SOURCE: Actel Corporation

February 04, 2010 16:15 ET

Actel Announces Fourth Quarter 2009 Financial Results and CEO Transition

MOUNTAIN VIEW, CA--(Marketwire - February 4, 2010) - Actel Corporation (NASDAQ: ACTL) today announced net revenues of $49.7 million for the fourth quarter of 2009, down 5.8 percent from the fourth quarter of 2008, and up 5.2 percent from the third quarter of 2009. For the full fiscal year, net revenues were $190.6 million, down 12.7 percent from fiscal 2008.

Actel reported net income in accordance with U.S. generally accepted accounting principles (GAAP) of $1.0 million, or $0.04 per diluted share, for the fourth quarter of 2009 compared with a net loss of $(12.5) million, or $(0.48) per basic share, for the fourth quarter of 2008 and a net income of $0.9 million, or $0.03 per diluted share, for the third quarter of 2009. For the full fiscal year, net loss was $(46.2) million, or $(1.77) per basic share, compared with a net loss of $(11.7) million, or $(0.45) per basic share, in fiscal 2008.

Non-GAAP net income, which excludes stock-based compensation, certain excess inventory reserves, fixed asset impairment charges, expenses associated with the restructuring, adjustments to deferred tax valuation allowances and other non-recurring adjustments, was $3.3 million, or $0.12 per diluted share, for the fourth quarter of 2009 compared with $3.3 million, or $0.13 per diluted share, for the fourth quarter of 2008 and $2.4 million, or $0.09 per diluted share, for the third quarter of 2009. For the full fiscal year, non-GAAP net income was $6.5 million, or $0.25 per diluted share, compared with a net income of $12.0 million, or $0.46 per diluted share, for fiscal 2008.

Significant Developments

During the fourth quarter:

-- Actel IGLOO® Nano FPGAs were voted the Leading Product in the highly competitive Programmable Logic category of the prestigious 2009 Electronics Design News China (EDNC) Innovation Awards.

-- Actel announced several highly configurable DSP IP cores for RTAX DSP FPGAs targeted at the space market. The new cores enable designers to easily create common DSP functions such as filters (FIR, IIR) and transforms (FFT, IFT, DCT).

-- Pigeon Point Systems, an Actel company, announced continued compliance and interoperability initiatives for its xTCA™ board and module management controller releases. Formal testing for the recently released Pigeon Point management solutions based on the Actel Fusion® mixed-signal FPGA and the Renesas H8S microcontroller was demonstrated live at the 2009 ATCA Summit xTCA SlotFest.

-- Actel IGLOO FPGAs were highlighted in a teardown article in embedded.com about the latest technology in digital cameras, featuring a dual view LCD screen. This confirms that Actel's low power FPGAs are being designed into the latest portable digital consumer products.

CEO Transition

Actel also today announced that John East will retire as President and Chief Executive Officer of the Company and as a member of the Board of Directors. The Board has formed a committee to conduct a search for a new President and Chief Executive Officer (CEO). East will participate in the search, which will include both internal and external candidates. He will remain in his current role until a new CEO is in place, and will then serve as a consultant until August 2, 2011, under the terms of a Transition Agreement that was filed today with the Securities and Exchange Commission.

"I have had the privilege and pleasure of leading Actel for more than two decades, but I'm 65 now and the time has come for me to pass the baton," said East. "I am proud of the Company, the caliber of our management and employees, the quality of our products and services, and the integrity with which we have conducted business over the years. I am also decidedly optimistic about the Company's prospects and highly motivated to make a smooth handoff to a superb successor."

"In accepting John's decision to retire, the Board is appreciative of his long and distinguished service," said Robert Spencer, the Company's Lead Director. "Under John's stewardship, Actel emerged as the leading supplier of aerospace, low-power, and mixed-signal FPGAs. In addition to John's acumen, his honesty, fairness, and goodwill have left an indelible imprint on the Company and the industry. We now look forward to a successful transition and the next stage in the Company's growth."

Business Outlook -- First Quarter 2010

The Company believes that first quarter 2010 revenues will be up two percent to six percent sequentially. Gross margin is expected to be about 62 percent. Operating expenses are anticipated to come in at approximately $27.0 million, which excludes an estimated $2.1 million of stock-based compensation expense and $0.6 million associated with the acquisition of Pigeon Point Systems. Other income is expected to be about $0.5 million. The non-GAAP tax rate for the quarter is expected to be about 30 percent. Outstanding fully diluted share count is expected to be about 26.5 million shares.

