, and patent-award options included in monthly
    grants are subject to separate formal approval processes that
    include the Vice President of Human Resources (who signs the
    grant list included in the monthly grants) and result in signed
    and dated Personnel Action Notices (or PANs)
    evidencing management approval of the stock option awards on or
    before the stated grant date. For this reason, the terms and
    recipients of each monthly grant are known on the
    stated grant date, making the compilation of the grant list for
    each monthly grant from the PANs merely an administrative task.
    As with the new-hire, promotion, merit-adjustment, and
    patent-award options included in other monthly grants, the
    budget for the Evergreen options granted in 2005 and 2006 was
    approved by the Compensation Committee at a meeting near the
    beginning of each fiscal year, and the grants to officers were
    pre-cleared by the Compensation Committee. By explicitly
    pre-clearing the grant of Evergreen options to officers in 2005
    and 2006, the Compensation Committee implicitly authorized the
    grant of Evergreen options to all employees.
    The Company operated as if the terms of the awards included in
    the monthly grants were final prior to completion of the formal
    Compensation Committee approval procedure, indicating that
    formal approval of the monthly grants represented only an
    administrative delay rather than a period during which any of
    the terms of the awards remained under consideration or subject
    to change. For example, we frequently communicated the option
    terms to recipients and entered the option terms and recipients
    into Equity Edge, our stock administration database, prior to
    completion of the formal Compensation Committee approval
    procedure.  
    The Special Committee recommended, and we agree, that the
    completion of the formal Compensation Committee approval
    procedure subsequent to the stated grant date does not in and of
    itself require a correction in the measurement date for a
    monthly grant.
    A process of making non-monthly grants on irregular
    dates primarily for (i) eleven annual replenishment options
    to continuing employees and one additional Evergreen grant in
    2003, (ii) options to continuing employees in connection
    with two repricings (one in 1996 and one in 1998) and two
    exchanges (one in 2001 41




---



##### Table of Contents



and one in 2006), and (iii) options to new employees
    retained in connection with four business combinations or
    acquisitions (one in 1998, one in 1999, and two in 2000). Any
    new-hire, promotion, merit-adjustment,
    and/or
    patent-award options that were pending on the date of these
    non-monthly grants were usually also awarded, and new-hire,
    promotion, merit-adjustment,
    and/or
    patent-award options were sometimes awarded by themselves in
    non-monthly grants. Primarily because our non-monthly grant
    process (which was abandoned in 2004) did not use stock
    option grant dates that were fixed in advance, the Special
    Committee concluded that it was not a reliable process with
    respect to the risk of stock option backdating to the extent
    that hindsight could have been used (and in one instance was
    found to have been used) to select the stated grant dates.
    Accordingly, the Special Committee recommended, and we agree,
    that the completion of the formal Compensation Committee
    approval procedure subsequent to the stated grant date does
    require a correction in the measurement date for a monthly grant.  
    A process of making automatic grants of Director
    options. The automatic grant process uses stock option grant
    dates that are fixed in advance for replenishment options, so
    the Special Committee concluded that it is a reliable process
    with respect to the risk of stock option backdating (even though
    there can be uncertainty about when a new Director joins the
    Board). Almost all stock options granted during the
    Investigation Period were awarded under the monthly and
    non-monthly grant processes, which were approved by means of a
    Unaminous Written Consent (UWC) of the three-member
    Compensation Committee. In light of the risk of stock option
    backdating presented by each granting process, the Special
    Committee directed the Investigation Team to examine all
    non-monthly grants and all grants to Directors and executive
    officers (who are responsible for all of the stock option
    granting processes), but determined that testing of the monthly
    grants on a sample basis was sufficient in combination with
    appropriate analytical procedures. Approximately 85% of the
    options granted during the Investigation Period were examined by
    the Investigation Team. The additional analytical review
    procedures applied to the monthly grant population consisted of
    new-hire, rehire, and Equity Edge record-add date (i.e., the
    date option terms and recipients were entered into our stock
    administration database) analyses. The Special Committee
    concluded, and the Investigation Team agreed, that no additional
    procedures were required since all non-monthly grants and all
    grants to Directors and executive officers were tested directly
    and all monthly grants were either tested directly or analyzed
    using the additional review procedures to provide reasonable
    assurance that the untested population does not contain any
    material errors of the types found in the tested population.  Form 8-K
  
    There was inadequate documentation supporting the measurement
    dates for each of the Companys company-wide annual grants
    during the period
    1996-2001.
    There were a number of other grants during the
    1996-2001
    period for which there was inadequate documentation supporting
    the recorded measurement dates, including some executive grants
    and grants to new employees in connection with corporate
    acquisitions.
    In at least one instance during the
    1996-2001
    period, at a time when he was the Companys Chief Financial
    Officer, Mr. Henry L. Perret participated in the selection
    of a favorable stated grant date with the benefit of hindsight
    and did not properly consider the accounting implications of
    that action.
    Beginning in 2002, documentation relating to annual and other
    grants improved substantially, although some minor errors
    occurred thereafter in the form of corrections or adjustments to
    grant allocations after the recorded measurement dates.
    The Special Committee did not conclude that any current officers
    or employees of the Company engaged in any knowing or
    intentional misconduct with regard to the Companys option
    granting practices.
    The Special Committee has confidence in the integrity of John C.
    East, the Companys Chief Executive Officer, and Jon A.
    Anderson, its Chief Financial Officer. 42




---



##### Table of Contents



2002-2004,
  Stock-Based
    Compensation Adjustments Resulting From Corrected Measurement
    Dates
    Judgment
     43




---



##### Table of Contents



all available relevant information
  General
    Approach to Determining the Revised Measurement
    Dates
    Sensitivity
    Analysis
    Low Point of Range


Actel Actual


High Point of RangeGross


Expense


Gross


Expense


Gross


ExpenseDeferred


(Net of


Deferred


(Net of


Deferred


(Net ofGrant Classification

Compensation


Forfeitures)


Compensation


Forfeitures)


Compensation


Forfeitures)Evergreen Grants

$
4,659,783


$
2,684,744


$
10,132,794


$
6,175,052


$
19,001,910


$
12,671,714Acquisition Grants










50,916



50,916



50,916



50,916Non-Monthly Grants


91,361



30,697



979,298



743,462



1,367,501



1,057,093Director Options


26,213



26,213



97,508



97,508



97,508



97,508Monthly Grants


462,215



385,936



505,015



421,673



624,842



521,726Non-Sensitivity


11,607,096



9,959,521



11,607,095



9,959,521



11,607,095



9,959,521Total

$
16,846,668


$
13,087,111


$
23,372,626


$
17,448,132


$
32,749,772


$
24,358,478    44




---



##### Table of Contents



Other
    Stock-Based Compensation Adjustments
    Payroll
    and Withholding Taxes and Penalties
   45




---



##### Table of Contents



Stock
    Option Grant Modifications in Connection with Employee
    Terminations and Grants to Consultants
      Other
    Matters
   46




---



##### Table of Contents



Adjustment to











OtherStock-Based











DeferredCompensation











Revenue


OtherExpense


Other


Adjustment


Subtotal


Adjustments


Adjustments-Associated


Adjustments to


to Payroll


Stock-Based


Associated


-Other


Adjustment


Totalwith


Stock-Based


Tax


Compensation


with


Income and


to Income


RestatementRemeasured


Compensation


Expense


Expense and


European


Expense


Tax Expense


ExpenseFiscal Year

Grants


Expense


(Benefit)


Payroll Taxes


Distributor


Charges(1)


(Benefit)


(Benefit)1994

$



$
60


$



$
60


$



$



$
(24
)

$
361995


205



27







232











(73
)


1591996


539



42



6



587











(175
)


4121997


823



32



23



878











(262
)


6161998


937



35



18



990











(307
)


6831999


814



12



105



931











(242
)


6892000


2,574



92



347



3,013



(1,528
)






(436
)


1,0492001


5,455



485



88



6,028



(100
)


(17
)


(2,111
)


3,8002002


2,810



(73
)


93



2,830



203



(31
)


(953
)


2,0492003


2,155



1,687



181



4,023







20



(1,370
)


2,673Cumulative through January 4, 2004


16,312



2,399



861



19,572



(1,425
)


(28
)


(5,953
)


12,1662004


950



(604
)


(312
)


34



100



(463
)


(51
)


(380
)2005


186



(431
)


(91
)


(336
)


338



12



(14
)


Total

$
17,448


$
1,364


$
458


$
19,270


$
(987
)

$
(479
)

$
(6,018
)

$
11,786     (1)
    
    Reflects mark to market adjustments relating to
    $1.0 million of awards originally charged to stock-based
    compensation which were subsequently classified as liability
    awards following the termination of employment. 47




---



##### Table of Contents



Results
    of Operations
    Years EndedDec. 31, 2006


Jan. 1, 2006


Jan. 2, 2005Restated


RestatedNet revenues


100.0
%


100.0
%


100.0
%Cost of revenues


39.5



41.0



42.6Gross margin


60.5



59.0



57.4Research and development


29.7



27.0



27.6Selling, general, and administrative


35.5



27.7



29.0Amortization of acquisition-related intangibles


0.0



1.1



1.6Income (loss) from operations


(4.7
)


3.2



(0.8
)Interest income and other, net of expense


3.7



2.2



2.1Income (loss) before tax provision (benefit)


(1.0
)


5.4



1.3Tax provision (benefit)


0.1



1.5



(0.4
)Net income (loss)


(1.1
)%


3.9
%


1.7
%    Net
    Revenues
           48




---



##### Table of Contents



 Gross
    Margin
  Form 10-K
       Research
    and Development (R&D)
       Selling,
    General, and Administrative (SG&A)
   49




---



##### Table of Contents



 Amortization
    of Other Acquisition-Related Intangibles
     Interest
    Income and Other, Net of Expense
     Tax
    Provision (Benefit)
      Financial
    Condition, Liquidity, and Capital Resources
    As of


As ofDec. 31, 2006


Jan. 1, 2006


$ Change


% ChangeRestatedIn thousandsCash and cash equivalents, short and long term investments

$
191,955


$
168,316


$
23,639



14
%Accounts receivable, net

$
22,017


$
25,287


$
(3,270
)


(13
)%Inventories

$
39,203


$
37,372


$
1,831



5
%   50




---



##### Table of Contents



Year EndedDec. 31, 2006


Jan. 1, 2006RestatedIn thousandsNet cash provided by operating activities

$
24,529


$
22,585Net cash used in investing activities

$
(22,066
)

$
(6,149
)Net cash provided by financing activities

$
7,203


$
1,192    Cash,
    Cash Equivalents, and Investments
              Payments Due by Period2012Total


2007


2008


2009


2010


2011


and Later(In thousands)Operating leases

$
21,628


$
3,367


$
3,080


$
3,094


$
2,933


$
2,880


$
6,274    51




---



##### Table of Contents



 Accounts
    Receivable
     Inventories
       Property
    and Equipment
     Goodwill
     52




---



##### Table of Contents



 Other
    Assets
     Current
    Liabilities
     Shareholders
    Equity
    Impact of
    Recently Issued Accounting Standards
      No. 06-2,
   53




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
     Revenues
   54




---



##### Table of Contents



 Inventories
       55




---



##### Table of Contents



 Legal
    Matters and Loss Contingencies
  and/or and/or
   Income
    Taxes
     Stock-Based
    Compensation Expense
   56




---



##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK       57




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  ACTEL
    CORPORATION
  CONSOLIDATED
    BALANCE SHEETS
  Dec. 31, 2006


Jan. 1, 2006Restated(1)(In thousands, exceptshare and per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
33,699


$
24,033Short-term investments


124,022



119,158Accounts receivable, net


22,017



25,287Inventories


39,203



37,372Deferred income taxes


30,389



21,489Prepaid expenses and other current assets


9,492



8,554Total current assets


258,822



235,893Long-term investments


34,234



25,125Property and equipment, net


22,770



23,859Goodwill


30,209



32,142Deferred tax asset


3,055



12,786Other assets, net


19,832



13,391$
368,922


$
343,196LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
15,799


$
14,503Accrued salaries and employee benefits


5,984



5,452Accrued license


9,098



5,714Other accrued liabilities


7,366



4,482Deferred income on shipments to distributors


29,297



28,251Total current liabilities


67,544



58,402Deferred compensation plan liability


4,428



3,667Deferred rent liability


1,367



1,242Long term accrued licenses, net


4,967



3,828Total liabilities


78,306



67,139Commitments and contingenciesShareholders equity:Preferred stock, $.001 par value per share;
    4,500,000 shares authorized; 1,000,000 issued and converted
    to common stock; and none outstanding






Series A Preferred stock, $.001 par value per share;
    500,000 shares authorized; none issued or outstanding






Common Stock, $.001 par value; 55,000,000 shares
    authorized; 26,516,850 and 25,733,490 shares issued and
    outstanding at December 31, 2006 and January 1, 2006,
    respectively


26



26Additional paid-in capital


226,443



210,101Deferred stock compensation






(63
)Retained earnings


64,578



66,733Accumulated other comprehensive loss


(431
)


(740
)Total shareholders equity


290,616



276,057$
368,922


$
343,196     (1)
    
    See Explanatory Note immediately preceding
    Part I, Item 1 and Note 2, Restatements of
    Consolidated Financial Statements, in Notes to
    Consolidated Financial Statements of this
    Form 10-K.   58




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##### Table of Contents



ACTEL
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Years Ended,Dec. 31, 2006


Jan. 1, 2006


Jan. 2, 2005Restated(1)Restated(1)(In thousands, except per share amounts)Net revenues

$
191,499


$
178,947


$
165,402Costs and expenses:Cost of revenues


75,618



73,282



70,404Research and development


56,926



48,242



45,701Selling, general, and administrative


67,959



49,649



47,975Amortization of acquisition-related intangibles


15



1,908



2,651Total costs and expenses


200,518



173,081



166,731Income (loss) from operations


(9,019
)


5,866



(1,329
)Interest income and other, net of expense


7,128



3,912



3,398Income (loss) before tax provision (benefit)


(1,891
)


9,778



2,069Tax provision (benefit)


264



2,742



(705
)Net income (loss)

$
(2,155
)

$
7,036


$
2,774Net income (loss) per share:Basic

$
(0.08
)

$
0.28


$
0.11Diluted

$
(0.08
)

$
0.28


$
0.11Shares used in computing net income (loss) per share:Basic


26,106



25,277



25,584Diluted


26,106



25,545



26,381     (1)
    
    See Explanatory Note immediately preceding
    Part I, Item 1 and Note 2, Restatements of
    Consolidated Financial Statements, in Notes to
    Consolidated Financial Statements of this
    Form 10-K.   59




