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Exar Announces Fiscal 2013 Third Quarter Financial Results

Company Reports Sequential Growth in Revenue and Profit

FREMONT, Calif., Jan. 23, 2013 /PRNewswire/ -- Exar Corporation (Nasdaq: EXAR), a leading supplier of high performance analog mixed-signal components and data management solutions today announced financial results for the Company's third quarter of fiscal year 2013.

(Logo: http://photos.prnewswire.com/prnh/20120716/SF41155LOGO)

The Company reported revenue of $31.0 million, up from $30.6 million in the second quarter of fiscal year 2013.  Non-GAAP net income of $4.0 million increased 42% from $2.9 million in the prior quarter and improved $6.0 million from a loss of $1.9 million in the third quarter of fiscal year 2012.  Non-GAAP gross margin was 49.0%, a 223 basis points improvement from the prior quarter, and up 60 basis points compared to the same quarter a year ago.  Non-GAAP net income per fully-diluted share was $0.09, up from $0.06 in the prior quarter, and a $0.13 improvement from a non-GAAP net loss of $0.04 in the third quarter of fiscal year 2012.

On a GAAP basis, net income for the third quarter of fiscal year 2013 was $1.5 million, up from $0.3 million in the prior quarter, and a $6.3 million improvement from a loss of $4.7 million in the third quarter of fiscal year 2012.  GAAP gross margin increased to 45.8%.  GAAP net income per fully-diluted share for the third quarter of fiscal year 2013 was $0.03, compared to $0.01 in the prior quarter, and a loss of $0.11 in the third quarter of fiscal year 2012.  Free cash flow for the third quarter of fiscal year 2013 was $3.6 million, up from $1.8 million in the prior quarter, and improved from a negative $3.2 million in the third quarter of fiscal year 2012.

"Our third fiscal quarter results demonstrate continued profitable growth in a difficult market environment.  On a non-GAAP basis we achieved 11% operating profit and 13% net profit.  While overall revenue growth was modest, our growth in networking and storage for big data analytics remains robust. This growth, coupled with gross margin expansion and a continued focus on prudent spending, drove a 60% sequential increase in non-GAAP operating income. Free cash flow of $3.6 million for the quarter represents improvements of $1.8 million and $6.8 million as compared to the prior quarter and third quarter of 2012 respectively," commented company President and CEO Louis DiNardo.

For the fourth quarter of fiscal year 2013 ending March 31, 2013, the Company expects revenue in the range of $31.0 million to $32.0 million.  Gross margin on a non-GAAP basis is expected to be in the range of 49% to 51%, and non-GAAP net income per fully-diluted share is expected to be in the range of $0.08 to $0.10.

 












GAAP FINANCIAL COMPARISON









(In millions, except per share amounts)









(Unaudited)
























THREE MONTHS ENDED


NINE MONTHS ENDED



DECEMBER 30,


SEPTEMBER 30,


JANUARY 1,


DECEMBER 30,


JANUARY 1,



2012


2012


2012


2012


2012

Net sales

$

31.0

$

30.6

$

29.7

$

90.9

$

102.8

Gross margin


45.8%


43.5%


45.0%


44.4%


45.6%

Loss from operations

$

(0.4)

$

(0.4)

$

(5.4)

$

(1.9)

$

(9.1)

Net income (loss)

$

1.5

$

0.3

$

(4.7)

$

1.2

$

(7.2)

Net income (loss) per share











Basic

$

0.03

$

0.01

$

(0.11)

$

0.03

$

(0.16)

Diluted

$

0.03

$

0.01

$

(0.11)

$

0.03

$

(0.16)

















NON-GAAP FINANCIAL COMPARISON









(In millions, except per share amounts)









(Unaudited)
























THREE MONTHS ENDED


NINE MONTHS ENDED



DECEMBER 30,


SEPTEMBER 30,


JANUARY 1,


DECEMBER 30,


JANUARY 1,



2012


2012


2012


2012


2012

Net sales

$

31.0

$

30.6

$

29.7

$

90.9

$

102.8

Gross margin


49.0%


46.7%


48.4%


47.7%


48.7%

Income (loss) from operations

$

3.6

$

2.2

$

(2.4)

$

6.7

$

(1.5)

Net income (loss)

$

4.0

$

2.9

$

(1.9)

$

8.3

$

0.2

Net income (loss) per share











Basic

$

0.09

$

0.06

$

(0.04)

$

0.18

$

0.00

Diluted

$

0.09

$

0.06

$

(0.04)

$

0.18


0.00

 

Fiscal Year 2013 Third Quarter Results Conference Call

The Company invites investors, financial analysts, and the general public to listen to its conference call discussing the Company's financial results for the third quarter of fiscal year 2013, today, Wednesday, January 23, 2013 at 1:30 p.m. PST.  To access the conference call, please dial 800-230-1085 after 1:20 p.m. PST. In addition, a live webcast will be available on the Company's Investor webpage.  A taped replay of the conference call will be available starting at 3:00 p.m. PST. To access the replay, please dial 800-475-6701 and use conference ID number 279343.

