Actel Announces Second Quarter 2009 Financial Results

MOUNTAIN VIEW, CA -- (MARKET WIRE) -- Jul 28, 2009 -- Actel Corporation (NASDAQ: ACTL) today announced net revenues of $45.2 million for the second quarter of 2009, down 21.5 percent from the second quarter of 2008 and down 6.7 percent from the first quarter of 2009.

Non-GAAP net income, which excludes stock-based compensation, certain excess inventory reserves, fixed asset impairment charges, expenses associated with a restructuring initiated during the first quarter, adjustments to deferred tax valuation allowances and other non-recurring adjustments, was $14 thousand for the second quarter of 2009 compared with $4.0 million for the second quarter of 2008 and $0.8 million for the first quarter of 2009.

Including stock-based compensation, excess inventory reserves, fixed asset impairment charges, expenses associated with the restructuring, adjustments to deferred tax valuation allowances and other non-recurring adjustments in accordance with generally accepted accounting principles (GAAP), Actel reported a net loss of ($45.1) million, or ($1.73) per basic share, for the second quarter of 2009 compared with net income of $2.0 million, or $0.08 per diluted share, for the second quarter of 2008 and a net loss of ($3.0) million, or ($0.11) per basic share, for the first quarter of 2009. During the second quarter of 2009, the Company recorded a non-cash impairment charge of $5.5 million for certain manufacturing fixed assets that were determined to be excess to current and expected future manufacturing requirements. The provision for income taxes for the second quarter of 2009 includes non-cash charges of $24.4 million to increase the Company's valuation allowance associated with its deferred income tax assets. The Company established a full reserve for its remaining deferred tax assets as a result of current-year and cumulative losses coupled with continuing uncertainties surrounding the nature and timing of the taxable income required to realize deferred tax assets in future periods.

During the second quarter of 2009, the Company established reserves of $13.3 million for some of its newer product lines. As noted previously, during 2008 the Company built up inventory of its new Flash products due to a conscious effort to support increased turns business and shorter lead times for the consumer products at which many of the new Flash products are targeted. However, due to uncertainty regarding the timing and extent of the economic recovery, coupled with the high levels of inventory on hand compared with historical norms, the Company determined that the excess reserves were appropriate based on its historical excess reserve accounting policies. As a consequence of the charges associated with these inventory reserves, gross margin was 27.9 percent for the second quarter of 2009 compared with 60.0 percent for the second quarter of 2008 and 57.1 percent for the first quarter of 2009. Excluding these excess reserve charges, non-GAAP gross margin for the second quarter of 2009 was 57.2 percent.

Business Outlook - Third Quarter 2009

The Company believes that third quarter 2009 revenues will be four percent up to two percent down sequentially. Gross margin is expected to be about 56 or 57 percent. Operating expenses are anticipated to come in at approximately $27.2 million, which excludes an estimated $1.7 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 $0.8 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 26.4 million shares.

Conference Call

A conference call to discuss second quarter results will be held Tuesday, July 28, 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.

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 $4.0 million to $4.5 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.

Common Stock Repurchase Program

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.

"We continue to believe that our Common Stock repurchase program provides an excellent opportunity to increase shareholder value," said John C. East, Actel president and CEO. "While any future stock repurchases are subject to market conditions and the consideration of alternative investment opportunities available from time to time, we remain committed to preserving and maximizing shareholder value."

Forward-Looking Statements

The statements in the paragraphs under the headings "Corporate Restructuring" and "Business Outlook - Third 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 third 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          Six Months Ended
                     -------------------------------  --------------------
                      Jul 5,     Apr 5,     Jul 6,     Jul 5,     Jul 6,
                           2009              2009              2008              2009              2008
                                          ---------    ---------    ---------    ---------    ---------


Net  revenues                  $    45,227    $    48,459    $    57,649    $    93,686    $  112,405
Costs  and  expenses:
    Cost  of  revenues            32,595          20,785          23,035          53,380          45,773
    Research  and
      development                    15,326          16,393          17,103          31,719          33,812
    Selling,  general,
      and  administrative      13,659          13,490          15,613          27,149          32,393
    Restructuring  and
      asset  impairment
      charges                              5,594            1,119                    -            6,713                    -
    Amortization  of
      acquisition-related
      intangibles                          192                193                    -                385                    -
                                          ---------    ---------    ---------    ---------    ---------
        Total  costs  and
          expenses                      67,366          51,980          55,751        119,346        111,978
                                          ---------    ---------    ---------    ---------    ---------
Income  (loss)  from
  operations                        (22,139)        (3,521)          1,898        (25,660)              427
Interest  income  and
  other,  net                                776            1,752            1,701            2,528            3,633
                                          ---------    ---------    ---------    ---------    ---------
Income  (loss)  before
  tax  provision                  (21,363)        (1,769)          3,599        (23,132)          4,060
Tax  provision                      23,778            1,187            1,635          24,965            1,920
                                          ---------    ---------    ---------    ---------    ---------
Net  income  (loss)        $  (45,141)  $    (2,956)  $      1,964    $  (48,097)  $      2,140
                                          =========    =========    =========    =========    =========