Conference Call

A conference call to discuss fourth quarter results will be held Thursday, February 4, 2010, at 1:30 p.m. Pacific Time. A live web cast and replay of the call will be available. Web cast and replay access information as well as financial and other statistical information can be found on Actel's web site, www.actel.com.

Corporate Restructuring

Actel announced in January 2009 a company-wide restructuring plan to increase profitability. In conjunction with cost-reduction initiatives taken in the fourth quarter of 2008, the restructuring is expected to result in a quarterly reduction in expenses of approximately $6.5 million in the third quarter of 2010 compared with the third quarter of 2008. To date, the Company has recorded charges of $5.0 million for severance and other costs related to reductions in force. In addition, the Company has also recorded $5.5 million in restructuring costs not related to reductions in force. The Company expects to record additional charges of approximately $0.5 million by the beginning of the third quarter of 2010, when the restructuring will be substantially complete.

Non-GAAP Adjustments and Reconciliation

This release includes non-GAAP net income, non-GAAP net income per share data, and other non-GAAP line items from the Condensed Consolidated Statements of Operations, including total costs and expenses, income from operations, and income before tax provision. These measures are not in accordance with, or an alternative for, GAAP and may be different from non-GAAP measures used by other companies. These non-GAAP adjustments are provided to enhance the user's overall understanding of our operating performance. Actel believes that the presentation of these non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, provides useful information to both management and investors regarding financial and business trends relating to Actel's financial condition and results of operations, particularly by excluding certain expense and income items that we believe are not indicative of our core operating results. Actel believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. In addition, since we have historically reported non-GAAP results to the investment community, we believe the inclusion of non-GAAP numbers provides consistency in our financial reporting.

Common Stock Repurchase Program and Rule 10b5-1 Plan

The Company's stock repurchase program was instituted in 1998 for the purpose of replenishing some or all of the shares of Common Stock issued upon exercise of stock options and in connection with other stock compensation plans. The overall objective of the program is to reduce or eliminate earnings per share dilution caused by the issuance of such additional shares. Repurchases may be made in the open market or in privately negotiated transactions. To date, Actel's Board of Directors has authorized the repurchase of 7,000,000 shares under the program, and 5,326,258 shares of Common Stock have been repurchased on the open market. The Company has remaining authority to repurchase 1,673,742 shares under the program. To facilitate repurchases under the Company's stock repurchase program, Actel's Board of Directors has adopted a plan under Rule 10b5-1 of the Securities and Exchange Commission. Under the Rule 10b5-1 plan, the Company repurchases shares of Actel Common Stock whenever the price and other criteria set forth in the plan are met, including times when the Company would not otherwise be in the market due to the Company's trading policies or the possession of material non-public information.

Forward-Looking Statements

The statements in the paragraph under the heading "Business Outlook -- First Quarter 2010," and certain statements in the paragraph under the heading "Corporate Restructuring," are forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and should be read with the "Risk Factors" in Actel's most recent Form 10-Q, which can be found on Actel's web site, www.actel.com. Actel's projected revenues and operating results for the first quarter of 2010, as well as the anticipated results of and charges for the restructuring, are subject to a multitude of risks, including general economic conditions and a variety of risks specific to Actel or characteristic of the semiconductor industry, such as fluctuating demand, intense competition, rapid technological change and related intellectual property and international trade issues, wafer and other supply shortages, booking and shipment uncertainties, and a failure to fully achieve the projected results of or to accurately estimate the charges for the restructuring. These and the other Risk Factors make it difficult for Actel to accurately project quarterly financial and restructuring results, and could cause actual results to differ materially from those projected in the forward-looking statements. Any failure to meet expectations could cause the price of Actel's stock to decline significantly. Actel undertakes no obligation to update any information contained in this press release.

About Actel

Actel is the leader in low-power FPGAs and mixed-signal FPGAs, offering the most comprehensive portfolio of system and power management solutions. Power Matters. Learn more at www.actel.com.

Editor's Note: The Actel name and logo are registered trademarks of Actel Corporation.

