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

<TABLE>
<CAPTION>

                                                                          Years Ended December 31,
                                                        -----------------------------------------------------------
                                                           1999         1998        1997        1996         1995
                                                        ---------    ---------   ---------   ---------    ---------
<S>                                                     <C>          <C>         <C>         <C>          <C>
Statements of Operations Data:
Net revenues ........................................   $ 171,661    $ 154,427   $ 155,858   $ 148,779    $ 108,516
Costs and expenses:
   Cost of revenues .................................      66,387       61,642      64,244      64,420       52,517
   Research and development .........................      32,338       31,220      26,465      23,934       20,560
   Selling, general, and administrative .............      45,903       40,558      40,317      37,518       26,706
   Amortization of goodwill and other
     acquisition-related intangibles ................       1,185          877         877         658        2,226
   Restructuring charge (1) .........................       1,963         --          --          --           --
   Purchased in-process research and
     development (2) ................................        --           --          --        16,600          600
                                                        ---------    ---------   ---------   ---------    ---------
         Total costs and expenses ...................     149,417      134,605     131,903     126,749      117,041
                                                        ---------    ---------   ---------   ---------    ---------
Income (loss) from operations .......................      22,244       19,822      23,955      22,030       (8,525)
Interest expense ....................................        --           --          --           (13)         (93)
Interest income and other, net ......................       3,642        2,380       1,842       1,068          846
                                                        ---------    ---------   ---------   ---------    ---------
Income (loss) before tax provision (benefit)
   and equity in net loss of equity method
   investee .........................................      22,202       25,797      23,085      (7,772)      25,886
Equity in net (loss) of equity method
   investee .........................................        (193)        --          --          --           --
Tax provision (benefit) .............................       8,055        7,215       9,029       8,147       (6,640)
                                                        ---------    ---------   ---------   ---------    ---------
Net income (loss) ...................................   $  17,638    $  14,987   $  16,768   $  14,938    $  (1,132)
                                                        =========    =========   =========   =========    =========
Net income (loss) per share:
   Basic (3) ........................................   $    0.81    $    0.71   $    0.82   $    0.84    $   (0.07)
                                                        =========    =========   =========   =========    =========
   Diluted (3) ......................................   $    0.76    $    0.68   $    0.76   $    0.70    $   (0.07)
                                                        =========    =========   =========   =========    =========
Shares used in computing net income (loss) per share:
   Basic ............................................      21,664       21,251      20,370      17,826       17,367
                                                        =========    =========   =========   =========    =========
   Diluted ..........................................      23,058       21,921      21,968      21,485       17,367
                                                        =========    =========   =========   =========    =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                December 31,
                                                        ----------------------------------------------------------
                                                           1999         1998        1997        1996         1995
                                                        ---------    ---------   ---------   ---------    ---------
<S>                                                     <C>          <C>         <C>         <C>          <C>
Consolidated Balance Sheet Data:
Working capital ................                        $ 108,818    $  85,858   $  76,279   $  55,397    $  39,867
Total assets ...................                          259,211      179,708     159,994     136,712      107,119
Redeemable convertible preferred
 stock (4) .....................                             --           --          --        18,147       18,147
Total shareholders' equity .....                        $ 178,630    $ 127,054   $ 109,010   $  69,357    $  50,920

------------------------------------------------------------
<FN>
    (1)       During  the  second  quarter  of 1999,  the  Company  completed  a
              restructuring  plan that  resulted in a  reduction  in force along
              with  the  elimination  of  certain   projects  and   non-critical
              activities.
    (2)       The 1995 expense  represents a charge for in-process  research and
              development  incurred in the first  quarter of 1995 in  connection
              with the  Company's  acquisition  of the field  programmable  gate
              array business of Texas Instruments  Incorporated ("TI"). The 1999
              expense   represents   a  charge  for   in-process   research  and
              development  incurred in the fourth  quarter of 1999 in connection
              with the Company's acquisition of AutoGate Logic, Inc.
    (3)       The earnings per share amounts prior to 1997 have been restated as
              required  to  comply  with   Statement  of  Financial   Accounting
              Standards  No. 128,  "Earnings Per Share." See Note 16 of Notes to
              Consolidated   Financial  Statements  for  further  discussion  of
              earnings per share and the impact of Statement No. 128.
    (4)       Represents redeemable  convertible preferred stock issued to TI in
              connection  with the acquisition of TI's field  programmable  gate
              array  business.  On March 12,  1997,  TI  converted  the Series A
              preferred stock into 2,631,578 shares of common stock.
</FN>
</TABLE>
<PAGE>

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

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

Business Developments

         GateField

         In May 1999,  the Company paid $8.0  million to  GateField  Corporation
("GateField") in exchange for a convertible  promissory note bearing interest at
5.22% per annum with a five-year  term.  Interest is payable  quarterly  and the
note is  secured by a lien  against  all the  assets of  GateField.  The note is
convertible  at Actel's  election  into 420,000  shares of GateField  Series C-1
Convertible  Preferred  Stock,  which are convertible  into 1,230,769  shares of
GateField  common  stock,  equating  to a price of $6.50 per share of  GateField
common stock.

         Additionally,  during  1999,  the Company  increased  its  ownership of
GateField  common stock from 16,500 shares to 190,529 shares.  The cost of these
shares  (less the amount of  GateField's  losses  recognized  by Actel under the
equity method of accounting) is included in "other assets."

         In light of Actel's common and preferred  equity interest in GateField,
its $8.0 million convertible  promissory note from GateField,  and its marketing
and licensing  agreements with GateField,  Actel began accounting for its equity
interest in GateField  under the equity  method of accounting  during 1999.  The
impact of this  implementation  was a $1.1 million  charge to the  Company's net
income for 1999 ($0.9  million in  amortization  of goodwill and $0.2 million of
equity in net loss of equity method investee).

         GateField common stock, which is listed on the National  Association of
Security Dealers ("NASD")  Over-The-Counter  Bulletin Board, closed at $3.875 on
December 31, 1999.

        The Company  assesses the  recoverability  of its  investments  in, and
amounts due from GateField on a regular basis.  Impairment,  if any, is based on
the  excess of the  carrying  amount  over the fair  value of those  assets.  No
impairment has been indicated to date.

         AGL

On December 21, 1999, the Company  completed the  acquisition of AutoGate Logic,
Inc. ("AGL") in a transaction accounted for as a purchase.  AGL developed a wide
range of VLSI (very large scale integration)  development tools,  including FPGA
and custom IC place and route and timing analysis  software.  In connection with
the acquisition,  the Company issued a total of 375,000 shares, of which 285,943
were shares issued and 89,057 represents options assumed, at $18.29 per share in
exchange  for all  outstanding  common  shares and options of AGL. The price per
share of common stock was based on an average of five days closing market prices
for Actel common  stock during the period of October 1, 1999 through  October 7,
1999 when the Agreement to acquire AGL was announced.  Amounts  prepaid by Actel
for a source  code  license  and  amounts  payable to AGL were  netted  into the
purchase price to arrive at a total purchase price of $7,199,000.

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

<TABLE>
<CAPTION>
Allocation of AGL purchase price (in thousands):
<S>                                                <C>
   In-process research and development .........   $   600
   Completed technology ........................     2,100
   Assembled work force ........................       200
   Cash ........................................       281
   Deferred tax liability ......................      (920)
   Goodwill ....................................     4,938
                                                   -------
                                                   $ 7,199
                                                   =======
</TABLE>

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

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

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

         The acquired  assembled  workforce is comprised of employees from AGL's
engineering  group.  The Company  expects to amortize the value  assigned to the
assembled workforce of approximately $200 thousand on a straight-line basis over
an estimated remaining useful life of six months.

         Goodwill,  which  represents  the  excess of the  purchase  price of an
investment  in an acquired  business over the fair value of the  underlying  net
identifiable  assets,  is amortized on a straight-line  basis over its estimated
remaining life of 5 years.

Results of Operations

The following  table sets forth  certain  financial  data from the  Consolidated
Statements of Operations expressed as a percentage of net revenues:
<TABLE>
<CAPTION>
                                                                         Years Ended December 31,
                                                                       ----------------------------
                                                                         1999      1998      1997
                                                                       --------  --------  --------
<S>                                                                     <C>       <C>       <C>
Net revenues ......................................................     100.0%    100.0%    100.0%
Cost of revenues ..................................................      38.7      39.9      41.2
                                                                       --------  --------  --------
Gross margin ......................................................      61.3      60.1      58.8
Research and development ..........................................      18.8      20.2      17.0
Selling, general, and administrative ..............................      26.7      26.3      25.9
Amortization of goodwill and other acquisition-related intangibles        0.7       0.5       1.3
Restructure and other charges .....................................       1.2        --        --
Purchased in-process research and development .....................       0.3        --        --
                                                                       --------  --------  --------
Income from operations ............................................      13.0      12.9      15.4
Interest and other income, net ....................................       2.1       1.5       1.2
                                                                       --------  --------  --------
Income (loss) before tax provision and equity in net loss of equity
    method investee ...............................................      14.4      16.6      15.1
Equity in net (loss) of equity method investee ....................      (0.1)       --        --
Tax provision .....................................................       4.7       4.7       5.8
                                                                       --------  --------  --------
Net income ........................................................      10.3%      9.7%     10.8%
                                                                       ========  ========  ========
</TABLE>

          For 1997,  the  Company's  fiscal year ended on the Sunday  closest to
December  31. For 1998 and 1999,  the  Company's  fiscal year ended on the first
Sunday in January. Fiscal 1999, 1998, and 1997 ended on January 2, 2000, January
3, 1999, and December 28, 1997, respectively. Fiscal 1998 was a fifty-three week
fiscal  year,rather  than a  normal  fifty-two  week  fiscal  year.  For ease of
presentation,  December 31 has been  indicated  as the fiscal  year-end  for all
years.

         Net Revenues

         Net  revenues  for 1999 were  $171.7  million,  an increase of 11% over
1998.  This  compares  with a decrease in net revenues of 1% for 1998 from 1997.
The  Company  derives  its  revenues  primarily  from the sale of  FPGAs,  which
accounted  for 96% of net revenues for 1999,  compared with 97% for 1998 and 98%
for 1997.  The Company  also derives  revenues  from  royalties  and the sale of
software,  hardware,  maintenance, and design services. The increase in non-FPGA
net  revenues  over the last two years is  primarily  driven by the Actel Design
Services Group, which was acquired from GateField in 1998.

         Net revenues  from the sale of FPGAs for 1999  increased 10% over 1998.
This  compares  with a decrease  of 2% for 1998 from 1997.  The  increase in net
revenues from the sale of FPGAs for 1999 from 1998 resulted primarily from a 21%
increase  in unit  sales,  which was  offset by a 10%  decrease  in the  overall
average  selling  price of FPGAs.  The decrease in net revenues from the sale of
FPGAs for 1998 from 1997 was due  primarily  to an 11%  decrease  in the overall
average selling prices of FPGAs,  which was offset by an increase of 12% in unit
sales.  The increases in unit sales and declines in the overall  average selling
price of FPGAs for 1999 and 1998 were caused by higher  percentage  shipments of
MX product, which had lower average selling prices than other families,  coupled
with selling price erosion typical to the semiconductor industry.  Revenues were
also  favorably  impacted in 1999 by the  increase in sales to Nortel  Networks,
which accounted for nine percent of sales in 1999,  compared to three percent in
1998 and two percent in 1997.

