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: Dirk Sodestrom Actel Corporation (650) 318-4795