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##### Table of Contents



ACTEL
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY AND ACCUMULATED OTHER
    COMPREHENSIVE INCOME/(LOSS)
  AccumulatedOther


TotalCommon


Additional


Deferred Stock


Retained


Comprehensive


ShareholdersStock


Paid-in Capital


Compensation


Earnings


Income (Loss)


Equity(In thousands, except share amounts)Balance at January 1, 2004, as previously reported

$
25


$
184,674


$
(44
)

$
79,518


$
260


$
264,433Cumulative effect of restatements






15,780



(1,267
)


(12,165
)






2,348Balance at January 1, 2004  Restated(1)


25



200,454



(1,311
)


67,353



260



266,781Net income














2,774







2,774Other comprehensive income (loss):Change in unrealized loss on investments


















(700
)


(700
)Total comprehensive income














2,774



(700
)


2,074Adjustment for stock-based compensation expense associated with
    remeasured grants






950















950Other adjustments for stock-based compensation expense






(604
)














(604
)Adjustment to income tax benefit






(51
)














(51
)Reversal of unearned stock-based compensation expense due to
    employee terminations, net






(1,012
)


1,012











Issuance of stock option to consultant






74















74Issuance of 682,106 shares of Common Stock under employee
    stock plans


1



8,174















8,175Repurchase of 661,697 shares of Common Stock


(1
)


(4,888
)






(4,738
)






(9,627
)Cashless exercise of options to purchase 54,563 shares of
    Common Stock using 30,563 mature shares of Common Stock






598







(598
)






Amortization of unearned compensation cost










44











44Balance at January 2, 2005  Restated(1)

$
25


$
203,695


$
(255
)

$
64,791


$
(440
)

$
267,816     (1)
    
    See Explanatory Note immediately preceding
    Part I, Item 1 and Note 2, Restatements of
    Consolidated Financial Statements, in Notes to
    Consolidated Financial Statements of this
    Form 10-K.   60




---



##### Table of Contents



ACTEL
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY AND ACCUMULATED OTHER
    COMPREHENSIVE INCOME/(LOSS)
  AccumulatedOther


TotalCommon


Additional


Deferred Stock


Retained


Comprehensive


ShareholdersStock


Paid-in Capital


Compensation


Earnings


Income (Loss)


Equity(In thousands, except share amounts)Balance at January 2, 2005  Restated(1)

$
25


$
203,695


$
(255
)

$
64,791


$
(440
)

$
267,816Net income














7,036







7,036Other comprehensive income (loss):Change in unrealized loss on investments


















(300
)


(300
)Total comprehensive income














7,036



(300
)


6,736Adjustment for stock-based compensation expense associated with
    remeasured grants






186















186Other adjustments for stock-based compensation expense






(431
)














(431
)Reversal of unearned compensation expense due to expiration of
    options






646















646Tax impact of stock-based compensation






(88
)














(88
)Reversal of unearned stock-based compensation expense due to
    employee terminations, net






(192
)


192











Issuance of 951,835 shares of Common Stock under employee
    stock plans


1



10,987















10,988Repurchase of 627,500 shares of Common Stock






(4,702
)






(5,094
)






(9,796
)Balance at January 1, 2006  Restated(1)


26



210,101



(63
)


66,733



(740
)


276,057Net loss














(2,155
)






(2,155
)Other comprehensive income (loss):Change in unrealized loss on investments


















309



309Total comprehensive loss














(2,155
)


309



(1,846
)Stock based compensation






11,256















11,256Reversal of deferred tax assets upon cancellation of options






(2,054
)














(2,054
)Issuance of 906,380 shares of Common Stock under employee
    stock plans






9,437















9,437Repurchase of 123,020 shares of Common Stock






(2,234
)














(2,234
)Reversal of unearned stock-based compensation upon adoption of
    SFAS No. 123R






(63
)


63











Balance at December 31, 2006

$
26


$
226,443


$



$
64,578


$
(431
)

$
290,616     (1)
    
    See Explanatory Note immediately preceding
    Part I, Item 1 and Note 2, Restatements of
    Consolidated Financial Statements, in Notes to
    Consolidated Financial Statements of this
    Form 10-K.   61




---



##### Table of Contents



ACTEL
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended,Dec. 31, 2006


Jan. 1, 2006


Jan. 2, 2005Restated(1)


Restated(1)(In thousands)Operating activities:Net income(loss)

$
(2,155
)

$
7,036


$
2,774Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation and amortization


9,782



11,033



10,496Stock compensation cost recognized


10,990



(233
)


1Changes in operating assets and liabilities:Accounts receivable


3,270



(8,854
)


2,946Inventories


(1,564
)


3,846



(2,554
)Deferred income taxes


(434
)


2,187



(568
)Prepaid expenses and other current assets


(938
)


(2,446
)


(1,366
)License agreements and other long-term assets


(5,627
)


(7,894
)


1Accounts payable, accrued salaries and employee benefits, and
    other accrued liabilities


10,159



11,992



(3,048
)Deferred income on shipments to distributors


1,046



5,918



1,213Net cash provided by operating activities


24,529



22,585



9,895Investing activities:Purchases of property and equipment


(8,678
)


(10,180
)


(10,714
)Purchases of available-for-sale securities


(145,200
)


(72,252
)


(166,356
)Sales and maturities of available-for-sale securities


131,731



75,767



161,657Changes in other long term assets


81



516



(273
)Net cash used in investing activities


(22,066
)


(6,149
)


(15,686
)Financing activities:Issuance of Common Stock under employee stock plans


9,437



10,988



8,175Repurchase of Common Stock


(2,234
)


(9,796
)


(9,627
)Net cash provided by (used in) financing activities


7,203



1,192



(1,452
)Net increase (decrease) in cash and cash equivalents


9,666



17,628



(7,243
)Cash and cash equivalents, beginning of year


24,033



6,405



13,648Cash and cash equivalents, end of year

$
33,699


$
24,033


$
6,405Supplemental disclosures of cash flow information:Cash paid during the year for income taxes

$
510


$
435


$
431Supplemental schedule of non-cash activities:Accrual of long-term license agreements

$
9,557


$
10,678


$
     (1)
    
    See Explanatory Note immediately preceding
    Part I, Item 1 and Note 2, Restatements of
    Consolidated Financial Statements, in Notes to
    Consolidated Financial Statements of this
    Form 10-K.   62




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##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Organization
    and Summary of Significant Accounting Policies    Advertising
    and Promotion Costs
    Basis
    of Presentation
      Cash
    Equivalents and Investments
           63




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Concentration
    of Credit Risk
         64




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  and/or
  Fair
    Value of Financial Instruments
     Accounts
    Payable
     Cash
    and Cash Equivalents
     Insurance
    Contracts
     Investment
    Securities
    Goodwill
    and other Acquisition-Related Intangibles
      Impact
    of Recently Issued Accounting Standards
   65




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      No. 06-2,
       66




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Income
    Taxes
    Inventories
  (first-in,
       67




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Legal
    Matters and Loss Contingencies
  and/or and/or
  Property
    and Equipment
    Equipment

2 to 5 yearsFurniture and fixtures

3 to 5 yearsLeasehold improvements

Shorter of useful life or remaining term of lease     Revenue
    Recognition
   68




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##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Stock-Based
    Compensation
  Adoption
    of SFAS 123(R)
  No. 96-18,
 69




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Determining
    Fair Value
  Valuation and amortization method
  Expected Term
  Expected Volatility 
  Expected Dividend
  Risk-Free Interest Rate
  Estimated Forfeitures
 70




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair Value
  Option Plan SharesExpected term (in years)

4.65Volatility

44.4%Risk-free interest rate

4.5%Estimated forfeitures

3%Weighted-average fair value

$7.22ESPP SharesExpected term (in years)

1.27Volatility

32.0%Risk-free interest rate

4.6%Estimated forfeitures

3%Weighted-average fair value

$4.07     Pro
    Forma Information for Periods Prior to Adoption of
    FAS 123(R)
    Stock Options


Stock Purchase Plan RightsYear Ended December 31,

2005


2004


2005


2004Expected life of options (years)


3.90



4.18



1.29



1.24Expected stock price volatility


51
%


57
%


48
%


56
%Risk-free interest rate


3.7
%


3.0
%


3.7
%


2.3
%       71




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Years EndedJanuary 1,


January 2,2006


2005As Reported


Adjustments


As Restated


As Reported


Adjustments


As Restated(In thousands, except per share amounts)Net income as reported

$
7,036


$



$
7,036


$
2,394


$
380


$
2,774Add back:Stock-based compensation included in reported net income, net of
    tax(1)






(149
)


(149
)


118



211



329Less:Total stock-based employee compensation expense determined under
    the fair value method for all awards, net of tax


(12,401
)


(113
)


(12,514
)


(12,411
)


(396
)


(12,807
)Pro forma net loss

$
(5,365
)

$
(262
)

$
(5,627
)

$
(9,899
)

$
195


$
(9,704
)Net income per share as reported:Basic

$
0.28


$
0.00


$
0.28


$
0.09


$
0.01


$
0.11Diluted

$
0.28


$
0.00


$
0.28


$
0.09


$
0.01


$
0.11Pro forma net income (loss) per share:Basic

$
(0.21
)

$
(0.01
)

$
(0.22
)

$
(0.39
)

$
0.01


$
(0.38
)Diluted

$
(0.21
)

$
(0.01
)

$
(0.22
)

$
(0.39
)

$
0.01


$
(0.38
)     (1)
    
    Adjustments reflect the sum of stock-based compensation expense
    associated with remeasured grants, net of tax, plus other
    stock-based compensation expense, net of tax  Use of
    Estimates
    Reclassifications
   72




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2.
    Restatement
    of Financial Statements  Restatement
    of Previously-Issued Financial Statements
  Form 10-K Form 10-K),
    Stock
    Option Reviews, Investigation, and Informal
    Inquiry
        
    A regular process of making monthly grants of
    new-hire, promotion, merit-adjustment, and patent-award options
    (and, in 2005 and 2006, annual replenishment awards to
    continuing employees known as Evergreen options) on
    the first Friday of each month. We have made a monthly grant of
    options on the first Friday of almost every month since
    September 1994. Primarily because our monthly grant process uses
    stock option grant dates that are fixed in advance, the Special
    Committee concluded that it is a reliable process with respect
    to the risk of stock option backdating (even though there is
    still a risk that the grants may not 73




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  have been determined with finality or that all granting actions
    may not have been complete on the stated grant date, requiring a
    measurement date for accounting purposes that is different than
    the stated grant date). Other factors that support our
    conclusion that the monthly grant process is reliable include
    the following:  
    The parameters of the new-hire, promotion, merit-adjustment, and
    patent-award options included in monthly grants are pre-approved
    by the Compensation Committee as part of the annual stock option
    budget.
    The events giving rise to the new-hire, promotion,
    merit-adjustment, and patent-award options included in monthly
    grants are subject to separate formal approval processes that
    include the Vice President of Human Resources (who signs the
    grant list included in the monthly grants) and result in signed
    and dated Personnel Action Notices (or PANs)
    evidencing management approval of the stock option awards on or
    before the stated grant date. For this reason, the terms and
    recipients of each monthly grant are known on the
    stated grant date, making the compilation of the grant list for
    each monthly grant from the PANs merely an administrative task.
    As with the new-hire, promotion, merit-adjustment, and
    patent-award options included in other monthly grants, the
    budget for the Evergreen options granted in 2005 and 2006 was
    approved by the Compensation Committee at a meeting near the
    beginning of each fiscal year, and the grants to officers were
    pre-cleared by the Compensation Committee. By explicitly
    pre-clearing the grant of Evergreen options to officers in 2005
    and 2006, the Compensation Committee implicitly authorized the
    grant of Evergreen options to all employees.
    The Company operated as if the terms of the awards included in
    the monthly grants were final prior to completion of the formal
    Compensation Committee approval procedure, indicating that
    formal approval of the monthly grants represented only an
    administrative delay rather than a period during which any of
    the terms of the awards remained under consideration or subject
    to change. For example, we frequently communicated the option
    terms to recipients and entered the option terms and recipients
    into Equity Edge, our stock administration database, prior to
    completion of the formal Compensation Committee approval
    procedure.    
    A process of making non-monthly grants on irregular
    dates primarily for (i) eleven annual Evergreen option
    grants to continuing employees and one additional Evergreen
    option grant in 2003, (ii) options to continuing employees
    in connection with two repricings (one in 1996 and one in
    1998) and two exchanges (one in 2001 and one in 2006), and
    (iii) options to new employees retained in connection with
    four business combinations or acquisitions (one in 1998, one in
    1999, and two in 2000). Any new-hire, promotion,
    merit-adjustment,
    and/or
    patent-award options that were pending on the date of these
    non-monthly grants were usually also awarded, and new-hire
    promotion, merit-adjustment,
    and/or
    patent-award options were sometimes awarded by themselves in
    non-monthly grants. Primarily because our non-monthly grant
    process (which was abandoned in 2004) did not use stock
    option grant dates that were fixed in advance, the Special
    Committee concluded that it was not a reliable process with
    respect to the risk of stock option backdating to the extent
    that hindsight could have been used (and in one instance was
    found to have been used) to select the stated grant dates.
    Accordingly, the Special Committee recommended, and we agree,
    that the completion of the formal Compensation Committee
    approval procedure subsequent to the stated grant date does
    require a correction in the measurement date for a monthly grant.
    A process of making automatic grants of Director
    options. The automatic grant process uses stock option grant
    dates that are fixed in advance for replenishment options so the
    Special Committee concluded that it is 74




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  a reliable process with respect to the risk of stock option
    backdating (even though there can be uncertainty about when a
    new Director joins the Board).    Form 8-K
  
    There was inadequate documentation supporting the measurement
    dates for each of the Companys company-wide annual grants
    during the period
    1996-2001.
    There were a number of other grants during the
    1996-2001
    period for which there was inadequate documentation supporting
    the recorded measurement dates, including some executive grants
    and grants to new employees in connection with corporate
    acquisitions.
    In at least one instance during the
    1996-2001
    period, at a time when he was the Companys Chief Financial
    Officer, Mr. Henry L. Perret participated in the selection
    of a favorable stated grant date with the benefit of hindsight
    and did not properly consider the accounting implications of
    that action.
    Beginning in 2002, documentation relating to annual and other
    grants improved substantially, although some minor errors
    occurred thereafter in the form of corrections or adjustments to
    grant allocations after the recorded measurement dates.
    The Special Committee did not conclude that any current officers
    or employees of the Company engaged in any knowing or
    intentional misconduct with regard to the Companys option
    granting practices.
    The Special Committee has confidence in the integrity of John C.
    East, the Companys Chief Executive Officer, and Jon A.
    Anderson, its Chief Financial Officer.     75