         As is typical in the semiconductor industry, the average selling prices
of the Company's products generally decline over the lives of such products.  To
increase  revenues,  the  Company  seeks to  increase  unit  sales  of  existing
products,  principally  by  reducing  prices,  and to  introduce  and  sell  new
products. No assurance can be given that these efforts will be successful.

         As is also common in the semiconductor  industry, the Company generates
significant  revenues from the sales of its products through  distributors.  The
Company's principal  distributors are Unique  Technologies,  Inc. ("Unique") and
Pioneer-Standard  Electronics,  Inc.  ("Pioneer")  in North  America  and  Arrow
Electronics, Inc. and Zeus Electronics (collectively, "Arrow") worldwide. Unique
replaced Wyle  Electronics  Marketing Group ("Wyle") as an Actel  distributor in
the second  half of 1998.  Unique and Wyle are both part of the  worldwide  Veba
Electronics Group. The Company is now strategically  positioned as Unique's only
FPGA supplier. This provides the Company with a partner whose FPGA focus will be
exclusively  on  the  Company's  channel  distribution,   service,  and  support
requirements.  The following table sets forth, for each of the last three years,
the percentage of revenues derived from all customers accounting for 10% or more
of net revenues in any of such years:
<TABLE>
<CAPTION>
                                1999  1998  1997
                                ----  ----  ----
<S>                              <C>   <C>   <C>
Wyle/Unique ..................   13%   14%   17%
Arrow ........................   16%   14%   17%
Pioneer ......................   12%    9%   12%
</TABLE>

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

         Sales to customers  outside the United States for 1999,  1998, and 1997
accounted for 29%, 33%, and 31% of net revenues,  respectively.  Of these export
sales, the largest portion was derived from European customers.

         Gross Margin

         Gross margin for 1999 was 61% of net  revenues,  compared  with 60% for
1998 and 59% for  1997.  The  improved  gross  margin  resulted  primarily  from
improved sort yields  (especially on newer  products) and better  utilization of
manufacturing   capacity.   These  improvements  were  offset  in  part  by  the
unfavorable  impact of the strengthening yen against the dollar during 1999. The
improvement  in margin in 1998  versus 1997  resulted  primarily  from  improved
manufacturing  yields,  wafer price reductions and the appreciation in the value
of the United  States  dollar  versus  the  Japanese  yen,  in which some of the
Company's wafer purchases are denominated.

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

         Research and Development

         Research and development  expenditures for 1999 were $32.3 million,  or
19% of net revenues,  compared with $31.2 million,  or 20% of net revenues,  for
1998  and  $26.5  million,  or 17% of  net  revenues,  for  1997.  Research  and
development  expenditures  for 1999  increased  by 4%  compared  with 1998,  but
decreased as a percentage of net revenues.  The increase in  expenditures in the
last two years is driven by the Company's  effort to accelerate the introduction
of new products.

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

         Selling, General, and Administrative

         Selling,  general,  and  administrative  expenses  for 1999 were  $45.9
million,  or 27% of net  revenues,  compared with $40.6  million,  or 26% of net
revenues, for 1998 and $40.3 million, or 26% of net revenues, for 1997. Selling,
general,  and  administrative  expenses for 1999  increased by 13% compared with
1998,  while the Company's net revenues for 1999  increased by 11% compared with
1998.  Selling,   general,  and  administrative   expenses  for  1999  increased
principally  because of an accrual of estimated  settlement  costs of claims for
alleged  infringement  prior to the balance  sheet date,  an increased  level of
sales and marketing  activities in support of new products and expenses  related
to the  termination  of a  distributor.  Selling,  general,  and  administrative
expenses  for  1998  increased  by  1%  compared  with  1997.  The  increase  in
expenditures in 1998 over 1997 was principally  because of an increased level of
sales and marketing activities in support of new products.

         Amortization of Goodwill and Other Acquisition-Related Intangibles

         Amortization of goodwill and other acquisition-related  intangibles for
1999 were $2.2  million  compared  with $1.2 million in 1998 and $0.9 million in
1997. The increase in 1999 versus 1998 was mainly attributable to a $0.9 million
charge related to goodwill  amortization for the equity investment in GateField.
The increase in 1998 over 1997 was due to the  amortization  of goodwill for the
acquisition  of the Design  Services  Business  Unit of GateField  in 1998.  For
future years,  amortization  expenses are expected to increase,  as amortization
begins on the intangible assets related to the AGL acquisition and the GateField
product marketing agreement.

         Restructuring Charges

         During the second  quarter of fiscal  1999,  the  Company  completed  a
restructuring  plan  that  resulted  in a  reduction  in  force  along  with the
elimination of certain  projects and non-critical  activities.  The total pretax
restructure and other charges for these activities amounted to $1,963,000. These
measures  were taken to bring  overall  spending  in line with  current  revenue
projections  for the balance of the year and to sharpen the  Company's  focus on
new product development.
<TABLE>
<CAPTION>
                                                                Restruc-              Balance at
                                                       Cash/     turing               December
Description                                          Non-Cash    Charge    Activity   31, 1999
--------------------------------------------------   --------   --------   --------   --------
                                                                  (in thousands)
<S>                                                             <C>        <C>        <C>
Employee severance and outplacement ..............   Cash       $   586    $   586    $    --
Write-off of prepaid license .....................   Non-cash       734        734         --
Abandoned capital assets .........................   Non-cash       643        643         --
                                                                --------   --------   --------
                                                                $ 1,963    $ 1,963    $    --
                                                                ========   ========   ========
</TABLE>

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

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

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

         Interest Income and Other

         Interest and other income for 1999,  1998,  and 1997 were $3.6 million,
$2.4 million, and $1.8 million, respectively. The increase in interest and other
income  for  the  three  years  was  due  primarily  to  increased   cash,  cash
equivalents, and short term investments available for investing by the Company.

         Tax Provision

         The Company's  effective tax rates for 1999, 1998, and 1997 were 31.4%,
32.5%, and 35.0%,  respectively.  Significant components affecting the effective
tax rate include  benefits of federal research and development  credits,  income
from tax exempt securities, the state composite rate, and recognition of certain
deferred  tax assets  subject to valuation  allowances  as of December 31, 1998,
December 31, 1997, and December 31, 1996,  respectively.  The effective tax rate
for 1999  was  less  than the  effective  tax  rate  for 1998 due  primarily  to
increased  research and development  spending,  increased income from tax exempt
securities, and a lower state composite rate.


     Financial Condition, Liquidity, and Capital Resources


     The Company's total assets were $259.2 million at the end of 1999, compared
with  $179.7  million  at the end of 1998.  The  increase  in total  assets  was
attributable  principally  to increases in cash,  cash  equivalents,  short-term
investments,  accounts  receivable,  appreciation  in the value of the Company's
investment in Chartered  Semiconductor,  a semiconductor  manufacturer that went
public in 1999, and the additional  investments  made in GateField  during 1999.
The following  table sets forth  certain  financial  data from the  consolidated
balance sheets  expressed as the  percentage  change from the end of 1998 to the
end of 1999:
<TABLE>
<CAPTION>
                                                 Percentage Change
                                                 From 1998 to 1999
                                                 -----------------
<S>                                                     <C>
Cash, cash equivalents, and short-term investments      52.2%
Accounts receivable, net .........................       9.3
Inventories ......................................      (1.3)
Property and equipment, net ......................     (13.9)
Investment in Chartered Semiconductor ............     252.2
Other assets (primarily advances to and investment
 in GateField and AGL) ...........................      95.6
Total assets .....................................      44.2
Total current liabilities ........................      31.2
Shareholders' equity .............................      40.6
</TABLE>


         Cash, Cash Equivalents, and Short-Term Investments

         The Company's cash, cash equivalents,  and short-term  investments were
$107.1  million at the end of 1999,  compared  with $70.4  million at the end of
1998. The amount of cash, cash equivalents, and short-term investments increased
as a result of $44.3 million of cash provided by operations  and $9.0 million of
cash  provided  by  financing  activities,  which  were  offset in part by $16.1
million of cash used in investing  activities.  These  activities  included cash
used in the loan of $8.0  million to  GateField  and  purchases  of property and
equipment of $6.4 million.

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

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

         The  Company  has a  line  of  credit  with a bank  that  provides  for
borrowings  not to exceed  $5,000,000.  The agreement  contains  covenants  that
require  the  Company to  maintain  certain  financial  ratios and levels of net
worth.  At December 31, 1999,  the Company was in compliance  with the covenants
for the line of credit.  Borrowings  against the line of credit bear interest at
the bank's prime rate.  There were no  borrowings  against the line of credit at
December 31, 1999. The line of credit expires in May 2000.

         Notwithstanding the foregoing, the Company believes that existing cash,
cash equivalents, and short-term investments,  together with cash generated from
operations, will be sufficient to meet its cash requirements for 2000. A portion
of available cash may be used for investment in or acquisition of  complementary
businesses, products, or technologies.

         Investment in Chartered Semiconductor

         The  Company  holds an equity  investment  in  Chartered  Semiconductor
Manufacturing Ltd. ("Chartered Semiconductor"),  a semiconductor company located
in Singapore.  The Company's  investment in Chartered  Semiconductor  amounts to
less  than  1%  of  the  total  equity  of  Chartered  Semiconductor.  Chartered
Semiconductor  issued shares to the public and began trading on the Nasdaq Stock
Market in November 1999 for the first time. As a result the Company  changed the
classification  of its equity investment to  available-for-sale.  Previously the
investment  had been  accounted  for under  the cost  method.  Accordingly,  the
Chartered Semiconductor investment was valued at $37,619,000 at the end of 1999,
compared with $10,680,000 at the end of 1998.

         Accounts Receivable

         The Company's net accounts  receivable were $22.8 million at the end of
1999,  compared with $20.8 million at the end of 1998.  Accounts  receivable for
1999  increased by 9% compared  with 1998,  while the Company's net revenues for
1999  increased  by 11%.  The  increase  in  accounts  receivable  was less than
commensurate   with  increases  in  sales  due  to  more  timely  collection  of
receivables.

         Inventories

         The  Company's  inventories  were  $25.3  million  at the end of  1999,
compared with $25.7 million at the end of 1998. Days of inventory decreased from
148 to 132 days,  approaching  the Company's  inventory  model of 120 days.  The
decrease  in days of  inventory  is due to the  higher  level of sales  for 1999
compared  to prior  year.  Since  the  Company's  FPGAs are  manufactured  using
customized steps that are added to the standard  manufacturing  processes of its
independent  wafer suppliers,  the Company's  manufacturing  cycle is longer and
hence more  difficult  to adjust in  response  to  changing  demands or delivery
schedules.  Accordingly,  the Company's  inventory model will probably always be
higher than that of its major competitors using standard processes.

