Exar Corporation Announces Fiscal 2013 Second Quarter Results Company Reports Sequential Growth In Sales and Profit

FREMONT, Calif., Oct. 24, 2012 /PRNewswire/ -- Exar Corporation (Nasdaq: EXAR), a leading supplier of high performance, analog mixed-signal components and data management solutions, today reported financial results for the second quarter of fiscal year 2013 ended September 30, 2012.

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Revenue for the quarter was $30.6 million, or 5% growth compared to the prior quarter. Non-GAAP net income for the quarter was $2.9 million, or 98% growth compared to the prior quarter.  Non-GAAP net income per fully diluted share was $0.06 compared to $0.03 in the prior quarter.  Non-GAAP gross margin was 46.7%, and non-GAAP operating expenses were $12.1 million. GAAP net income for the quarter was $0.3 million compared to a net loss of $0.6 million in the prior quarter, and GAAP net income per fully diluted share was $0.01 compared to a net loss of $0.01 in the prior quarter.

"The second quarter of fiscal 2013 exceeded our expectations as both revenue and profit grew nicely.  Data Compression and Security products led revenue growth as our presence in the Big Data Analytics market supported 23% growth quarter-over-quarter.  Our component products, Power Management and Connectivity, also showed growth in the quarter; however this growth was muted by lower overall OEM demand and supply limitations," commented Louis DiNardo, president and CEO.

"During our second fiscal quarter our programmable power management products began to ship to both Intel and ARM based next generation server designs as well as in industrial equipment applications," continued Mr. DiNardo. "As more servers are deployed in data center applications energy monitoring is playing an increasingly important role.  Our programmable power management products provide critical information for data center management. Additionally, our PCIe solutions for Big Data Analytics are gaining momentum in large networking and storage environments as they provide increased system performance and lower overall system cost. We are pleased with our new product development efforts and progress in achieving our goal of consistent profitable growth," concluded Mr. DiNardo.

For the third quarter of fiscal year 2013 the Company expects revenue growth in the range of 2% to 4% and non-GAAP gross margin in the range of 47% to 48%.  Non-GAAP net income per fully diluted share is expected to be in the range of $0.06 to $0.07.












GAAP FINANCIAL COMPARISON









(In millions, except per share amounts)









(Unaudited)
























THREE MONTHS ENDED


SIX MONTHS ENDED



 SEPTEMBER 30, 


 JULY 1, 


 OCTOBER 2,  


 SEPTEMBER 30, 


 OCTOBER 2,  



2012


2012


2011


2012


2011

Net sales


$               30.6


$               29.3


$               36.1


$               59.9


$               73.1

Gross margin


43.5%


44.0%


46.3%


43.8%


45.9%

Loss from operations


$               (0.4)


$               (1.2)


$               (1.5)


$               (1.5)


$               (3.6)

Net income (loss)


$                 0.3


$               (0.6)


$               (1.1)


$               (0.3)


$               (2.5)

Net income (loss) per share









  Basic 


$               0.01


$             (0.01)


$             (0.02)


$             (0.01)


$             (0.06)

  Diluted 


$               0.01


$             (0.01)


$             (0.02)


$             (0.01)


$             (0.06)















 

NON-GAAP FINANCIAL COMPARISON







(In millions, except per share amounts)









(Unaudited)
























THREE MONTHS ENDED


SIX MONTHS ENDED



 SEPTEMBER 30, 


 JULY 1, 


 OCTOBER 2,  


 SEPTEMBER 30, 


 OCTOBER 2,  



2012


2012


2011


2012


2011

Net sales


$               30.6


$               29.3


$               36.1


$               59.9


$               73.1

Gross margin


46.7%


47.2%


49.0%


47.0%


48.8%

Income from operations


$                 2.2


$                 0.9


$                 0.8


$                 3.1


$                 0.9

Net income


$                 2.9


$                 1.4


$                 1.4


$                 4.3


$                 2.1

Net income per share











  Basic 


$               0.06


$               0.03


$               0.03


$               0.09


$               0.05

  Diluted 


$               0.06


$               0.03


$               0.03


$               0.09


$               0.05












 

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 second quarter of fiscal year 2013, today, Wednesday, October 24, 2012 at 1:30 p.m. PDT.  To access the conference call, please dial 800-230-1059 after 1:20 p.m. PDT. In addition, a live webcast will be available on Exar's Investor Relations webpage.

