SOURCE: Actel Corporation

February 03, 2009 16:26 ET

Actel Announces Fourth Quarter 2008 Financial Results and Corporate Restructuring

Restructuring Plan Expected to Reduce Quarterly Expenses by $6.5 Million

MOUNTAIN VIEW, CA--(Marketwire - February 3, 2009) - Actel Corporation (NASDAQ: ACTL) today announced net revenues of $52.8 million for the fourth quarter of 2008, up 2 percent from the fourth quarter of 2007 and down 1 percent from the third quarter of 2008. For the full fiscal year, net revenues were $218.4 million, up 11 percent from fiscal 2007.

Non-GAAP net income, which excludes stock-based compensation, adjustments to deferred tax valuation allowances, expenses associated with a reduction-in-force and other cost reduction initiatives taken during the fourth quarter, and other non-recurring adjustments, was $3.3 million for the fourth quarter of 2008 compared with $2.6 million for the fourth quarter of 2007 and $1.9 million for the third quarter of 2008. Non-GAAP net income was $12.0 million, or $0.46 per diluted share, for the 2008 fiscal year compared with $10.7 million, or $0.39 per diluted share, for the 2007 fiscal year.

Including stock-based compensation, adjustments to deferred tax valuation allowances, expenses associated with the fourth quarter reduction-in-force, and other non-recurring adjustments in accordance with generally accepted accounting principles (GAAP), Actel reported a net loss of ($12.5) million, or ($0.48) per basic share, for the fourth quarter of 2008 compared with a net loss of ($1.3) million, or ($0.05) per basic share, for the fourth quarter of 2007 and net loss of ($1.4) million, or ($0.05) per basic share, for the third quarter of 2008. Net loss in accordance with GAAP was ($11.7) million, or ($0.45) per basic share, for the 2008 fiscal year, compared with a net loss of ($2.9) million, or ($0.11) per basic share, for the 2007 fiscal year. The provision for income taxes for the 2008 fourth quarter and fiscal year includes non-cash charges of $13.3 million to increase the Company's valuation allowance associated with its deferred income tax assets. The increase in the valuation allowance results from uncertainties surrounding the nature and timing of the taxable income required to realize certain tax credits and net operating loss carryforwards. Charges of $2.4 million for expenses associated with the fourth quarter reduction-in-force adversely affected net income in accordance with GAAP for the fourth quarter of 2008 and the 2008 fiscal year.

Gross margin was 59.1 percent for the fourth quarter of 2008 compared with 55.0 percent for the fourth quarter of 2007 and 58.0 percent for the third quarter of 2008. Gross margin was 58.9 percent for the 2008 fiscal year compared with 58.2 percent for the 2007 fiscal year.

Corporate Restructuring

Actel also today announced a company-wide restructuring plan that embodies a shift in corporate philosophy making profitability more important than sales growth. In conjunction with the 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. The Company estimates that approximately $5.5 million of the quarterly reductions will be in operating spending and that the balance of savings will be in cost of goods sold. The Company expects to record additional charges of $4.0 million to $4.5 million for severance and other costs related to the restructuring between now and the beginning of the third quarter of 2010, when the restructuring will be substantially complete.

Business Outlook - First Quarter 2009

The Company believes that first quarter 2009 revenues will decline sequentially 10 percent to 15 percent. Gross margin is expected to be about 59 percent or 60 percent. Operating expenses are anticipated to come in at approximately $29 million, which excludes an estimated $1.6 million of stock-based compensation expense. The operating expense outlook also does not include any restructuring charges that may be incurred during the first quarter of 2009 in connection with the restructuring plan. Other income is expected to be about $2 million. The tax rate for the quarter is expected to be about 30 percent. Outstanding fully diluted share count is expected to be about 26.3 million shares.

About Actel

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

A conference call to discuss fourth quarter results will be held Tuesday, February 3, 2009, at 2:00 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.

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, in particular 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.

Forward-Looking Statements

The statements in the paragraphs under the headings "Corporate Restructuring" and "Business Outlook - First Quarter 2009" 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 or 10-K, which can be found on Actel's web site, www.actel.com. Actel's anticipated results from its restructuring plan and its projected revenues and operating results for the first quarter of 2009 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 a failure to achieve the full projected results of the restructuring plan, fluctuating demand, intense competition, rapid technological change and related intellectual property and international trade issues, wafer and other supply shortages, and booking and shipment uncertainties. These and the other Risk Factors make it difficult for Actel to accurately project quarterly revenues and operating 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.