Net  income  (loss)
  per  share:
      Basic                          $      (1.73)  $      (0.11)  $        0.08    $      (1.84)  $        0.08
                                          =========    =========    =========    =========    =========
      Diluted                      $      (1.73)  $      (0.11)  $        0.08    $      (1.84)  $        0.08
                                          =========    =========    =========    =========    =========

Shares  used  in
  computing  net
  income  (loss)
  per  share:
      Basic                                26,146          26,027          25,408          26,087          25,947
                                          =========    =========    =========    =========    =========
      Diluted                            26,146          26,027          26,155          26,087          26,416
                                          =========    =========    =========    =========    =========



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


                                                              Three  Months  Ended                Six  Months  Ended
                                                    -----------------------------  -------------------
                                                      Jul  5,        Apr  5,        Jul  6,        Jul  5,        Jul  6,
                                                        2009            2009            2008            2009            2008
                                                    ---------  ---------  ---------  ---------  ---------
Cost  and  expenses:
    Non-GAAP  cost  of
      revenues                              $    19,339  $    20,785  $    23,035  $    40,124  $    45,773
    Adjustments  related  to
      excess  inventory                    13,256                  -                  -        13,256                  -
                                                    ---------  ---------  ---------  ---------  ---------
    GAAP  cost  of  revenues      $    32,595  $    20,785  $    23,035  $    53,380  $    45,773
                                                    =========  =========  =========  =========  =========

    Non-GAAP  research  and
      development                        $    14,056  $    15,105  $    16,159  $    29,161  $    31,842
    Adjustments  related  to
      stock  based
      compensation  and  other          1,270          1,288              944          2,558          1,970
                                                    ---------  ---------  ---------  ---------  ---------
    GAAP  research  and
      development                        $    15,326  $    16,393  $    17,103  $    31,719  $    33,812
                                                    =========  =========  =========  =========  =========

    Non-GAAP  restructuring
      and  asset  impairment
      charges                                $              -  $              -  $              -  $              -  $              -
    Adjustments  related  to
      restructuring  and
      asset  impairments                    5,594          1,119                  -          6,713                  -
                                                    ---------  ---------  ---------  ---------  ---------
    GAAP  restructuring  and
      asset  impairment
      charges                                $      5,594  $      1,119  $              -  $      6,713  $              -
                                                    =========  =========  =========  =========  =========

    Non-GAAP  amortization
      of  acquisition-related
      intangibles                        $              -  $              -  $              -  $              -  $              -
    Adjustments  related  to
      amortization  of
      acquisition-related
      intangibles                                    192              193                  -              385                  -
                                                    ---------  ---------  ---------  ---------  ---------
    GAAP  amortization  of
      acquisition-related
      intangibles                        $          192  $          193  $              -  $          385  $              -
                                                    =========  =========  =========  =========  =========

    Non-GAAP  selling,
      general  and
      administrative                  $    12,588  $    12,454  $    14,437  $    25,042  $    28,626
    Adjustments  related  to
      stock  based
      compensation,  option
      investigation  and
      other                                            1,071          1,036          1,176          2,107          3,767
                                                    ---------  ---------  ---------  ---------  ---------
    GAAP  selling,  general
      and  administrative          $    13,659  $    13,490  $    15,613  $    27,149  $    32,393
                                                    =========  =========  =========  =========  =========



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


                                                        Three  Months  Ended                    Six  Months  Ended
                                          -------------------------------    --------------------
                                            Jul  5,          Apr  5,          Jul  6,          Jul  5,          Jul  6,
                                              2009              2009              2008              2009              2008
                                          ---------    ---------    ---------    ---------    ---------

Income  (loss)  from
  operations:
    Non-GAAP  income
      from  operations      $        (756)  $          115    $      4,018    $        (641)  $      6,164
    Adjustments
      related  to  excess
      inventory,
      restructuring  and
      asset  impairment
      charges,  stock
      based  compensation,
      and  other                      (21,383)        (3,636)        (2,120)      (25,019)        (5,737)
                                          ---------    ---------    ---------    ---------    ---------
    GAAP  (loss)  income
      from  operations      $  (22,139)  $    (3,521)  $      1,898    $  (25,660)  $          427
                                          =========    =========    =========    =========    =========

Interest  income  and
  other,  net:
    Non-GAAP  interest
      income  and  other,
      net                              $          776    $      1,036    $      1,701    $      1,812    $      3,633
    Adjustments
      related  to
      insurance
      reimbursement                          -                716                    -                716                    -
                                          ---------    ---------    ---------    ---------    ---------
    GAAP  interest
      income  and  other,
      net                              $          776    $      1,752    $      1,701    $      2,528    $      3,633
                                          =========    =========    =========    =========    =========

