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Actel Corporation
Investor PresentationCanaccord/Genuity Growth ConferenceAugust 12, 2010Maurice CarsonCFO
Actel Corporation © 2010 2
Safe Harbor Statement
All forward-looking statements are made pursuant to the safe harbor provisions of the Public Securities Litigation Reform Act of 1995. All forward-looking statements relatingto Actel’s operating results are based on current expectations and projections about the semiconductor industry and programmable logic market, and assumptions made by he Company’s management that reflect its best judgment based on other factors currently known by management, but they are not guarantees of future performance. Actual events and results may differ materially from those expressed or forecast in the forward-looking statements due to a multitude of factors, including the “Risk Factors” discussed in Actel’s most recent Forms 10-K and 10-Q, which will be provided to you free of charge upon request.
Unless the context otherwise requires, all statements are made as of the date indicated. The Company undertakes no obligation to update any statement, including all forward-looking statements.
Actel Corporation © 2010 3
FinanciallyStable
Actel Defined
$190M Revenue in 2009$149M Cash & Investments No Debt
Leader25 Years of FPGA Success
Leader in radiation-tolerant FPGAsLeader in low-power FPGAsCore competence in non-volatile technologies
Profitable 81 Consecutive Quartersof Pro-Forma Profitability
Global Global Company500+ employees3500+ customers
Actel Corporation © 2010 4
Corporate Objectives
Commitmentto
Profitability
ConsistentGrowth
SignificantEarnings
PROFITGROWTH EARNINGS
Actel Corporation © 2010 5
Our Capabilities
Leaders in serving the space marketTop FPGA vendor in Space
Deep knowledge of radiation tolerance & space qualification combined with a long history of excellent service
Lowest power FPGAsTechnology, design and software all drive lowest power FPGA in industry
Mixed signal FPGA leadershipOnly Mixed Signal FPGA
Only FPGA with hard ARM processor
Architecture, design, software, tools, hard/soft micro processors
Only embedded flash FPGA in marketHave taped out industry leading 65nm embedded flash part
Actel Corporation © 2010 6
$3.3bn
$5.9bn
2009 2014
Semiconductor Market Size
FPGA’s Expected to Grow at 13% CAGR vs. 7% Overall Semiconductor Market
FPGA / PLD2 Market Size Growth
Source: Gartner, February 2010
12.6% CAGR
Actel Corporation © 2010 7
$0
$20
$40
$60$80
$100
$120
$140
$160
180-nm 130-nm 90-nm 65-nm 45-nm 32-nmDesign Cost Mask CostEmbedded Software Yield Ramp-up Cost
ASIC Business Model Struggling
New global market dynamics stress ASIC model:
$50-$100mm per designFewer markets support ROI
Market requirements shifting:Fast time to marketIncreased design flexibility
Cost of Design Increases at Smaller Nodes
FPGA’s Solve These Problems
Internal study by Sony: “… in 2005 for applications that require under 3 million units, an integration level of under 300K gates, and an operating frequency of under 300 MHz, it will be more efficient to use an FPGA than an ASIC, and the FPGA will prove to have more advantages overall.”