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2002-2004,
  General
    Approach to Determining the Revised Measurement
    Dates
    Summary
    of Stock-Based Compensation Adjustments
     76




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Payroll
    and Withholding Taxes and Penalties
        Stock
    Option Grant Modifications in Connection with Employee
    Terminations and Grants to Consultants
     77




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Other
    Matters
         78




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Adjustment to











OtherStock-Based








Subtotal


Deferred


OtherCompensation


Other


Adjustment to


Stock-Based


Revenue


Adjustments-


AdjustmentExpense


Adjustments to


Payroll


Compensation


Adjustments


Other


to Income


TotalAssociated with


Stock-Based


Tax


Expense and


Associated with


Income and


Tax


RestatementRemeasured


Compensation


Expense


Payroll


European


Expense


Expense


ExpenseFiscal Year

Grants


Expense


(Benefit)


Taxes


Distributor


Charges(1)


(Benefit)


(Benefit)1994

$



$
60


$



$
60


$



$



$
(24
)

$
361995


205



27







232











(73
)


1591996


539



42



6



587











(175
)


4121997


823



32



23



878











(262
)


6161998


937



35



18



990











(307
)


6831999


814



12



105



931











(242
)


6892000


2,574



92



347



3,013



(1,528
)






(436
)


1,0492001


5,455



485



88



6,028



(100
)


(17
)


(2,111
)


3,8002002


2,810



(73
)


93



2,830



203



(31
)


(953
)


2,0492003


2,155



1,687



181



4,023







20



(1,370
)


2,673Cumulative through January 4, 2004


16,312



2,399



861



19,572



(1,425
)


(28
)


(5,953
)


12,1662004


950



(604
)


(312
)


34



100



(463
)


(51
)


(380
)2005


186



(431
)


(91
)


(336
)


338



12



(14
)


Total

$
17,448


$
1,364


$
458


$
19,270


$
(987
)

$
(479
)

$
(6,018
)

$
11,786     (1)
    
    Reflects mark to market adjustments relating to
    $1.0 million of awards originally charged to stock-based
    compensation which were subsequently classified as liability
    awards following the termination of employment. 79




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Consolidated
    Statement of Operations
  RestatementAs Previously


AdjustmentsYear Ended January 1, 2006

Reported


(1)(2)


As Restated(In thousands, except per share data)Net revenues

$
179,397


$
(450
)

$
178,947Costs and expensesCost of revenues


73,392



(110
)


73,282Research and development


48,173



69



48,242Selling, general and administrative


50,056



(407
)


49,649Amortization of acquisition-related intangibles


1,908







1,908Total costs and expenses


173,529



(448
)


173,081Income (loss) from operations


5,868



(2
)


5,866Interest income and other, net of expense


3,924



(12
)


3,912Income (loss) before tax provision (benefit)


9,792



(14
)


9,778Tax provision (benefit)


2,756



(14
)


2,742Net income

$
7,036






$
7,036Net income per share:Basic:

$
0.28


$
0.00


$
0.28Diluted:

$
0.28


$
0.00


$
0.28Shares used in computing net income per share:Basic:


25,277







25,277Diluted:


25,556



(11
)


25,545     (1)
    
    Adjustment of $450 to revenue and adjustment of ($112) to cost
    of revenue for European distributor deferred income.(2)
    
    Restatement adjustments of ($245) for stock-based compensation
    expenses, relating to improper measurement dates, other stock
    option modifications, adjustments to other income and expense of
    $12, and related payroll and income tax benefit impacts of ($91)
    and ($14), respectively. 80




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Consolidated
    Statement of Operations
  As


RestatementPreviously


AdjustmentsYear Ended January 2, 2005

Reported


(1)(2)


As Restated(In thousands, except per share data)Net revenues

$
165,536


$
(134
)

$
165,402Costs and expensesCost of revenues


70,451



(47
)


70,404Research and development


45,360



341



45,701Selling, general and administrative


48,269



(294
)


47,975Amortization of acquisition-related intangibles


2,651







2,651Total costs and expenses


166,731







166,731Loss from operations


(1,195
)


(134
)


(1,329
)Interest income and other, net of expense


2,935



463



3,398Income before tax benefit


1,740



329



2,069Tax benefit


(654
)


(51
)


(705
)Net income

$
2,394


$
380


$
2,774Net income per share:Basic:

$
0.09


$
0.01


$
0.11Diluted:

$
0.09


$
0.01


$
0.11Shares used in computing net income per share:Basic:


25,584







25,584Diluted:


26,421



(40
)


26,381     (1)
    
    Adjustment of $134 to revenue and adjustment of ($34) to cost of
    revenue for European distributor deferred income.(2)
    
    Restatement adjustments of $346 for stock-based compensation
    expenses, relating to improper measurement dates, other stock
    option modifications, adjustments to other income and expense of
    ($463) and related payroll and income tax benefit impacts of
    ($312) and ($51), respectively. 81




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Consolidated
    Balance Sheet
  As PreviouslyJanuary 1, 2006

Reported


Adjustments(1)(2)


As Restated(In thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents

$
24,033


$



$
24,033Short-term investments(3)


119,158







119,158Accounts receivable, net(4)


25,287







25,287Inventories


37,372







37,372Deferred income taxes


21,489







21,489Prepaid expenses and other current assets(4)


8,554







8,554Total current assets


235,893







235,893Long-term investments(3)


25,125







25,125Property and equipment, net


23,859







23,859Goodwill


32,142







32,142Deferred tax asset


9,979



2,807



12,786Other assets, net


13,391







13,391$
340,389


$
2,807


$
343,196LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
14,503


$



$
14,503Accrued salaries and employee benefits


4,994



458



5,452Accrued license


5,714







5,714Other accrued liabilities


4,482







4,482Deferred income on shipments to distributors


29,238



(987
)


28,251Total current liabilities


58,931



(529
)


58,402Deferred compensation plan liability


3,667







3,667Deferred rent liability


1,242







1,242Long term accrued licenses, net


3,828







3,828Total liabilities


67,668



(529
)


67,139Commitments and contingenciesShareholders equity:Preferred stock, $.001 par value per share;
    4,500,000 shares authorized; 1,000,000 issued and converted
    to common stock; and none outstanding










Series A Preferred stock, $.001 par value per share;
    500,000 shares authorized; none issued or outstanding










Common Stock, $.001 par value; 55,000,000 shares
    authorized; 25,733,490 shares issued and outstanding at
    January 1, 2006


26







26Additional paid-in capital


194,916



15,185



210,101Deferred compensation






(63
)


(63
)Retained earnings


78,519



(11,786
)


66,733Accumulated other comprehensive loss


(740
)






(740
)Total shareholders equity


272,721



3,336



276,057$
340,389


$
2,807


$
343,196     (1)
    
    Cumulative adjustment of ($987) for European distributor
    deferred income.(2)
    
    Cumulative restatement adjustments for stock-based compensation
    expenses, relating to improper measurement dates, other stock
    option modifications and related payroll and income tax expense
    (benefit) impacts.(3)
    
    The Company has reclassified $1,581 of previously reported
    long-term investments to short-term to conform to the current
    presentation.(4)
    
    The Company has reclassified $1,549 previously reported as
    accounts receivable, net to prepaid expenses and other current
    assets to conform to the current presentation. 82




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Common Stock &Additional Paid in


Deferred Stock





Net Impact toFiscal Year

Capital


Compensation


Retained Earnings


Shareholders Equity1994

$
60


$



$
(36
)

$
241995


2,142



(1,911
)


(159
)


721996


678



(191
)


(412
)


751997


2,048



(1,293
)


(616
)


1391998


(269
)


1,034



(683
)


821999


3,350



(2,762
)


(689
)


(101
)2000


6,011



(3,711
)


(1,049
)


1,2512001


1,011



3,283



(3,800
)


4942002


494



1,992



(2,049
)


4372003


255



2,292



(2,673
)


(126
)Cumulative through January 4, 2004


15,780



(1,267
)


(12,166
)


2,3472004


(716
)


1,012



380



6762005


121



192



0



314Total

$
15,185


$
(63
)

$
(11,786
)

$
3,337  83




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Consolidated
    Statement of Cash Flows
  As


RestatementPreviously


AdjustmentsYear Ended January 1, 2006

Reported


(1)(2)


As Restated(In thousands)Operating activities:Net income

$
7,036


$



$
7,036Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


11,033







11,033Stock compensation cost recognized






(233
)


(233
)Changes in operating assets and liabilities:Accounts receivable(3)


(8,854
)






(8,854
)Inventories


3,846







3,846Deferred income taxes


2,201



(14
)


2,187Prepaid expenses and other current assets(3)(4)


(2,446
)






(2,446
)License agreements and other long-term assets(4)


(7,894
)






(7,894
)Accounts payable, accrued salaries and employee benefits, and
    other accrued liabilities(3)(4)


12,083



(91
)


11,992Deferred income on shipments to distributors


5,580



338



5,918Net cash provided by operating activities


22,585







22,585Investing activities:Purchases of property and equipment


(10,180
)






(10,180
)Purchases of available-for-sale securities


(72,252
)






(72,252
)Sales and maturities of available-for-sale securities


75,767







75,767Changes in other long term assets


516







516Net cash used in investing activities


(6,149
)






(6,149
)Financing activities:Issuance of Common Stock under employee stock plans


10,988







10,988Repurchase of Common Stock


(9,796
)






(9,796
)Net cash provided by financing activities


1,192







1,192Net increase in cash and cash equivalents


17,628







17,628Cash and cash equivalents, beginning of year


6,405







6,405Cash and cash equivalents, end of year

$
24,033


$



$
24,033Supplemental disclosures of cash flow information:Cash paid during the year for income taxes

$
435


$



$
435Supplemental schedule of non-cash activities:Accrual of long-term license agreements

$
10,678


$



$
10,678     (1)
    
    Adjustment of $450 to European distributor deferred revenue and
    adjustment of ($112) to Cost of Revenue for European distributor.(2)
    
    Restatement adjustments for stock-based compensation expenses,
    relating to improper measurement dates, other stock option
    modifications and related payroll and income tax expense
    (benefit) impacts.(3)
    
    The Company has reclassified $296 of previously reported
    accounts receivable to prepaid expenses and other current assets
    and ($1,005) of previously reported accounts receivable to
    accounts payable, accrued salaries and employee benefits, and
    other accrued liabilities. Both reclassifications were made to
    conform to the current presentation.(4)
    
    The Company has reclassified $9,518 of previously reported
    accounts payable, accrued salaries and employee benefits, and
    other accrued liabilities to prepaid expenses and other current
    assets and license and other long-term assets to conform to the
    current presentation. 84




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Consolidated
    Statement of Cash Flows
  As Previously


RestatementYear Ended January 2, 2005

Reported


Adjustments(1)(2)


As Restated(In thousands)Operating activities:Net income

$
2,394


$
380


$
2,774Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


10,496







10,496Stock compensation cost recognized


118



(117
)


1Changes in operating assets and liabilities:Accounts receivable(3)


2,946







2,946Inventories


(2,554
)






(2,554
)Deferred income taxes


(517
)


(51
)


(568
)Prepaid expenses and other current assets(3)(4)


(1,366
)






(1,366
)License agreements and other long-term assets(4)


1







1Accounts payable, accrued salaries and employee benefits, and
    other accrued liabilities


(2,736
)


(312
)


(3,048
)Deferred income on shipments to distributors


1,113



100



1,213Net cash provided by operating activities


9,895







9,895Investing activities:Purchases of property and equipment


(10,714
)






(10,714
)Purchases of available-for-sale securities


(166,356
)






(166,356
)Sales and maturities of available-for-sale securities


161,657







161,657Changes in other long term assets


(273
)






(273
)Net cash used in investing activities


(15,686
)






(15,686
)Financing activities:Issuance of Common Stock under employee stock plans


8,175







8,175Repurchase of Common Stock


(9,627
)






(9,627
)Net cash used in financing activities


(1,452
)






(1,452
)Net decrease in cash and cash equivalents


(7,243
)






(7,243
)Cash and cash equivalents, beginning of year


13,648







13,648Cash and cash equivalents, end of year

$
6,405


$



$
6,405Supplemental disclosures of cash flow information:Cash paid during the year for income taxes

$
431


$



$
431Supplemental schedule of non-cash activities:Accrual of long-term license agreements

$



$



$
     (1)
    
    Adjustment of $134 to European distributor deferred revenue and
    adjustment of ($34) to Cost of Revenue for European distributor.(2)
    
    Restatement adjustments for stock-based compensation expenses,
    relating to improper measurement dates, other stock option
    modifications and related payroll and income tax expense
    (benefit) impacts.(3)
    
    The Company has reclassified $95 of previously reported accounts
    receivable to prepaid expenses and other current assets to
    conform to the current presentation.(4)
    
    The Company has reclassified $1 of previously reported prepaid
    and other current assets to license and other long-term assets
    to conform to the current presentation. 85




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   3.
    Balance
    Sheet Detail  Dec. 31, 2006


Jan. 1, 2006(In thousands)Accounts receivable:Trade accounts receivable

$
22,631


$
26,495Allowance for doubtful accounts


(614
)


(1,208
)$
22,017


$
25,287Inventories:Purchased parts and raw materials

$
7,537


$
6,403Work-in-process


21,336



25,599Finished goods


10,330



5,370$
39,203


$
37,372Property and equipment:Equipment

$
81,294


$
77,547Furniture and fixtures


2,729



2,656Leasehold improvements


3,752



3,46187,775



83,664Accumulated depreciation


(65,005
)


(59,805
)$
22,770


$
23,859     Goodwill:
    Dec. 31, 2006


Jan. 1, 2006(In thousands)Other Assets:Prepaid long-term license fees

$
13,584


$
8,457Deferred compensation plan assets


4,104



3,350Identifiable intangible assets from acquisitions


12,728



12,728Acquired patents


1,842



1,842Other


2,144



1,569Subtotal


34,402



27,946Less accumulated amortization


(14,570
)


(14,555
)$
19,832


$
13,391  86




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    AccumulatedGross Assets


Amortization


Net(In thousands)Acquisition-related developed technology

$
11,454


$
(11,454
)

$
Other acquisition-related intangibles


1,274



(1,274
)


Acquired patents


1,842



(1,842
)


Total identified intangible assets

$
14,570


$
(14,570
)

$
     AccumulatedGross Assets


Amortization


Net(In thousands)Acquisition-related developed technology

$
11,454


$
(11,454
)

$
Other acquisition-related intangibles


1,274



(1,274
)


