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Actel Corp (907687) SEC Filing 10-K Annual report for the fiscal year ending Sunday, January 3, 2010

Actel Corp

CIK: 907687

Investor Contact: Maurice Carson, (650) 318-4700

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

For Release: February 4, 2010 @ 1:15 P.M. PT

ACTEL ANNOUNCES FOURTH QUARTER 2009 FINANCIAL RESULTS
AND CEO TRANSITION

Mountain View, Calif. – Actel Corporation (NASDAQ: ACTL) today announced net revenues of $49.7 million for the fourth quarter of 2009, down 5.8 percent from the fourth quarter of 2008, and up 5.2 percent from the third quarter of 2009. For the full fiscal year, net revenues were $190.6 million, down 12.7 percent from fiscal 2008.

Actel reported net income in accordance with U.S. generally accepted accounting principles (GAAP) of $1.0 million, or $0.04 per diluted share, for the fourth quarter of 2009 compared with a net loss of $(12.5) million, or $(0.48) per basic share, for the fourth quarter of 2008 and a net income of $0.9 million, or $0.03 per diluted share, for the third quarter of 2009. For the full fiscal year, net loss was $(46.2) million, or $(1.77) per basic share, compared with a net loss of $(11.7) million, or $(0.45) per basic share, in fiscal 2008.

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 $3.3 million, or $0.12 per diluted share, for the fourth quarter of 2009 compared with $3.3 million, or $0.13 per diluted share, for the fourth quarter of 2008 and $2.4 million, or $0.09 per diluted share, for the third quarter of 2009. For the full fiscal year, non-GAAP net income was $6.5 million, or $0.25 per diluted share, compared with a net income of $12.0 million, or $0.46 per diluted share, for fiscal 2008.

Significant Developments

During the fourth quarter:

    Actel IGLOO® Nano FPGAs were voted the Leading Product in the highly competitive Programmable Logic category of the prestigious 2009 Electronics Design News China (EDNC) Innovation Awards.

    Actel announced several highly configurable DSP IP cores for RTAX DSP FPGAs targeted at the space market. The new cores enable designers to easily create common DSP functions such as filters (FIR, IIR) and transforms (FFT, IFT, DCT).

    Pigeon Point Systems, an Actel company, announced continued compliance and interoperability initiatives for its xTCA™ board and module management controller releases. Formal testing for the recently released Pigeon Point management solutions based on the Actel Fusion® mixed-signal FPGA and the Renesas H8S microcontroller was demonstrated live at the 2009 ATCA Summit xTCA SlotFest.

    Actel IGLOO FPGAs were highlighted in a teardown article in embedded.com about the latest technology in digital cameras, featuring a dual view LCD screen. This confirms that Actel’s low power FPGAs are being designed into the latest portable digital consumer products.

CEO Transition

Actel also today announced that John East will retire as President and Chief Executive Officer of the Company and as a member of the Board of Directors. The Board has formed a committee to conduct a search for a new President and Chief Executive Officer (CEO). East will participate in the search, which will include both internal and external candidates. He will remain in his current role until a new CEO is in place, and will then serve as a consultant until August 2, 2011, under the terms of a Transition Agreement that was filed today with the Securities and Exchange Commission.

“I have had the privilege and pleasure of leading Actel for more than two decades, but I’m 65 now and the time has come for me to pass the baton,” said East. “I am proud of the Company, the caliber of our management and employees, the quality of our products and services, and the integrity with which we have conducted business over the years. I am also decidedly optimistic about the Company’s prospects and highly motivated to make a smooth handoff to a superb successor.”

“In accepting John’s decision to retire, the Board is appreciative of his long and distinguished service,” said Robert Spencer, the Company’s Lead Director. “Under John’s stewardship, Actel emerged as the leading supplier of aerospace, low-power, and mixed-signal FPGAs. In addition to John’s acumen, his honesty, fairness, and goodwill have left an indelible imprint on the Company and the industry. We now look forward to a successful transition and the next stage in the Company’s growth.”

Business Outlook – First Quarter 2010

The Company believes that first quarter 2010 revenues will be up two percent to six percent sequentially. Gross margin is expected to be about 62 percent. Operating expenses are anticipated to come in at approximately $27.0 million, which excludes an estimated $2.1 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 $0.5 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 26.5 million shares.

