Actel reported net income in accordance with generally accepted accounting principles (GAAP) of $0.9 million, or $0.03 per diluted share, for the third quarter of 2009 compared with a net loss of $(1.4) million, or $(0.05) per basic share, for the third quarter of 2008 and a net loss of $(45.1) million, or $(1.73) per basic share, for the second quarter of 2009.
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 $2.4 million for the third quarter of 2009 compared with $1.9 million for the third quarter of 2008 and $14,000 for the second quarter of 2009.
Significant Developments
Significant developments during the third quarter included:
-- The availability of a free Mixed-Signal Power Manager (MPM) reference design and graphical user interface (GUI) tool included in the recently announced Fusion® Advanced Development Kit. This tool is key to enabling designers to control and reduce power at the system level, offering fully-verified, timing-closed, proven-in-hardware power supervision and management capabilities.
-- The availability of RTAX-DSP prototype FPGAs for demonstration and timing validation of designs targeted to Actel's RTAX-DSP space-flight FPGAs. These prototypes have the same pin assignment, mechanical footprint and timing properties across the full military temperature range (-55°C to 125°C) as their space-flight counterparts.
-- The continued performance of critical functions by Actel's radiation-tolerant RTAX-S FPGAs aboard the NASA Lunar Reconnaissance Orbiter (LRO) and Lunar Crater Observation and Sensing Satellite (LCROSS), which will return more data about the moon than any previous mission.
-- The opening of a new development and support center in Hyderabad, India. The facility will house engineering, operations and marketing employees as well as a 24-hour customer support center.
Business Outlook - Fourth Quarter 2009
The Company believes that fourth quarter 2009 revenues will be up two percent to six percent sequentially. Gross margin is expected to be about 59 or 60 percent. Operating expenses are anticipated to come in at approximately $26.9 million, which excludes an estimated $2.2 million of stock-based compensation expense, an estimated $1.2 million charge for the fourth quarter 2009 reduction in force, and $0.6 million associated with the acquisition of Pigeon Point Systems. Other income is expected to be about $0.7 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 26.3 million shares.
Conference Call
A conference call to discuss third quarter results will be held Tuesday, October 27, 2009, 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 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. The Company expects to record aggregate charges of $5.0 million to $5.5 million for severance and other costs related to the restructuring 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, 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 - Fourth 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, 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 fourth 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.
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 Nine Months Ended
---------------------------- ------------------
Oct. 4, July 5, Oct. 5, Oct. 4, Oct. 5,
2009 2009 2008 2009 2008
-------- -------- -------- -------- --------
Net revenues $ 47,248 $ 45,227 $ 53,215 $140,934 $165,620
Costs and expenses:
Cost of revenues 18,760 32,595 22,343 72,140 68,116
Research and development 14,839 15,326 16,995 46,558 50,807
Selling, general,
and administrative 13,196 13,659 15,038 40,345 47,431
Restructuring and asset
impairment charges 175 5,594 - 6,888 -
Amortization of
acquisition-related
intangibles 193 192 458 578 458
-------- -------- -------- -------- --------
Total costs and
expenses 47,163 67,366 54,834 166,509 166,812
-------- -------- -------- -------- --------
Income (loss) from
operations 85 (22,139) (1,619) (25,575) (1,192)
Interest income and
other, net 664 776 465 3,192 4,098
-------- -------- -------- -------- --------
Income (loss) before tax
provision 749 (21,363) (1,154) (22,383) 2,906