Income  (loss)  before
  tax  provision:
    Non-GAAP  income
      before  tax
      provision                  $            20    $      1,151    $      5,719    $      1,171    $      9,797
    Adjustments
      related  to  excess
      inventory,
      restructuring  and
      asset  impairment
      charges,  stock
      based  compensation,
      and  other                      (21,383)        (2,920)        (2,120)      (24,303)        (5,737)
                                          ---------    ---------    ---------    ---------    ---------
    GAAP  (loss)  income
      before  tax
      provision                  $  (21,363)  $    (1,769)  $      3,599    $  (23,132)  $      4,060
                                          =========    =========    =========    =========    =========




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


                                                        Three  Months  Ended                    Six  Months  Ended
                                          -------------------------------    --------------------
                                            Jul  5,          Apr  5,          Jul  6,          Jul  5,          Jul  6,
                                              2009              2009              2008              2009              2008
                                          ---------    ---------    ---------    ---------    ---------
Net  income  (loss):
    Non-GAAP  net
      income                        $            14    $          806    $      4,003    $          820    $      6,858
    Adjustments
      related  to  excess
      inventory,
      restructuring  and
      asset  impairment
      charges,  stock
      based  compensation,
      deferred  tax
      valuation
      allowances,  other
      and  tax                          (45,155)        (3,762)        (2,039)      (48,917)        (4,718)
                                          ---------    ---------    ---------    ---------    ---------
    GAAP  net  income
      (loss)                        $  (45,141)  $    (2,956)  $      1,964    $  (48,097)  $      2,140
                                          =========    =========    =========    =========    =========

Net  income  (loss)
  per  share:
  Basic:
    Non-GAAP  net
      income  per  share    $        0.00    $        0.03    $        0.16    $        0.03    $        0.26
    Adjustments
      related  to  excess
      inventory,
      restructuring  and
      asset  impairment
      charges,  stock
      based  compensation,
      deferred  tax
      valuation
      allowances,  other
      and  tax                              (1.73)          (0.14)          (0.08)          (1.87)          (0.18)
                                          ---------    ---------    ---------    ---------    ---------
    GAAP  net  income
      (loss)  per  share    $      (1.73)  $      (0.11)  $        0.08    $      (1.84)  $        0.08
                                          =========    =========    =========    =========    =========

  Diluted:
    Non-GAAP  net
      income  per  share    $        0.00    $        0.03    $        0.15    $        0.03    $        0.26
    Adjustments
      related  to  excess
      inventory,
      restructuring  and
      asset  impairment
      charges,  stock
      based
      compensation,
      deferred  tax
      valuation
      allowances,  other
      and  tax                              (1.73)          (0.14)          (0.07)          (1.87)          (0.18)
                                          ---------    ---------    ---------    ---------    ---------
    GAAP  net  income
      (loss)  per  share    $      (1.73)  $      (0.11)  $        0.08    $      (1.84)  $        0.08
                                          =========    =========    =========    =========    =========



                                                          ACTEL  CORPORATION

                                        CONDENSED  CONSOLIDATED  BALANCE  SHEETS
                                                              (In  thousands)

                                                                                                            Jul  5,              Jan  4,
                                                                                                              2009                  2009
                                                                                                      -----------    -----------
                                            ASSETS                                              (Unaudited)        (Audited)

Current  assets:
    Cash  and  cash  equivalents                                                $        43,652    $        49,639
    Short-term  investments                                                                91,604              89,111
    Accounts  receivable,  net                                                            25,917              11,596
    Inventories                                                                                      40,467              60,630
    Deferred  income  taxes                                                                            -              11,313
    Prepaid  expenses  and  other  current  assets                            7,175                6,888
                                                                                                      -----------    -----------
            Total  current  assets                                                          208,815            229,177
Long-term  investments                                                                        4,245                7,807
Property  and  equipment,  net                                                          26,406              34,747
Goodwill  and  other  intangible  assets,  net                              34,957              35,540
Deferred  income  taxes                                                                                -              13,968
Other  assets,  net                                                                              28,211              22,022
                                                                                                      -----------    -----------
                                                                                                      $      302,634    $      343,261
                                                                                                      ===========    ===========

                  LIABILITIES  AND  SHAREHOLDERS'  EQUITY

Current  liabilities:
    Accounts  payable                                                                  $          8,005    $        14,672
    Accrued  compensation  and  employee  benefits                          7,438              11,240
    Accrued  licenses                                                                              4,083                3,952
    Other  accrued  liabilities                                                            5,469                5,274
    Deferred  income  on  shipments  to  distributors                    30,270              24,316
                                                                                                      -----------    -----------
            Total  current  liabilities                                                  55,265              59,454
    Deferred  compensation  plan  liability                                      4,454                4,086
    Deferred  rent  liability                                                                1,419                1,449
    Accrued  sabbatical  compensation                                                2,561                2,739
    Other  long-term  liabilities,  net                                            12,151                7,208
                                                                                                      -----------    -----------
            Total  liabilities                                                                  75,850              74,936
    Shareholders'  equity                                                                  226,784            268,325
                                                                                                      -----------    -----------
                                                                                                      $      302,634    $      343,261
                                                                                                      ===========    ===========
 

Investor Contact:
Dirk Sodestrom
(650) 318-4795

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





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