About Exar

Exar Corporation designs, develops and markets high performance, analog mixed-signal integrated circuits and advanced sub-system solutions for the Networking & Storage, Industrial & Embedded Systems, and Communications Infrastructure markets.  Exar's product portfolio includes power management and connectivity components, communications products, and network security and storage optimization solutions.  Exar has locations worldwide providing real-time customer support. For more information about Exar, visit http://www.exar.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The forward-looking statements contained in this press release and in related comments by our management, our use of the words "expect," "anticipate," "possible," "potential," "target," "believe," "commit," "intend," "continue," "may," "would," "could," "should," "project," "projected," "positioned" or similar expressions is intended to identify forward-looking statements that represent our current judgment about possible future events.  This may include statements about future financial and operating results, economic growth rates, industry and market conditions, potential synergies and cost savings, the ability to drive growth and expand customer and partner relationships, changes in gross margins, revenues and operating expenses, manufacturing yields or operations, product development initiatives, design win conversion and other such statements. These statements are not guarantees of any event or future performance, involve risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed herein. In any forward-looking statement in which the Company expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis at the time expressed, but there can be no assurance that the statement or expectation or belief will result or be achieved or accomplished.  Information concerning risk factors is detailed in the Company's SEC reports, including the Annual Report on Form 10-K for the year ended April 1, 2012 and the Quarterly Report on Form 10-Q for the quarters ended July 1, 2012, and September 30, 2012.

Generally Accepted Accounting Principles

The Company reports its financial results in accordance with GAAP. Additionally, the Company supplements reported GAAP financials with non-GAAP measures which are included in related press releases and reports furnished to the SEC, copies of which are available at the Company's website: http://www.exar.com or the SEC's website at: http://www.sec.gov. In this press release and in related comments by management, we are disclosing non-GAAP gross profit, non-GAAP operating expenses, non-GAAP operating income or loss, non-GAAP net income or loss, and non-GAAP basic and diluted net income or loss per share, which are adjusted to exclude from our GAAP results all stock-based compensation expense, amortization of acquired intangible assets, restructuring charges and exit costs, provision for dispute resolution, certain income tax credits, and related income tax effects on certain excluded items. We are also disclosing the non-GAAP measure of free cash flow, which is derived from our net cash provided (used) by operations, less purchases of fixed assets and IP, plus proceeds from the sale of IP. These non-GAAP measures are presented in part to enhance the understanding of the Company's historical financial performance and comparability between reporting periods. The Company believes the non-GAAP presentation, when shown in conjunction with the corresponding GAAP measures, provide relevant and useful information to analysts, investors, management and other interested parties. For its internal purposes, the Company uses the foregoing non-GAAP measures to evaluate performance across reporting periods, determine certain employee benefits as well as plan for and forecast the Company's future periods. These non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with GAAP, and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP. These measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures. A reconciliation of the non-GAAP numbers to the most comparable GAAP numbers is provided in the tables included with this press release.

 

EXAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)














THREE MONTHS ENDED


NINE MONTHS ENDED



 DECEMBER 30, 


 SEPTEMBER 30, 


 JANUARY 1, 


 DECEMBER 30, 


 JANUARY 1, 



2012


2012


2012


2012


2012


































Net sales


$             22,235


$             21,528


$            20,749


$            63,210


$            71,732

Net sales, related party


8,764


9,094


8,930


27,662


31,045

               Total net sales


30,999


30,622


29,679


90,872


102,777












Cost of sales:











  Cost of sales


11,922


12,054


11,130


34,846


38,128

  Cost of sales, related party


4,005


4,380


4,299


12,897


14,867

  Amortization of purchased intangible assets


801


858


905


2,578


2,715

  Restructuring charges and exit costs


79


-


-


160


152

               Total cost of sales


16,807


17,292


16,334


50,481


55,862

Gross profit


14,192


13,330


13,345


40,391


46,915

Operating expenses:











  Research and development 


5,376


5,773


8,871


16,598


26,989

  Selling, general and administrative 


8,645


7,639


9,334


24,066


28,249

  Restructuring charges and exit costs


524


291


-


1,619


173

  Separation costs


-


-


575


-


575

               Total operating expenses


14,545


13,703


18,780


42,283


55,986

Income (loss) from operations


(353)