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

                            ACTEL CORPORATION

              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (In thousands except per share amounts)



                     -------------------------------  --------------------
                           Three Months Ended           Fiscal Year Ended
                     -------------------------------  --------------------
                      Jan. 4,    Oct. 5,    Jan. 6,    Jan. 4,    Jan. 6,
                       2009       2008       2008       2009       2008
                     ---------  ---------  ---------  ---------  ---------
                     unaudited  unaudited  unaudited  unaudited  unaudited
Net revenues         $  52,786  $  53,215  $  51,769  $ 218,406  $ 197,043
Costs and expenses:
  Cost of revenues      21,598     22,343     23,291     89,714     82,363
  Research and
   development          14,851     16,995     15,475     65,658     63,726
  Selling, general,
   and
   administrative       15,714     15,038     16,768     63,145     63,053
  Restructuring
   charge                2,424          -          -      2,424          -
  Amortization of
   acquisition-related
   intangibles             338        458          -        796          -
                     ---------  ---------  ---------  ---------  ---------
     Total costs and
      expenses          54,925     54,834     55,534    221,737    209,142
                     ---------  ---------  ---------  ---------  ---------
Loss from operations    (2,139)    (1,619)    (3,765)    (3,331)   (12,099)
Interest income and
 other, net              1,335        465      2,231      5,433      8,607
                     ---------  ---------  ---------  ---------  ---------
Income (loss) before
 tax provision
 (benefit)                (804)    (1,154)    (1,534)     2,102     (3,492)
Tax provision
 (benefit)              11,688        219       (237)    13,827       (588)
                     ---------  ---------  ---------  ---------  ---------
Net loss             $ (12,492) $  (1,373) $  (1,297) $ (11,725) $  (2,904)
                     =========  =========  =========  =========  =========

Net loss per share:
  Basic              $   (0.48) $   (0.05) $   (0.05) $   (0.45) $   (0.11)
                     =========  =========  =========  =========  =========
  Diluted            $   (0.48) $   (0.05) $   (0.05) $   (0.45) $   (0.11)
                     =========  =========  =========  =========  =========

Shares used in
 computing net loss
 per share:
  Basic                 25,784     25,726     27,026     25,851     26,888
                     =========  =========  =========  =========  =========
  Diluted               25,784     25,726     27,026     25,851     26,888
                     =========  =========  =========  =========  =========





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



                                   Three Months Ended     Fiscal Year Ended
                               -------------------------- -----------------
                               Jan. 4,  Oct. 5,  Jan. 6,  Jan. 4,  Jan. 6,
                                 2009     2008     2008     2009     2008
                               -------- -------- -------- -------- --------
Cost and expenses:
  Non-GAAP research and
   development                 $ 13,511 $ 15,408 $ 14,660 $ 60,761 $ 56,002
  Adjustments related to stock
   based compensation and
   other                          1,340    1,587      815    4,897    7,724
                               -------- -------- -------- -------- --------
  GAAP research and
   development                 $ 14,851 $ 16,995 $ 15,475 $ 65,658 $ 63,726
                               ======== ======== ======== ======== ========

  Non-GAAP restructuring
   charge                      $      - $      - $      - $      - $      -
  Adjustments related to
   restructuring                  2,424        -        -    2,424        -
                               -------- -------- -------- -------- --------
  GAAP restructuring charge    $  2,424 $      - $      - $  2,424 $      -
                               ======== ======== ======== ======== ========

  Non-GAAP amortization of
   acquisition-related
   intangibles                 $      - $      - $      - $      - $      -
  Adjustments related to
   amortization of
   acquisition-related
   intangibles                      338      458        -      796        -
                               -------- -------- -------- -------- --------
  GAAP amortization of
   acquisition-related
   intangibles                 $    338 $    458 $      - $    796 $      -
                               ======== ======== ======== ======== ========

  Non-GAAP selling, general
   and administrative          $ 14,347 $ 14,126 $ 14,564 $ 57,099 $ 54,286
  Adjustments related to stock
   based compensation, option
   investigation and other        1,367      912    2,204    6,046    8,767
                               -------- -------- -------- -------- --------
  GAAP selling, general and
   administrative              $ 15,714 $ 15,038 $ 16,768 $ 63,145 $ 63,053
                               ======== ======== ======== ======== ========






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



                           Three Months Ended           Fiscal Year Ended
                     -------------------------------  --------------------
                      Jan. 4,    Oct. 5,    Jan. 6,    Jan. 4,    Jan. 6,
                       2009       2008       2008       2009       2008
                     ---------  ---------  ---------  ---------  ---------
Income (loss) from
 operations:
  Non-GAAP income
   from operations   $   3,330  $   1,338  $   1,471  $  10,832  $   6,609
  Adjustments
   related to stock
   based
   compensation and
   other                (5,469)    (2,957)    (5,236)   (14,163)   (18,708)
                     ---------  ---------  ---------  ---------  ---------
  GAAP (loss) income
   from operations   $  (2,139) $  (1,619) $  (3,765) $  (3,331) $ (12,099)
                     =========  =========  =========  =========  =========