– Tsugio Makimoto, Corporate Advisor
Source: Gartner, October 2009
# Design Starts Decreasing as Shift to Smaller Nodes
0
1,000
2,000
3,000
4,000
2004 2009 2013>0.5 0.5 0.35 0.25 0.18
0.13 0.09 0.065 0.045/040 <=0.032
Actel Corporation © 2010 8
FPGA TAM (Gartner) and Actel SAM ($K)
Significant TAM growthSAM as a percentage of TAM increasing
More designs focused on Actel strengthsProduct roadmap serves greater proportion of TAM
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
2009 2012 2014
$3,272
$4,980
$5,920
$790 $1,335
$1,741
TAM SAM
24%27%
29%
Actel Corporation © 2010 9
Today’s Changing Face of Design
Low Power
Security
Reliability
Actel Corporation © 2010 10
Today’s Changing Face of Design
Low Power
Security
Reliability
Actel Corporation © 2010 11
High Reliability: Immunity to Radiation Configuration Loss
Radiation Sources
Neutrons – generated in earth’satmosphere by radiation from space
Alpha particles – generated by radioactive isotopes in package materials
Heavy Ions – background radiation in space
Actel Corporation © 2010 12
100%
Reliability Concerns are Growing
Increased concern around firm errors
SpaceNumber one design requirement
Avionics Important design requirement, growing over the years
Ground basedMore system designers recognize the impact of firm error upsets and the cost of mitigationConcern growing at an increasing pace
Increasing Importance of Reliability Over Time
0%
Past Present Future
Space
Actel Corporation © 2010 13
Actel’s Products are Used in System Critical Applications
AvionicsCommercial Military
Cockpit DisplaysFlight ComputersPower Management
Weapons ControlMission ComputersPower Management
SpaceBus Payload
Command and Data HandlingTelemetry Tracking & ControlPower ManagementCentral ComputerAttitude and Orbit Control
Communications SwitchesCamerasHyperspectral ImagersRadar
CommunicationsCarrier-Class Secure
Power ManagementSystem SupervisorThermal Control
Power ManagementCryptography
WeaponsMissiles Smart Munitions
Navigation and GuidanceFuzesFlight ControlMotor Control
Navigation and GuidanceFlight Control
Actel Corporation © 2010 14
Today’s Changing Face of Design
Low Power
Security
Reliability
Actel Corporation © 2010 15
Security
No bitstream required every time you power up
Flash FPGAs are non-volatile
FlashLock protects against tampering, reprogramming, overbuilding
Device locked by 128-bitpass key128 bit AES-encrypted bitstream for in-system programmingAbility to permanently lock device
In SmartFusion, the microcontroller and FPGA interface is not exposed
Bitstream
Actel Corporation © 2010 16
Today’s Changing Face of Design
Low Power
Security
Reliability
Actel Corporation © 2010 17
Bit Line Vdd Vdd Bit Line
Word Line
Typical Competitors SRAM Cell
Flash FPGAs – Inherently Low Power
Substantial Leakage per CellMillions of Configuration CellsHigh Static Current
1000x lower leakage per cellUltra Low Static Current
Flash Cell
Actel Corporation © 2010 18
Actel’s Low-Power Advantage
33.6 uW
35,210.0 uW
57,930.0 uW
0
10,000
20,000
30,000
40,000
50,000
60,000
Actel IGLOO(AGL600)
Altera®Cyclone® III
Xilinx®Spartan® -3AN
Larger DensityIGLOO 1000x – 1700x lower
power consumption than competition
Small DensityIGLOO 15x – 25x lower
power consumption than competition
500,000 System Gates
10,000 System Gates
2.0 uW
31.0 uW
47.0 uW
52.0 uW
0
10
20
30
40
50
60
Actel IGLOOnano
Xilinx®CoolRunner™ -11
Lattice®ispMACH®
400ZE
Altera®MAX®
IIZ
Stat
ic P
ower
(mic
roW
atts
)
Stat
ic P
ower
(mic
roW
atts
)
Actel Corporation © 2010 19
“Power is the new performance”
-- EETimes 2/16/10
Actel Corporation © 2010 20
Today’s Changing Face of Design
Low Power
Security
Reliability
Actel Corporation © 2010 21
SmartFusion: Innovative, Intelligent, Integration
Proven FPGA
ARM® Cortex™-M3
Programmable Analog
$5B
$15B$8B
>$1.5B
Significant TAM and SAM Increase; From New Socket Sales at existing Customers and New Customers
Gartner 2012
Actel Corporation © 2010 22
Motor Control: Co-processing Benefit
Efficient co-processing performance between FPGA and MCU
Actel Corporation © 2010 23
Motor Control: Integration Benefit
Discrete Analog Components
SmartFusion
SmartFusion replaces:- ARM9- SRAM FPGA- Analog acquisition device array
SRAM FPGA
ARM9
Actel Corporation © 2010 24
Key Statistics
Dozens of customers part of our Lead Customer Program
