Exar Announces Fiscal 2013 Third Quarter Financial Results

Company Reports Sequential Growth in Revenue and Profit

Jan 23, 2013, 16:05 ET from Exar Corporation

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.

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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



RELATED LINKS

http://www.exar.com