Acquired patents


1,842



(1,827
)


15Total identified intangible assets

$
14,570


$
(14,555
)

$
15     4.
    Financial
    Instruments    Gross


GrossUnrealized


Unrealized


Estimated FairCost


Gains


Losses


Values(In thousands)December 31, 2006Money market mutual funds

$
337


$



$



$
337Asset backed obligations


27,755



1



(42
)


27,714Corporate bonds


64,788



19



(413
)


64,394U.S. government securities


47,327



11



(234
)


47,104Floating rate notes


10,589



10



(30
)


10,569Municipal obligations


8,527







(52
)


8,475Total available-for-sale securities

$
159,323


$
41


$
(771
)

$
158,593Included in cash and cash equivalents













$
337Included in short term investments














124,022Included in long term investments














34,234Total available-for-sale securities













$
158,593   87




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Gross


GrossUnrealized


Unrealized


Estimated FairCost


Gains


Losses


Values(In thousands)January 1, 2006Commercial paper

$
7,179


$
1


$



$
7,180Money market mutual funds


300











300Corporate bonds


62,788



5



(584
)


62,209U.S. government securities


62,983



10



(541
)


62,452Floating rate notes


7,132



3



(18
)


7,117Municipal obligations


12,613







(109
)


12,504Total available-for-sale securities

$
152,995


$
19


$
(1,252
)

$
151,762Included in cash and cash equivalents













$
7,479Included in short term investments(1)














119,158Included in long term investments(1)














25,125Total available-for-sale securities













$
151,762     (1)
    
    The Company has reclassified $1,581 of previously reported
    long-term investments to short-term to conform to the current
    presentation.    Aggregate


AggregateValue of


Fair ValueUnrealized


ofLoss


InvestmentsUnrealized loss position for less than twelve months

$
(198
)

$
69,269Unrealized loss position for greater than twelve months

$
(573
)

$
63,964         88




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (In thousands)Available-for-sale debt securities:Due in less than one year

$
35,776Due in one to five years


111,800Due in five to ten years


5,581Due after ten years


5,099$
158,256     5.
    Commitments
    and Contingencies   Commitments
        Payments Due by Period2012Total


2007


2008


2009


2010


2011


and Later(In thousands)Operating leases

$
21,628


$
3,367


$
3,080


$
3,094


$
2,933


$
2,880


$
6,274    89




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Contingencies
    6.
    Retirement
    Plan      7.
    Stock
    Based Compensation    Stock-Based
    Compensation Expense
    Cost of revenues

$
506Research and development


5,648Selling, general, and administrative


4,836Total stock-based compensation expense, before income taxes


10,990Tax benefit


1,632Total stock-based compensation expense, net of income taxes

$
9,358    90




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                Stock
    Option Plans
  EITF 96-18
     91




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted-Weighted-


AverageAverage


Remaining


AggregateNumber


Exercise


Contractual


IntrinsicOptions

of Shares


Price


Term


Value(In thousands)Outstanding at January 5, 2004


8,344,940


$
19.55Granted


1,413,042



21.87Exercised


(289,722
)


12.76Cancelled


(488,851
)


23.16Outstanding at January 2, 2005


8,979,409


$
19.94Granted


1,219,365



15.45Exercised


(250,166
)


11.02Cancelled


(302,121
)


21.06Outstanding at January 1, 2006


9,646,487


$
19.57Granted


1,009,927



15.13Exercised


(540,221
)


12.43Exchanged


(4,182,027
)


23.39Forfeitures and cancellations


(269,312
)


18.08Outstanding at December 31, 2006


5,664,854



16.71



6.09


$
14,457Vested and expected to vest at December 31, 2006


5,551,522



16.73



6.03


$
14,138Exercisable at December 31, 2006


3,649,528



17.18



4.80


$
9,146    92




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31, 2006Options Outstanding


Options ExercisableWeightedAverageRemaining


Weighted





WeightedContract


Average





AverageNumber of


Life


Exercise


Number of


ExerciseRange of Exercise Prices

Shares


(In Years)


Price


Shares


Price$0.07  13.06


772,536



2.27


$
12.22



760,398


$
12.2013.61  14.75


573,413



7.36



14.22



312,144



14.3214.77  14.81


591,675



8.79



14.77



37,062



14.8014.88  15.13


187,715



6.55



15.01



103,232



15.0315.15  15.15


666,673



5.77



15.15



546,526



15.1515.25  15.42


9,735



9.60



15.41



187



15.2515.70  15.70


814,632



7.75



15.70



361,222



15.7015.83  17.45


566,661



6.51



16.55



316,642



16.8617.56  20.13


572,399



6.57



18.95



398,431



19.2520.38  54.45


909,415



4.78



24.47



813,684



24.455,664,854



6.09


$
16.71



3,649,528


$
17.18      Employee
    Stock Purchase Plan
       93




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Restricted
    Stock Units (RSUs)
      EITF 00-23. EITF 00-23
    Weighted-AverageNumber of


Grant DateFairShares


ValueNonvested at January 1, 2006






Granted


125,160


$
12.66Granted under exchange program


1,130,965



13.17Vested


(350,870
)


13.17Forfeited


(94,569
)


13.23Nonvested at December 31, 2006


810,686


$
13.09  94




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    Comprehensive
    Income (Loss)    Years EndedDec. 31, 2006


Jan. 1, 2006


Jan. 2, 2005Restated


Restated(In thousands)Net income(loss)

$
(2,155
)

$
7,036


$
2,774Change in gain (loss) on available-for-sale securities, net of
    tax of $207 in 2006, ($210) in 2005, ($468) in 2004


329



(315
)


(702
)Reclassification adjustment for gains or losses included in net
    income (loss), net of tax of ($13) in 2006, $11 in 2005, $1 in
    2004


(20
)


15



2Other comprehensive income (loss), net of tax of $194 in 2006,
    ($199) in 2005, ($467) in 2004


309



(300
)


(700
)Total comprehensive income (loss)

$
(1,846
)

$
6,736


$
2,074     9.
    Tax
    Provision    Years EndedDec. 31,


Jan. 1,


Jan. 2,2006


2006


2005(In thousands)U.S.

$
(2,598
)

$
9,130


$
1,205Foreign


707



648



864Income(loss) before income taxes

$
(1,891
)

$
9,778


$
2,069     Years EndedDec. 31,


Jan. 1,


Jan. 2,2006


2006


2005Restated


Restated(In thousands)Federal  current

$
(158
)

$
150


$
(512
)Federal  deferred


2,149



2,706



912State  current


105



50



10State  deferred


(2,240
)


(519
)


(1,480
)Foreign  current


408



355



365$
264


$
2,742


$
(705
)  95




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Dec. 31,


Jan. 1,


Jan. 2,2006


2006


2005Restated


Restated(In thousands)Provision/(benefit) at federal statutory rate

$
(662
)

$
3,414


$
724Tax exempt interest income






(31
)


(62
)Federal research credits


(260
)


(452
)


(534
)State taxes, net of federal benefit


(1,387
)


(305
)


(779
)Non-deductible stock compensation


2,518



(8
)


(161
)Non-deductible meals and entertainment expenses


91



112



88Settlement of tax contingencies


(386
)






Foreign tax rate differential


297







Other


53



12



19Tax provision (benefit)

$
264


$
2,742


$
(705
)     Dec. 31,


Jan. 1,2006


2006Restated(In thousands)Deferred tax assets:Depreciation

$



$
214Deferred income on shipments to distributors


11,558



10,033Intangible assets


3,186



2,468Inventories


5,458



5,168Net operating losses


6,398



17,239Capitalized research and development expenses


1,938



2,983Research and development tax credit


7,141



5,391Stock options


2,200



2,896Other, net


6,575



5,95044,454



52,342Valuation allowance


(9,920
)


(18,069
)Deferred tax assets

$
34,534


$
34,273Deferred tax liabilities:Depreciation

$
(1,090
)

$
Net deferred tax assets

$
33,444


$
34,273    96




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      10.
    Shareholders
    Equity   Stock
    Repurchase
     Shareholder
    Rights Plan
    11.
    Segment
    Disclosures   97




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years EndedDecember 31, 2006


January 1, 2006


January 2, 2005(In thousands, except percentages)United States

$
97,716



51
%

$
99,159



56
%

$
89,975



55
%Export:Europe


51,401



27
%


49,042



27
%


45,198



27
%Japan


12,427



6
%


10,296



6
%


9,787



6
%Other international


29,955



16
%


20,450



11
%


20,442



12
%$
191,499



100
%

$
178,947



100
%

$
165,402



100
%     Dec. 31,


Jan. 1,2006


2006(In thousands)United States

$
21,849


$
21,629Europe


873



662Japan


13



93Other international


35



1,475$
22,770


$
23,859   12.
    Net
    Income (Loss) Per Share    Years EndedDec. 31,


Jan. 1,


Jan. 2,2006


2006


2005Restated


Restated(In thousands, except per share amounts)Basic:Weighted-average common shares outstanding


26,106



25,277



25,584Net income(loss)

$
(2,155
)

$
7,036


$
2,774Net income(loss) per share

$
(0.08
)

$
0.28


$
0.11Diluted:Weighted-average common shares outstanding


26,106



25,277



25,584Net effect of dilutive stock options based on the treasury stock
    method






268



797Shares used in computing net income per share


26,106



25,545



26,381Net income(loss)

$
(2,155
)

$
7,036


$
2,774Net income(loss) per share

$
(0.08
)

$
0.28


$
0.11  98




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##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        13.
    Legal
    Proceedings  and/or and/or
  14.
    Subsequent
    Events       99




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    15.
    Unaudited
    Quarterly Information    Year
    Ended December 31, 2006
  Fourth Quarter


Third Quarter


Second Quarter


First QuarterRestated(1)


Restated(1)Net revenues

$
48,151


$
49,639


$
47,576


$
46,133Costs and expenses:Cost of revenues


20,583



18,471



18,067



18,496Research and development


14,294



14,475



14,428



13,728Selling, general, and administrative


24,861



14,105



14,202



14,792Amortization of acquisition-related intangibles










7



8Total costs and expenses


59,738



47,051



46,704



47,024Income (loss) from operations


(11,587
)


2,588



872



(891
)Interest income and other, net of expense


2,103



2,021



1,641



1,363Income (loss) before tax (benefit) provision


(9,484
)


4,609



2,513



472Tax (benefit) provision


(1,961
)


1,198



864



162Net income (loss)

$
(7,523
)

$
3,411


$
1,649


$
310Net income (loss) per share:Basic

$
(0.28
)

$
0.13


$
0.06


$
0.01Diluted(2)

$
(0.28
)

$
0.12


$
0.06


$
0.01Shares used in computing net income (loss) per share:Basic


26,515



26,281



25,874



25,753Diluted(2)


26,515



27,393



27,087



26,879     (1)
    
    See Explanatory Note immediately preceding
    Part I, Item 1 and Note 2, Restatements of
    Consolidated Financial Statements, in Notes to
    Consolidated Financial Statements of this
    Form 10-K.(2)
    
    For the fourth quarter of 2006, we incurred a quarterly net loss
    and the inclusion of stock options in the shares used for
    computing diluted earnings per share would have been
    anti-dilutive and reduced the loss per share. Accordingly, all
    Common Stock equivalents (such as stock options) have been
    excluded from the shares used to calculate diluted earnings per
    share for that period. 100




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Year
    Ended January 1, 2006
  Fourth Quarter


Third Quarter


Second Quarter


First QuarterRestated(1)


Restated(1)


Restated(1)


Restated(1)Net revenues

$
43,608


$
46,228


$
45,227


$
43,884Costs and expenses:Cost of revenues


17,860



18,998



18,538



17,886Research and development


12,417



12,196



11,791



11,838Selling, general, and administrative


12,230



12,271



12,557



12,592Amortization of acquisition-related intangibles


258



540



552



558Total costs and expenses


42,765



44,005



43,438



42,874Income from operations


843



2,223



1,789



1,010Interest income and other, net of expense


1,199



1,019



926



768Income before tax provision


2,042



3,242



2,715



1,778Tax provision


573



909



761



499Net income

$
1,469


$
2,333


$
1,954


$
1,279Net income per share:Basic

$
0.06


$
0.09


$
0.08


$
0.05Diluted

$
0.06


$
0.09


$
0.08


$
0.05Shares used in computing net income per share:Basic


25,425



25,388



25,183



25,111Diluted


25,571



25,587



25,387



25,638     (1)
    
    See Explanatory Note immediately preceding
    Part I, Item 1 and Note 2, Restatements of
    Consolidated Financial Statements, in Notes to
    Consolidated Financial Statements of this
    Form 10-K. 101




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##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Statement
    of Operations Data (unaudited, in thousands, except per share
    data):
  For
    the Three Months Ended July 2, 2006
  As Previously


RestatementReported


Adjustments(1)(2)


As RestatedNet revenues

$
47,701


$
(125
)

$
47,576Costs and expenses:Cost of revenues


18,098



(31
)


18,067Research and development


14,417



11



14,428Selling, general, and administrative


14,208



(6
)


14,202Amortization of acquisition-related intangibles


7







7Total costs and expenses


46,730



(26
)


46,704Income from operations


971



(99
)


872Interest income and other, net of expense


1,641







1,641Income before tax provision


2,612



(99
)


2,513Tax provision


1,320



(456
)


864Net income

$
1,292


$
357


$
1,649Net income per share:Basic

$
0.05


$
0.01


$
0.06Diluted

$
0.05


$
0.01


$
0.06Shares used in computing net income per share:Basic


25,874







25,874Diluted


27,087







27,087     (1)
    
    Adjustment of $125 to revenue and adjustment of ($31) to cost of
    revenue for European distributor deferred revenue.(2)
    
    Restatement adjustments for payroll tax expense of $8,
    FAS 123R benefit of ($3) and adjustment of ($456) relating
    to changes in the effective income tax rate. 102




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##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   For
    the Three Months Ended April 2, 2006
  As Previously


RestatementReported


Adjustments (1)(2)


As RestatedNet revenues

$
46,268


$
(135
)

$
46,133Costs and expenses:Cost of revenues


18,550



(54
)


18,496Research and development


13,779



(51
)


13,728Selling, general, and administrative


14,805



(13
)


14,792Amortization of acquisition-related intangibles


8







8Total costs and expenses


47,142



(118
)


47,024Income (loss) from operations


(874
)


(17
)


(891
)Interest income and other, net of expense


1,363







1,363Income before tax provision


489



(17
)


472Tax provision


641



(479
)


162Net income (loss)

$
(152
)

$
462


$
310Net income (loss) per share:Basic

$
(0.01
)