Tax provision (benefit) (157) 23,778 219 24,808 2,139
-------- -------- -------- -------- --------
Net income (loss) $ 906 $(45,141) $ (1,373) $(47,191) $ 767
======== ======== ======== ======== ========
Net income (loss) per
share:
Basic $ 0.03 $ (1.73) $ (0.05) $ (1.81) $ 0.03
======== ======== ======== ======== ========
Diluted $ 0.03 $ (1.73) $ (0.05) $ (1.81) $ 0.03
======== ======== ======== ======== ========
Shares used in computing
net income (loss) per
share:
Basic 26,160 26,146 25,726 26,111 25,873
======== ======== ======== ======== ========
Diluted 26,247 26,146 25,726 26,111 26,267
======== ======== ======== ======== ========
RECONCILIATION OF NON-GAAP STATEMENTS OF OPERATIONS TO GAAP STATEMENTS OF
OPERATIONS
(Unaudited, in thousands)
Three Months Ended Nine Months Ended
-------------------------- -----------------
Oct. 4, July 5, Oct. 5, Oct. 4, Oct. 5,
2009 2009 2008 2009 2008
-------- -------- -------- -------- --------
Cost and expenses:
Non-GAAP cost of revenues $ 18,760 $ 19,339 $ 22,343 $ 58,884 $ 68,116
Adjustments related to excess
inventory - 13,256 - 13,256 -
-------- -------- -------- -------- --------
GAAP cost of revenues $ 18,760 $ 32,595 $ 22,343 $ 72,140 $ 68,116
======== ======== ======== ======== ========
Non-GAAP research and
development $ 13,378 $ 14,056 $ 15,408 $ 42,539 $ 47,250
Adjustments related to stock
based compensation and other 1,461 1,270 1,587 4,019 3,557
-------- -------- -------- -------- --------
GAAP research and
development $ 14,839 $ 15,326 $ 16,995 $ 46,558 $ 50,807
======== ======== ======== ======== ========
Non-GAAP restructuring and
asset impairment charges $ - $ - $ - $ - $ -
Adjustments related to
restructuring and asset
impairments 175 5,594 - 6,888 -
-------- -------- -------- -------- --------
GAAP restructuring and asset
impairment charges $ 175 $ 5,594 $ - $ 6,888 $ -
======== ======== ======== ======== ========
Non-GAAP amortization of
acquisition-related
intangibles $ - $ - $ - $ - $ -
Adjustments related to
amortization of
acquisition-related
intangibles 193 192 458 578 458
-------- -------- -------- -------- --------
GAAP amortization of
acquisition-related
intangibles $ 193 $ 192 $ 458 $ 578 $ 458
======== ======== ======== ======== ========
Non-GAAP selling, general
and administrative $ 12,354 $ 12,588 $ 14,126 $ 37,396 $ 42,752
Adjustments related to stock
based compensation, option
investigation and other 842 1,071 912 2,949 4,679
-------- -------- -------- -------- --------
GAAP selling, general and
administrative $ 13,196 $ 13,659 $ 15,038 $ 40,345 $ 47,431
======== ======== ======== ======== ========
RECONCILIATION OF NON-GAAP STATEMENTS OF OPERATIONS TO GAAP STATEMENTS OF
OPERATIONS
(Unaudited, in thousands)
Three Months Ended Nine Months Ended
---------------------------- ------------------
Oct. 4, July 5, Oct. 5, Oct. 4, Oct. 5,
2009 2009 2008 2009 2008
-------- -------- -------- -------- --------
Income (loss) from
operations:
Non-GAAP income from
operations $ 2,756 $ (756) $ 1,338 $ 2,115 $ 7,502
Adjustments related to
excess inventory,
restructuring and asset
impairment charges,
stock based
compensation, and other (2,671) (21,383) (2,957) (27,690) (8,694)
-------- -------- -------- -------- --------
GAAP income (loss) from
operations $ 85 $(22,139) $ (1,619) $(25,575) $ (1,192)
======== ======== ======== ======== ========
Interest income and
other, net:
Non-GAAP interest income
and other, net $ 664 $ 776 $ 1,338 $ 2,476 $ 4,971
Adjustments related to
investment impairment
and insurance
reimbursement - - (873) 716 (873)
-------- -------- -------- -------- --------
GAAP interest income
and other, net $ 664 $ 776 $ 465 $ 3,192 $ 4,098
======== ======== ======== ======== ========
Income (loss) before tax
provision:
Non-GAAP income before
tax provision $ 3,420 $ 20 $ 2,676 $ 4,591 $ 12,473
Adjustments related to
excess inventory,
restructuring and asset
impairment charges,
stock based
compensation, and other (2,671) (21,383) (3,830) (26,974) (9,567)
-------- -------- -------- -------- --------
GAAP (loss) income