Conference Call

A conference call to discuss fourth quarter results will be held Thursday, February 4, 2010, 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 2009 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. To date, the Company has recorded charges of $5.0 million for severance and other costs related to reductions in force. In addition, the Company recorded $5.5 million in restructuring costs not related to reductions in force. The Company expects to record additional charges of approximately $0.5 million 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, particularly 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 and Rule 10b5-1 Plan

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. To facilitate repurchases under the Company’s stock repurchase program, Actel’s Board of Directors has adopted a plan under Rule 10b5-1 of the Securities and Exchange Commission. Under the Rule 10b5-1 plan, the Company repurchases shares of Actel Common Stock whenever the price and other criteria set forth in the plan are met, including times when the Company would not otherwise be in the market due to the Company’s trading policies or the possession of material non-public information.

Forward-Looking Statements

The statements in the paragraph under the heading “Business Outlook – First Quarter 2010,” and certain statements in the paragraph under the heading “Corporate Restructuring,” 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 projected revenues and operating results for the first quarter of 2010, as well as the anticipated results of and charges for the restructuring, 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, booking and shipment uncertainties, and a failure to fully achieve the projected results of or to accurately estimate the charges for the restructuring. These and the other Risk Factors make it difficult for Actel to accurately project quarterly financial and restructuring 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.

1

ACTEL CORPORATION

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

                                         
    Three Months Ended   Year Ended
    Jan. 3, 2010   Oct. 4, 2009   Jan. 4, 2009   Jan. 3, 2010   Jan. 4, 2009
Net revenues
  $ 49,699     $ 47,248     $ 52,786     $ 190,633     $ 218,406  
Costs and expenses:
                                       
Cost of revenues
    18,715       18,760       21,598       90,855       89,714  
Research and development
    14,160       14,839       14,851       60,718       65,658  
Selling, general, and administrative
    14,401       13,196       15,714       54,746       63,145  
Restructuring and asset impairment charges
    1,202       175       2,424       8,090       2,424  
Amortization of acquisition- related intangibles
    193       193       338       771       796  
 
                                       
Total costs and expenses
    48,671       47,163       54,925       215,180       221,737  
 
                                       
Income (loss) from operations
    1,028       85       (2,139 )     (24,547 )     (3,331 )
Interest income and other, net.
    71       664       1,335       3,263       5,433  
 
                                       
Income (loss) before tax provision
    1,099       749       (804 )     (21,284 )     2,102  
Tax provision (benefit)
    137       (157 )     11,688       24,945       13,827  
 
                                       
Net income (loss)
  $ 962     $ 906     $ (12,492 )   $ (46,229 )   $ (11,725 )
 
                                       
Net income (loss) per share:
                                       
Basic
  $ 0.04     $ 0.03     $ (0.48 )   $ (1.77 )   $ (0.45 )
 
                                       
Diluted
  $ 0.04     $ 0.03     $ (0.48 )   $ (1.77 )   $ (0.45 )
 
                                       
Shares used in computing net income (loss) per share:
                                       
Basic
    26,203       26,160       25,784       26,134       25,851  
 
                                       
Diluted
    26,362       26,247       25,784       26,134       25,851  
 
                                       

2

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

                                         
    Three Months Ended   Year Ended
    Jan. 3, 2010   Oct. 4, 2009   Jan. 4, 2009   Jan. 3, 2010   Jan. 4, 2009
Cost and expenses:
                                       
Non-GAAP cost of revenues
  $ 18,715     $ 18,760     $ 21,598     $ 77,599     $ 89,714  
Adjustments related to excess inventory
                      13,256        
 
                                       
GAAP cost of revenues
  $ 18,715     $ 18,760     $ 21,598     $ 90,855     $ 89,714  
 
                                       
Non-GAAP research and development
  $ 12,915     $ 13,378     $ 13,511     $ 55,454     $ 60,761  
Adjustments related to stock based compensation and other.
    1,245       1,461       1,340       5,264       4,897  
 
                                       
GAAP research and development
  $ 14,160     $ 14,839     $ 14,851     $ 60,718     $ 65,658  
 