                              ACTEL CORPORATION

               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              (Unaudited, in thousands except per share amounts)



                           Three Months Ended              Year Ended
                     -------------------------------- --------------------
                      Jan. 3,    Oct. 4,    Jan. 4,    Jan. 3,    Jan. 4,
                       2010       2009       2009       2010       2009
                     ---------- ---------  ---------  ---------  ---------


Net revenues         $   49,699 $  47,248  $  52,786  $ 190,633  $ 218,406
Costs and expenses:
  Cost of revenues       18,715    18,760     21,598     90,855     89,714
  Research and
   development           14,160    14,839     14,851     60,718     65,658
  Selling, general,
   and administrative    14,401    13,196     15,714     54,746     63,145
  Restructuring and
   asset impairment
   charges                1,202       175      2,424      8,090      2,424
  Amortization of
   acquisition-
   related
   intangibles              193       193        338        771        796
                     ---------- ---------  ---------  ---------  ---------
    Total costs and
     expenses            48,671    47,163     54,925    215,180    221,737
                     ---------- ---------  ---------  ---------  ---------
Income (loss) from
 operations               1,028        85     (2,139)   (24,547)    (3,331)
Interest income and
 other, net                  71       664      1,335      3,263      5,433
                     ---------- ---------  ---------  ---------  ---------
Income (loss) before
 tax provision            1,099       749       (804)   (21,284)     2,102
Tax provision
 (benefit)                  137      (157)    11,688     24,945     13,827
                     ---------- ---------  ---------  ---------  ---------
Net income (loss)    $      962 $     906  $ (12,492) $ (46,229) $ (11,725)
                     ========== =========  =========  =========  =========

Net income (loss)
 per share:
  Basic              $     0.04 $    0.03  $   (0.48) $   (1.77) $   (0.45)
                     ========== =========  =========  =========  =========
  Diluted            $     0.04 $    0.03  $   (0.48) $   (1.77) $   (0.45)
                     ========== =========  =========  =========  =========

Shares used in
 computing net
 income (loss) per
 share:
  Basic                  26,203    26,160     25,784     26,134     25,851
                     ========== =========  =========  =========  =========
  Diluted                26,362    26,247     25,784     26,134     25,851
                     ========== =========  =========  =========  =========




       RECONCILIATION OF NON-GAAP STATEMENTS OF OPERATIONS TO GAAP
                       STATEMENTS OF OPERATIONS
                       (Unaudited, in thousands)



                                   Three Months Ended        Year Ended
                               -------------------------- -----------------
                               Jan. 3,  Oct. 4,  Jan. 4,  Jan. 3,  Jan. 4,
                                 2010     2009     2009     2010     2009
                               -------- -------- -------- -------- --------
Cost and expenses:
  Non-GAAP cost of revenues    $ 18,715 $ 18,760 $ 21,598 $ 77,599 $ 89,714
  Adjustments related to
   excess inventory                   -        -        -   13,256        -
                               -------- -------- -------- -------- --------
  GAAP cost of revenues        $ 18,715 $ 18,760 $ 21,598 $ 90,855 $ 89,714
                               ======== ======== ======== ======== ========

  Non-GAAP research and
   development                 $ 12,915 $ 13,378 $ 13,511 $ 55,454 $ 60,761
  Adjustments related to stock
   based compensation and
   other                          1,245    1,461    1,340    5,264    4,897
                               -------- -------- -------- -------- --------
  GAAP research and
   development                 $ 14,160 $ 14,839 $ 14,851 $ 60,718 $ 65,658
                               ======== ======== ======== ======== ========

  Non-GAAP restructuring and
   asset impairment charges    $      - $      - $      - $      - $      -
  Adjustments related to
   restructuring and asset
   impairments                    1,202      175    2,424    8,090    2,424
                               -------- -------- -------- -------- --------
  GAAP restructuring and asset
   impairment charges          $  1,202 $    175 $  2,424 $  8,090 $  2,424
                               ======== ======== ======== ======== ========

  Non-GAAP amortization of
   acquisition-related
   intangibles                 $      - $      - $      - $      - $      -
  Adjustments related to
   amortization of
   acquisition-related
   intangibles                      193      193      338      771      796
                               -------- -------- -------- -------- --------
  GAAP amortization of
   acquisition-related
   intangibles                 $    193 $    193 $    338 $    771 $    796
                               ======== ======== ======== ======== ========

