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Actel Announces Third Quarter 2008 Financial Results (Revenue up 11%)

MOUNTAIN VIEW, CA -- (MARKET WIRE) -- Oct 28, 2008 -- Actel Corporation (NASDAQ: ACTL) today announced net revenues of $53.2 million for the third quarter of 2008, down 8 percent from the second quarter of 2008 and up 11 percent from the third quarter of 2007.

Non-GAAP net income, which excludes stock-based compensation, option restatement expenses, and other nonrecurring adjustments, was $1.9 million for the third quarter of 2008 compared with $4.0 million for the second quarter of 2008 and $3.3 million for the third quarter of 2007. Non-GAAP earnings were $0.07 per diluted share for the third quarter of 2008 compared with $0.15 for the second quarter of 2008 and $0.12 for the third quarter of 2007.

Including stock-based compensation and other adjustments in accordance with generally accepted accounting principles (GAAP), Actel reported a net loss of $1.4 million, or ($0.05) per basic share, for the third quarter of 2008 compared with net income of $2.0 million, or $0.08 per diluted share, for the second quarter of 2008 and net income of $1.8 million, or $0.07 per diluted share, for the third quarter of 2007.

Gross margin was 58.0 percent for the third quarter of 2008 compared with 60.0 percent for the second quarter of 2008 and 59.7 percent for the third quarter of 2007.

Business Outlook - Fourth Quarter 2008

The company believes that fourth quarter 2008 revenues will be flat to four percent down sequentially. Gross margin is expected to be around 59 to 60 percent. Operating expenses are anticipated to come in at approximately $29 million, which excludes an estimated $1.8 million of stock-based compensation expense. Other income is expected to be about $1.5 million. The tax provision for the quarter is expected to be a credit of approximately $1 million. Outstanding fully diluted share count is expected to be about 25.9 million shares. The guidance for operating expenses does not include the ongoing amortization of intangibles and deferred compensation for the acquisition of Pigeon Point Systems of approximately $0.7 million or the one time charge for the reduction in force that is expected to be around $3 million.

Conference Call

A conference call to discuss third quarter results will be held Tuesday, October 28, 2008, 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.

Non-GAAP Financial Measures

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.

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.

Forward-Looking Statement Safe Harbor

The statements in the paragraph under the heading "Business Outlook - Fourth Quarter 2008" 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 quarterly revenues and operating results 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, 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.

Editor's Note: The Actel name and logo are registered trademarks of Actel Corporation. All other trademarks and servicemarks are the property of their respective owners.



                        ACTEL CORPORATION

           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
         (Unaudited, in thousands except per share amounts)


                           Three Months Ended          Nine Months Ended
                     -------------------------------  --------------------
                      Oct. 5,     Jul. 6,   Sep. 30,   Oct. 5,   Sep. 30,
                       2008        2008       2007      2008       2007
                     ---------  ---------- ---------- ---------  ---------
Net revenues         $  53,215  $   57,649 $   47,880 $ 165,620  $ 145,274
Costs and expenses:
Cost of revenues        22,343      23,035     19,306    68,116     59,072
Research and
 development            16,995      17,103     13,754    50,807     48,251
Selling, general,
 and administrative     15,038      15,613     14,800    47,431     46,285
Amortization of
 acquisition-
 related intangibles       458           -          -       458          -
                     ---------  ---------- ---------- ---------  ---------
Total costs and
 expenses               54,834      55,751     47,860   166,812    153,608
                     ---------  ---------- ---------- ---------  ---------
Income (loss) from
 operations             (1,619)      1,898         20    (1,192)    (8,334)
Interest income and
 other, net                465       1,701      2,156     4,098      6,376
                     ---------  ---------- ---------- ---------  ---------
Income (loss) before
 tax provision
 (benefit)              (1,154)      3,599      2,176     2,906     (1,958)
Tax provision
 (benefit)                 219       1,635        391     2,139       (351)
                     ---------  ---------- ---------- ---------  ---------
Net income (loss)    $  (1,373) $    1,964 $    1,785 $     767  $  (1,607)
                     =========  ========== ========== =========  =========

Net income (loss)
 per share:
   Basic             $   (0.05) $     0.08 $     0.07 $    0.03  $   (0.06)
                     =========  ========== ========== =========  =========
   Diluted           $   (0.05) $     0.08 $     0.07 $    0.03  $   (0.06)
                     =========  ========== ========== =========  =========

Shares used in
 computing net
 income (loss) per
 share:
   Basic                25,726      25,408     26,935    25,873     26,842
                     =========  ========== ========== =========  =========
   Diluted              25,726      26,155     27,234    26,267     26,842
                     =========  ========== ========== =========  =========





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



                                   Three Months Ended     Nine Months Ended
                               -------------------------- -----------------
                                Oct. 5,  Jul. 6, Sep. 30, Oct. 5, Sep. 30,
                                 2008     2008     2007     2008     2007
                               -------- -------- -------- -------- --------

Cost and expenses:
  Non-GAAP research and
   development                 $ 15,408 $ 16,159 $ 12,917 $ 47,250 $ 41,342
  Adjustments related to
   stock based compensation
   and other                      1,587      944      837    3,557    6,909
                               -------- -------- -------- -------- --------
  GAAP research and
   development                 $ 16,995 $ 17,103 $ 13,754 $ 50,807 $ 48,251
                               ======== ======== ======== ======== ========