Silicon and Software available since October of 2009
First revenue achieved in February of 2010
Announced publically on March 2, 2010
Actel Corporation © 2010 25
What Editors Are Saying About
“It’s an interesting new class of FPGA, really a multicore device with complete gate programmability, that should allow designers who can’t afford to tackle a custom SoC design to do many things not possible before.” – Don Dingee, Embedded Computing Design
“It’s basically drag-and-drop analog design, no advanced degree required. And for a great swath of the embedded-design community, that’s a welcome relief.”– Jim Turley, Embedded Technology Journal
“I think the guys and gals at Actel have got something really cool here – not the least that the SmartFusion Design Environment will allow lots of folks from small to large design houses implement some very innovative designs quickly, easily, and affordably – an attractive proposition whichever way you cut the pie!”– Clive “Max” Maxfield, Techbites.com
“Actel Corp. today is launching one of the better embedded ARM architectures I’ve seen of late, in or out of the FPGA market.” –Loring Wirbel, FPGA Gurus (EDN)
Over 150 Editorial Briefings and 115 Press Articles Since Launch
Actel Corporation © 2010 26
Summary
Delivering ReliabilitySecurityLow Power
And… Innovating with Mixed Signal and MCU integration
Low Power
Security
Reliability
Q2 2010 Financial Update
June 2010
Actel Corporation © 2010 28
Quarterly Net Revenues
53.2 52.848.5
45.2 47.2 49.7 52.457.8
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10
Rev
enue
s ($
, in
Mill
ions
)
Actel Corporation © 2010 29
Flash FPGA Revenue
29% 28%
24%
29%26%
24% 24%
29%
0%
5%
10%
15%
20%
25%
30%
35%
Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10
% o
f Net
Rev
enue
s
Actel Corporation © 2010 30
Actel Revenue Breakdown
North America
46%
Europe33%
Asia Pac/ROW
21%
Revenue by Geography
Comms9%
Consumer12%
Industrial36%
Mil/Aero43%
Revenue by End Market
Second Quarter 2010
Actel Corporation © 2010 31
Quarterly Gross Margin Non-GAAP*
58.0%59.1%
57.1% 57.2%
60.3%
62.3% 62.2% 62.8%
Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10
% of Revenue
Actel Corporation © 2010 32
Quarterly EPS Non-GAAP*
$0.07
$0.13
$0.03$0.00
$0.09$0.12
$0.14
$0.25
Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10*Non-GAAP earnings per share excludes stock-based compensation charges, expenses associated with restructuring and other non-recurring items
Actel Corporation © 2010 33
Balance Sheet Quarterly Trend ($ in Millions)
Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10
Cash & Short-term Investments 133.4 138.8 131.1 135.3 142.5 152.0 148.6 160.0
Accounts Receivable 29.6 11.6 21.8 25.9 22.8 19.1 33.2 44.1
Inventory 56.2 60.6 56.0 40.5 38.4 37.3 38.4 36.4
Prepaid & Other Current Assets 27.1 18.2 19.2 7.2 7.7 9.9 8.8 6.2
Property & Equipment, net 35.4 34.7 33.6 26.4 24.8 23.0 22.0 20.7
Long term Investments 11.3 7.8 8.8 4.2 3.2 0.7 0.7 2.8
Other Assets 38.1 36.0 34.6 28.2 29.8 30.1 29.8 30.7
Goodwill 37.5 35.5 35.3 34.9 35.1 34.9 34.7 36.4
Total Assets 368.6 343.2 340.4 302.6 304.3 307.0 316.2 335.5
Current Liabilities 40.3 35.1 26.3 24.9 24.7 28.9 28.6 34.3
Deferred Income 36.0 24.3 30.5 30.3 30.1 22.9 30.2 40.0
Long Term Liabilities 14.9 15.5 14.7 20.6 19.3 21.8 21.1 20.4
Equity 277.4 268.3 268.9 226.8 230.2 233.4 236.3 240.8
Total Liabilities/Equity 368.6 343.2 340.4 302.6 304.3 307.0 316.2 335.5
Actel Corporation © 2010 34
Competitive Sequential Revenue Change
Q3’08 (8%) (1%) (1%) (1%)
Q4’08 (1%) (12%) (13%) (5%)
2008 11% 8% (3%) 5%
Q1’09 (8%) (16%) (13%) (14%)
Q2’09 (7%) 5% 8% (5%)
Q3’09 5% 3% 5% 10%
Q4’09 5% 27% 12% 24%2009 (13%) (13%) (13%) (11%)Q1’10 5% 10% 28% NAQ2 ’10 10.5% 16.7% 10% 12.4%
Actel Corporation © 2010 35
Financial Targets – Q3 2010
Revenue We expect that third quarter 2010 revenues will be up sequentially three percent to seven percent
Gross Margin Gross margin is expected to be around 65 percent
Operating Spending Non-GAAP operating expenses are anticipated to come in flat at $25.5 million
Other Income Other income is expected to be about $0.5 million
Tax Rate The non-GAAP tax rate for the quarter is expected to be about 30 percent
Outstanding Shares Outstanding fully diluted share count is expected to be about 26.3 millionshares
As of July 29, 2010