  Non-GAAP selling, general
   and administrative          $ 13,487 $ 12,354 $ 14,347 $ 50,883 $ 57,099
  Adjustments related to stock
   based compensation, option
   investigation and other          914      842    1,367    3,863    6,046
                               -------- -------- -------- -------- --------
  GAAP selling, general and
   administrative              $ 14,401 $ 13,196 $ 15,714 $ 54,746 $ 63,145
                               ======== ======== ======== ======== ========






         RECONCILIATION OF NON-GAAP STATEMENTS OF OPERATIONS TO GAAP
                          STATEMENTS OF OPERATIONS
                          (Unaudited, in thousands)


                           Three Months Ended              Year Ended
                     -------------------------------  --------------------
                      Jan. 3,    Oct. 4,    Jan. 4,    Jan. 3,    Jan. 4,
                       2010       2009       2009       2010       2009
                     ---------  ---------  ---------  ---------  ---------

Income (loss) from
 operations:
  Non-GAAP income
   from operations   $   4,582  $   2,756  $   3,330  $   6,697  $  10,832
  Adjustments
   related to excess
   inventory,
   restructuring and
   asset impairment
   charges, stock
   based
   compensation, and
   other                (3,554)    (2,671)    (5,469)   (31,244)   (14,163)
                     ---------  ---------  ---------  ---------  ---------
  GAAP income (loss)
   from operations   $   1,028  $      85  $  (2,139) $ (24,547) $  (3,331)
                     =========  =========  =========  =========  =========

Interest income and
 other, net:
  Non-GAAP interest
   income and other,
   net               $      71  $     664  $   1,335  $   2,547  $   6,306
  Adjustments
   related to
   investment
   impairment and
   insurance
   reimbursement             -          -          -        716       (873)
                     ---------  ---------  ---------  ---------  ---------
  GAAP interest
   income and other,
   net               $      71  $     664  $   1,335  $   3,263  $   5,433
                     =========  =========  =========  =========  =========

Income (loss) before
 tax provision:
  Non-GAAP income
   before tax
   provision         $   4,653  $   3,420  $   4,665  $   9,244  $  17,138
  Adjustments
   related to excess
   inventory,
   restructuring and
   asset impairment
   charges, stock
   based
   compensation, and
   other                (3,554)    (2,671)    (5,469)   (30,528)   (15,036)
                     ---------  ---------  ---------  ---------  ---------
  GAAP (loss) income
   before tax
   provision         $   1,099  $     749  $    (804) $ (21,284) $   2,102
                     =========  =========  =========  =========  =========





         RECONCILIATION OF NON-GAAP STATEMENTS OF OPERATIONS TO GAAP
                           STATEMENTS OF OPERATIONS
              (Unaudited, in thousands except per share amounts)



                           Three Months Ended              Year Ended
                     -------------------------------  --------------------
                      Jan. 3,    Oct. 4,    Jan. 4,    Jan. 3,    Jan. 4,
                       2010       2009       2009       2010       2009
                     ---------  ---------  ---------  ---------  ---------
Net income (loss):
  Non-GAAP net
   income            $   3,257  $   2,394  $   3,266  $   6,471  $  11,997
  Adjustments
   related to excess
   inventory,
   restructuring and
   asset impairment
   charges, stock
   based
   compensation,
   deferred tax
   valuation
   allowances, other
   and tax              (2,295)    (1,488)   (15,758)   (52,700)   (23,722)
                     ---------  ---------  ---------  ---------  ---------
  GAAP net income
   (loss)            $     962  $     906  $ (12,492) $ (46,229) $ (11,725)
                     =========  =========  =========  =========  =========

Net income (loss)
 per share:
  Basic:
    Non-GAAP net
     income per
     share           $    0.12  $    0.09  $    0.13  $    0.25  $    0.46
    Adjustments
     related to excess
     inventory,
     restructuring
     and asset
     impairment
     charges, stock
     based
     compensation,
     deferred tax
     valuation
     allowances,
     other
     and tax             (0.08)     (0.06)     (0.61)     (2.02)     (0.91)
                     ---------  ---------  ---------  ---------  ---------
    GAAP net income
     (loss) per
     share           $    0.04  $    0.03  $   (0.48) $   (1.77) $   (0.45)
                     =========  =========  =========  =========  =========