Interest income and
 other, net:
  Non-GAAP interest
   income and other,
   net               $   1,335  $   1,338  $   2,231  $   6,306  $   8,607
  Adjustments
   related to
   investment
   impairment                -       (873)         -       (873)         -
                     ---------  ---------  ---------  ---------  ---------
  GAAP interest
   income and other,
   net               $   1,335  $     465  $   2,231  $   5,433  $   8,607
                     =========  =========  =========  =========  =========

Income (loss) before
 tax provision:
  Non-GAAP income
   before tax
   provision         $   4,665  $   2,676  $   3,702  $  17,138  $  15,216
  Adjustments
   related to stock
   based
   compensation and
   other                (5,469)    (3,830)    (5,236)   (15,036)   (18,708)
                     ---------  ---------  ---------  ---------  ---------
  GAAP (loss) income
   before tax
   provision         $    (804) $  (1,154) $  (1,534) $   2,102  $  (3,492)
                     =========  =========  =========  =========  =========





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



                           Three Months Ended           Fiscal Year Ended
                     -------------------------------  --------------------
                      Jan. 4,    Oct. 5,    Jan. 6,    Jan. 4,    Jan. 6,
                       2009       2008       2008       2009       2008
                     ---------  ---------  ---------  ---------  ---------
Net income (loss):
  Non-GAAP net
   income            $   3,266  $   1,873  $   2,591  $  11,997  $  10,651
  Adjustments
   related to stock
   based
   compensation,
   deferred tax
   valuation
   allowances, other
   and tax             (15,758)    (3,246)    (3,888)   (23,722)   (13,555)
                     ---------  ---------  ---------  ---------  ---------
  GAAP net loss      $ (12,492) $  (1,373) $  (1,297) $ (11,725) $  (2,904)
                     =========  =========  =========  =========  =========

Net income (loss)
 per share:
 Basic:
  Non-GAAP net
   income per share  $    0.13  $    0.07  $    0.10  $    0.46  $    0.39
  Adjustments
   related to stock
   based
   compensation,
   deferred tax
   valuation
   allowances, other
   and tax               (0.61)     (0.12)     (0.15)     (0.91)     (0.50)
                     ---------  ---------  ---------  ---------  ---------
  GAAP net loss per
   share             $   (0.48) $   (0.05) $   (0.05) $   (0.45) $   (0.11)
                     =========  =========  =========  =========  =========

 Diluted:
  Non-GAAP net
   income per share  $    0.13  $    0.07  $    0.10  $    0.46  $    0.39
  Adjustments
   related to stock
   based
   compensation,
   deferred tax
   valuation
   allowances, other
   and tax               (0.61)     (0.12)     (0.15)     (0.91)     (0.50)
                     ---------  ---------  ---------  ---------  ---------
  GAAP net loss per
   share             $   (0.48) $   (0.05) $   (0.05) $   (0.45) $   (0.11)
                     =========  =========  =========  =========  =========









                            ACTEL CORPORATION

                        CONSOLIDATED BALANCE SHEETS
                              (In thousands)



                                                         Jan. 4,   Jan. 6,
                                                          2009      2008
                                                      ----------- ---------
                  ASSETS                              (Unaudited) (Audited)
Current assets:
  Cash and cash equivalents                           $    49,639 $  30,119
  Short-term investments                                   89,111   152,609
  Accounts receivable, net                                 11,596    18,116
  Inventories                                              60,630    35,587
  Deferred income taxes                                    13,893    19,350
  Prepaid expenses and other current assets                 6,888    10,259
                                                      ----------- ---------
    Total current assets                                  231,757   266,040
Property and equipment, net                                34,747    25,417
Long-term investments                                       7,807     6,442
Goodwill                                                   35,343    30,197
Deferred income taxes                                      11,549    16,082
Other assets, net                                          22,022    19,438
                                                      ----------- ---------
                                                      $   343,225 $ 363,616
                                                      =========== =========
           LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                    $    14,612 $  16,972
  Accrued compensation and employee benefits               11,300     6,181
  Accrued licenses                                          3,952     4,927
  Other accrued liabilities                                 5,238     3,941
  Deferred income on shipments to distributors             24,316    26,109
                                                      ----------- ---------
    Total current liabilities                              59,418    58,130
  Deferred compensation plan liability                      4,086     5,479
  Deferred rent liability                                   1,449     1,417
  Accrued sabbatical compensation                           2,739     3,380
  Other long-term liabilities, net                          7,208     3,718
                                                      ----------- ---------
     Total liabilities                                     74,900    72,124
  Shareholders' equity                                    268,325   291,492
                                                      ----------- ---------
                                                      $   343,225 $ 363,616
                                                      =========== =========

Contact Information

  • Contact:
    Dirk Sodestrom
    Actel Corporation
    (650) 318-4795