         Property and Equipment

         The  Company's  net property and equipment was $12.6 million at the end
of 1999,  compared with $14.6 million at the end of 1998.  The Company  invested
$6.4 million in property and  equipment in 1999,  compared  with $7.6 million in
1998.  Depreciation of property and equipment was $8.1 million for both 1998 and
1999.  Capital  expenditures  during the past two years have been  primarily for
engineering, manufacturing, and office equipment.

         Other Assets

         The  Company's  other assets grew to $31.1  million at the end of 1999,
compared with $15.9 million at the end of 1998.  This increase was  attributable
primarily to the  Company's  investments  in  GateField  common  stock,  an $8.0
million  convertible  note  receivable  from  GateField and the  acquisition  of
certain  intangibles  ($4.9  million  in  goodwill  and  $2.3  million  in other
intangibles) relating to the purchase of AGL in December 1999. See Notes 4 and 6
of Notes to Consolidated Financial Statements.

         Current Liabilities

         The Company's total current  liabilities  were $69.1 million at the end
of 1999,  compared  with $52.7  million  at the end of 1998.  The  increase  was
attributable primarily to increases of $5.5 million in deferred revenue from the
settlement of a lawsuit.  (which will be recognized ratably over the anticipated
life of the benefit);  $3.8 million in general accounts payable and $2.4 million
in deferred  income on shipments  to  distributors  arising  from the  Company's
increased level of operations; and $1.9 million in accrued salaries and employee
benefits.

         Shareholders' Equity

         Shareholders'  equity was $178.6  million at the end of 1999,  compared
with $127.1 million at the end of 1998.  The increase  included $17.6 million of
net  income,  proceeds  of $9.0  million  from the sale of  common  stock  under
employee  stock plans,  $2.2 million  from the tax benefit from  employee  stock
plans,   a  $15.9  million   increase  in  unrealized   gain  on  the  Chartered
Semiconductor  investment net of a deferred tax liability of $10.6 million,  and
$6.9  million  from the  issuance  of common  stock in  connection  with the AGL
acquisition.

Employees

         At the end of 1999, the Company had 449 full-time employees,  including
136 in marketing,  sales, and customer support; 144 in research and development;
122 in operations;  13 in Design Services; and 34 in administration and finance.
This compares with 457 full-time employees at the end of 1998, a decrease of 2%.
Net revenues per employee were  approximately  $382,000 for 1999,  compared with
approximately $338,000 for 1998, which represents an increase of 13%.

Impact of Recently Issued Accounting Standards

         In June 1998, the Financial Accounting Standards Board issued Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments  and  Hedging  Activities"  ("SFAS  133"),  which is  required to be
adopted in years  beginning  after June 15,  2000.  SFAS 133  requires  that all
derivatives  be recognized on the balance sheet at fair market value.  Depending
on whether or not a derivative is an effective hedge and certain other criteria,
changes in the fair value of the  derivative  instrument  will be  recognized in
earnings or in accumulated other  comprehensive  income until the hedged item is
recognized  in  earnings.  The Company is  currently  evaluating  the impact the
adoption of SFAS 133 will have on financial  position,  operating  results,  and
cash flow.

Market Risk

         As of December 31, 1999, the Company's  investment  portfolio consisted
primarily of corporate  bonds,  floating  rate notes,  and federal and municipal
obligations.  The primary objectives of the Company's investment  activities are
to preserve principal,  meet liquidity needs, and maximize yields. To meet these
objectives, the Company invests only in high credit quality debt securities with
average  maturities  of less  than  two  years.  The  Company  also  limits  the
percentage  of  total  investments  that  may be  invested  in any  one  issuer.
Corporate investments as a group are also limited to a maximum percentage of the
Company's investment portfolio.

         The  Company's  investments  are  subject to  interest  rate  risk.  An
increase in interest  rates could subject the Company to a decline in the market
value of its  investments.  These  risks are  mitigated  by the  ability  of the
Company to hold these  investments to maturity.  A  hypothetical  75 basis point
increase in interest rates would result in a decrease of approximately  $861,000
(less  than  0.9%)  in  the  fair  value  of  the  Company's  available-for-sale
securities.

         The  Company  purchases  a portion of the wafers it uses in  production
from  Japanese  suppliers,  which are  denominated  in Japanese  yen. An adverse
change in the foreign  exchange rate would affect the price the Company pays for
a portion of the wafers  used in  production  over the long  term.  The  Company
attempts to mitigate its exposure to risks from foreign currency fluctuations by
purchasing forward foreign exchange contracts to hedge firm purchase commitments
denominated in foreign currencies. Forward exchange contracts are short term and
do not hedge  purchases  that  will be made for  anticipated  longer-term  wafer
needs.  An adverse  change of 10% in exchange rates would result in a decline in
income  before  taxes  of  approximately   $1,097,000  based  on  projected  yen
denominated wafer purchases for the next year.

         The  Company  is  exposed to equity  price  risk on the  investment  in
Chartered Semiconductor that is held as an available-for-sale  marketable equity
security  entered into for the promotion of business and  strategic  objectives.
The  Company  does not attempt to reduce or  eliminate  it's market risk on this
equity  security.  For every 10% adverse change in the market price of Chartered
Semiconductor  from  December  31, 1999  levels,  the  Company's  investment  in
Chartered Semiconductor would decrease in value by approximately $3,762,000.

         All of the  potential  changes  noted above are based upon  sensitivity
analysis  performed on the  Company's  financial  position at December 31, 1999.
Actual results may differ materially.

Impact of Year 2000

         In late 1999, the Company  completed Year 2000  remediation and testing
of its  mission-critical  computer  systems.  As a result  of its  planning  and
implementation  efforts,  the Company experienced no significant  disruptions in
information  or  non-information  technology  systems and believes those systems
successfully  responded  to the Year  2000 date  change.  The  Company  incurred
expenses of approximately  $0.4 million during 1999 and $0.5 million during 1998
in connection with the remediation of its systems. The Company is unaware of any
material problems  resulting from Year 2000 issues,  either with its products or
internal systems or with the products or services of third parties.  The Company
will continue to monitor its mission-critical computer applications and those of
its  suppliers and vendors  throughout  2000 to assure that any latent Year 2000
matters that may arise are promptly addressed.

Other Risks

         The  Company's  operating  results  are  subject  to  general  economic
conditions and a variety of risks  characteristic of the semiconductor  industry
(including booking and shipment  uncertainties,  wafer supply fluctuations,  and
price  erosion)  or  specific  to the  Company,  any of which  could  cause  the
Company's  operating  results  to differ  materially  from past  results.  For a
discussion of such risks,  see "Risk Factors" in Part I of the Company's  Annual
Report on Form 10-K for 1999, which is incorporated herein by this reference.

          On March 29, 2000, Unisys  Corporation  ("Unisys") brought suit in the
United States District Court for the Northern  District of California,  San Jose
Division,  against the Company seeking  monetary  damages and injunctive  relief
based on Actel's  alleged  infringement  of four  patents  held by  Unisys.  The
Company  believes  that it has  meritorious  defenses to the claims  asserted by
Unisys  and  intends  to  defend  itself   vigorously  in  this  matter.   After
consideration  of the information  currently known, the Company does not believe
that the  ultimate  outcome  of case will have a  materially  adverse  effect on
Actel's business,  financial  condition,  or results of operations,  although no
assurance  can be given  to that  effect.  The  foregoing  is a  forward-looking
statement  subject to all of the risks and  uncertainties of a legal proceeding,
including  the  discovery  of new  information  and  unpredictability  as to the
ultimate outcome.

Quarterly Information

         The following table presents certain  unaudited  quarterly  results for
each of the eight  quarters in the period ended  January 2, 2000. In the opinion
of  management,  this  information  has been  presented on the same basis as the
audited  consolidated  financial  statements  appearing elsewhere in this Annual
Report  and all  necessary  adjustments  (consisting  only of  normal  recurring
accruals)  have been included in the amounts  stated below to present fairly the
unaudited   quarterly   results  when  read  in  conjunction  with  the  audited
consolidated  financial  statements of the Company and notes  thereto.  However,
these  quarterly  operating  results are not  indicative  of the results for any
future period.

<PAGE>
<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                  Jan. 2,   Oct. 3,   Jul. 4,   Apr. 4,   Jan. 3,   Oct. 4,  June 28,  Mar. 29,
                                                   2000      1999      1999      1999      1999      1998      1998      1998
                                                 --------  --------  --------  --------  --------  --------  --------  --------
                                                                   (in thousands, except per share amounts)
<S>                                              <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
Statements of Income Data:
Net revenues .................................   $46,042   $43,162   $41,619   $40,838   $40,174   $38,628   $37,160   $38,465
Gross profit .................................    28,546    26,503    25,381    24,844    24,377    23,383    22,345    22,680
Income from operations .......................     7,175     7,492     2,111     5,466     5,535     5,012     4,426     4,849
Net income ...................................   $ 5,823   $ 5,668   $ 1,926   $ 4,221   $ 4,118   $ 3,837   $ 3,419   $ 3,613
Net income per share:
   Basic .....................................   $  0.26   $  0.26   $  0.09   $  0.20   $  0.20   $  0.18   $  0.16   $  0.17
                                                 ========  ========  ========  ========  ========  ========  ========  ========
   Diluted ...................................   $  0.24   $  0.25   $  0.09   $  0.19   $  0.19   $  0.18   $  0.16   $  0.17
                                                 ========  ========  ========  ========  ========  ========  ========  ========
Shares used in computing net income per share:
   Basic .....................................    22,048    21,748    21,511    21,347    21,091    21,449    21,288    21,163
                                                 ========  ========  ========  ========  ========  ========  ========  ========
   Diluted ...................................    24,015    23,003    22,454    22,673    22,201    21,724    21,968    21,864
                                                 ========  ========  ========  ========  ========  ========  ========  ========
</TABLE>
<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                  Jan. 2,   Oct. 3,   Jul. 4,   Apr. 4,   Jan. 3,   Oct. 4,  June 28,  Mar. 29,
                                                   2000      1999      1999      1999      1999      1998      1998      1998
                                                 --------  --------  --------  --------  --------  --------  --------  --------
<S>                                                <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
As a Percentage of Net Revenues:
Net revenues .................................     100.0%    100.0%    100.0%    100.0%    100.0%    100.0%    100.0%    100.0%
Gross profit .................................      62.0      61.4      61.0      60.8      60.7      60.5      60.1      59.0
Income from operations .......................      15.6      17.4       5.1      13.4      13.8      13.0      11.9      12.6
Net income ...................................      12.6      13.1       4.6      10.3      10.3       9.9       9.2       9.4
</TABLE>