$
0.02


$
0.01Diluted

$
(0.01
)

$
0.02


$
0.01Shares used in computing net income (loss) per share:Basic


25,753







25,753Diluted


25,753



1,126



26,879     (1)
    
    Adjustment of $135 to revenue and adjustment of ($34) to cost of
    revenue for European distributor deferred income.(2)
    
    Restatement adjustments for payroll tax benefit of ($103),
    FAS 123R expense of $19 and adjustment of ($479) relating
    to changes in the effective income tax rate. 103




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##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   For
    the Three Months Ended January 1, 2006
  As Previously


RestatementReported


Adjustments(1)(2)


As RestatedNet revenues

$
43,708


$
(100
)

$
43,608Costs and expenses:Cost of revenues


17,883



(23
)


17,860Research and development


12,390



27



12,417Selling, general, and administrative


12,348



(118
)


12,230Amortization of acquisition-related intangibles


258







258Total costs and expenses


42,879



(114
)


42,765Income from operations


829



14



843Interest income and other, net of expense


1,199







1,199Income before tax provision


2,028



14



2,042Tax provision


874



(301
)


573Net income

$
1,154


$
315


$
1,469Net income per share:Basic

$
0.05


$
0.01


$
0.06Diluted

$
0.05


$
0.01


$
0.06Shares used in computing net income per share:Basic


25,425







25,425Diluted


25,577



(6
)


25,571     (1)
    
    Adjustment of $100 to revenue and adjustment of ($25) to cost of
    revenue for European distributor deferred income.(2)
    
    Restatement adjustments of ($94) for stock-based compensation
    expenses relating to improper measurement dates and other stock
    option modifications, and related payroll tax expense and income
    tax impacts of $5 and ($301), respectively. 104




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   For
    the Three Months Ended October 2, 2005
  As Previously


RestatementReported


Adjustments(1)(2)


As RestatedNet revenues

$
46,378


$
(150
)

$
46,228Costs and expenses:Cost of revenues


19,033



(35
)


18,998Research and development


12,166



30



12,196Selling, general, and administrative


12,204



67



12,271Amortization of acquisition-related intangibles


540







540Total costs and expenses


43,943



62



44,005Income from operations


2,435



(212
)


2,223Interest income and other, net of expense


1,019







1,019Income before tax provision


3,454



(212
)


3,242Tax provision


1,216



(307
)


909Net income

$
2,238


$
95


$
2,333Net income per share:Basic

$
0.09


$
0.00


$
0.09Diluted

$
0.09


$
0.00


$
0.09Shares used in computing net income per share:Basic


25,388







25,388Diluted


25,596



(9
)


25,587     (1)
    
    Adjustment of $150 to revenue and adjustment of ($38) to cost of
    revenue for European distributor deferred income.(2)
    
    Restatement adjustments of $94 for stock-based compensation
    expenses relating to improper measurement dates and other stock
    option modifications, and related payroll tax expense and income
    tax impacts of $6 and ($307), respectively. 105




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   For
    the Three Months Ended July 3, 2005
  As Previously


RestatementReported


Adjustments(1)(2)


As RestatedNet revenues

$
45,327


$
(100
)

$
45,227Costs and expenses:Cost of revenues


18,560



(22
)


18,538Research and development


11,759



32



11,791Selling, general, and administrative


12,667



(110
)


12,557Amortization of acquisition-related intangibles


552







552Total costs and expenses


43,538



(100
)


43,438Income from operations


1,789







1,789Interest income and other, net of expense


926







926Income before tax provision


2,715







2,715Tax provision


508



253



761Net income

$
2,207


$
(253
)

$
1,954Net income per share:Basic

$
0.09


$
(0.01
)

$
0.08Diluted

$
0.09


$
(0.01
)

$
0.08Shares used in computing net income per share:Basic


25,183







25,183Diluted


25,400



(13
)


25,387     (1)
    
    Adjustment of $100 to revenue and adjustment of ($25) to cost of
    revenue for European distributor deferred income.(2)
    
    Restatement adjustments of ($80) for stock-based compensation
    expenses relating to improper measurement dates and other stock
    option modifications, and related payroll tax expense and income
    tax impacts of $5 and $253, respectively. 106




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   For
    the Three Months Ended April 3, 2005
  As Previously


RestatementReported


Adjustments(1)(2)


As RestatedNet revenues

$
43,984


$
(100
)

$
43,884Costs and expenses:Cost of revenues


17,916



(30
)


17,886Research and development


11,858



(20
)


11,838Selling, general, and administrative


12,837



(245
)


12,592Amortization of acquisition-related intangibles


558







558Total costs and expenses


43,169



(295
)


42,874Income from operations


815



195



1,010Interest income and other, net of expense


780



(12
)


768Income before tax provision


1,595



183



1,778Tax provision


158



341



499Net income

$
1,437


$
(158
)

$
1,279Net income per share:Basic

$
0.06


$
(0.01
)

$
0.05Diluted

$
0.06


$
(0.01
)

$
0.05Shares used in computing net income per share:Basic


25,111







25,111Diluted


25,652



(14
)


25,638     (1)
    
    Adjustment of $100 to revenue and adjustment of ($25) to cost of
    revenue for European distributor deferred income.(2)
    
    Restatement adjustments of ($165) for stock-based compensation
    expenses relating to improper measurement dates and other stock
    option modifications, and related payroll tax expense and income
    tax impacts of ($105) and $341, respectively. 107




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Condensed
    Consolidated Balance Sheets
  As Previously


RestatementJuly 2, 2006

Reported


Adjustments(1)(2)


As Restated(Unaudited, in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
40,441


$



$
40,441Short-term investments(4)


105,455







105,455Accounts receivable, net(3)


21,375







21,375Inventories


36,466







36,466Deferred income taxes


21,489







21,489Prepaid expenses and other current assets(3)


8,313







8,313Total current assets


233,539







233,539Long-term investments(4)


40,224







40,224Property and equipment, net


23,616







23,616Goodwill


32,142







32,142Deferred tax asset


10,283



2,807



13,090Other assets, net


16,781







16,781$
356,585


$
2,807


$
359,392LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
14,063


$



$
14,063Accrued salaries and employee benefits


6,714



362



7,076Other accrued liabilities


14,692



(935
)


13,757Deferred income on shipments to distributors


30,351



(792
)


29,559Total current liabilities


65,820



(1,365
)


64,455Deferred compensation plan liability


4,085







4,085Deferred rent liability


1,307







1,307Long term accrued license agreements, net


2,755







2,755Total liabilities


73,967



(1,365
)


72,602Commitments and contingenciesShareholders equity:Common stock


26







26Additional paid-in capital


203,967



15,139



219,106Retained earnings


79,659



(10,967
)


68,692Accumulated other comprehensive loss


(1,034
)






(1,034
)Total shareholders equity


282,618



4,172



286,790$
356,585


$
2,807


$
359,392     (1)
    
    Cumulative adjustment of ($792) for European distributor
    deferred income.(2)
    
    Cumulative restatement adjustments for stock-based compensation
    expenses, relating to improper measurement dates, other stock
    option modifications and related payroll and income tax expense
    (benefit) impacts.(3)
    
    The Company reclassified $1,876 of previously reported accounts
    receivable to prepaid and other current assets to conform to the
    current presentation.(4)
    
    The Company reclassified $1,963 of previously reported
    short-term investments to long-term to conform to the current
    presentation.  108




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  As Previously


RestatementApril 2, 2006

Reported


Adjustments(1)(2)


As Restated(Unaudited, in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
22,047


$



$
22,047Short-term investments(4)


107,676







107,676Accounts receivable, net(3)


26,746







26,746Inventories


36,988







36,988Deferred income taxes


21,489







21,489Prepaid expenses and other current assets(3)


8,402







8,402Total current assets


223,348







223,348Long-term investments(4)


41,808







41,808Property and equipment, net


23,432







23,432Goodwill


32,142







32,142Deferred tax asset


10,177



2,807



12,984Other assets, net


15,873







15,873$
346,780


$
2,807


$
349,587LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
13,136


$



$
13,136Accrued salaries and employee benefits


5,626



354



5,980Accrued license agreements


5,871







5,871Other accrued liabilities


4,924



(479
)


4,445Deferred income on shipments to distributors


32,501



(886
)


31,615Total current liabilities


62,058



(1,011
)


61,047Deferred compensation plan liability


4,083







4,083Deferred rent liability


1,278







1,278Long term accrued license agreements, net


3,385







3,385Total liabilities


70,804



(1,011
)


69,793Commitments and contingenciesShareholders equity:Common stock


26







26Additional paid-in capital


198,469



15,143



213,612Retained earnings


78,367



(11,325
)


67,042Accumulated other comprehensive loss


(886
)






(886
)Total shareholders equity


275,976



3,818



279,794$
346,780


$
2,807


$
349,587     (1)
    
    Cumulative adjustment of ($886) for European distributor
    deferred income.(2)
    
    Cumulative restatement adjustments for stock-based compensation
    expenses, relating to improper measurement dates, other stock
    option modifications and related payroll and income tax expense
    (benefit) impacts.(3)
    
    The Company reclassified $1,680 of previously reported accounts
    receivable to prepaid and other current assets to conform to the
    current presentation.(4)
    
    The Company reclassified $215 of previously reported long-term
    investments to short-term to conform to the current presentation. 109




---



##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   As Previously


RestatementJanuary 1, 2006

Reported


Adjustments(1)(2)


As Restated(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
24,033


$



$
24,033Short-term investments(3)


119,158







119,158Accounts receivable, net(4)


25,287







25,287Inventories


37,372







37,372Deferred income taxes


21,489







21,489Prepaid expenses and other current assets(4)


8,554







8,554Total current assets


235,893







235,893Long-term investments(3)


25,125







25,125Property and equipment, net


23,859







23,859Goodwill


32,142







32,142Deferred tax asset


9,979



2,807



12,786Other assets, net


13,391







13,391$
340,389


$
2,807


$
343,196LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
14,503


$



$
14,503Accrued salaries and employee benefits


4,994



458



5,452Accrued license agreements


5,714







5,714Other accrued liabilities


4,482







4,482Deferred income on shipments to distributors


29,238



(987
)


28,251Total current liabilities


58,931



(529
)


58,402Deferred compensation plan liability


3,667







3,667Deferred rent liability


1,242







1,242Long term accrued license agreements, net


3,828







3,828Total liabilities


67,668



(529
)


67,139Commitments and contingenciesShareholders equity:Common stock


26







26Additional paid-in capital


194,916



15,185



210,101Deferred compensation






(63
)


(63
)Retained earnings


78,519



(11,786
)


66,733Accumulated other comprehensive loss


(740
)






(740
)Total shareholders equity


272,721



3,336



276,057$
340,389


$
2,807


$
343,196     (1)
    
    Cumulative adjustment of ($987) for European distributor
    deferred income.(2)
    
    Cumulative restatement adjustments for stock-based compensation
    expenses, relating to improper measurement dates, other stock
    option modifications and related payroll and income tax expense
    (benefit) impacts.(3)
    
    The Company has reclassified $1,581 of previously reported
    long-term investments to short-term to conform to the current
    presentation.(4)
    
    The Company reclassified $1,549 of previously reported accounts
    receivable to prepaid expenses and other current assets to
    conform to current presentation.  110




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##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  As Previously


RestatementOctober 2, 2005

Reported


Adjustments(1)(2)


As Restated(Unaudited, in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
17,288


$



$
17,288Short-term investments


136,349







136,349Accounts receivable, net(3)


28,762







28,762Inventories


40,148







40,148Deferred income taxes


22,124







22,124Prepaid expenses and other current assets(3)


6,305







6,305Total current assets


250,976







250,976Property and equipment, net


23,670







23,670Goodwill


32,142







32,142Deferred tax asset






2,881



2,881Other assets, net


25,939







25,939$
332,727


$
2,881


$
335,608LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
11,202


$



$
11,202Accrued salaries and employee benefits


5,834



453



6,287Other accrued liabilities


5,753



933



6,686Deferred income on shipments to distributors


29,332



(1,062
)


28,270Total current liabilities


52,121



324



52,445Deferred compensation plan liability


3,545







3,545Deferred rent liability


1,194







1,194Long term accrued license agreements, net


7,890







7,890Total liabilities


64,750



324



65,074Commitments and contingenciesShareholders equity:Common stock


25







25Additional paid-in capital


191,306



14,762



206,068Deferred compensation






(105
)


(105
)Retained earnings


77,365



(12,100
)


65,265Accumulated other comprehensive loss


(719
)






(719
)Total shareholders equity


267,977



2,557



270,534$
332,727


$
2,881


$
335,608     (1)
    
    Cumulative adjustment of ($1,062) for European distributor
    deferred income.(2)
    
    Cumulative restatement adjustments for stock-based compensation
    expenses, relating to improper measurement dates, other stock
    option modifications and related payroll and income tax expense
    (benefit) impacts.(3)
    
    The Company reclassified $1,412 of previously reported accounts
    receivable to prepaid and other current assets to conform to the
    current presentation.  111




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##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  As Previously


RestatementJuly 3, 2005

Reported


Adjustments(1)(2)


As Restated(Unaudited, in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
11,599


$



$
11,599Short-term investments


140,458







140,458Accounts receivable, net(3)


16,901







16,901Inventories


42,205







42,205Deferred income taxes


22,124







22,124Prepaid expenses and other current assets(3)


6,133







6,133Total current assets


239,420







239,420Property and equipment, net


24,392







24,392Goodwill


32,142







32,142Deferred tax asset






2,881



2,881Other assets, net


17,816







17,816$
313,770


$
2,881


$
316,651LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
11,387


$



$
11,387Accrued salaries and employee benefits


3,739



448



4,187Other accrued liabilities


3,852



1,240



5,092Deferred income on shipments to distributors


24,721



(1,175
)


23,546Total current liabilities


43,699



513



44,212Deferred compensation plan liability


3,343







3,343Deferred rent liability


1,146







1,146Total liabilities


48,188



513



48,701Commitments and contingenciesShareholders equity:Common stock


25







25Additional paid-in capital


191,016



14,713



205,729Deferred compensation






(149
)


(149
)Retained earnings


75,127



(12,196
)


62,931Accumulated other comprehensive loss


(586
)






(586
)Total shareholders equity


265,582



2,368



267,950$
313,770


$
2,881


$
316,651     (1)
    
    Cumulative adjustment of ($1,175) for European distributor
    deferred income.(2)
    
    Cumulative restatement adjustments for stock-based compensation
    expenses, relating to improper measurement dates, other stock
    option modifications and related payroll and income tax expense
    (benefit) impacts.(3)
    
