Actel Announces Fourth Quarter 2008 Financial Results and Corporate Restructuring

MOUNTAIN VIEW, CA -- (MARKET WIRE) -- Feb 03, 2009 -- Actel Corporation (NASDAQ: ACTL) today announced net revenues of $52.8 million for the fourth quarter of 2008, up 2 percent from the fourth quarter of 2007 and down 1 percent from the third quarter of 2008. For the full fiscal year, net revenues were $218.4 million, up 11 percent from fiscal 2007.

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





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