To access the webcast, please go to the Company's Investor Relations Homepage at: http://www.exar.com/news/investornews.aspx.  A recorded replay of the conference call will be available starting at 3:00 p.m. PDT the day of the call until 11:59 p.m. PDT on October 31, 2012. To access the replay, please dial 800-475-6701 and use conference ID number 267782.

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, 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 may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements are based on management's current expectations or belief about the future events and financial, political and social trends and assumptions it has made based on information currently available to it.  Exar cannot assure that any expectations, forecasts or assumptions made by management preparing these forward-looking statements will prove accurate, or that any projections will be realized.  Such forward-looking statements may be affected by inaccurate assumptions or by known or unknown risks or uncertainties.  Actual results may vary materially from those expressed or implied by the statements herein.  Forward-looking statements contained herein speak only as of this release.  Exar does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.  For factors that could cause actual results to vary, perhaps materially, from these forward-looking statements, please refer to Exar's filings with the Securities and Exchange Commission, 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 period ended July 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 operating expenses, non-GAAP operating income, non-GAAP net income and non-GAAP basic and diluted net income  per share, which are adjusted to exclude from our GAAP results all stock-based compensation, amortization of acquired intangible assets, restructuring charges and exit costs, 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


SIX MONTHS ENDED



 SEPTEMBER 30, 


 JULY 1, 


 OCTOBER 2,  


 SEPTEMBER 30, 


 OCTOBER 2,  



2012


2012


2011


2012


2011


































Net sales


$               21,528


$   19,447


$       25,910


$          40,975


$         50,983

Net sales, related party


9,094


9,804


10,210


18,898


22,115

               Total net sales


30,622


29,251


36,120


59,873


73,098












Cost of sales:











  Cost of sales


12,054


10,870


13,661


22,924


26,998

  Cost of sales, related party


4,380


4,512


4,825


8,892


10,568

  Amortization of purchased intangible assets

858


919


905


1,777


1,810

  Restructuring charges and exit costs


-


81


-


81


152

               Total cost of sales


17,292


16,382


19,391


33,674


39,528

Gross profit


13,330


12,869


16,729


26,199


33,570

Operating expenses:











  Research and development 


5,773


5,449


8,838


11,222


18,118

  Selling, general and administrative 


7,639


7,782


9,373


15,421


18,915

  Restructuring charges and exit costs


291


804


-


1,095


173

               Total operating expenses


13,703


14,035


18,211


27,738


37,206

Loss from operations


(373)


(1,166)


(1,482)


(1,539)


(3,636)












Other income and expense, net:











   Interest income and other, net


674


646


715


1,320


1,426

   Interest expense


(38)


(34)


(61)


(72)


(121)

              Total other income and expense, net

636


612


654


1,248


1,305












Income (loss) before income taxes


263


(554)


(828)


(291)


(2,331)

Provision for income taxes


-


22


249


22


172












Net income (loss)


$                   263


$      (576)


$       (1,077)


$             (313)


$         (2,503)

Net income (loss) per share:











  Basic


$                  0.01


$     (0.01)


$         (0.02)


$            (0.01)


$          (0.06)

  Diluted


$                  0.01


$     (0.01)


$         (0.02)


$            (0.01)


$          (0.06)












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











  Basic


45,720


45,388


44,759


45,554


44,676

  Diluted


46,046


45,388


44,759


45,554


44,676


 

EXAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS  

(In thousands, except share amounts)

(Unaudited)








SEPTEMBER 30,


APRIL 1,



2012


2012 (1)

ASSETS










Current assets:





Cash and cash equivalents


$            10,423


$              8,714

Short-term marketable securities


187,629


187,668

Accounts receivable (net of allowances of $755 and $781, respectively)


12,976


8,454

Accounts receivable, related party (net of allowances of $494 and $815, respectively)

3,762


2,918

Inventories


16,055


18,374

Other current assets


3,688


3,124

Total current assets


234,533


229,252






Property, plant and equipment, net


25,817


27,793

Goodwill


3,184


3,184

Intangible assets, net


7,740


9,755

Other non-current assets


1,404


1,668






Total assets


$           272,678


$           271,652






LIABILITIES AND STOCKHOLDERS' EQUITY










Current liabilities: 