<PAGE>



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

<TABLE>
<CAPTION>
                                                          December 31,
                                                     -------------------
                                                      1999          1998
                                                     --------   --------
                                 ASSETS
<S>                                                  <C>        <C>
Current assets:
   Cash and cash equivalents .....................   $  4,939   $ 13,947
   Short-term investments ........................    102,201     56,449
   Accounts receivable, net ......................     22,753     20,820
   Inventories, net ..............................     25,324     25,669
   Deferred income taxes .........................     20,622     18,169
   Notes receivable from officers ................         73        356
   Prepaid expenses and other current assets .....      1,972      3,102
                                                     --------   --------
         Total current assets ....................    177,884    138,512
Property and equipment, net ......................     12,564     14,592
Investment in Chartered Semiconductor ............     37,619     10,680
Other assets, net ................................     31,144     15,924
                                                     --------   --------
                                                     $259,211   $179,708
                                                     ========   ========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable ..............................   $ 15,374   $ 11,525
   Accrued salaries and employee benefits ........      6,884      4,960
   Other accrued liabilities .....................      2,887        828
   Income taxes payable ..........................      4,025      3,370
   Deferred income ...............................     39,896     31,971
                                                     --------   --------
         Total current liabilities ...............     69,066     52,654
   Deferred tax liability ........................     11,515       --
                                                     --------   --------
         Total liabilities .......................     80,581     52,654

Commitments and contingencies

Shareholders' equity:
   Preferred stock, $.001 par value; 5,000,000
     shares authorized; 1,000,000 issued and
     converted to common stock, and none
     outstanding .................................        --         --
   Common stock, $.001 par value;  55,000,000
     shares authorized;  22,422,418 and
     21,181,930 shares issued and outstanding
     at December 31, 1999 and 1998, respectively .         22         21
   Additional paid-in capital ....................    110,146     92,092
   Retained earnings .............................     52,401     34,763
   Accumulated other comprehensive income ........     16,061        178
                                                     --------   --------
         Total shareholders' equity ..............    178,630    127,054
                                                     --------   --------
                                                     $259,211   $179,708
                                                     ========   ========
</TABLE>
<PAGE>
                                ACTEL CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                    (in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                            Years Ended December 31,
                                                        1999         1998        1997
                                                     ---------    ---------   ---------
<S>                                                  <C>          <C>         <C>
Net revenues .....................................   $ 171,661    $ 154,427   $ 155,858
Costs and expenses:
   Cost of revenues ..............................      66,387       61,642      64,244
   Research and development ......................      32,338       31,220      26,465
   Selling, general, and administrative ..........      45,903       40,558      40,317
   Amortization of goodwill and other acquisition-
     related intangibles .........................       2,226        1,185         877
   Restructuring charge ..........................       1,963         --          --
   Purchased in-process research and development .         600         --          --
                                                     ---------    ---------   ---------
         Total costs and expenses ................     149,417      134,605     131,903
                                                     ---------    ---------   ---------
Income from operations ...........................      22,244       19,822      23,955
Interest expense .................................        --           --          --
Interest income and other, net ...................       3,642        2,380       1,842
                                                     ---------    ---------   ---------
Income before tax provision and equity in net loss
 of equity method investee .......................      25,886       22,202      25,797
Equity in net (loss) of equity method investee ...        (193)        --          --
Tax provision ....................................       8,055        7,215       9,029
                                                     ---------    ---------   ---------
Net income .......................................   $  17,638    $  14,987   $  16,768
                                                     =========    =========   =========
Net income per share:
   Basic .........................................   $    0.81    $    0.71   $    0.82
                                                     =========    =========   =========
   Diluted .......................................   $    0.76    $    0.68   $    0.76
                                                     =========    =========   =========
Shares used in computing net income per share:
   Basic .........................................      21,664       21,251      20,370
                                                     =========    =========   =========
   Diluted .......................................      23,058       21,921      21,968
                                                     =========    =========   =========
</TABLE>
<PAGE>

                                ACTEL CORPORATION
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                      (in thousands, except share amounts)
<TABLE>
<CAPTION>
                                                                                         Accumu-
                                                                            Earnings      Other      Total
                                                              Additional    (Accumu-    Compre-      Stock-
                                                  Common       Paid-In       lated      hensive     holders'
                                                   Stock       Capital      Deficit)     Income      Equity
                                                 ---------    ---------    ---------    ---------   ---------
<S>                                              <C>          <C>          <C>          <C>         <C>
Balance at December 31, 1996 .................   $      18    $  63,133    $   6,205    $       1   $  69,357
                                                 =========    =========    =========    =========   =========
Net income ...................................        --           --         16,768         --        16,768
Other comprehensive income:
  Change in unrealized gain on investments ...        --           --           --             50          50
                                                                                                    ---------
Comprehensive income .......................                                                           16,818
Conversion of 1,000,000 shares of redeemable,
   convertible preferred stock into 2,631,578
   shares of common stock ....................           3      18,144         --           --         18,147
Issuance of 423,813 shares of common stock
   under employee stock plans ................        --          3,970         --           --         3,970
Tax benefit from exercise of stock options ...        --            718         --           --           718
                                                 ---------    ---------    ---------    ---------   ---------
Balance at December 31, 1997 .................   $      21    $  85,965    $  22,973    $      51   $ 109,010
                                                 =========    =========    =========    =========   =========
Net income ...................................        --           --         14,987         --        14,987
  Other comprehensive income:
  Change in unrealized gain on investments ...        --           --           --            127         127
                                                                                                    ---------
Comprehensive income .........................                                                         15,114
Issuance of 785,036 shares of common stock
   under employee stock plans ................           1        7,599         --           --         7,600
Issuance of 25,000 shares of common stock for
   patent acquisition ........................        --            366         --           --           366
Tax benefit from exercise of stock options ...        --          1,097         --           --         1,097
Repurchase of common stock ...................          (1)      (2,935)      (3,197)        --        (6,133)
                                                 ---------    ---------    ---------    ---------   ---------
Balance at December 31, 1998 .................   $      21    $  92,092    $  34,763    $     178   $ 127,054
                                                 =========    =========    =========    =========   =========
Net income ...................................        --           --         17,638         --        17,638
  Other comprehensive income:
  Change in unrealized gain on investments ...        --           --           --         15,883      15,883
                                                                                                    ---------
Comprehensive income .........................                                                         33,521
Issuance of  954,569 shares of common stock
   under employee stock plans, net of
   repurchases ...............................           1        9,003         --           --         9,004
Issuance of 285,943 shares of common stock for
   purchase of AGL ...........................        --          6,858         --           --         6,858
Tax benefit from exercise of stock options ...        --          2,193         --           --         2,193
                                                 ---------    ---------    ---------    ---------   ---------
Balance at December 31, 1999 .................   $      22    $ 110,146    $  52,401    $  16,061   $ 178,630
                                                 =========    =========    =========    =========   =========
</TABLE>
<PAGE>
                                                 ACTEL CORPORATION
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (in thousands)
<TABLE>
<CAPTION>
                                                                              Years Ended December 31,
                                                                           1999         1998        1997
                                                                        ---------    ---------   ---------
<S>                                                                     <C>          <C>         <C>
Operating activities:
   Net income .......................................................   $  17,638    $  14,987   $  16,768
   Adjustments to reconcile net income to net cash provided by
     operating activities:
     Depreciation and amortization ..................................      10,294        9,320       8,358
     Non-cash portion of restructure and other charges and other ....       2,695         --          --
     Purchased in-process research and development ..................         600         --          --
     Equity in net loss of equity method investee ...................         193         --          --
     Loss on disposal of fixed assets ...............................         136         --           175
     Changes in operating assets and liabilities:
       Accounts receivable ..........................................      (1,933)       4,315       4,360
       Inventories ..................................................         345       (5,197)      6,376
       Deferred income taxes ........................................      (3,775)       2,613      (5,050)
       Other current assets and notes receivable from officers ......         429       (1,619)        577
       Accounts payable, accrued salaries and employee benefits, and
         other accrued liabilities ..................................       9,769        1,724      (1,048)
       Deferred income ..............................................       7,925        1,043       3,542
                                                                        ---------    ---------   ---------
   Net cash provided by operating activities ........................      44,316       27,186      34,058
Investing activities:
   Purchases of property and equipment ..............................      (6,407)      (7,646)     (6,764)
   Purchases of available-for-sale securities .......................    (178,616)    (134,630)   (157,753)
   Sales and maturities of available for sale securities ............     132,342      129,580     132,156
   Cash acquired in AutoGate Logic acquisition ......................         281         --          --
   Investment in note receivable from GateField .....................      (8,000)        --          --
   Investments in GateField including purchase of design center,
     preferred stock and other intangible assets ....................        --        (10,000)       --
   Other assets .....................................................      (1,928)         227      (1,447)
                                                                        ---------    ---------   ---------
   Net cash used in investing activities ............................     (62,328)     (22,469)    (33,808)
Financing activities:
   Sale of common stock .............................................       9,004        7,600       3,970
   Repurchase of common stock .......................................        --         (6,133)       --
                                                                        ---------    ---------   ---------
   Net cash provided by financing activities ........................       9,004        1,467       3,970
Net increase (decrease) in cash and cash equivalents ................       (9008)       6,184       4,220
Cash and cash equivalents, beginning of year ........................      13,947        7,763       3,543
                                                                        ---------    ---------   ---------
Cash and cash equivalents, end of year ..............................   $   4,939    $  13,947   $   7,763
                                                                        =========    =========   =========
Supplemental  disclosures of cash flows  information and non-cash
  investing and financing activities:
   Cash paid during the year for interest ...........................   $    --      $    --     $    --
   Cash paid during the year for taxes ..............................      10,195        2,207      15,398
   Tax benefits from exercise of stock options ......................       2,193        1,097         718
   Issuance of common stock for patent acquisition ..................        --            366        --
   Issuance of common stock for AGL acquisition .....................       6,858         --          --
   Unrealized gain on available-for-sale securities .................      26,478         --          --
   Conversion of preferred stock into common stock ..................        --           --       (18,147)
</TABLE>
<PAGE>
                                ACTEL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       Organization and Summary of Significant Accounting Policies

         Actel Corporation ("Actel" or "the Company") was incorporated under the
laws of  California  on October 17, 1985.  The Company  designs,  develops,  and
markets field  programmable  gate arrays  ("FPGAs") and  associated  development
system  software and  programming  hardware.  The Company also  provides  design
services,  including FPGA, application specific integrated circuit ("ASIC"), and
system design,  software  development  and  implementation,  and  development of
prototypes,  first articles, and production units. Net revenues from the sale of
FPGAs  accounted for 96% of the  Company's net revenues for 1999,  compared with
97% for 1998 and 98% for 1997. Design Services,  which the Company acquired from
GateField Corporation  ("GateField") in the third quarter of 1998, accounted for
2% of the Company's net revenues for 1999 and 1% for 1998.

