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.
Investor Contact: Maurice Carson (650) 318-4700 Media Contact: Anna del Rosario (650) 318-4500