(373)


(5,435)


(1,892)


(9,071)












Other income and expense, net:











   Interest income and other, net


586


674


593


1,906


2,019

   Interest expense


(56)


(38)


(60)


(128)


(181)

              Total other income and expense, net

530


636


533


1,778


1,838












Income (loss) before income taxes


177


263


(4,902)


(114)


(7,233)

Provision for (benefit from) income taxes


(1,346)


-


(169)


(1,324)


3












Net income (loss)


$               1,523


$                  263


$            (4,733)


$              1,210


$            (7,236)

Net income (loss) per share:











  Basic


$                 0.03


$                 0.01


$              (0.11)


$                0.03


$              (0.16)

  Diluted


$                 0.03


$                 0.01


$              (0.11)


$                0.03


$              (0.16)












Shares used in the computation of net income (loss) per share:











  Basic


45,925


45,720


44,830


46,228


44,726

  Diluted


46,438


46,046


44,830


46,623


44,726

 

EXAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS  

(In thousands, except share amounts)

(Unaudited)








DECEMBER 30,


APRIL 1,



2012


2012 (1)

ASSETS










Current assets:





Cash and cash equivalents


$           15,334


$             8,714

Short-term marketable securities


185,784


187,668

Accounts receivable (net of allowances of $769 and $781, respectively)


12,865


8,454

Accounts receivable, related party (net of allowances of $785 and $815, respectively)


2,176


2,918

Inventories


18,720


18,374

Other current assets


3,835


3,124

Total current assets


238,714


229,252






Property, plant and equipment, net


23,743


27,793

Goodwill


3,184


3,184

Intangible assets, net


6,793


9,755

Other non-current assets


1,386


1,668






Total assets


$         273,820


$         271,652






LIABILITIES AND STOCKHOLDERS' EQUITY










Current liabilities: 





Accounts payable


$           10,079


$             7,823

Accrued compensation and related benefits


4,255


3,918

Deferred income and allowances on sales to distributors


2,786


3,410

Deferred income and allowances on sales to distributors, related party


8,384


9,608

Other current liabilities


11,174


13,615

             Total current liabilities


36,678


38,374






Long-term lease financing obligations


1,598


3,771

Other non-current obligations 


3,679


6,215






Total liabilities


41,955


48,360






Stockholders' equity


231,865


223,292

Total liabilities and stockholders' equity


$         273,820


$         271,652











(1) Due to the correction of an immaterial error in the fourth quarter fiscal of 2012, the balances at April 1, 2012 of Accumulated deficit decreased by $741 thousand and Additional paid-in capital decreased by $741 thousand. Total Stockholders' equity remained the same.

 

EXAR CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(In thousands, except per share amounts)

(Unaudited)














THREE MONTHS ENDED


NINE MONTHS ENDED



 DECEMBER 30, 


 SEPTEMBER 30, 


 JANUARY 1, 


 DECEMBER 30, 


 JANUARY 1, 



2012


2012


2012


2012


2012












 Net Sales


$             30,999


$             30,622


$            29,679


$            90,872


$          102,777












 GAAP gross profit


$             14,192


$             13,330


$            13,345


$            40,391


$            46,915

 GAAP gross margin


45.8%


43.5%


45.0%


44.4%


45.6%

   Stock-based compensation


106


129


104


220


232

   Amortization of acquired intangible assets


801


853


905


2,534


2,715

   Restructuring charges and exit costs


79


-


-


160


152

Non-GAAP gross profit 


$             15,178


$             14,312


$            14,354


$            43,305


$            50,014

Non-GAAP gross margin 


49.0%


46.7%


48.4%


47.7%


48.7%












GAAP operating expenses


$             14,545


$             13,703


$            18,780


$            42,283


$            55,986

   Stock-based compensation 


1,296


1,218


1,229


2,703


3,162

   Amortization of acquired intangible assets


107


107


174


334


522

   Restructuring charges and exit costs


524


291


575


1,619


748

   Provison for dispute resolution


1,000


-


-


1,000


-

Non-GAAP operating expenses


$             11,618


$             12,087


$            16,802


$            36,627


$            51,554












GAAP operating income (loss)


$                (353)


$                (373)


$            (5,435)


$            (1,892)


$            (9,071)

   Stock-based compensation 


1,402


1,347


1,333


2,923


3,394

   Amortization of acquired intangible assets


908


960


1,079


2,868


3,237

   Restructuring charges and exit costs


603


291


575


1,779


900

   Provison for dispute resolution


1,000


-


-


1,000


-

Non-GAAP operating income (loss)


$               3,560


$               2,225


$            (2,448)


$              6,678


$            (1,540)












GAAP net income (loss)


