Exar Corporation Reports Fiscal 2012 Fourth Quarter Results

Fiscal Year End 2012 Results and Completion of Planned Restructuring

FREMONT, Calif., May 3, 2012 /PRNewswire/ -- Exar Corporation (Nasdaq: EXAR) today reported financial results for the Company's fourth quarter and fiscal year 2012 ended April 1, 2012.  The Company reported revenue of $27.8 million for the fourth quarter of fiscal year 2012 and $130.6 million for fiscal year 2012.

Company president and CEO Louis DiNardo commented, "During the fourth quarter of fiscal year 2012, we executed a strategy to reduce our workforce and align resources with our market, product and financial plans.  The gross impact of these actions represents over $22 million in annual expense savings and will be reflected in our financial performance in the coming year.  Additionally, we strengthened our marketing, design, test and operations organizations during the quarter and established a focused plan to achieve profitability in fiscal year 2013."

"This quarter our Power Management product sales grew over 12% and our Connectivity product sales grew 3%.  This growth was offset by continued weakness in the Communications market and inventory adjustments at our major customers in the Networking market.  Our book-to-bill for the quarter was greater than one-to-one and we expect growth in all of our product areas in the first quarter of fiscal year 2013," added Mr. DiNardo.

For the first quarter of fiscal year 2013 ending July 1, 2012, the Company projects that net sales will grow between 5% and 10%.  The non-GAAP gross margin is currently expected to be between 46% and 48%.  Non-GAAP operating expenses are expected to be between $13 million and $14 million and earnings per share are expected to be between $0.01 and 0.03 per fully diluted share on a non-GAAP basis.

The following non-GAAP financial information excludes stock-based compensation, amortization of acquired intangible assets, restructuring and exit charges, separation costs, provision for dispute resolution, impairment of purchased intangible assets, and related tax effects.  See "Generally Accepted Accounting Principles" below for further description.

Non-GAAP Financial Comparison

(In millions, except per share amount)

(Unaudited)








THREE MONTHS ENDED


TWELVE MONTHS ENDED



 APRIL 1, 


 JANUARY 1, 


 MARCH 27, 


 APRIL 1, 


 MARCH 27, 



2012


2012


2011


2012


2011

Net sales


$           27.8


$                29.7


$                      33.8


$            130.6


$                    146.0

Gross margin


40.0%


48.4%


46.1%


46.8%


49.9%

Loss from operations


$            (5.4)


$                (2.4)


$                      (5.4)


$              (6.9)


$                    (11.7)

Net loss


$            (4.6)


$                (1.9)


$                      (4.6)


$              (4.5)


$                      (7.2)

Basic loss per share


$          (0.10)


$              (0.04)


$                    (0.10)


$            (0.10)


$                    (0.16)

 

GAAP Financial Comparison

(In millions, except per share amount)

(Unaudited)








THREE MONTHS ENDED


TWELVE MONTHS ENDED



 APRIL 1, 


 JANUARY 1, 


 MARCH 27, 


 APRIL 1, 


 MARCH 27, 



2012


2012


2011


2012


2011

Net sales


$             27.8


$                       29.7


$                     33.8


$           130.6


$                   146.0

Gross margin


32.4%


45.0%


35.0%


42.8%


43.8%

Loss from operations


$           (22.3)


$                       (5.4)


$                    (19.5)


$            (31.3)


$                    (40.0)

Net loss


$           (21.6)


$                       (4.7)


$                    (18.8)


$            (28.8)


$                    (35.7)

Basic loss per share


$           (0.48)


$                     (0.11)


$                    (0.42)


$            (0.64)


$                    (0.81)

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 fourth quarter and fiscal year 2012, today, Thursday, May 3 at 1:30 p.m. PDT.  To access the conference call, please dial (800) 288-8960 by 1:20 p.m. PDT and use conference ID number 245707.  In addition, a live webcast will also be available.

To access the webcast, please go to the Company's Investors' Relations Homepage at: http://www.exar.com/news/investornews.aspx.  A replay of the call will be available starting at 3:00 p.m. PDT on May 3, 2012 until 11:59 p.m. PDT on May 10, 2012.  To access the replay, please dial (800) 475-6701 and use conference ID number 245707.