         FPGAs are logic  integrated  circuits  that  adapt the  processing  and
memory  capabilities of electronic systems to specific  applications.  FPGAs are
used   by   designers   of   communication,    computer,   industrial   control,
military/aerospace, and other electronic systems to differentiate their products
and get them to market faster.

Information on the Company's sales by geographic area is included in Note 14.

         Advertising and Promotion Costs

         The Company's  policy is to expense  advertising and promotion costs as
they are  incurred.  The  Company's  advertising  and  promotion  expenses  were
approximately $3,345,000,  $3,454,000,  and $4,050,000 for 1999, 1998, and 1997,
respectively.

         Basis of Presentation

         The  consolidated  financial  statements  include  the  accounts of the
Company and its wholly owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.

         For 1997,  the  Company's  fiscal  year ended on the Sunday  closest to
December  31. For 1998 and 1999,  the  Company's  fiscal year ended on the first
Sunday in January. Fiscal 1999, 1998, and 1997 ended on January 2, 2000, January
3, 1999, and December 28, 1997, respectively. Fiscal 1998 was a fifty-three week
fiscal  year,  rather  than a normal  fifty-two  week fiscal  year.  For ease of
presentation,  December 31 has been  indicated  as the fiscal  year-end  for all
years in the consolidated financial statements and accompanying notes.

         Cash Equivalents and Short-Term Investments

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

         The  Company  accounts  for  its  investment  in  accordance  with  the
provisions of Statement of Financial  Accounting  Standards No. 115, "Accounting
for Certain  Investments in Debt and Equity Securities."  Management  determines
the  appropriate  classification  of debt securities at the time of purchase and
re-evaluates  such  designation  as of each balance  sheet date. At December 31,
1999,   all   debt    securities    are   designated   as    available-for-sale.
Available-for-sale  securities  are carried at fair value,  with the  unrealized
gains  and  losses   reported  as  a  component  of   comprehensive   income  in
shareholders'  equity. The amortized cost of debt securities in this category is
adjusted for  amortization  of premiums and  accretion of discounts to maturity.
Such  amortization is included in interest and other income.  Realized gains and
losses  and   declines  in  value   judged  to  be  other  than   temporary   on
available-for-sale  securities  are included in interest  income and other.  The
cost of securities sold is based on the specific identification method. Interest
and dividends on securities  classified  as  available-for-sale  are included in
interest income and other.

         Concentration of Credit Risk

         Financial   instruments  that   potentially   subject  the  Company  to
concentrations of credit risk consist  principally of cash investments and trade
receivables  and amounts due from and invested in GateField.  The Company limits
its  exposure to credit risk by only  investing  in  securities  of A, A1, or P1
grade.  The  Company is  exposed to credit  risks in the event of default by the
financial  institutions  or  issuers  of  investments  to the  extent of amounts
recorded on the balance  sheet.  The Company  sells its products to customers in
diversified  industries.  The Company is exposed to credit risks in the event of
non-payment by customers to the extent of amounts recorded on the balance sheet.
The Company  limits its  exposure to credit risk by  performing  ongoing  credit
evaluations  of its  customers'  financial  condition and generally  requires no
collateral.

         The  Company  holds  an  investment  in the  common  stock  ($843,000),
preferred  stock  ($1,390,000)  of  GateField,  as  well as an  $8,000,000  note
receivable,  and is exposed to credit risks in the event of default by GateField
to the extent of the amounts  recorded on its balance sheet. The Company holds a
lien against the total assets of GateField.

         The Company is exposed to credit  risks in the event of  insolvency  by
its  customers  and limits its  exposure to  accounting  losses by limiting  the
amount of credit  extended  whenever  deemed  necessary.  Three of the Company's
distributors -- Unique (Wyle), Arrow, and Pioneer -- accounted for approximately
13%, 16%, and 12% of the Company's net revenues for 1999, respectively. The same
three  distributors  accounted in the  aggregate  for  approximately  37% of the
Company's  net revenues  for 1998 and 46% for 1997.  Unique  replaced  Wyle as a
distributor  in the  second  half of 1998.  Unique and Wyle are both part of the
worldwide  Veba  Electronics  Group.  The loss of any one of these  distributors
could have a materially  adverse  effect on the Company's  results of operations
and financial position.

         Fair Value of Financial Instruments

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

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

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

                    Investment  Securities.  The fair values for marketable debt
          and equity securities are based on quoted market prices.

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

         Goodwill and other acquisition-related intangibles

         Goodwill  is  recorded  when the  consideration  paid for  acquisitions
exceeds the fair value of net  intangible  assets  acquired.  Goodwill and other
acquisition-related  intangibles  are  amortized on a  straight-line  basis over
their useful lives.  Reviews are regularly  performed to determine whether facts
or  circumstances  exist which  indicate  that the carrying  value of assets are
impaired. No impairment has been indicated to date.

         Impact of Recently Issued Accounting Standards

         In June 1998, the Financial Accounting Standards Board issued Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments  and  Hedging  Activities"  ("SFAS  133"),  which is  required to be
adopted in years  beginning  after June 15,  2000.  SFAS 133  requires  that all
derivatives  be recognized on the balance sheet at fair market value.  Depending
on whether or not a derivative is an effective hedge and certain other criteria,
changes in the fair value of the  derivative  instrument  will be  recognized in
earnings or in accumulated other  comprehensive  income until the hedged item is
recognized in earnings.  The Company is currently evaluating the impact adoption
of SFAS 133 will have on financial position, operating results, and cash flow.

         Income Taxes

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

         Inventories

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

         Off-Balance-Sheet Risk

         The  Company  enters  into  foreign  exchange  contracts  to hedge firm
purchase commitments denominated in foreign currencies. The Company does not use
forward  foreign  exchange  contracts for speculative or trading  purposes.  The
Company's  accounting  policies for these instruments are based on the Company's
designation  of such  instruments  as hedging  transactions.  The  criteria  the
Company uses for designating an instrument as a hedge includes its effectiveness
in  exposure  reduction  and  one-to-one  matching of the  derivative  financial
instrument  with the underlying  transaction  being hedged.  Gains and losses on
these  contracts are recognized  upon maturity of the contracts and are included
in cost of sales.  If the  criteria  for  designation  of these  instruments  as
hedging  transactions  are not met,  then the  instruments  would be  marked  to
market,  with gains and losses  recognized in that period. At December 31, 1999,
the Company had no forward foreign exchange contracts outstanding.

          In addition,  the Company had an outstanding  standby letter of credit
in the amount of $1,174,985 at December 31, 1999.

         Property and Equipment

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

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

         Revenue Recognition

         Revenue from  product  shipped to end  customers is generally  recorded
upon  transfer  of  title.  Revenue  related  to  products  shipped  subject  to
customers'  evaluation  is  recognized  upon  final  acceptance.   Shipments  to
distributors  are made under  agreements  allowing  certain rights of return and
price  protection on unsold  merchandise.  For that reason,  the Company  defers
recognition  of revenues  and  related  cost of revenues on sales of products to
distributors until such products are sold by the distributor.  Royalty income is
recognized  upon the sale by others of  products  subject to  royalties.  Design
Services revenues are recognized as the services are performed.

         Research and Development

         Research  and  development  expenditures  are  charged  to  expense  as
incurred.  Statement of Financial  Accounting  Standards No. 86, "Accounting for
the  Costs of  Computer  Software  to Be Sold,  Leased  or  Otherwise  Marketed"
requires the capitalization of certain software  development costs subsequent to
the  establishment  of  technological  feasibility.  Through  December 31, 1999,
software  development has been completed  concurrently with the establishment of
technological feasibility and, as a result, the Company has charged all costs to
research and development expense in the periods incurred.

         Stock-Based Compensation

         The Company  accounts for  stock-based  awards to  employees  using the
intrinsic value method in accordance with  Accounting  Principles  Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25").  Accordingly,  no
compensation  cost has been recognized for its fixed-cost  stock option plans or
its stock purchase plan. In Note 11, the Company  provides  additional pro forma
disclosures as required under  Statement of Financial  Accounting  Standards No.
123, "Accounting for Stock Based Compensation" ("SFAS 123").

         Use of Estimates

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

2.       Balance Sheet Detail

<TABLE>
<CAPTION>
                                                               December 31,
                                                         ----------------------
                                                           1999         1998
                                                         --------      --------
                                                             (in thousands)
<S>                                                      <C>           <C>
Accounts receivable:
   Trade accounts receivable .......................     $ 24,690      $ 22,374
   Allowance for doubtful accounts .................       (1,937)       (1,554)
                                                         --------      --------
                                                         $ 22,753      $ 20,820
                                                         ========      ========

Inventories:
   Purchased parts and raw materials ...............     $  3,363      $  1,285
   Work-in-process .................................        8,366        12,052
   Finished goods ..................................       13,595        12,332
                                                         --------      --------
                                                         $ 25,324      $ 25,669
                                                         ========      ========
Property and equipment:
   Equipment .......................................     $ 43,971      $ 39,711
   Furniture and fixtures ..........................        2,298         2,267
   Leasehold improvements ..........................        5,050         4,728
                                                         --------      --------
                                                           51,319        46,706
   Accumulated depreciation and amortization .......      (38,755)      (32,114)
                                                         --------      --------
                                                         $ 12,564      $ 14,592
                                                         ========      ========
</TABLE>

          Depreciation  expense was approximately  $8,068,442,  $8,134,563,  and
$7,481,000 for 1999, 1998 and 1997, respectively.



<TABLE>
<CAPTION>
                                                               December 31,
                                                         ----------------------
                                                           1999         1998
                                                         --------      --------
                                                             (in thousands)
<S>                                                      <C>           <C>
Other Assets:
GateField intangible asset ...........................     $ 2,050      $ 2,050
GateField product marketing agreement ................       6,000        6,000
GateField preferred and common stock .................       2,612        1,650
GateField note receivable ............................       8,000         --
AutoGate Logic identifiable intangible assets ........       2,300         --
AutoGate Logic goodwill ..............................       4,938         --
TI intangible asset ..................................       3,958        3,958
Other ................................................       6,810        5,713
Accumulated amortization expenses ....................      (5,524)      (3,447)
                                                         --------      --------
                                                         $ 31,144      $ 15,924
                                                         ========      ========
</TABLE>


         Amortization  expense was  approximately  $2,226,000,  $1,185,000,  and
$877,000 for 1999, 1998, and 1997, respectively.  Approximately $149,000 of 1999
amortization  expense was related to other current assets.  The intangible asset
acquired from Texas  Instruments  Incorporated  ("TI") was fully amortized as of
December 31, 1999. For further discussion of AGL and GateField,  see Notes 4 and
6, respectively.