before tax provision $ 749 $(21,363) $ (1,154) $(22,383) $ 2,906
======== ======== ======== ======== ========
RECONCILIATION OF NON-GAAP STATEMENTS OF OPERATIONS TO GAAP STATEMENTS OF
OPERATIONS
(Unaudited, in thousands except per share amounts)
Three Months Ended Nine Months Ended
-------------------------- -----------------
Oct. 4, July 5, Oct. 5, Oct. 4, Oct. 5,
2009 2009 2008 2009 2008
------- -------- ------- -------- -------
Net income (loss):
Non-GAAP net income $ 2,394 $ 14 $ 1,873 $ 3,214 $ 8,731
Adjustments related to
excess inventory,
restructuring and asset
impairment charges, stock
based compensation,
deferred tax valuation
allowances, other and tax (1,488) (45,155) (3,246) (50,405) (7,964)
------- -------- ------- -------- -------
GAAP net income (loss) $ 906 $(45,141) $(1,373) $(47,191) $ 767
======= ======== ======= ======== =======
Net income (loss) per share:
Basic:
Non-GAAP net income per
share $ 0.09 $ 0.00 $ 0.07 $ 0.12 $ 0.34
Adjustments related to
excess inventory,
restructuring and asset
impairment charges, stock
based compensation,
deferred tax valuation
allowances, other and tax (0.06) (1.73) (0.12) (1.93) (0.31)
------- -------- ------- -------- -------
GAAP net income (loss) per
share $ 0.03 $ (1.73) $ (0.05) $ (1.81) $ 0.03
======= ======== ======= ======== =======
Diluted:
Non-GAAP net income per
share $ 0.09 $ 0.00 $ 0.07 $ 0.12 $ 0.33
Adjustments related to
excess inventory,
restructuring and asset
impairment charges, stock
based compensation,
deferred tax valuation
allowances, other and tax (0.06) (1.73) (0.12) (1.93) (0.30)
------- -------- ------- -------- -------
GAAP net income (loss) per
share $ 0.03 $ (1.73) $ (0.05) $ (1.81) $ 0.03
======= ======== ======= ======== =======
ACTEL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Oct. 4, 2009 Jan. 4, 2009
------------ ------------
ASSETS (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 55,887 $ 49,639
Short-term investments 86,612 89,111
Accounts receivable, net 22,837 11,596
Inventories 38,392 60,630
Deferred income taxes - 11,313
Prepaid expenses and other current assets 7,688 6,888
------------ ------------
Total current assets 211,416 229,177
Long-term investments 3,245 7,807
Property and equipment, net 24,778 34,747
Goodwill and other intangible assets, net 35,132 35,540
Deferred income taxes - 13,968
Other assets, net 29,756 22,022
------------ ------------
$ 304,327 $ 343,261
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,006 $ 14,672
Accrued compensation and employee benefits 6,510 11,240
Accrued licenses 4,279 3,952
Other accrued liabilities 4,909 5,274
Deferred income on shipments to distributors 30,117 24,316
------------ ------------
Total current liabilities 54,821 59,454
Deferred compensation plan liability 5,116 4,086
Deferred rent liability 1,391 1,449
Accrued sabbatical compensation 2,561 2,739
Other long-term liabilities, net 10,262 7,208
------------ ------------
Total liabilities 74,151 74,936
Shareholders' equity 230,176 268,325
------------ ------------
$ 304,327 $ 343,261
============ ============
ACTEL CORPORATION
SUPPLEMENTAL HISTORICAL FINANCIAL INFORMATION
(Unaudited)
Three Months Ended Nine Months Ended
------------------------- ---------------
Oct. 4, July 5, Oct. 5, Oct. 4, Oct. 5,
2009 2009 2008 2009 2008
------- ------- ------- ------- ------
Non-GAAP Operations Information
Percent of Revenue
Gross Margin 60.3% 57.2% 58.0% 58.2% 58.9%
R&D Expense 28.3% 31.1% 29.0% 30.2% 28.5%
SG&A Expense 26.1% 27.8% 26.5% 26.5% 25.8%
Depreciation and Amortization
Expense (000's) 3,079 3,257 3,465 9,833 8,896
Capital Expenditures (000's) 1,237 1,382 7,401 4,764 18,706
Revenue by Technology
Flash 26% 29% 29% 26% 25%
Other 74% 71% 71% 74% 75%
Revenue by Geographic Region
North America 49% 52% 49% 51% 48%
Europe 26% 25% 28% 26% 28%
Asia Pacific/Rest of World 25% 23% 23% 23% 24%
Revenue by Channel
OEM 28% 29% 28% 30% 25%
Distribution 72% 71% 72% 70% 75%
Revenue by Market Segment
Communication 8% 7% 9% 7% 9%
Consumer 15% 20% 19% 17% 17%
Industrial 34% 34% 36% 35% 36%
Aero/Military 43% 39% 36% 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