    The Company reclassified $1,334 of previously reported accounts
    receivable to prepaid and other current assets to conform to the
    current presentation. 112




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##### Table of Contents



ACTEL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   As Previously


RestatementApril 3, 2005

Reported


Adjustments(1)(2)


As Restated(Unaudited, in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
7,449


$



$
7,449Short-term investments


138,877







138,877Accounts receivable, net(3)


20,718







20,718Inventories


44,844







44,844Deferred income taxes


22,124







22,124Prepaid expenses and other current assets(3)


6,577







6,577Total current assets


240,589







240,589Property and equipment, net


22,575







22,575Goodwill


32,142







32,142Deferred tax asset






2,881



2,881Other assets, net


18,595







18,595$
313,901


$
2,881


$
316,782LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
11,120


$



$
11,120Accrued salaries and employee benefits


4,797



443



5,240Other accrued liabilities


3,668



987



4,655Deferred income on shipments to distributors


29,244



(1,250
)


27,994Total current liabilities


48,829



180



49,009Deferred compensation plan liability


3,238







3,238Deferred rent liability


1,097







1,097Total liabilities


53,164



180



53,344Commitments and contingenciesShareholders equity:Common stock


25







25Additional paid-in capital


188,605



14,842



203,447Deferred compensation






(198
)


(198
)Retained earnings


72,920



(11,943
)


60,977Accumulated other comprehensive loss


(813
)






(813
)Total shareholders equity


260,737



2,701



263,438$
313,901


$
2,881


$
316,782     (1)
    
    Cumulative adjustment of ($1,250) for European distributor
    deferred income.(2)
    
    Cumulative restatement adjustments for stock-based compensation
    expenses, relating to improper measurement dates, other stock
    option modifications and related payroll and income tax expense
    (benefit) impacts.(3)
    
    The Company reclassified $1,342 of previously reported accounts
    receivable to prepaid and other current assets to conform to the
    current presentation. 113




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##### Table of Contents



REPORT OF
    ERNST & YOUNG LLP
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
          Share-Based Payment
    /s/ Ernst & Young LLP
    114




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##### Table of Contents



REPORT OF
    ERNST & YOUNG LLP
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
              /s/ Ernst & Young LLP
    115




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##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE   
  ITEM 9A.
    CONTROLS
    AND PROCEDURES  Stock
    Option Reviews, Investigation, and Restatement
    1996-2001; 1996-2001
  2002-2004,
  Remedial
    Measures Instituted by the Company
    
    Our procedures for granting stock options was enhanced to
    facilitate the public reporting of stock option grants to
    executive officers and Directors within two business days after
    the grant date, in accordance with Section 403 of the
    Sarbanes-Oxley Act of 2002. Prior to the Sarbanes-Oxley Act,
    insiders were required to file Forms 4 to report
    transactions in our securities no later than 10 days after
    the end of the month in which the transaction occurred.
    The procedure for approving new-hire, promotion,
    merit-adjustment, and patent-award options by the Unanimous
    Written Consent (UWC) of the Compensation Committee
    for grant on the first Friday of each month was revised to
    include more rigorous cut-off procedures, preparation of the
    grant list by the Finance 116




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##### Table of Contents




    By policy, our Company-wide annual grants were also granted on
    the first Friday of a month, making them subject to the
    procedures described above.
    All grants are communicated to employees within a relatively
    short period after the grant date.
    Our General Counsel or his designee drafts all UWCs and reviews
    the minutes of all Compensation Committee meetings.      Evaluation
    of Effectiveness of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e) Form 10-K.
  Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
    Managements
    Report on Internal Control over Financial Reporting
   117




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##### Table of Contents



Inherent
    Limitations of Internal Controls
    
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of our assets;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that our receipts and expenditures are being made only in
    accordance with authorizations of our management and
    directors; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use, or disposition of
    our assets that could have a material effect on the financial
    statements.    Changes
    in Internal Control over Financial Reporting
   
  ITEM 9B.
    OTHER
    INFORMATION   118




---



##### Table of Contents



PART III
 
  ITEM 10.
    DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE
    GOVERNANCE  Directors
    Name of Director

Age

Principal Occupation

Director SinceJohn C. East


62


President and Chief Executive Officer, Actel Corporation


1988James R. Fiebiger


67


Business Consultant


2000Jacob S. Jacobsson


55


President and Chief Executive Officer, Blaze, Inc.


1998J. Daniel McCranie


64


Business Consultant


2004Robert G. Spencer


63


Principal, The Spencer Group


1989              119




---



##### Table of Contents



Executive
    Officers
    Name(1)

Age

PositionJohn C. East


62


President and Chief Executive OfficerEsmat Z. Hamdy


57


Senior Vice President of Technology and OperationsJay A. Legenhausen


41


Senior Vice President of Worldwide SalesFares N. Mubarak


46


Senior Vice President of Engineering & MarketingJon A. Anderson


49


Vice President of Finance and Chief Financial OfficerAnthony Farinaro


45


Vice President & General Manager of Design ServicesBarbara L. McArthur


57


Vice President of Human ResourcesDavid L. Van De Hey


52


Vice President & General Counsel and Secretary                120




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##### Table of Contents



Section 16(a)
    Beneficial Ownership Reporting Compliance
    Code of
    Ethics
  http://www.actel.com. http://www.actel.com (http://media.corporate-ir.net/media 
  Form 10-K.
  Audit
    Committee
    
 ITEM 11.
    EXECUTIVE
    COMPENSATION  Compensation
    Discussion and Analysis
  Overview
   121




---



##### Table of Contents



Objectives
    and Principles of Our Executive Compensation
                Elements
    of Executive Compensation
       122




---



##### Table of Contents



Base Salary.
      Incentive Bonus Plan.
     123




---



##### Table of Contents



Stock and Option Awards.
     124




---



##### Table of Contents



Change-in-Control Arrangements.
  and/or
 125




---



##### Table of Contents



Non-Qualified Deferred Compensation.
  Employee Stock Purchase Plan. 24-month
  Compensation
    Committee Report
  Form 10-K.
        Compensation
    Committee Interlocks and Insider Participation
   126




---



##### Table of Contents



Summary
    Compensation Table
    SUMMARY
    COMPENSATION TABLE
  Change inPensionNon-

Value andEquity

NonqualifiedIncentive

DeferredStock

Option

Plan

Compensation

All OtherName and



Salary

Bonus

Awards

Awards

Compensation

Earnings

Compensation

TotalPrincipal Position

Year

($)

($)

($)(1)

($)(1)

($)(2)

($)

($)

($)John C. East


2006


$
422,000






$



$
1,002,493


$
117,415










$
1,541,908President and Chief Executive Officer (Principal Executive
    Officer)Esmat Z. Hamdy


2006


$
306,800






$
361,243


$
327,187


$
56,908










$
1,052,138Senior Vice President, Technology and OperationsDennis G. Kish(3)


2006


$
296,357






$
486,779


$
363,573


$
55,365










$
1,202,074Former Senior Vice President, Sales and MarketingFares N. Mubarak


2006


$
298,480






$
374,365


$
356,241


$
55,365










$
1,084,451Senior Vice President, EngineeringJon A. Anderson


2006


$
258,250






$
304,566


$
324,162


$
51,381










$
938,359Vice President, Finance and Chief Financial Officer (Principal
    Financial Officer)     (1)
    
    The amounts shown do not reflect compensation actually received.
    Instead, the amounts shown are the compensation costs recognized
    by Actel in 2006 for stock option and stock awards granted
    during or prior to 2006 as determined pursuant to
    SFAS 123(R). The assumptions used to calculate the value of
    the stock option and stock awards are set forth in Note 1
    to Consolidated Financial Statements included in this Annual
    Report on Form
    10-K.(2)
    
    Represents amounts paid pursuant to our 2006 Key Employee
    Incentive Plan for performance during 2006. These amounts were
    determined on January 19, 2007, and paid on
    February 15, 2007.(3)
    
    Mr. Kish resigned effective August 1, 2007. 127




---



##### Table of Contents



Grants of
    Plan-Based Awards
   GRANTS OF
    PLAN-BASED AWARDS
  All Other


All Other





GrantStock


Option


Exercise or


DateAwards


Awards:


Base


FairNumber of


Number of


Price of


Value ofEstimated Possible Payouts Under Non-Equity Incentive Plan
    Awards(2)


Estimated Possible Payouts Under  Equity Incentive Plan
    Awards


Shares or


Securities


Option


Stock &Grant


Threshold


Target


Maximum


Threshold


Target


Maximum


Stock


Underlying


Awards


OptionsName

Date


($)


($)


($)


($)


($)


($)


Units (#)


Options (#)


($/Sh)


Awards ($)John C. East


3/03/2006































130,000



14.77



946,67548,614



82,796



199,076Esmat Z. Hamdy


01/03/2006
(1)


























4,54701/03/2006
(1)


























10,85801/03/2006
(1)


























14,28701/03/2006
(1)


























15,00001/03/2006
(1)


























12,85803/03/2006































33,750



14.77



245,77203/03/2006



























4,500











66,46523,562



40,129



96,487Dennis G. Kish


1/03/2006
(1)


























18,57201/03/2006
(1)


























4,54701/03/2006
(1)


























11,42901/03/2006
(1)


























14,28701/03/2006
(1)


























15,00001/03/2006
(1)


























12,85803/03/2006































33,750



14.77



245,77203/03/2006































25,000



14.77



171,84003/03/2006



























4,500











66,46522,923



39,041



93,871Fares N. Mubarak


01/03/2006
(1)


























1,43001/03/2006
(1)


























4,54701/03/2006
(1)


























11,42901/03/2006
(1)


























14,28701/03/2006
(1)


























15,00001/03/2006
(1)


























12,85803/03/2006































33,750



14.77



245,77203/03/2006































20,000



14.77



137,69503/03/2006



























4,50022,923



39,041



93,871



























66,465Jon A. Anderson


01/03/2006
(1)


























3,54701/03/2006
(1)


























19,57301/03/2006
(1)


























12,50001/03/2006
(1)


























12,85803/03/2006































33,750



14.77



245,77203/03/2006



























4,500











66,46521,274



36,232



87,115     (1)
    
    Represents restricted stock units issued pursuant to our Option
    Exchange Offer.(2)
    
    These columns show the range of potential payouts under the 2006
    Key Employee Incentive Plan as described under the caption
    Elements of Executive Compensation  Incentive
    Bonus Plan in the Compensation Discussion and Analysis. 128




---



##### Table of Contents



Additional
    Material Information Regarding Compensation Tables
    1986
    Equity Incentive Plan
        Administration.
  Stock Options.
  Exercise of Option.
  Exercise Price.
  Termination of Relationship.
  Disability.
 129




---



##### Table of Contents



Death.
  Term and Termination of Option.
  Restricted StockUnits.
  Nontransferability of Awards.
  Stock Subject to Equity Plan.
  Adjustments; Dissolutions; Mergers and Asset
    Sales.
      Amendment and Termination.
 130




---



##### Table of Contents



Option
    Exchange Offer
     131




---



##### Table of Contents



Outstanding
    Equity Awards at Fiscal Year-End
    OUTSTANDING
    EQUITY AWARDS AT FISCAL YEAR-END
  Option Awards


Stock AwardsEquityEquity


IncentiveIncentive


PlanPlan


Awards:Equity














Awards:


Market orIncentive














Number of


PayoutPlan











Market


Unearned


Value ofAwards:








Number of


Value


Shares,


UnearnedNumber of


Number of


Number of








Shares or


of Shares or


Units or


Shares,Securities


Securities


Securities








Units


Units of


Other


Units orUnderlying


Underlying


Underlying








of Stock


Stock


Rights


Other RightsUnexercised


Unexercised


Unexercised


Option


Option


That


That


That


ThatOptions (#)


Options (#)


Unearned


Exercise


Expiration


Have not


Have not


Have not


Have notName

Exercisable


Unexercisable


Options (#)


Price ($)


Date


Vested (#)


Vested ($)


Vested (#)


Vested ($)John C. East


6,106
(1)










16.38



07/03/200723,385
(1)










16.38



07/03/20073,636
(2)










27.50



02/18/201071,364
(2)










27.50



02/18/201054,616
(3)










20.56



12/21/201010,384
(3)










20.56



12/21/20104,566
(4)










21.90



07/31/2011120,000
(5)










19.73



03/13/201286,937
(6)


20,063







15.15



01/28/201373,125
(7)


56,875







24.76



03/02/201461,250
(13)


78,750







15.70



01/07/2015130,000
(8)






14.77



03/03/2016120,434
(4)










21.90



07/31/2011Esmat Z. Hamdy






















7,500
(9)


136,200868
(9)


15,7634,562
(9)


82,8466,119
(9)


111,1211,025
(9)


18,61412,858
(10)


233,5014,099
(11)


74,438448
(11)


8,1364,500
(12)


81,72032,500
(6)


7,500







15.15



01/28/201319,687
(13)


25,313







15.70



01/07/201533,750
(8)






14.77



03/03/2016Dennis G. Kish






















7,500
(9)


136,2002,170
(9)


39,4074,313
(9)


78,3242,804
(9)


50,921913
(9)


16,5804,802
(9)


87,2046,119
(9)


111,1211,025
(9)


18,61412,858
(10)


233,5014,262
(11)


77,398285
(12)


5,1764,500
(12)


81,72032,500
(6)


7,500







15.15



01/28/201319,687
(13)


25,313







15.70



01/07/201533,750
(9)






14.77



03/03/20164,687
(14)


20,313







14.77



03/03/2016 132




---



##### Table of Contents



Option Awards


Stock AwardsEquityEquity


IncentiveIncentive


PlanPlan


Awards:Equity














Awards:


Market orIncentive














Number of


PayoutPlan











Market


Unearned


Value ofAwards:








Number of


Value


Shares,


UnearnedNumber of


Number of


Number of








Shares or


of Shares or


Units or


Shares,Securities


Securities


Securities








Units


Units of


Other


Units orUnderlying


Underlying


Underlying








of Stock


Stock


Rights


Other RightsUnexercised


Unexercised


Unexercised


Option


Option


That


That


That


ThatOptions (#)


Options (#)


Unearned


Exercise


Expiration


Have not


Have not


Have not


Have notName

Exercisable


Unexercisable


Options (#)


Price ($)


Date


Vested (#)


Vested ($)


Vested (#)


Vested ($)Fares N. Mubarak






















7,500
(9)


136,200913
(9)


16,5804,802
(9)


87,2046,119
(9)


111,1211,025
(9)


18,614583
(9)


10,587132
(9)


2,39712,858
(10)


233,5014,099
(11)


74,438448
(11)


8,1364,500
(12)


81,7205,679
(1)