3.       Available-for-Sale Securities

         The following is a summary of available-for-sale securities at December
31, 1999 and 1998:
<TABLE>
<CAPTION>
                                                                       Gross      Gross     Estimated
                                                                     Unrealized Unrealized     Fair
                                                             Cost      Gains      Losses      Values
                                                           --------   --------   --------    --------
                                                                         (in thousands)
<S>                                                        <C>        <C>        <C>         <C>
December 31, 1999
   Auction Market Preferred ............................   $  1,900   $   --     $   --      $  1,900
   Corporate bonds .....................................     13,619          4        (45)     13,578
   Commercial paper ....................................      1,265       --         --         1,265
   U.S. government securities ..........................      6,970       --          (61)      6,909
   Floating rate notes .................................     17,146          4       --        17,150
   Municipal obligations ...............................     58,584          9       (194)     58,399
   Weekly floater ......................................      3,000       --         --         3,000
                                                           --------   --------   --------    --------
   Total available-for-sale securities .................    102,484         17       (300)    102,201
  Less amounts classified as cash equivalents ..........       --         --         --          --
                                                           --------   --------   --------    --------
Total short-term available-for-sale debt securities ....    102,484         17       (300)    102,201
                                                           ========   ========   ========    ========

  Long-term marketable strategic investment in Chartered
     Semiconductor .....................................     10,680     26,939       --        37,619
                                                           --------   --------   --------    --------
Total available-for-sale securities ....................    113,164     26,956       (300)    139,820
                                                           ========   ========   ========    ========
</TABLE>
<TABLE>
<CAPTION>
                                                                       Gross      Gross     Estimated
                                                                     Unrealized Unrealized     Fair
                                                             Cost      Gains      Losses      Values
                                                           --------   --------   --------    --------
                                                                         (in thousands)
<S>                                                          <C>           <C>         <C>     <C>
December 31, 1998
   Corporate bonds .....................................   $  3,500   $   --     $   --      $  3,500
   Commercial paper ....................................      4,415       --         --         4,415
   Floating rate notes .................................      5,500       --         --         5,500
   Municipal obligations ...............................     47,271        180         (2)     47,449
   Total available-for-sale securities .................     60,686        180         (2)     60,864
  Less amounts classified as cash equivalents ..........     (4,415)      --         --        (4,415)
                                                           --------   --------   --------    --------
Total available-for-sale securities ....................   $ 56,271   $    180   $     (2)   $ 56,449
                                                           ========   ========   ========    ========
</TABLE>


         The  adjustments  to net  unrealized  gains and (losses) on investments
included as a separate component of shareholders'  equity totaled  approximately
$15,883,000,  $127,000, and $50,000 for the years ended December 31, 1999, 1998,
and 1997,  respectively.  Realized gains and losses during 1999,  1998, and 1997
were not material.

         See Note 1 for  discussion  of the Company's  policy on accounting  for
investments and the manner in which fair values were determined.

         The expected  maturities of the Company's  investments  at December 31,
1999,  are  shown  below.   Expected  maturities  may  differ  from  contractual
maturities  because the issuers of the  securities  may have the right to prepay
obligations without prepayment penalties.
<TABLE>
<CAPTION>
 Available-for-sale debt securities (in thousands):
<S>                                             <C>
     Due in less than one year ..............   $ 27,990
     Due in one to five years ...............     34,820
     Due after five years ...................     39,391
                                                --------
                                                $102,201
                                                ========
</TABLE>

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

4.       AGL Acquisition

On December 21, 1999, the Company  completed the  acquisition of AutoGate Logic,
Inc. ("AGL") in a transaction accounted for as a purchase.  AGL developed a wide
range of VLSI (very large scale integration)  development tools,  including FPGA
and custom IC place and route and timing analysis  software.  In connection with
the acquisition,  the Company issued a total of 375,000 shares, of which 285,943
are shares issued and 89,057  represents  options  assumed,  of common stock and
options at $18.29 per share in exchange for all  outstanding  common  shares and
options of AGL.  The price per share of common  stock was based on an average of
five days  closing  market  prices for Actel  common  stock during the period of
October 1, 1999  through  October 7, 1999 when the  Agreement to acquire AGL was
made  public.  Amounts  prepaid by Actel for a source  code  license and amounts
payable to AGL were netted into the purchase price to arrive at a total purchase
price of $7,199,000.

         In accordance  with provisions of Accounting  Principles  Board Opinion
No. 16, "Business Combinations", all identifiable assets were assigned a portion
of the total  consideration  on the basis of their  respective fair values.  The
consideration  was  allocated  as follows  based on the  valuation  report of an
independent valuation specialist:
<TABLE>
<CAPTION>
 Allocation of AGL purchase price (in thousands):
<S>                                                            <C>
     In-process research and development ...................   $   600
     Completed technology ..................................     2,100
     Assembled work force ..................................       200
     Cash ..................................................       281
     Deferred tax liability ................................      (920)
     Goodwill ..............................................     4,938
                                                               -------
                                                               $ 7,199
                                                               =======
</TABLE>

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

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

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

         The acquired  assembled  workforce is comprised of employees from AGL's
engineering  group.  The Company  expects to amortize the value  assigned to the
assembled workforce of approximately $200 thousand on a straight-line basis over
an estimated remaining useful life of six months.

         Goodwill,  which  represents  the  excess of the  purchase  price of an
investment  in an acquired  business over the fair value of the  underlying  net
identifiable  assets,  is amortized on a straight-line  basis over its estimated
remaining life of five years.

         The following unaudited pro forma results of operations for the periods
ending 1998 and 1999 are presented are as if the acquisition of AGL had occurred
as of  the  beginning  of  1998,  and  includes  certain  estimated  adjustments
including  amortization  of  intangibles.  The pro  forma  results  exclude  the
one-time  write-off of $600,000 of in-process  research and  development and the
tax effect of the  charge.  The  pro-forma  information  has been  prepared  for
comparative  purposes  only  and  does  not  purport  to be  indicative  of what
operating results would have been if the acquisition had actually taken place at
the beginning of 1998 or of future operating results.

<TABLE>
<CAPTION>
                                                        Years Ended December 31,
                                                          1999           1998
                                                        ---------     ---------
                                                       (in thousands, except per
                                                             share amounts)
<S>                                                      <C>           <C>
Net revenues .......................................     $171,272      $156,534
Net income .........................................       15,739        15,101
Diluted earnings per share .........................         0.67          0.68
</TABLE>

5.       Investment in Chartered Semiconductor

         The  Company  holds an equity  investment  in  Chartered  Semiconductor
Manufacturing Ltd. ("Chartered Semiconductor"),  a semiconductor company located
in Singapore.  The Company's  investment in Chartered  Semiconductor  amounts to
less  than  1%  of  the  total  equity  of  Chartered  Semiconductor.  Chartered
Semiconductor  issued shares to the public and began trading on the Nasdaq Stock
Market in November 1999 for the first time. As a result, the Company changed the
classification  of its equity investment to  available-for-sale.  Previously the
investment  had been  accounted  for under  the cost  method.  Accordingly,  the
Chartered Semiconductor investment was valued at $37,619,000 at the end of 1999,
compared with $10,680,000 at the end of 1998.

6.       GateField

         In the  third  quarter  of 1998,  the  Company  entered  into a product
marketing  rights agreement with GateField and purchased  GateField  convertible
preferred stock. Concurrently, the Company acquired the Design Services Business
Unit of GateField in a transaction  accounted  for as a purchase.  Consideration
paid in these transactions totaled $10,447,000, consisting entirely of cash.

         In accordance  with provisions of Accounting  Principles  Board Opinion
No. 16, "Business Combinations," all identifiable assets (including identifiable
intangible  assets) were  assigned a portion of the total  consideration  on the
basis of their  respective  fair  values.  The  consideration  was  allocated as
follows: $6,000,000 to the product marketing rights agreement; $1,650,000 to the
convertible  preferred stock; and $2,797,000  (consisting of $447,000 related to
net assets and $2,350,000 related to intangible assets) to Design Services.

         The product  marketing  rights  agreement  provides the Company with an
exclusive  right to market and sell  GateField's  standard  ProASIC  products in
process  geometries of 0.35 micron and smaller as part of the Company's  product
line. Under the terms of the agreement, development of the underlying technology
and products is managed and executed  primarily  by  GateField.  The Company has
agreed to pay additional  consideration of $1,000,000 upon  qualification of the
initial .25 micron product. The $6,000,000 allocated to product marketing rights
will   be   amortized   over   the   related   products'   currently   estimated
revenue-producing life of seven years; the Company will re-evaluate the expected
life if product  sales do not commence as scheduled or fail to achieve  expected
volumes in the future.  The amount  allocated  to the product  marketing  rights
agreement is included in "other assets."

         The Company's  investment in GateField's  convertible  preferred  stock
consists  of  300,000  shares of  GateField  Series C  Preferred  Stock that are
convertible,  at the Company's election, into 200,000 shares of GateField Common
Stock. The amount allocated to the Company's investment in GateField convertible
preferred stock is also included in "other assets."

         The Design  Services  Business Unit purchased form GateField in 1998 is
located in Mt. Arlington, New Jersey. Design Services provides varying levels of
design services, including: design methodology and tool consulting; turnkey FPGA
and ASIC  design;  IP  development  and  integration;  board and system  design;
software  design  and  implementation;  and  development  of  prototypes,  first
articles, and production units. The Company was the first FPGA provider to offer
system-level  design  expertise,  expanding the  Company's  ability to support a
greater  portion of the customers'  overall design and risk  management.  Design
Services is a secure  facility  certified to handle  government,  military,  and
proprietary designs.  Design Services is not involved in the development efforts
underlying the product  marketing rights  agreement.  The net tangible assets of
the  Design  Services  Business  Unit  was  valued  at  $447,000  and  consisted
principally  of  fixed  assets,  accounts  receivable,  deposits,  and  accounts
payable.  Intangible  assets were valued at $2,350,000 and consisted of $300,000
related to backlog,  $1,000,000  related to  workforce-in-place,  and $1,050,000
related to goodwill. Backlog was amortized over its estimated useful life of six
months.  The workforce and goodwill  associated  with Design  Services are being
amortized over their  estimated  useful life of five years and are also included
in "other assets."

         In May 1999,  the Company  paid  $8,000,000  to  GateField  Corporation
("GateField") in exchange for a convertible  promissory note bearing interest at
5.22% per annum with a five-year  term.  Interest is payable  quarterly  and the
note is  secured by a lien  against  all the  assets of  GateField.  The note is
convertible  at Actel's  election  into 420,000  shares of GateField  Series C-1
Convertible  Preferred  Stock,  which are convertible  into 1,230,769  shares of
GateField  common  stock,  equating  to a price of $6.50 per share of  GateField
common stock.

         During 1999,  the Company  increased its ownership of GateField  common
stock from 16,500 shares to 190,529  shares.  The cost of these shares (less the
amount of  GateField's  losses  recognized  by Actel under the equity  method of
accounting) is included in "other assets."