                                       
Non-GAAP restructuring and asset impairment charges
  $     $     $     $     $ -  
Adjustments related to restruc-turing and asset impairments
    1,202       175       2,424       8,090       2,424  
 
                                       
GAAP restructuring and asset impairment charges
  $ 1,202     $ 175     $ 2,424     $ 8,090     $ 2,424  
 
                                       
Non-GAAP amortization of acquisition-related intangibles
  $     $ -     $ -     $     $ -  
Adjustments related to amorti-zation of acquisition-related intangibles
    193       193       338       771       796  
 
                                       
GAAP amortization of acquisition-related intangibles
  $ 193     $ 193     $ 338     $ 771     $ 796  
 
                                       
Non-GAAP selling, general and administrative
  $ 13,487     $ 12,354     $ 14,347     $ 50,883     $ 57,099  
Adjustments related to stock based compensation, option investigation and other
    914       842       1,367       3,863       6,046  
 
                                       
GAAP selling, general and administrative
  $ 14,401     $ 13,196     $ 15,714     $ 54,746     $ 63,145  
 
                                       

3

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

                     
    Three Months Ended   Year Ended
    Jan. 3, 2010   Oct. 4, 2009   Jan. 4, 2009   Jan. 3, 2010   Jan. 4, 2009
Income (loss) from operations:
 
 
 
 
 
Non-GAAP income from
operations.
 
$4,582
 
$2,756
 
$3,330
 
$6,697
 
$10,832
Adjustments related to
excess inventory,
restructuring and asset
impairment charges, stock
based compensation, and
other.
 




(3,554)
 




(2,671)
 




(5,469)
 




(31,244)
 




(14,163)
 
                   
GAAP income (loss) from
operations.
 
$1,028
 
$85
 
$(2,139)
 
$(24,547)
 
$(3,331)
 
                   
Interest income and other, net:
 
 
 
 
 
Non-GAAP interest income
and other, net
 
$71
 
$664
 
$1,335
 
$2,547
 
$6,306
Adjustments related to
investment impairment and
insurance reimbursement
 

-
 

-
 

-
 

716
 

(873)
 
                   
GAAP interest income and
other, net
 
$71
 
$664
 
$1,335
 
$3,263
 
$5,433
 
                   
Income (loss) before tax
provision:
 

 

 

 

 

Non-GAAP income before tax
provision.
 
$4,653
 
$3,420
 
$4,665
 
$9,244
 
$17,138
Adjustments related to
excess inventory,
restructuring and asset
impairment charges, stock
based compensation, and
other.
 




(3,554)
 




(2,671)
 




(5,469)
 




(30,528)
 




(15,036)
 
                   
GAAP (loss) income before
tax provision.
 
$1,099
 
$749
 
$(804)
 
$(21,284)
 
$2,102
 
                   

4

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

                                         
    Three Months Ended   Year Ended
    Jan. 3, 2010   Oct. 4, 2009   Jan. 4, 2009   Jan. 3, 2010   Jan. 4, 2009
Net income (loss):
                                       
Non-GAAP net income
  $ 3,257     $ 2,394     $ 3,266     $ 6,471     $ 11,997  
Adjustments related to excess inventory, restructuring and asset impairment charges, stock based compensation, deferred tax valuation allowances, other and tax
    (2,295 )     (1,488 )     (15,758 )     (52,700 )     (23,722 )
 
                                       
GAAP net income (loss)
  $ 962     $ 906     $ (12,492 )   $ (46,229 )   $ (11,725 )
 
                                       
Net income (loss) per share:
                                       
Basic:
                                       
Non-GAAP net income per share
  $ 0.12     $ 0.09     $ 0.13     $ 0.25     $ 0.46  
Adjustments related to excess inventory, restructuring and asset impairment charges, stock based compensation, deferred tax valuation allowances, other and tax
    (0.08 )     (0.06 )     (0.61 )     (2.02 )     (0.91 )
 
                                       
GAAP net income (loss) per share
  $ 0.04     $ 0.03     $ (0.48 )   $ (1.77 )   $ (0.45 )
 
                                       
Diluted:
                                       