16.38



07/03/20072,321
(1)










16.38



07/03/200720,625
(15)










13.06



03/01/20091,875
(15)










13.06



03/01/20093,750
(16)










13.56



08/06/200916,250
(16)










13.56



08/06/200932,500
(6)


7,500







15.15



01/28/201319,687
(13)


25,313







15.70



01/07/201533,750
(8)






14.77



03/03/20163,750
(14)


16,250







14.77



03/03/2016Jon A. Anderson






















6,250
(9)


113,500683
(9)


12,4038,017
(9)


145,589532
(9)


9,661555
(9)


10,07912,858
(10)


233,5011,480
(11)


26,877248
(11)


4,504940
(11)


17,070879
(11)


15,9634,500
(12)


81,72032,500
(6)


7,500







15.15



01/28/201319,687
(13)


25,313







15.70



01/07/201533,750
(12)






14.77



03/03/2016     (1)
    
    Option grant date is July 3, 1997; 100% of the shares
    subject to the grant vested on August 1, 2001.(2)
    
    Option grant date is February 18, 2000; 50% of the shares
    subject to the grant vested 2 years from that date and
    6.25% vest at the end of each three month period thereafter
    until February 18, 2004.(3)
    
    Option grant date is December 21, 2000; 6.25% of the shares
    subject to the grant vested at the end of each three month
    period after that date until December 21, 2004.(4)
    
    Option grant date is July 31, 2001; 50% of the shares
    subject to the grant vested on August 1, 2001, and 6.25%
    vested at the end of each three month period thereafter until
    August 1, 2005.(5)
    
    Option grant date is March 14, 2002; 50% of the shares
    subject to the grant vested on August 1, 2004, and 6.25%
    vested at the end of each three month period thereafter until
    August 1, 2006.(6)
    
    Option grant date is January 28, 2003; 50% of the shares
    subject to the grant vested on August 1, 2005, and 6.25%
    vest at the end of each three month period thereafter until
    August 1, 2007.(7)
    
    Option grant date is March 2, 2004; 50% of the shares
    subject to the grant vested on August 1, 2006, and 6.25%
    vest at the end of each three month period thereafter until
    August 1, 2008. 133




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##### Table of Contents



(8)
    
    Option grant date is March 3, 2006; 50% of the shares
    subject to the grant vest two years from that date and 6.25%
    vest at the end of each three month period thereafter until
    March 3, 2010.(9)
    
    Restricted Stock Unit grant date is January 3, 2006; 50% of
    the shares subject to the award vested on December 31,
    2006, and 12.5% vest quarterly thereafter until
    December 31, 2007.(10)
    
    Restricted Stock Unit grant date is January 3, 2006; 50% of
    the shares subject to the award vest on March 31, 2007, and
    10% vest quarterly thereafter until June 30, 2008.(11)
    
    Restricted Stock Unit grant date is January 3, 2006; 50% of
    the shares subject to the award vest on September 30, 2007,
    and 7.143% vest quarterly thereafter until June 30, 2009.(12)
    
    Restricted Stock Unit grant date is March 3, 2006; 50% of
    the shares subject to the award vest on March 31, 2008, and
    25% vest annually thereafter until March 31, 2010.(13)
    
    Option grant date is January 7, 2005; 6.25% of the shares
    subject to the grant vest at the end of each three month period
    after that date until January 7, 2009.(14)
    
    Option grant date is March 3, 2006; 6.25% of the shares
    subject to this grant vest on May 1, 2006, and 6.25% vest
    at the end of each three month period thereafter until
    February 1, 2010.(15)
    
    Option grant date is March 1, 1999; 6.25% of the shares
    subject to the grant vest at the end of each three month period
    after that date until March 1, 2003.(16)
    
    Option grant date is August 6, 1999; 50% of the shares
    subject to the grant vested on August 1, 2001, and 6.25%
    vest every month thereafter until August 1, 2003. 134




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##### Table of Contents



Option
    Exercises and Stock Vested
    OPTION
    EXERCISES AND STOCK VESTED AT FISCAL YEAR END
  Option Awards


Stock AwardsNumber of Shares





Number of SharesAcquired on


Value Realized on


Acquired on Vesting


Value Realized onName of Executive Officer

Exercise (#)


Exercise ($)


(#)


Vesting ($)John C. East














Esmat Z. Handy










20,071



364,489Dennis G. Kish










29,642



538,299Fares N. Mubarak










21,072



382,668Jon A. Anderson










16,036



291,214   Nonqualified
    Deferred Compensation
    NONQUALIFIED
    DEFERRED COMPENSATION
  ExecutiveContributions


Registrant


Aggregate


Aggregate


Aggregatein Last


Contributions


Earnings in


Withdrawals/


Balance at LastName

FY ($)


in Last FY ($)


Last FY ($)(3)


Distributions ($)


FYE ($)John D. East(1)


118,198(1
)






103,853







898,4910(2
)






110,517







369,610Esmat Z. Hamdy


20,110(1
)






20,524







162,631Dennis G. Kish


0(1
)






4,694







35,100Fares N. Mubarak


33,281(1
)






31,418







294,102Jon A. Anderson


0(1
)














     (1)
    
    Represents cash contributions.(2)
    
    Represents contributions of stock.(3)
    
    Amounts in this column are not included in the Summary
    Compensation Table.    Potential
    Payments upon Termination or Change of Control
     135




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##### Table of Contents



and/or
      Employee


ManagementRetention


ContinuityName

Benefit

Plan(1)


Agreement(2)John C. East

Retention payment

$
352,073



Acceleration of stock options





$
1,001,940Acceleration of restricted stock units






Esmat Z. Hamdy

Retention payment

$
327,406



Acceleration of stock options





$
199,257Acceleration of restricted stock units





$
762,339Dennis G. Kish

Retention payment

$
410,195



Acceleration of stock options





$
268,119Acceleration of restricted stock units





$
936,166Fares N. Mubarak

Retention payment

$
333,523



Acceleration of stock options





$
199,257Acceleration of restricted stock units





$
780,499Jon A. Anderson

Retention payment

$
296,597



Acceleration of stock options





$
199,257Acceleration of restricted stock units





$
670,867     (1)
    
    Retention payments are earned by employees who remain employed
    for six months following a change in control or upon earlier
    termination of employment other than for Cause (see Note
    (3) below) and who hold unvested stock options and/or
    restricted stock units on the date of the change of control. The
    amounts shown are equal to one third of the sum of (X) the
    aggregate fair market value of any unvested restricted stock
    units held on December 29, 2006, and (Y) the
    difference between $18.35, the closing price of a share of Actel
    common stock on December 28, 2006 (one day prior to assumed
    change of control date pursuant to the plan), and the option
    exercise price for each unvested stock option held on
    December 29, 2006, multiplied by the number of shares
    subject to such options.(2)
    
    If an executive officer dies or his employment is involuntarily
    terminated (see Note (4) below), other than for Cause (see
    Note (5) below) following a change in control, his stock
    options and restricted stock units accelerate and become fully
    vested. The amounts shown for acceleration of stock options are
    based upon the difference between $18.16, the closing price of a
    share of Actel common stock on December 29, 2006, and the
    option exercise price for all unvested stock options held on
    such date, multiplied by the number of shares subject to such
    options. The Named Executive Officer may exercise such options
    for a period of twelve months following 136




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##### Table of Contents



termination but in no event later than the expiration of the
    term of the option. The amounts shown for restricted stock units
    are based upon the product obtained by multiplying the number of
    restricted stock units vesting by $18.16, the closing price of a
    share of Actel common stock on December 29, 2006.(3)
    
    Cause is defined under the Employee Retention Plan
    as (i) any act of personal dishonesty taken by the
    participant in connection with his or her 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 and substantial violation 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 or her duties.(4)
    
    Involuntary Termination is defined under the
    Management Continuity Agreement as (i) without the
    employees express written consent, a significant reduction
    in the employees duties, authority or responsibilities,
    relative to the employees duties, authority or
    responsibilities as in effect immediately prior to such
    reduction, or the assignment to employee of such reduced duties,
    authority or responsibilities; (ii) without the
    employees express written consent, a substantial
    reduction, without good business reasons, in the facilities and
    perquisites (including office space and location) available to
    the employee immediately prior to such reduction; (iii) a
    reduction by the Company in the base salary of the employee as
    in effect immediately prior to such reduction; (iv) a
    material reduction by the Company in the kind or level of
    employee benefits, including bonuses, to which the employee was
    entitled immediately prior to such reduction with the result
    that the employees overall benefits package is
    significantly reduced; (v) the relocation of the employee
    to a facility or a location more than thirty (30) miles
    from the employees then present location, without the
    employees express written consent; (vi) any purported
    termination of the employee by the Company which is not effected
    for Disability or for Cause, or any purported termination for
    which the grounds relied upon are not valid; (vii) the
    failure of the Company to obtain the assumption of this
    agreement by any successors contemplated in a change of control;
    or (viii) any act or set of facts or circumstances which
    would, under California case law or statute, constitute a
    constructive termination of the employee.(5)
    
    Cause is defined under the Management Continuity
    Agreements as (i) any act of personal dishonesty taken by
    the employee in connection with his responsibilities as an
    employee and intended to result in substantial personal
    enrichment of the employee, (ii) the conviction of a
    felony, (iii) a willful act by the employee which
    constitutes gross misconduct and which is injurious to the
    Company, and (iv) following delivery to the employee of a
    written demand for performance from the Company which describes
    the basis for the Companys belief that the employee has
    not substantially performed his duties, continued violations by
    the employee of the employees obligations to the Company
    which are demonstrably willful and deliberate on the
    employees part.. 137




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##### Table of Contents



Compensation
    of Directors
    DIRECTOR
    COMPENSATION
  Change inPensionNon-Equity


Value andIncentive


NonqualifiedFees Earned








Plan


Deferred


All Otheror Paid in


Stock


Option


Compensa-


Compensation


Compensa-Name

Cash ($)


Awards ($)


Awards(1)($)


tion ($)


Earnings ($)


tion ($)


Total ($)James R. Fiebiger(2)


79,000























79,000Jacob S. Jacobsson(2)


46,000























46,000J. Daniel McCranie(2)


94,000























94,000Robert G. Spencer(2)


38,000























38,000Henry L. Perret(1)(2)


55,000























55,000     (1)
    
    Mr. Perret resigned from the Board of Directors on
    January 30, 2007.(2)
    
    The aggregate number of shares subject to stock awards and stock
    options outstanding at December, 2006 for each director is as
    follows:  Aggregate Number of Stock Awards


Aggregate Number of Option AwardsName

Outstanding as Dec. 31, 2006 (#)


Outstanding as Dec. 31, 2006 (#)(1)James R. Fiebiger






55,000Jacob S. Jacobsson






65,000J. Daniel McCranie






37,500Robert G. Spencer






60,000Henry L. Perret






45,000     (1)
    
    As discussed below, no options were granted to our Directors in
    2006 because we did not hold an Annual Meeting. On the date of
    our Combined
    2006-2007
    Annual Meeting, each Director then in office will receive an
    option to purchase 12,500 shares of our Common Stock
    relating to the Directors service during 2006 (which will
    be fully vested) and an additional option to purchase
    12,500 shares of our Common Stock relating to the
    Directors service during 2007.  Explanation
    of Director Compensation
     138




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##### Table of Contents



2006-2007
 
  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Security
    Ownership of Certain Beneficial Owners and Management
            (3) Amount and Nature of(1) Title of Class

(2) Name and Address of Beneficial Owner

Beneficial Ownership


(4) Percent of Class5% or Greater Shareholders:Common Stock

Charles Jobson


2,106,923
(1)


8.0
%(2)One International Place, Suite 2401
    Boston, MA 02110Common Stock

Dimensional Fund Advisors LP


2,195,786
(3)


8.3
%(2)1299 Ocean Avenue
    Santa Monica, CA 90401Current Directors and Named Executive Officers:Common Stock

John C. East


788,154
(4)


2.8
%(5)Common Stock

Esmat Z. Hamdy


168,245
(4)



* (5)Common Stock

Fares N. Mubarak


185,987
(4)



* (5)Common Stock

Jon A. Anderson


118,318
(4)



* (5)Common Stock

James R. Fiebiger


55,000
(4)



* (5)Common Stock

Jacob S. Jacobsson


65,000
(4)



* (5)Common Stock

J. Daniel McCranie


37,500
(4)



* (5)Common Stock

Robert G. Spencer


67,666
(4)



* (5)Common Stock

All current directors and executive officers as a group
    (12 persons)


1,827,969
(4)


6.5
%(5)     *
    
    Less than 1%. 139




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##### Table of Contents



(1)
    
    As reported by the beneficial owner as of December 31,
    2006, in a Schedule 13G (Amendment No. 1) filed
    with the Securities and Exchange Commission (SEC) on
    February 12, 2007. Shares reported for the reporting
    person, who is a United States citizen, include
    2,066,623 shares beneficially owned by Delta Partners LLC,
    a Delaware Limited Liability Company and investment adviser,
    Tetra Capital Partners, LP, Tetra Offshore Fund, Ltd., and a
    second separate account. In addition, shares reported for the
    reporting person include shares that could be obtained from the
    exercise of option contracts.(2)
    
    Calculated as a percentage of shares of Common Stock outstanding
    as of December 31, 2006.(3)
    
    As reported by the beneficial owner as of December 31,
    2006, in a Schedule 13G (Amendment No. 1) filed
    with the SEC on February 9, 2007. The reporting person, an
    investment advisor registered under Section 203 of the
    Investment Advisors Act of 1940, furnishes investment advice to
    four investment companies registered under the Investment
    Company Act of 1940, and serves as investment manager to certain
    other commingled group trusts and separate accounts. These
    investment companies, trusts, and accounts are the
    Funds. In its role as investment advisor or manager,
    the reporting person possesses investment and/or voting power
    over the securities of the Company that are owned by the Funds,
    and may be deemed to be the beneficial owner of the shares held
    by the Funds. However, all securities reported in this schedule
    are owned by the Funds. The reporting person disclaims
    beneficial ownership of such securities and any admission that
    the reporting person or any of its affiliates is the beneficial
    owner of any such securities for any purpose other than
    reporting purposes under Section 13(d) of the Securities
    Exchange Act of 1934.(4)
    
    Includes shares issuable pursuant to stock options that are
    exercisable within 60 days after December 31, 2007, as
    follows: for Mr. East, 710,750, shares; for Mr. Hamdy,
    73,500 shares; for Mr. Mubarak, 127,500 shares;
    for Mr. Anderson, 73,750 shares; for
    Mr. Fiebiger, 55,000 shares; for Mr. Jacobsson,
    65,000 shares; for Mr. McCranie, 37,500 shares;
    and for Mr. Spencer, 55,000 shares; and for all
    Directors and officers as a group, 1,470,841 shares.(5)
    