$               1,523


$                  263


$            (4,733)


$              1,210


$            (7,236)

   Stock-based compensation 


1,402


1,347


1,333


2,923


3,394

   Amortization of acquired intangible assets


908


960


1,079


2,868


3,237

   Restructuring charges and exit costs


603


291


575


1,779


900

   Provison for dispute resolution


1,000


-


-


1,000


-

   Income tax effects


(1,389)


(6)


(194)


(1,434)


(115)

Non-GAAP net income (loss)


$               4,047


$               2,855


$            (1,940)


$              8,346


$                 180












GAAP net income (loss) per share











  Basic


$                 0.03


$                 0.01


$              (0.11)


$                0.03


$              (0.16)

  Diluted


$                 0.03


$                 0.01


$              (0.11)


$                0.03


$              (0.16)












Non-GAAP net income (loss) per share 











  Basic


$                 0.09


$                 0.06


$              (0.04)


$                0.18


$                0.00

  Diluted


$                 0.09


$                 0.06


$              (0.04)


$                0.18


$                0.00























Net cash provided (used) by operations


$               3,611


$               2,304


$            (2,226)


$              3,654


$              2,907

   Less purchases of fixed assets and IP


(147)


(646)


(1,016)


(1,253)


(2,658)

   Add proceeds from sale of IP


125


125


-


250


170

Free cash flow


$               3,589


$               1,783


$            (3,242)


$              2,651


$                 419

 

EXAR CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL NET SALES INFORMATION

























THREE MONTHS ENDED


NINE MONTHS ENDED



 DECEMBER 30, 


 SEPTEMBER 30, 


 JANUARY 1, 


 DECEMBER 30, 


 JANUARY 1, 

By Product Line


2012


2012


2012


2012


2012

Connectivity


56%


53%


52%


55%


52%

Power management


20%


22%


22%


21%


21%

Data compression and security


16%


15%


14%


15%


13%

Communications


8%


10%


12%


9%


14%














THREE MONTHS ENDED


NINE MONTHS ENDED



 DECEMBER 30, 


 SEPTEMBER 30, 


 JANUARY 1, 


 DECEMBER 30, 


 JANUARY 1, 

By Geography


2012


2012


2012


2012


2012

Asia


59%


58%


57%


60%


58%

Americas


29%


27%


31%


26%


28%

EMEA


12%


15%


12%


14%


14%













































EXAR CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE
















GUIDANCE FOR THE QUARTER ENDING MARCH 31, 2013







ADJUSTMENTS











AMORTIZATION











OF ACQUIRED









 STOCK-BASED 


INTANGIBLE







NON-GAAP


COMPENSATION


ASSETS


GAAP

Net Sales




0% - 3%






0% - 3%

Gross Margin




49% - 51%


~0.2 million


~$0.8 million


46% - 48%

Net income per share




 $0.08 - $0.10 


~1.5 million


~$0.9 million


 $0.03 - $0.05 

 

SOURCE Exar Corporation

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This is not a small hotel event. It is also not a big vendor party where politicians and entertainers are more important than real content. This is Cloud Expo, the world's longest-running conference and exhibition focused on Cloud Computing and all that it entails. If you want serious presentations and valuable insight about Cloud Computing for three straight days, then register now for Cloud Expo.
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SYS-CON Events announced today that SoftLayer, an IBM Company, has been named “Gold Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. SoftLayer, an IBM Company, provides cloud infrastructure as a service from a growing number of data centers and network points of presence around the world. SoftLayer’s customers range from Web startups to global enterprises.
So, you bought into the current machine learning craze and went on to collect millions/billions of records from this promising new data source. Now, what do you do with them? Too often, the abundance of data quickly turns into an abundance of problems. How do you extract that "magic essence" from your data without falling into the common pitfalls? In her session at @ThingsExpo, Natalia Ponomareva, Software Engineer at Google, will provide tips on how to be successful in large scale machine lear...
Up until last year, enterprises that were looking into cloud services usually undertook a long-term pilot with one of the large cloud providers, running test and dev workloads in the cloud. With cloud’s transition to mainstream adoption in 2015, and with enterprises migrating more and more workloads into the cloud and in between public and private environments, the single-provider approach must be revisited. In his session at 18th Cloud Expo, Yoav Mor, multi-cloud solution evangelist at Cloudy...
IoT device adoption is growing at staggering rates, and with it comes opportunity for developers to meet consumer demand for an ever more connected world. Wireless communication is the key part of the encompassing components of any IoT device. Wireless connectivity enhances the device utility at the expense of ease of use and deployment challenges. Since connectivity is fundamental for IoT device development, engineers must understand how to overcome the hurdles inherent in incorporating multipl...