About Exar

Exar Corporation designs, develops and markets high performance analog mixed-signal integrated circuits and advanced sub-system solutions for data communication, networking, storage, consumer and industrial applications.  Exar's product portfolio includes power management and connectivity components, communications products, network security and storage optimization solutions.  Exar has locations worldwide providing real-time customer support to drive rapid product development.  For more information about Exar, visit http://www.exar.com.

Safe Harbor Statement

The Company's statements about its future financial or business performance, changes in gross margins, net sales and operating expenses are forward-looking statements that involve risks and uncertainties.  These risks and uncertainties include global financial volatility, economic recession, and industry and market conditions, such as vendor capacity, quality or throughput constraints; possible disruption in commercial activities; successful development, market acceptance and demand for the Company's products; accounting considerations; and the level of inventories maintained at the Company's OEMs and distributors, as well as the other risks detailed from time to time in the Company's SEC reports, including the Annual Report on Form 10-K for the year ended March 27, 2011 and the Quarterly Reports on Form 10-Q for the periods ended July 3, 2011, October 2, 2011 and January 1, 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.  For the periods presented, we are disclosing non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development expenses, non-GAAP selling, general and administrative expenses, non-GAAP operating expenses, non-GAAP operating loss, non-GAAP net loss, and non-GAAP loss per share, which are adjusted to exclude from our GAAP results all stock-based compensation, amortization of acquired intangible assets, fair value adjustment of acquired inventories, acquisition-related costs, separation costs, provision for dispute resolution, impairment of acquired intangible assets, restructuring charges and exit costs, impairment charges on investments, and income tax effects.  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 following the semiconductor industry.  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.

 

EXAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)














THREE MONTHS ENDED


TWELVE MONTHS ENDED



 APRIL 1, 


 JANUARY 1, 


 MARCH 27, 


 APRIL 1, 


 MARCH 27, 



2012


2012


2011


2012


2011


































Net sales


$18,256


$20,749


$22,579


$89,988


$101,721

Net sales, related party


9,533


8,930


11,192


40,578


44,284

               Total net sales


27,789


29,679


33,771


130,566


146,005












Cost of sales:











  Cost of sales


11,721


11,130


12,754


49,849


52,780

  Cost of sales, related party


5,021


4,299


5,555


19,888


20,972

  Amortization of acquired intangible assets


888


905


1,443


3,603


6,044

  Restructuring charges and exit costs


1,160


-


2,212


1,312


2,212

               Total cost of sales


18,790


16,334


21,964


74,652


82,008












Gross profit


8,999


13,345


11,807


55,914


63,997












Operating expenses:











  Research and development 


8,486


8,871


11,534


35,475


49,888

  Selling, general and administrative 


10,036


9,909


10,929


38,860


45,267

  Impairment of acquired intangible assets


-


-


7,485


-


7,485

  Restructuring charges and exit costs


12,740


-


1,375


12,913


1,375

               Total operating expenses


31,262


18,780


31,323


87,248


104,015

Loss from operations


(22,263)


(5,435)


(19,516)


(31,334)


(40,018)












Other income and expense, net:











   Interest income and other, net


784


593


1,157


2,803


5,925

   Interest expense


(34)


(60)


(311)


(215)


(1,258)

   Impairment charges on investments


-


-


-


-


(62)

              Total other income and expense, net


750


533


846


2,588


4,605












Loss before income taxes


(21,513)


(4,902)


(18,670)


(28,746)


(35,413)

Provision for (benefit from)  income taxes


48


(169)


166


51


255












Net loss


$(21,561)


$(4,733)


$(18,836)


$(28,797)


$(35,668)























Loss per share:











  Basic loss per share


$(0.48)


$(0.11)


$(0.42)


$(0.64)


$(0.81)












  Diluted loss per share


$(0.48)


$(0.11)


$(0.42)


$(0.64)


$(0.81)












Shares used in the computation of loss per share:






















  Basic


45,012


44,830


44,503


44,796


44,218

  Diluted


45,012


44,830


44,503


44,796


44,218























Note: Certain amounts previously reported above have been reclassified to conform to the current period presentation.