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

  Non-GAAP selling, general
   and administrative          $ 14,126 $ 14,437 $ 13,079 $ 42,752 $ 39,722
  Adjustments related to stock
   based compensation, option
   investigation and other          912    1,176    1,721    4,679    6,563
                               -------- -------- -------- -------- --------
  GAAP selling, general and
   administrative              $ 15,038 $ 15,613 $ 14,800 $ 47,431 $ 46,285
                               ======== ======== ======== ======== ========





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



                               Three Months Ended       Nine Months Ended
                          ----------------------------  ------------------
                          Oct. 5,   Jul. 6,   Sep. 30,  Oct. 5,   Sep. 30,
                            2008      2008      2007      2008      2007
                          --------  --------  --------  --------  --------

Income (loss) from
 operations:
  Non-GAAP income from
   operations             $  1,338  $  4,018  $  2,578  $  7,502  $  5,138
  Adjustments related to
   stock based
   compensation and
   other                    (2,957)   (2,120)   (2,558)   (8,694)  (13,472)
                          --------  --------  --------  --------  --------
  GAAP (loss) income
   from operations        $ (1,619) $  1,898  $     20  $ (1,192) $ (8,334)
                          ========  ========  ========  ========  ========

Interest income and
 other, net:
  Non-GAAP interest
   income and other, net  $  1,338  $  1,701  $  2,156  $  4,971  $  6,376
  Adjustments related to
   investment impairment      (873)        -         -      (873)        -
                          --------  --------  --------  --------  --------
  GAAP interest income
   and other, net         $    465  $  1,701  $  2,156  $  4,098  $  6,376
                          ========  ========  ========  ========  ========

Income (loss) before tax
 provision:
  Non-GAAP income before
   tax provision          $  2,676  $  5,719  $  4,734  $ 12,473  $ 11,514
  Adjustments related to
   stock based
   compensation and
   other                    (3,830)   (2,120)   (2,558)   (9,567)  (13,472)
                          --------  --------  --------  --------  --------
  GAAP (loss) income
   before tax provision   $ (1,154) $  3,599  $  2,176  $  2,906  $ (1,958)
                          ========  ========  ========  ========  ========





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. 5,   Jul. 6,   Sep. 30,  Oct. 5,   Sep. 30,
                            2008      2008      2007      2008      2007
                          --------  --------  --------  --------  --------
Net income (loss):
  Non-GAAP net income     $  1,873  $  4,003  $  3,314  $  8,731  $  8,060
  Adjustments related
   to stock based
   compensation other
   and tax                  (3,246)   (2,039)   (1,529)   (7,964)   (9,667)
                          --------  --------  --------  --------  --------
  GAAP net income
   (loss)                 $ (1,373) $  1,964  $  1,785  $    767  $ (1,607)
                          ========  ========  ========  ========  ========

Net income (loss) per
 share:
 Basic:
  Non-GAAP net income
   per share              $   0.07  $   0.16  $   0.12  $   0.34  $   0.30
  Adjustments related
   to stock based
   compensation other
   and tax                   (0.12)    (0.08)    (0.05)    (0.31)    (0.36)
                          --------  --------  --------  --------  --------
  GAAP net income
   (loss) per share       $  (0.05) $   0.08  $   0.07  $   0.03  $  (0.06)
                          ========  ========  ========  ========  ========

 Diluted:
  Non-GAAP net income
   per share              $   0.07  $   0.15  $   0.12  $   0.33  $   0.29
  Adjustments related
   to stock based
   compensation other
   and tax                   (0.12)    (0.07)    (0.05)    (0.30)    (0.35)
                          --------  --------  --------  --------  --------
  GAAP net income
   (loss) per share       $  (0.05) $   0.08  $   0.07  $   0.03  $  (0.06)
                          ========  ========  ========  ========  ========





                            ACTEL CORPORATION

                        CONSOLIDATED BALANCE SHEETS
                              (In thousands)



                                                         Oct. 5,   Jan. 6,
                                                          2008      2008
                                                        --------- ---------
                      ASSETS                           (Unaudited)(Audited)

Current assets:
   Cash and cash equivalents                            $  25,832 $  30,119
   Short-term investments                                 107,559   152,609
   Accounts receivable, net                                29,588    18,116
   Inventories                                             56,183    35,587
   Deferred income taxes                                   19,331    19,350
   Prepaid expenses and other current assets                7,757    10,259
                                                        --------- ---------
      Total current assets                                246,250   266,040
Property and equipment, net                                35,442    25,417
Long-term investments                                      11,296     6,442
Goodwill                                                   37,533    30,197
Deferred income taxes                                      17,245    16,082
Other assets, net                                          20,843    19,438
                                                        --------- ---------
                                                        $ 368,609 $ 363,616
                                                        ========= =========
                 LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                     $  22,439 $  16,972
   Accrued compensation and employee benefits               8,541     6,181
   Accrued licenses                                         3,861     4,927
   Other accrued liabilities                                5,484     3,941
   Deferred income on shipments to distributors            35,972    26,109
                                                        --------- ---------
      Total current liabilities                            76,297    58,130
   Deferred compensation plan liability                     4,682     5,479
   Deferred rent liability                                  1,419     1,417
   Accrued sabbatical compensation                          3,380     3,380
   Other long-term liabilities, net                         5,424     3,718
                                                        --------- ---------
      Total liabilities                                    91,202    72,124
   Shareholders' equity                                   277,407   291,492
                                                        --------- ---------
                                                        $ 368,609 $ 363,616
                                                        ========= =========


 

 

 

Contact:
Jon Anderson
Actel Corporation
(650) 318-4445