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