EXAR CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(In thousands, except per share amounts)

(Unaudited)














THREE MONTHS ENDED


TWELVE MONTHS ENDED



 APRIL 1, 


 JANUARY 1, 


 MARCH 27, 


 APRIL 1, 


 MARCH 27, 



2012


2012


2011


2012


2011












 Net Sales


$27,789


$29,679


$33,771


$130,566


$146,005












 GAAP gross profit


$8,999


$13,345


$11,807


$55,914


$63,997

 GAAP gross margin


32.4%


45.0%


35.0%


42.8%


43.8%

   Stock-based compensation


79


104


93


311


489

   Amortization of acquired intangible assets


888


905


1,443


3,603


6,044

   Fair value adjustment of acquired inventories


-


-


-


-


42

   Restructuring charges and exit costs


1,160


-


2,212


1,312


2,212

Non-GAAP gross profit 


$11,126


$14,354


$15,555


$61,140


$72,784

Non-GAAP gross margin 


40.0%


48.4%


46.1%


46.8%


49.9%












GAAP research and development expenses


$8,486


$8,871


$11,534


$ 35,475


$49,888

   Stock-based compensation 


342


576


375


1,708


3,241

   Amortization of acquired intangible assets 


-


-


72


-


2,292

Non-GAAP research and development expenses


$8,144


$8,295


$11,087


$33,767


$44,355












GAAP selling, general and administrative expenses


$10,036


$9,909


$10,929


$38,860


$45,267

   Stock-based compensation 


676


653


769


2,472


3,651

   Amortization of acquired intangible assets 


174


174


254


696


1,143

   Acquisition-related costs


-


-


-


-


328

   Separation costs 


-


575


-


575


-

   Provision for dispute resolution


820


-


-


820


-

Non-GAAP selling, general and administrative expenses


$8,366


$8,507


$9,906


$34,297


$40,145












GAAP operating expenses


$31,262


$18,780


$31,323


$87,248


$104,015

   Stock-based compensation 


1,018


1,229


1,144


4,180


6,892

   Amortization of acquired intangible assets


174


174


326


696


3,435

   Acquisition-related costs


-


-


-


-


328

   Separation costs 


-


575


-


575


-

   Provision for dispute resolution


820


-


-


820


-

   Impairment of acquired intangible assets


-


-


7,485


-


7,485

   Restructuring charges and exit costs


12,740


-


1,375


12,913


1,375

Non-GAAP operating expenses


$16,510


$16,802


$20,993


$68,064


$84,500












GAAP operating loss


$(22,263)


$(5,435)


$(19,516)


$(31,334)


$(40,018)

   Stock-based compensation 


1,097


1,333


1,237


4,491


7,381

   Amortization of acquired intangible assets


1,062


1,079


1,769


4,299


9,479

   Fair value adjustment of acquired inventories


-


-


-


-


42

   Acquisition-related costs


-


-


-


-


328

   Separation costs 


-


575


-


575


-

   Provision for dispute resolution


820


-


-


820


-

   Impairment of acquired intangible assets


-


-


7,485


-


7,485

   Restructuring charges and exit costs


13,900


-


3,587


14,225


3,587

Non-GAAP operating loss


$(5,384)


$(2,448)


$(5,438)


$(6,924)


$(11,716)












GAAP net loss


$(21,561)


$(4,733)


$(18,836)


$(28,797)


$(35,668)

   Stock-based compensation 


1,097


1,333


1,237


4,491


7,381

   Amortization of acquired intangible assets


1,062


1,079


1,769


4,299


9,479

   Fair value adjustment of acquired inventories


-


-


-


-


42

   Acquisition-related costs


-


-


-


-


328

   Separation costs 


-


575


-


575


-

   Provision for dispute resolution


820


-


-


820


-

   Impairment of acquired intangible assets


-


-


7,485


-


7,485

   Restructuring charges and exit costs


13,900


-


3,587


14,225


3,587

   Impairment charges on investments


-


-


-


-


62

   Income tax effects


44


(194)


129


(71)


76

Non-GAAP net loss 


$(4,638)


$(1,940)


$(4,629)


$(4,458)


$(7,228)












GAAP loss per share


$(0.48)


$(0.11)


$(0.42)


$(0.64)


$(0.81)

   Stock-based compensation 


0.02


0.03


0.03


0.10


0.17

   Amortization of acquired intangible assets


0.02


0.02


0.04


0.10


0.21

   Fair value adjustment of acquired inventories


-


-


-


-


0.00

   Acquisition-related costs


-


-


-


-


0.01

   Separation costs 


-


0.01


-


0.01


-

   Provision for dispute resolution


0.02


-


-


0.02


-

   Impairment of acquired intangible assets


-


-


0.17


-


0.17

   Restructuring charges and exit costs


0.31


-


0.08


0.32


0.08

   Impairment charges on investments


-


-


-


-


0.00

   Income tax effects


0.00


(0.00)