         In light of Actel's common and preferred  equity interest in GateField,
$8.0 million  convertible  promissory  note from  GateField,  and  marketing and
licensing  agreements  with  GateField,  Actel began  accounting  for its equity
interest in GateField  under the equity  method of accounting  during 1999.  The
impact of this  implementation  was a $1.1 million  charge to the  Company's net
income for 1999 ($0.9  million  included in  amortization  of goodwill  and $0.2
million  included in equity in net losses of equity method  investee).  Assuming
conversion of all  outstanding  GateField  convertible  preferred stock owned by
Actel, and conversion of the convertible promissory note due from GateField, the
aggregate  total of  GateField  common  stock owned by Actel would be  1,621,298
shares, or 26.7% of the total common shares of GateField.

         GateField common stock, which is listed on the National  Association of
Security Dealers ("NASD")  Over-The-Counter  Bulletin Board, closed at $3.875 on
December 31, 1999.

         The Company  assesses the  recoverability  of its  investments  in, and
amounts due from GateField on a regular basis.  Impairment,  if any, is based on
the  excess of the  carrying  amount  over the fair  value of those  assets.  No
impairment has been indicated to date.

7.       Restructure and Other Charges

         During the second  quarter of fiscal  1999,  the  Company  completed  a
restructuring  plan  that  resulted  in a  reduction  in  force  along  with the
elimination of certain  projects and non-critical  activities.  The total pretax
restructure and other charges for these activities amounted to $1,963,000. These
measures  were taken to bring  overall  spending  in line with  current  revenue
projections  for the balance of the year and to sharpen the  Company's  focus on
new product development.

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

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

         Write-off of prepaid license was associated with the  cancellation of a
certain  product and  project.  The product was  eliminated  from the  Company's
future revenue stream and therefore the license has no future  economic  benefit
to the Company.

         Abandoned  capital  assets  consisted of the  write-off of  capitalized
costs associated with a new building project that was abandoned and fixed assets
no longer utilized by the Company that were scrapped.

8.       Line of Credit

         The  Company  has a  line  of  credit  with a bank  that  provides  for
borrowings  not to exceed  $5,000,000.  The agreement  contains  covenants  that
require  the  Company to  maintain  certain  financial  ratios and levels of net
worth.  At December 31, 1999,  the Company was in compliance  with the covenants
for the line of credit.  Borrowings  against the line of credit bear interest at
the bank's prime rate.  There were no  borrowings  against the line of credit at
December 31, 1999. The line of credit expires in May 2000.

9.       Commitments

         The  Company  leases  its  facilities  and  certain   equipment   under
non-cancelable  lease  agreements.  The current lease agreement  expires in June
2003, with one additional  five-year  renewal option.  The equipment  leases are
accounted  for as  operating  leases.  The lease terms  expire at various  dates
through  September 2001. All of these leases require the Company to pay property
taxes,  insurance,  and  maintenance  and repair costs. At December 31, 1999 and
1998, the Company had no capital lease obligations.

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

                                                              Operating
                                                                Leases
                                                               -------
     2000 ..................................................   $ 3,516
     2001 ..................................................     2,983
     2002 ..................................................     3,070
     2003 ..................................................     1,539
     2004 ..................................................        35
                                                               -------
     Total minimum lease payments ..........................   $11,143
                                                               =======

          Rental expense under operating  leases was  approximately  $4,172,307,
$3,282,730,   and   $2,481,313   for  1999,   1998,   and  1997,   respectively.

10.      Retirement Plan

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

         The Company may make contributions to the plan at the discretion of the
Board of Directors. The Company made distributions to the plan for the 1998 plan
year of $387,166  based on net revenues and net income for the 1998 fiscal year.
The  Company  also  made  distributions  to the plan for the 1997  plan  year of
$340,750  based on net  revenues  and net income for the 1997 fiscal  year.  The
Company  made  no  contributions  to the  plan  for  the  1999  plan  year.  The
contributions vest annually,  retroactively from an eligible  employee's date of
hire,  at the rate of 25% per year.  In  addition,  contributions  become  fully
vested upon  retirement  from the Company at age 65. There is no  guarantee  the
Company will make any contributions to the plan in the future, regardless of its
financial  performance.  If the Company,  in its  discretion,  chooses to make a
contribution again in the future, the amount could be higher or lower.

Shareholders' Equity

         Stock Repurchase

         The Company  authorized a stock  repurchase  program in September  1998
whereby up to 1,000,000  shares of the  Company's  common stock may be purchased
from  time to time in the open  market  at the  discretion  of  management.  The
program was amended in 1999 for an additional  1,000,000 shares,  for a total of
2,000,000 shares that can be repurchased.  The Company made no stock repurchases
in 1999. During 1998, the Company repurchased 675,000 shares of common stock for
$6,133,000.  The Company has reissued  these shares in its employee stock option
and purchase plans.

         Stock Option Plans

         The Company  has  adopted  stock  option  plans  under which  officers,
employees,   and  consultants   may  be  granted   incentive  stock  options  or
nonqualified  options to  purchase  shares of the  Company's  common  stock.  At
December 31, 1999,  9,917,991  shares of common stock were reserved for issuance
under these plans, of which 375,014 were available for grant.

         The Company has also  adopted a Directors'  Stock  Option  Plan,  under
which directors who are not employees of the Company may be granted nonqualified
options to purchase shares of the Company's  common stock. At December 31, 1999,
237,500  shares of common stock were  reserved for issuance  under such plan, of
which 80,000 were available for grant.

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

         The following table  summarizes the Company's stock option activity and
related information for the three years ended December 31, 1999:

<TABLE>
<CAPTION>
                                               1999                        1998                         1997
                                        ---------------------      ---------------------        ---------------------
                                                   Weighted                     Weighted                    Weighted
                                                   Average                      Average                     Average
                                        Number of   Exercise        Number of    Exercise       Number of   Exercise
                                         Shares      Price           Shares      Price           Shares      Price
                                        ---------  ----------       ---------  ----------       ---------  ----------
<S>                    <C>              <C>        <C>              <C>        <C>              <C>        <C>
Outstanding at January 1......          5,051,840  $    11.41       4,252,115  $    13.98       3,542,836  $    12.38
Granted.......................          2,339,561       14.34       3,626,060       11.44       1,252,895       17.39
Exercised.....................           (620,226)       9.94        (495,997)       9.50        (214,821)       8.29
Cancelled.....................           (908,242)      12.14      (2,330,338)      16.57        (328,795)      13.40
                                        ---------  ----------       ---------  ----------       ---------  ----------
Outstanding at December 31....          5,862,933       12.62       5,051,840       11.41       4,252,115       13.98
                                        =========  ==========       =========  ==========       =========  ==========
</TABLE>

The Company has, in connection  with the  acquisition of AGL,  assumed the stock
option plan of AGL and the related options are included in the preceding table.

The following table summarizes  information  about stock options  outstanding at
December 31, 1999:

<TABLE>
<CAPTION>
                                                                          December 31, 1999
                                                    -----------------------------------------------------------------
                                                           Options Outstanding                 Options Exercisable
                                                    -------------------------------------    ------------------------
                                                                Weighted
                                                                Average       Weighted                       Weighted
                                                               Remaining      Average                        Average
                                                   Number of   Contract       Exercise        Number of      Exercise
Range of Exercise Prices                             Shares       Life          Price          Shares         Price
                                                    ---------  ----------    ------------     ---------      --------
<S>                                                   <C>      <C>           <C>                <C>      <C>
$    0.87    -  $  10.00....................          459,943  5.86 years    $       6.79       341,124  $       5.86
                   10.06....................          709,881  8.57                 10.06        75,639         10.06
    10.25    -     11.13....................          734,116  6.47                 10.76       519,034         10.69
                   11.75....................          998,732  7.10                 11.75       374,325         11.75
    11.88    -     13.06....................          879,847  8.72                 12.91       157,650         12.90
                   13.38....................           10,000  7.92                 13.38         4,999         13.38
                   13.56....................          653,375  9.59                 13.56         5,900         13.56
    13.63    -     14.88....................          637,746  8.73                 14.67        88,299         14.53
    15.00    -     20.38....................          624,593  8.49                 17.46       124,444         16.53
    21.88    -     22.94....................          154,700  9.67                 22.37        10,124         22.43
                                                    ---------                                 ---------
     0.87    -     22.94....................        5,862,933  8.02                 12.62     1,701,538         10.85
                                                    =========                                 =========
</TABLE>

At December 31, 1998,  1,306,424  outstanding  options were exercisable;  and at
December  31,  1997,  1,099,059   outstanding  options  were  exercisable.   The
weighted-average  fair value of options granted during 1999, 1998, and 1997 were
$7.17, $4.69, and $7.38, respectively.

         Employee Stock Purchase Plan

         The Company has adopted an Employee  Stock  Purchase Plan (the "ESPP"),
under which  eligible  employees  may  designate not more than 15% of their cash
compensation to be deducted each pay period for the purchase of common stock (up
to a maximum of $25,000  worth of common  stock in any year).  At  December  31,
1999,  3,019,680  shares of common stock were  authorized for issuance under the
ESPP. The ESPP is administered in consecutive,  overlapping  offering periods of
up to 24 months each,  with each offering  period divided into four  consecutive
six-month  purchase  periods  beginning August 1 and February 1 of each year. On
the last  business  day of each  purchase  period,  shares of  common  stock are
purchased with employees' payroll  deductions  accumulated during the six months
at a price per share equal to 85% of the market price of the common stock on the
first day of the  applicable  offering  period  or the last day of the  purchase
period,  whichever is lower.  There were 364,163 and 291,469 shares issued under
the ESPP in 1999 and 1998,  respectively,  and 1,601,340  remained available for
issuance at December 31, 1999. The weighted-average fair value of employee stock
purchase  rights granted  during 1999,  1998,  and 1997 were $5.76,  $5.52,  and
$4.69, respectively.

         Pro Forma Disclosures

         Pro forma information  regarding net income and net income per share is
required by SFAS 123, which also requires that the  information be determined as
if the Company had accounted  for its  stock-based  awards to employees  granted
subsequent to December 31, 1994, under the fair value method. The fair value for
these  stock-based  awards to employees was estimated at the date of grant using
the Black-Scholes pricing model with the following weighted-average  assumptions
for 1999, 1998, and 1997:  risk-free interest rates of 5.55%,  5.34%, and 5.95%,
respectively;  no dividend yield; volatility factor of the expected market price
of the Company's common stock of 54%, 51%, and 48%, respectively; and a weighted
average expected life for the options and employee stock purchase rights of four
years and two years respectively.

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

         For purposes of pro forma disclosures,  the estimated fair value of the
Company's  stock-based  awards to  employees  is  amortized  to expense over the
options' vesting period (for options). The Company's pro forma information is as
follows:

<TABLE>
<CAPTION>
                                                Years Ended December 31,
                                           ----------------------------------
                                             1999         1998        1997
                                           ---------   ---------   ----------
                                        (in thousands, except per share amounts)

<S>                                        <C>         <C>         <C>
     Pro forma net income ..............   $   9,186   $   5,117   $   11,405
     Pro forma earnings per share:
        Basic ..........................        0.42        0.24         0.56
        Diluted ........................        0.41        0.24         0.54
</TABLE>

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

12.      Comprehensive Income

         The following  schedule of other  comprehensive  income shows the gross
current-period gain and the reclassification adjustment.