Non-GAAP net income per share
  $ 0.12     $ 0.09     $ 0.13     $ 0.25     $ 0.46  
Adjustments related to excess inventory, restructuring and asset impairment charges, stock based compensation, deferred tax valuation allowances, other and tax
    (0.08 )     (0.06 )     (0.61 )     (2.02 )     (0.91 )
 
                                       
GAAP net income (loss) per share
  $ 0.04     $ 0.03     $ (0.48 )   $ (1.77 )   $ (0.45 )
 
                                       

5


ACTEL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

                 
    Jan. 3, 2010   Jan. 4, 2009
ASSETS
  (Unaudited)   (Audited)
Current assets:
               
Cash and cash equivalents
  $ 45,994     $ 49,639  
Short-term investments
    106,007       89,111  
Accounts receivable, net
    19,112       11,596  
Inventories
    37,324       60,630  
Deferred income taxes
    1,729       11,313  
Prepaid expenses and other current assets
    8,166       6,888  
 
               
Total current assets
    218,332       229,177  
Long-term investments
    663       7,807  
Property and equipment, net
    22,969       34,747  
Goodwill and other intangible assets, net
    34,939       35,540  
Deferred income taxes
          13,968  
Other assets, net
    30,099       22,022  
 
               
 
  $ 307,002     $ 343,261  
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
  $ 10,262     $ 14,672  
Accrued compensation and employee benefits
    8,206       11,240  
Accrued licenses
    4,996       3,952  
Other accrued liabilities
    5,422       5,274  
Deferred income on shipments to distributors
    22,867       24,316  
 
               
Total current liabilities
    51,753       59,454  
Deferred compensation plan liability
    5,470       4,086  
Deferred rent liability
    1,590       1,449  
Accrued sabbatical compensation
    2,805       2,739  
Other long-term liabilities, net
    11,921       7,208  
 
               
Total liabilities
    73,539       74,936  
Shareholders’ equity
    233,463       268,325  
 
               
 
  $ 307,002     $ 343,261  
 
               

6

ACTEL CORPORATION

SUPPLEMENTAL HISTORICAL FINANCIAL INFORMATION
(Unaudited)

                                         
    Three Months Ended   Year Ended
    Jan. 3, 2010   Oct. 4, 2009   Jan. 4, 2009   Jan. 3, 2010   Jan. 4, 2009
Non-GAAP Operations Information
                                       
Percent of Revenue
                                       
Gross Margin
    62.3 %     60.3 %     59.1 %     59.3 %     58.9 %
R&D Expense
    26.0 %     28.3 %     25.6 %     29.1 %     27.8 %
SG&A Expense
    27.1 %     26.1 %     27.2 %     26.7 %     26.1 %
Depreciation and Amortization
                                       
Expense (000’s)
    3,063       3,079       3,749       12,896       12,645  
Capital Expenditures (000’s)
    1,044       1,237       2,716       5,808       21,422  
Revenue by Technology
                                       
Flash
    24 %     26 %     28 %     26 %     26 %
Other
    76 %     74 %     72 %     74 %     74 %
Revenue by Geographic Region
                                       
North America
    55 %     49 %     54 %     52 %     49 %
Europe
    23 %     26 %     25 %     25 %     27 %
Asia Pacific/Rest of World
    22 %     25 %     21 %     23 %     24 %
Revenue by Channel
                                       
OEM
    28 %     28 %     30 %     30 %     26 %
Distribution
    72 %     72 %     70 %     70 %     74 %
Revenue by Market Segment
                                       
Communication
    8 %     8 %     10 %     7 %     10 %
Consumer
    20 %     15 %     13 %     18 %     16 %
Industrial
    30 %     34 %     36 %     34 %     36 %
Aero/Military
    42 %     43 %     41 %     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.

7


The following information was filed by Actel Corp on Thursday, February 4, 2010 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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SEC Filing Tools
CIK: 907687
Form Type: 10-K Annual Report
Accession Number: 0000950123-10-024784
Submitted to the SEC: Mon Mar 15 2010 5:26:06 PM EST
Accepted by the SEC: Mon Mar 15 2010
Period: Sunday, January 3, 2010
Industry: Semiconductors And Related Devices

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