  Diluted:
    Non-GAAP net
     income per
     share           $    0.12  $    0.09  $    0.13  $    0.25  $    0.46
    Adjustments
     related to excess
     inventory,
     restructuring
     and asset
     impairment
     charges, stock
     based
     compensation,
     deferred tax
     valuation
     allowances,
     other
     and tax             (0.08)     (0.06)     (0.61)     (2.02)     (0.91)
                     ---------  ---------  ---------  ---------  ---------
    GAAP net income
     (loss) per
     share           $    0.04  $    0.03  $   (0.48) $   (1.77) $   (0.45)
                     =========  =========  =========  =========  =========






                           ACTEL CORPORATION

                CONDENSED CONSOLIDATED BALANCE SHEETS
                            (In thousands)


                                                        Jan. 3,   Jan. 4,
                                                         2010      2009
                                                       --------- ---------

             ASSETS                                   (Unaudited)(Audited)
Current assets:
  Cash and cash equivalents                            $  45,994 $  49,639
  Short-term investments                                 106,007    89,111
  Accounts receivable, net                                19,112    11,596
  Inventories                                             37,324    60,630
  Deferred income taxes                                    1,729    11,313
  Prepaid expenses and other current assets                8,166     6,888
                                                       --------- ---------
      Total current assets                               218,332   229,177
Long-term investments                                        663     7,807
Property and equipment, net                               22,969    34,747
Goodwill and other intangible assets, net                 34,939    35,540
Deferred income taxes                                          -    13,968
Other assets, net                                         30,099    22,022
                                                       --------- ---------
                                                       $ 307,002 $ 343,261
                                                       ========= =========

      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                     $  10,262 $  14,672
  Accrued compensation and employee benefits               8,206    11,240
  Accrued licenses                                         4,996     3,952
  Other accrued liabilities                                5,422     5,274
  Deferred income on shipments to distributors            22,867    24,316
                                                       --------- ---------
      Total current liabilities                           51,753    59,454
  Deferred compensation plan liability                     5,470     4,086
  Deferred rent liability                                  1,590     1,449
  Accrued sabbatical compensation                          2,805     2,739
  Other long-term liabilities, net                        11,921     7,208
                                                       --------- ---------
      Total liabilities                                   73,539    74,936
  Shareholders' equity                                   233,463   268,325
                                                       --------- ---------
                                                       $ 307,002 $ 343,261
                                                       ========= =========




                         ACTEL CORPORATION

           SUPPLEMENTAL HISTORICAL FINANCIAL INFORMATION
                           (Unaudited)


                               -------------------------------------------
                                   Three Months Ended        Year Ended
                               -------------------------  ----------------
                               Jan. 3,  Oct. 4,  Jan. 4,  Jan. 3,  Jan. 4,
                                 2010     2009     2009     2010     2009
                               -------  -------  -------  -------  -------
Non-GAAP Operations
 Information
  Percent of Revenue
  Gross Margin                    62.3%    60.3%    59.1%    59.3%    58.9%
  R&D Expense                     26.0%    28.3%    25.6%    29.1%    27.8%
  SG&A Expense                    27.1%    26.1%    27.2%    26.7%    26.1%

Depreciation and Amortization
  Expense (000's)                3,063    3,079    3,749   12,896   12,645
  Capital Expenditures (000's)   1,044    1,237    2,716    5,808   21,422

  Revenue by Technology
    Flash                           24%      26%      28%      26%      26%
    Other                           76%      74%      72%      74%      74%

  Revenue by Geographic Region
    North America                   55%      49%      54%      52%      49%
    Europe                          23%      26%      25%      25%      27%
    Asia Pacific/Rest of World      22%      25%      21%      23%      24%

  Revenue by Channel
    OEM                             28%      28%      30%      30%      26%
    Distribution                    72%      72%      70%      70%      74%

  Revenue by Market Segment
    Communication                    8%       8%      10%       7%      10%
    Consumer                        20%      15%      13%      18%      16%
    Industrial                      30%      34%      36%      34%      36%
    Aero/Military                   42%      43%      41%      41%      38%

Market segment numbers are based on our estimate of end uses by our customers.

FLASH Technology products are defined as -- ProASIC, ProASIC Plus, ProASIC 3, ProASIC 3 Low Power, IGLOO, IGLOO Plus, and FUSION project families.

Contact Information

  • Investor Contact:
    Maurice Carson
    (650) 318-4700

    Media Contact:
    Anna del Rosario
    (650) 318-4500