0.00


(0.00)


0.00

Non-GAAP loss per share 


$(0.10)


$(0.04)


$(0.10)


$(0.10)


$(0.16)























Shares used in the computation of loss per share --- GAAP

45,012


44,830


44,503


44,796


44,218

   The effect of dilutive potential common shares due to 











      reporting Non-GAAP net income 


-


-


-


-


-

   The effect of removing stock-based compensation expense









      under ASC 718 for Non-GAAP presentation purpose


-


-


-


-


-

Shares used in the computation of loss per share ---  Non-GAAP

45,012


44,830


44,503


44,796


44,218























Note: Certain amounts previously reported above have been reclassified to conform to the current period presentation.





EXAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS  

(In thousands, except share and per share amounts)

(Unaudited)








APRIL 1,


MARCH 27, 



2012


2011

ASSETS










Current assets:





   Cash and cash equivalents


$       8,714


$              15,039

   Short-term marketable securities


187,668


185,960

   Accounts receivable (net of allowances of $781 and $1,165)


8,454


9,776

   Accounts receivable, related party (net of allowances of $815 and $358)


2,918


3,194

   Inventories


18,374


21,962

   Other current assets


3,124


3,562

Total current assets


229,252


239,493






Property, plant and equipment, net


27,793


38,009

Goodwill


3,184


3,184

Intangible assets, net


9,755


15,390

Other non-current assets


1,668


2,139






Total assets


$   271,652


$            298,215






LIABILITIES AND STOCKHOLDERS' EQUITY










Current liabilities: 





   Accounts payable


$       7,823


$                8,794

   Accrued compensation and related benefits


3,918


6,069

   Deferred income and allowances on sales to distributors


3,410


4,632

   Deferred income and allowances on sales to distributors, related party


9,608


10,680

   Other accrued expenses


13,615


7,062

             Total current liabilities


38,374


37,237






Long-term lease financing obligations


3,771


12,558

Other non-current obligations 


6,215


3,841






Total liabilities


48,360


53,636






Total stockholders' equity 





Preferred stock, $.0001 par value; 2,250,000 shares authorized; no shares outstanding


-


-

Common stock, $.0001 par value; 100,000,000 shares authorized;  45,245,233 and





     44,519,663 shares issued and outstanding at April 1, 2012 and March 27, 2011,





            respectively (net of treasury shares)


5


4

Additional paid-in capital


735,562


728,139

Accumulated other comprehensive loss


(201)


(287)

Treasury stock at cost, 19,924,369 shares at April 1, 2012 and March 27, 2011


(248,983)


(248,983)

Accumulated deficit


(263,091)


(234,294)

Total stockholders' equity


223,292


244,579

Total liabilities and stockholders' equity


$   271,652


$            298,215

EXAR CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL NET SALES INFORMATION













THREE MONTHS ENDED


TWELVE MONTHS ENDED



APRIL1, 2012


JANUARY 1, 2012


MARCH 27, 2011


APRIL 1, 2012


 

MARCH 27, 2011

By Product Line

Communications


9%


12%


17%


13%


 

16%

Datacom and storage


7%


14%


10%


12%


11%

Connectivity


57%


52%


53%


53%


53%

Power management


27%


22%


20%


22%


20%

























THREE MONTHS ENDED


TWELVE MONTHS ENDED



 APRIL 1, 2012


 JANUARY 1, 2012


 MARCH 27, 2011


 APRIL 1, 2012


MARCH 27, 2011

By Geography





Americas


22%


31%


23%


26%


23%

Asia


61%


57%


59%


59%


61%

EMEA


17%


12%


18%


15%


16%










































EXAR CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE

(In millions)












GUIDANCE FOR THE QUARTER ENDING JULY  1, 2012







 ADJUSTMENTS 





NON-GAAP


STOCK-BASED COMPENSATION


AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS


GAAP










 Net Sales


 +5% to +10% 






 +5% to +10% 










Gross Margin


 46% - 48% 


 ~$0.1 million 


~$0.9 million


 42.5% - 44.5% 










GAAP operating expenses

 $13 - $14 million 


 ~$1.0 million 


~$0.2 million


 $14 - $15 million 










Earnings (loss) per share


 $0.01 - $0.03 


 ~$1.1 million 


 ~$1.1 million 


 ($0.04) - ($0.02) 




SOURCE Exar Corporation