<TABLE>
<CAPTION>
                                                                                     Years Ended December 31,
                                                                                 1999          1998          1997
                                                                             ------------  ------------  ------------
                                                                                          (in thousands)
<S>                                                                         <C>           <C>           <C>
Gains on investments during the period, net of tax of $(10,595) in 1999.     $     15,892  $        178  $         51
Less reclassification adjustment for gains included in net income.......               (9)          (51)           (1)
                                                                             ------------  ------------  ------------
Other comprehensive income..............................................     $     15,883  $        127  $         50
                                                                             ============  ============  ============
</TABLE>

The tax on unrealized gains prior to 1999 was not material.

13.      Tax Provision

         The tax provision consists of:

<TABLE>
<CAPTION>
                                                Years Ended December 31,
                                             1999        1998         1997
                                        ------------  ----------  -----------
                                                     (in thousands)

<S>                                       <C>         <C>           <C>
     Federal - current .................  $   11,709  $    3,565    $  11,585
     Federal - deferred ................      (5,073)      1,416       (4,544)
     State - current ...................       1,720         592        2,304
     State - deferred ..................        (591)      1,197         (506)
     Foreign - current .................         290         445          190
                                        ------------  ----------  -----------
                                          $    8,055  $    7,215    $   9,029
                                        ============  ==========  ===========
</TABLE>

          The tax provision reconciles to the amount computed by multiplying
income before tax by the U.S. statutory rate as follows:
<TABLE>
<CAPTION>
                                                        December 31,
                                           ------------------------------------
                                              1999         1998         1997
                                           ---------    ---------    ----------
                                                     (in thousands)
<S>                                        <C>          <C>          <C>
Provision  at statutory rate ...........   $   8,993    $   7,771    $    9,029
Change in valuation allowance ..........        (440)        (440)         (440)
Tax exempt income ......................        (770)        (875)         --
Federal research credits ...............      (1,031)        (856)         (772)
State taxes, net of federal benefit ....         734        1,163         1,169
Other ..................................         569          452            43
                                           ---------    ---------    ----------
Tax provision ..........................   $   8,055    $   7,215    $    9,029
                                           =========    =========    ==========
</TABLE>

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

<TABLE>
<CAPTION>
                                                                December 31,
                                                           --------------------
                                                             1999         1998
                                                           -------      -------
                                                              (in thousands)
<S>                                                        <C>          <C>
Deferred tax assets:
        Depreciation .................................     $ 2,297      $ 1,618
        Distributor reserve ..........................      15,574       12,452
        Charge for in-process research expenses ......       4,210        4,752
        Inventories ..................................       1,950        1,455
        Other, net ...................................       4,417        3,917
                                                           -------      -------
                                                            28,448       24,194
        Valuation allowance ..........................      (1,726)      (2,166)
                                                           -------      -------
                Net deferred tax assets ..............     $26,722      $22,028
                                                           =======      =======

Deferred tax liabilities:
         AGL intangible assets .......................     $   920      $  --
         Unrealized gain on investments ..............      10,595         --
                                                           -------      -------
                Deferred tax liability ...............     $11,515      $  --
                                                           =======      =======
</TABLE>

The valuation allowance declined by approximately $440,000 during 1998 and 1997.

14.      Segment Disclosures

         The  Company  operates  in  a  single  industry   segment:   designing,
developing,  and marketing FPGAs.  FPGA sales accounted for 96%, 97%, and 98% of
net  revenues  for  the  years  ended   December  31,  1999,   1998,  and  1997,
respectively.  The Company also derives  revenues  from the sale of software and
hardware systems,  which are used to design and program FPGAs. In addition,  the
Company  derives  revenues from the  performance of design  services,  including
FPGA,  ASIC, and system design;  software  development and  implementation;  and
development of prototypes, first articles and production units. Design Services,
which  the  Company  acquired  from  GateField  in the  third  quarter  of 1998,
accounted for 2% of the Company's net revenue in 1999 and 1% in 1998.

         The Chief Executive  Officer has been identified as the Chief Operating
Decision  Maker (CODM) because he has final  authority over resource  allocation
decisions  and  performance  assessment.  The  CODM  does not  receive  discrete
financial information about its system sales or Design Services activities,  nor
does the CODM use any financial  information to make decisions  regarding  asset
allocation,  expense allocation or profitability with respect to system sales or
Design Services activities. Accordingly, these business units are not considered
to be reportable segments.

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

<TABLE>
<CAPTION>
                                             Years Ended December 31,
                             -------------------------------------------------------
                                   1999              1998                1997
                             ----------------   ----------------   -----------------
                                            (in thousands, except percentages)

<S>                          <C>          <C>   <C>          <C>   <C>           <C>
United States ............   $  121,819   71%   $  102,817   67%   $  107,308    69%
Export:
     Europe ..............       29,010   17        29,675   19        26,239    17
     Japan ...............        9,562    6        10,658    7        13,328     8
     Other international .       11,270    6        11,277    7         8,983     6
                             ----------  ----   ----------  ----   ----------   ----
                             $  171,661  100%   $  154,427  100%   $  155,858   100%
                             ==========  ====   ==========  ====   ==========   ====
</TABLE>

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

<TABLE>
<CAPTION>
                           1999  1998  1997
                           ----  ----  ----
<S>                         <C>   <C>   <C>
     Wyle/Unique ........   13%   14%   17%
     Arrow ..............   16%   14%   17%
     Pioneer ............   12%    9%   12%
</TABLE>

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

15.      Patent Infringement

         Periodically,  the  Company is made aware that  technology  used by the
Company may infringe  intellectual  property rights held by others. During 1999,
the Company  continued to hold discussions with several third parties  regarding
potential patent infringement issues, including two semiconductor  manufacturers
with  significantly  greater financial and intellectual  property resources than
the  Company.  As it has in the past,  the  Company  may obtain  licenses  under
patents that it is alleged to infringe.  The Company has made adequate provision
for the estimated  settlement costs of claims for alleged  infringement prior to
the balance sheet date. While management  believes that a reasonable  resolution
will occur, there can be no assurance that these claims will be resolved or that
the  resolution  of these  claims will not have a materially  adverse  effect on
future  results of  operations or require  changes in the Company's  products or
processes.  In addition,  management's  evaluation of the likely impact of these
pending  disputes could change in the future based upon new information  learned
by management. Subject to the foregoing, management does not believe any pending
disputes,  including those described above, would be likely to have a materially
adverse effect on the Company's financial condition,  results of operations,  or
liquidity for the year ended December 31, 1999.

          On March 29, 2000, Unisys  Corporation  ("Unisys") brought suit in the
United States District Court for the Northern  District of California,  San Jose
Division,  against the Company seeking  monetary  damages and injunctive  relief
based on Actel's  alleged  infringement  of four  patents  held by  Unisys.  The
Company  believes  that it has  meritorious  defenses to the claims  asserted by
Unisys  and  intends  to  defend  itself   vigorously  in  this  matter.   After
consideration  of the information  currently known, the Company does not believe
that the ultimate outcome of this case will have a materially  adverse effect on
Actel's business,  financial  condition,  or results of operations,  although no
assurance  to that  effect  can be given.  The  foregoing  is a  forward-looking
statement  subject to all of the risks and  uncertainties of a legal proceeding,
including  the  discovery  of new  information  and  unpredictability  as to the
ultimate outcome.

16.      Earnings Per Share

         The  following  table sets forth the  computation  of basic and diluted
earnings per share:

<TABLE>
<CAPTION>
                                                                             Years Ended December 31,
                                                                            ---------------------------
                                                                              1999     1998      1997
                                                                            -------   -------   -------
                                                                       (in thousands, except per share amounts)
<S>                                                                          <C>       <C>       <C>
Basic:
Weighted-average common shares outstanding ..............................    21,664    21,251    20,370
                                                                            -------   -------   -------
Shares used in computing net income per share ...........................    21,664    21,251    20,370
                                                                            =======   =======   =======
Net income ..............................................................   $17,638   $14,987   $16,768
                                                                            =======   =======   =======
Net income per share ....................................................   $  0.81   $  0.71   $  0.82
                                                                            =======   =======   =======

Diluted:
Weighted-average common shares outstanding ..............................    21,664    21,251    20,370
Net effect of dilutive stock options, warrants, and convertible preferred
   stock - based on the treasury stock method ...........................     1,394       670     1,598
                                                                            -------   -------   -------
Shares used in computing net income per share ...........................    23,058    21,921    21,968
                                                                            =======   =======   =======
Net income ..............................................................   $17,638   $14,987   $16,768
                                                                            =======   =======   =======
Net income per share ....................................................   $  0.76   $  0.68   $  0.76
                                                                            =======   =======   =======
</TABLE>

         Options  outstanding under the Company's stock option plans to purchase
approximately 218,000,  1,096,000, and 623,000 shares of Actel common stock were
not included in the calculation to derive diluted income per share for the years
1999,  1998,  and  1997,  respectively,  as their  inclusion  would  have had an
anti-dilutive effect.

17.      Subsequent Events (unaudited)

         As  of  March  15,  2000,   the   Company's   investment  in  Chartered
Semiconductor  had a  market  value of  $52,435,000,  reflecting  an  additional
unrealized gain of $14,816,000 subsequent to December 31, 1999.


<PAGE>


                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


THE BOARD OF DIRECTORS AND SHAREHOLDERS

ACTEL CORPORATION


         We have audited the accompanying  consolidated  balance sheets of Actel
Corporation  as of  December  31, 1999 and 1998,  and the  related  consolidated
statements of income, cash flows, and shareholders' equity for each of the three
years in the period ended December 31, 1999. These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material respects,  the consolidated  financial position of Actel
Corporation  at December 31, 1999 and 1998 and the  consolidated  results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 1999, in conformity with accounting  principles  generally accepted
in the United States.

                                                           /s/ ERNST & YOUNG LLP

San Jose, California January 21, 2000, except for the second paragraph of Note
15,as to which the date is March 31, 2000

<PAGE>
                                 STOCK LISTING

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

     On March 20,  2000,  there  were 249  shareholders  of  record.  Since many
shareholders  have their  shares held of record in the names of their  brokerage
firm, the actual number of  shareholders is estimated by the Company to be about
9,000.

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

             1999                           High              Low
------------------------------------- ----------------- -----------------
First Quarter                              22 5/8            12 1/2
Second Quarter                            20 5/16             11 -
Third Quarter                               20 -              13 -
Fourth Quarter                             24 1/2             16 -

             1998                           High              Low
------------------------------------- ----------------- -----------------
First Quarter                              16 3/8           10 5/16
Second Quarter                             16 5/8            10 1/4
Third Quarter                              13 1/2            8 5/8
Fourth Quarter                             21 1/2            7 1/4