    Calculated as a percentage of shares of Common Stock outstanding
    as of December 31, 2007. For each named person, Common
    Stock that the person has the right to acquire either currently
    or within 60 days after December 31, 2007, including
    through the exercise of an option, is included in the shares
    beneficially owned by that person and in the total number of
    shares of Common Stock outstanding; however, such Common Stock
    is not deemed outstanding for the purpose of computing the
    percentage owned by any other person.  Equity
    Compensation Plan Information
    CNumber of SecuritiesRemaining AvailableA


B


for Future IssuanceNumber of Securities to


Weighted Average


under Equitybe Issued upon Exercise


Exercise Price of


Compensation Plansof Outstanding Options,


Outstanding Options,


(Excluding SecuritiesPlan Category

Warrants and Rights


Warrants and Rights


Reflected in Column A)Equity Compensation Plans Approved by Security Holders


6,068,609


$
16.56
(4)


2,759,464
(1)Equity Compensation Plans Not Approved by Security Holders


406,931


$
18.60



2,844,604
(2)Total


6,475,540
(3)

$
16.71
(3)(4)


5,604,068     (1)
    
    Consists of 1,902,160 shares available for issuance under
    our Amended and Restated 1986 Equity Incentive Plan (Equity
    Plan), 362,500 shares available for issuance under our
    2003 Director Stock Option Plan, and 494,804 shares
    available for issuance under our Amended and Restated 1993
    Employee Stock Purchase Plan.(2)
    
    Consists of options granted and available for issuance under our
    1995 Employee and Consultant Stock Plan. 140




---



##### Table of Contents



(3)
    
    Includes information for options assumed in connection with
    mergers and acquisitions. As of December 31, 2006, a total
    of 15,778 shares of Common Stock with a weighted-average
    exercise price of $26.36 were issuable upon exercise of such
    outstanding options.(4)
    
    Weighted average price calculation excludes 810,686 restricted
    stock unit awards, which have no exercise price. 
  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE  Review,
    Approval or Ratification of Transactions with Related
    Persons
        Director
    Independence
   
  ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    Fiscal Year 2005


Fiscal Year 2006Audit Fees(1)

$
1,225,500


$
3,397,222
(2)Audit-Related Fees

$



$
Tax Fees(3)

$
100,000


$
128,290All Other Fees

$



$
     (1)
    
    Represents the aggregate fees for professional services rendered
    for the audit of our annual financial statements, the review of
    the financial statements included in our quarterly reports
    during such period, the review and consent procedures for our
    Form S-8
    Registration Statements during such period, and Section 404
    attestation.(2)
    
    Includes $2,344,227 in fees for services performed in connection
    with the stock option investigation, reviews, and related
    restatement of financial statements.(3)
    
    Consists of tax-related services performed in connection with
    the preparation of state and federal tax returns as well as
    other tax consulting matters, including an analysis regarding
    the realizability of net operating losses, international tax
    planning (including the
    set-up of a
    sales office in China), and assistance with an IRS audit.
    Includes $100,000 in fees for services performed in connection
    with the preparation of state and federal tax returns. 141




---



##### Table of Contents



Policy on
    Audit Committee Pre-Approval of Audit and the Permissible
    Non-Audit Services of Independent Registered Public Accounting
    Firm
  case-by-case
 
  PART IV
 
  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES  Form 10-K:
  Financial Statements. Form 10-K:
  Consolidated balance sheets at December 31, 2006 and
    January 1, 2006Consolidated statements of operations for each of the three
    years in the period ended December 31, 2006Consolidated statements of shareholders equity and other
    comprehensive income/(loss) for each of the three years in the
    period ended December 31, 2006Consolidated statements of cash flows for each of the three
    years in the period ended December 31, 2006Notes to consolidated financial statements   Financial Statement Schedule. 10-K.
  Exhibits. 10-K.
  Exhibits. Form 10-K:
  ExhibitNumber

Description3
.1

Restated Articles of Incorporation, as amended (filed as
    Exhibit 3.1 to the Registrants Annual Report on
    Form 10-K
    (File
    No. 0-21970)
    for the fiscal year ended January 5, 2003).3
.2

Restated Bylaws (filed as Exhibit 3.1 to the
    Registrants Annual Report on
    Form 10-K
    (File
    No. 0-21970)
    for the fiscal year ended January 5, 2003).3
.3

Certificate of Amendment to Certificate of Determination of
    Rights, Preferences and Privileges of Series A
    Participating Preferred Stock of Actel Corporation (filed as
    Exhibit 3.3 to the Registrants Registration Statement
    on
    Form 8-A
    (File
    No. 000-2197),
    filed on October 24, 2003).4
.1

Preferred Stock Rights Agreement, dated as of October 17,
    2003, between the Registrant and Wells Fargo Bank, MN N.A.,
    including the Certificate of Amendment of Certificate to
    Determination, the form of Rights Certificate and the Summary of
    Rights attached thereto as Exhibits A, B, and C,
    respectively (filed as Exhibit 4.1 to the Registrants
    Registration Statement on
    Form 8-A
    (File
    No. 000-2197),
    filed on October 24, 2003). 142




---



##### Table of Contents



ExhibitNumber

Description10
.1(1)

Form of Indemnification Agreement for directors and officers
    (filed as Exhibit 10.1 to the Registrants
    Registration Statement on
    Form S-1
    (File
    No. 33-64704),
    declared effective on August 2, 1993).10
.2 (1)

Amended and Restated 1986 Equity Incentive Plan (filed as
    Exhibit 10.1 to the Registrants Quarterly Report on
    Form 10-Q
    (File
    No. 0-21970)
    for the fiscal quarter ended July 3, 2005).10
.3(1)

2003 Director Stock Option Plan (filed as Exhibit 4.4
    to the Registrants Registration Statement on
    Form S-8
    (File
    No. 333-112215),
    declared effective on January 26, 2004).10
.4(1)

Amended and Restated 1993 Employee Stock Purchase Plan (filed as
    Exhibit 10.2 to the Registrants Annual Report on
    Form 10-K
    (File
    No. 0-21970)
    for the fiscal quarter ended July 3, 2005).10
.5

1995 Employee and Consultant Stock Plan, as amended and restated
    (filed as Exhibit 10.2 to the Registrants Quarterly
    Report on
    Form 10-Q
    (File
    No. 0-21970)
    for the fiscal quarter ended July 7, 2002).10
.6(1)

Amended and Restated Employee Retention Plan (filed as
    Exhibit 10.6 to the Registrants Current Report on
    Form 8-K
    (File
    No. 0-21970)
    field with the Securities and Exchange Commission on
    December 5, 2005).10
.7(1)

Deferred Compensation Plan, as amended and restated (filed as
    Exhibit 10.7 to the Registrants Annual Report on Form 10-K
    (File No. 0-21970) for the fiscal year ended December 31, 2000).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

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

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 fiscal quarter ended July 2, 1995).10
.12

Asset Purchase Agreement dated as of March 16, 2007, between the
    Registrant and BTR, Inc., Advantage Logic Inc., Benjamin Ting,
    Peter Pani, and Richard Abraham.10
.13

Patent Cross License Agreement dated August 25, 1998, between
    the Registrant 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
.14

Development Agreement by and between the Registrant and Infineon
    Technologies AG effective as of June 6, 2002 (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 5, 2003).10
.15

Supply Agreement by and between the Registrant and Infineon
    Technologies AG effective as of June 6, 2002 (filed as Exhibit
    10.20 to the Registrants Annual Report on Form 10-K (File
    No. 0-21970) for the fiscal year ended January 5, 2003).10
.16

Office Lease Agreement for the Registrants facilities in
    Mountain View, California, dated February 27, 2003 (filed as
    Exhibit 10.21 to the Registrants Annual Report on Form
    10-K (File No. 0-21970) for the fiscal year ended January 5,
    2003).14


Code of Ethics for Principal Executive and Senior Financial
    Officers (filed as Exhibit 14 to the Registrants Annual
    Report on Form 10-K (File No. 0-21970) for the fiscal year ended
    January 4, 2004).21


Subsidiaries of Registrant.23


Consent of Ernst & Young LLP, Independent Registered Public
    Accounting Firm.24


Power of Attorney.31
.1

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
    Officer.31
.2

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial
    Officer.32


Section 1350 Certifications.  143




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##### Table of Contents



(1)
    
    This Exhibit is a management contract or compensatory plan or
    arrangement.  Financial Statement Schedule. Form 10-K
  Schedule

Description


PageII


Valuation and qualifying accounts



146    144




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##### Table of Contents



SIGNATURES
      By:
    /s/  John
    C. East       Form 10-K
  Signature

Title

Date/s/  John
    C. East(John
    C. East)

President and Chief Executive Officer (Principal Executive
    Officer) and Director

January 21, 2008/s/  Jon
    A. Anderson(Jon
    A. Anderson)

Vice President of Finance and Chief Financial Officer (Principal
    Financial and Accounting Officer)

January 21, 2008/s/  James
    R. Fiebiger(James
    R. Fiebiger)

Director

January 21, 2008/s/  Jacob
    S. Jacobsson(Jacob
    S. Jacobsson)

Director

January 21, 2008/s/  J.
    Daniel McCranie(J.
    Daniel McCranie)

Director

January 21, 2008/s/  Robert
    G. Spencer(Robert
    G. Spencer)

Director

January 21, 2008  145




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##### Table of Contents



SCHEDULE II
  ACTEL
    CORPORATION
  Valuation
    and Qualifying Accounts
  Balance at








Balance atBeginning








End ofof Period


Provisions


Write-Offs


Period(In thousands)Allowance for doubtful accounts:Year ended January 2, 2005


1,078



28



227



879Year ended January 1, 2006


879



329







1,208Year ended December 31, 2006


1,208



(594
)






614  146




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##### Table of Contents



Exhibit Index
  ExhibitNumber.

Description3
.1

Restated Articles of Incorporation, as amended (filed as
    Exhibit 3.1 to the Registrants Annual Report on
    Form 10-K
    (File
    No. 0-21970)
    for the fiscal year ended January 5, 2003).3
.2

Restated Bylaws (filed as Exhibit 3.1 to the
    Registrants Annual Report on
    Form 10-K
    (File
    No. 0-21970)
    for the fiscal year ended January 5, 2003).3
.3

Certificate of Amendment to Certificate of Determination of
    Rights, Preferences and Privileges of Series A
    Participating Preferred Stock of Actel Corporation (filed as
    Exhibit 3.3 to the Registrants Registration Statement
    on
    Form 8-A
    (File
    No. 000-2197),
    filed on October 24, 2003).4
.1

Preferred Stock Rights Agreement, dated as of October 17,
    2003, between the Registrant and Wells Fargo Bank, MN N.A.,
    including the Certificate of Amendment of Certificate to
    Determination, the form of Rights Certificate and the Summary of
    Rights attached thereto as Exhibits A, B, and C,
    respectively (filed as Exhibit 4.1 to the Registrants
    Registration Statement on
    Form 8-A
    (File
    No. 000-2197),
    filed on October 24, 2003).10
.1(1)

Form of Indemnification Agreement for directors and officers
    (filed as Exhibit 10.1 to the Registrants
    Registration Statement on
    Form S-1
    (File
    No. 33-64704),
    declared effective on August 2, 1993).10
.2(1)

Amended and Restated 1986 Equity Incentive Plan (filed as
    Exhibit 10.1 to the Registrants Quarterly Report on
    Form 10-Q
    (File
    No. 0-21970)
    for the fiscal quarter ended July 3, 2005).10
.3(1)

2003 Director Stock Option Plan (filed as Exhibit 4.4
    to the Registrants Registration Statement on
    Form S-8
    (File
    No. 333-112215),
    declared effective on January 26, 2004).10
.4(1)

Amended and Restated 1993 Employee Stock Purchase Plan (filed as
    Exhibit 10.2 to the Registrants Annual Report on
    Form 10-K
    (File
    No. 0-21970)
    for the fiscal quarter ended July 3, 2005).10
.5

1995 Employee and Consultant Stock Plan, as amended and restated
    (filed as Exhibit 10.2 to the Registrants Quarterly
    Report on
    Form 10-Q
    (File
    No. 0-21970)
    for the fiscal quarter ended July 7, 2002).10
.6(1)

Amended and Restated Employee Retention Plan (filed as
    Exhibit 10.6 to the Registrants Current Report on
    Form 8-K
    (File
    No. 0-21970)
    field with the Securities and Exchange Commission on
    December 5, 2005).10
.7(1)

Deferred Compensation Plan, as amended and restated (filed as
    Exhibit 10.7 to the Registrants Annual Report on
    Form 10-K
    (File
    No. 0-21970)
    for the fiscal year ended December 31, 2000).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

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

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 fiscal quarter ended July 2, 1995).10
.12

Asset Purchase Agreement dated as of March 16, 2007,
    between the Registrant and BTR, Inc., Advantage Logic Inc.,
    Benjamin Ting, Peter Pani, and Richard Abraham.10
.13

Patent Cross License Agreement dated August 25, 1998,
    between the Registrant 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
.14

Development Agreement by and between the Registrant and Infineon
    Technologies AG effective as of June 6, 2002 (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 5, 2003).




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##### Table of Contents



ExhibitNumber.

Description10
.15

Supply Agreement by and between the Registrant and Infineon
    Technologies AG effective as of June 6, 2002 (filed as
    Exhibit 10.20 to the Registrants Annual Report on
    Form 10-K
    (File
    No. 0-21970)
    for the fiscal year ended January 5, 2003).10
.16

Office Lease Agreement for the Registrants facilities in
    Mountain View, California, dated February 27, 2003 (filed
    as Exhibit 10.21 to the Registrants Annual Report on
    Form 10-K
    (File
    No. 0-21970)
    for the fiscal year ended January 5, 2003).14


Code of Ethics for Principal Executive and Senior Financial
    Officers (filed as Exhibit 14 to the Registrants
    Annual Report on
    Form 10-K
    (File
    No. 0-21970)
    for the fiscal year ended January 4, 2004).21


Subsidiaries of Registrant.23


Consent of Ernst & Young LLP, Independent Regisered
    Public Accounting Firm.24


Power of Attorney.31
.1

Rule 13a-14(a)/15d-14(a)
    Certification of Chief Executive Officer.31
.2

Rule 13a-14(a)/15d-14(a)
    Certification of Chief Financial Officer.32


Section 1350 Certifications.     (1)
    
    This Exhibit is a management contract or compensatory plan or
    arrangement.