Accounts payable


$              8,991


$              7,823

Accrued compensation and related benefits


3,211


3,918

Deferred income and allowances on sales to distributors


2,872


3,410

Deferred income and allowances on sales to distributors, related party


9,506


9,608

Other current liabilities


10,468


13,615

      Total current liabilities


35,048


38,374






Long-term lease financing obligations


3,683


3,771

Other non-current obligations 


6,273


6,215






Total liabilities


45,004


48,360






Stockholders' equity


227,674


223,292

Total liabilities and stockholders' equity


$           272,678


$           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


SIX MONTHS ENDED



 SEPTEMBER 30, 


 JULY 1, 


 OCTOBER 2,  


 SEPTEMBER 30, 


 OCTOBER 2,  



2012


2012


2011


2012


2011












 Net Sales


$            30,622


$          29,251


$       36,120


$             59,873


$           73,098












 GAAP gross profit


$            13,330


$          12,869


$       16,729


$             26,199


$           33,570

 GAAP gross margin


43.5%


44.0%


46.3%


43.8%


45.9%

   Stock-based compensation


129


(15)


69


114


128

   Amortization of acquired intangible assets

853


880


905


1,733


1,810

   Restructuring charges and exit costs

-


81


-


81


152

Non-GAAP gross profit 


$            14,312


$          13,815


$       17,703


$             28,127


$           35,660

Non-GAAP gross margin 


46.7%


47.2%


49.0%


47.0%


48.8%












GAAP operating expenses


$            13,703


$          14,035


$       18,211


$             27,738


$           37,206

   Stock-based compensation 


1,218


189


1,108


1,407


1,933

   Amortization of acquired intangible assets

107


120


174


227


348

   Restructuring charges and exit costs

291


804


-


1,095


173

Non-GAAP operating expenses


$            12,087


$          12,922


$       16,929


$             25,009


$           34,752












GAAP operating loss


$               (373)


$           (1,166)


$        (1,482)


$             (1,539)


$           (3,636)

   Stock-based compensation 


1,347


174


1,177


1,521


2,061

   Amortization of acquired intangible assets

960


1,000


1,079


1,960


2,158

   Restructuring charges and exit costs

291


885


-


1,176


325

Non-GAAP operating income


$              2,225


$               893


$            774


$              3,118


$               908












GAAP net income (loss)


$                263


$             (576)


$        (1,077)


$               (313)


$           (2,503)

   Stock-based compensation 


1,347


174


1,177


1,521


2,061

   Amortization of acquired intangible assets

960


1,000


1,079


1,960


2,158

   Restructuring charges and exit costs

291


885


-


1,176


325

   Income tax effects


(6)


(39)


221


(45)


79

Non-GAAP net income


$              2,855


$            1,444


$         1,400


$              4,299


$            2,120












GAAP net income (loss) per share










  Basic


$               0.01


$            (0.01)


$         (0.02)


$              (0.01)


$            (0.06)

  Diluted


$               0.01


$            (0.01)


$         (0.02)


$              (0.01)


$            (0.06)












Non-GAAP net income per share 










  Basic


$               0.06


$              0.03


$           0.03


$                0.09


$              0.05

  Diluted


$               0.06


$              0.03


$           0.03


$                0.09


$              0.05

 

 

EXAR CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL NET SALES INFORMATION

























THREE MONTHS ENDED


SIX MONTHS ENDED



 SEPTEMBER 30, 


 JULY 1, 


 OCTOBER 2,  


 SEPTEMBER 30, 


 OCTOBER 2,  

By Product Line


2012


2012


2011


2012


2011

Connectivity


53%


55%


52%


54%


52%

Power management

22%


23%


22%


22%


21%

Data compression and security

15%


12%


14%


14%


12%

Communications


10%


10%


12%


10%


15%














THREE MONTHS ENDED


SIX MONTHS ENDED



 SEPTEMBER 30, 


 JULY 1, 


 OCTOBER 2,  


 SEPTEMBER 30, 


 OCTOBER 2,  

By Geography


2012


2012


2011


2012


2011

Asia


58%


64%


60%


61%


59%

Americas


27%


22%


26%


24%


26%

EMEA


15%


14%


14%


15%


15%













































EXAR CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE
















GUIDANCE FOR THE QUARTER ENDING DECEMBER 30, 2012







ADJUSTMENTS











AMORTIZATION











OF ACQUIRED









 STOCK-BASED 


INTANGIBLE







NON-GAAP


COMPENSATION


ASSETS


GAAP

Net Sales




2% - 4%






2% - 4%

Gross Margin




47% - 48%


~$0.2 million


~$0.8 million


44% - 45%

Net income per share




 $0.06 - $0.07 


~$1.4 million


~$0.9 million


 $0.01 - $0.02 

 




 

SOURCE Exar Corporation



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