Exar Corporation Reports Fiscal 2010 Third Quarter Results
FREMONT, Calif., Jan. 28 /PRNewswire-FirstCall/ -- Exar Corporation (Nasdaq: EXAR), today reported financial results for its fiscal 2010 third quarter ended December 27, 2009.
Net sales for the third quarter of fiscal 2010 were $33.9 million compared to net sales of $31.6 million for the prior quarter and $26.3 million for the third quarter of fiscal 2009.
The GAAP gross margin for the third quarter of fiscal 2010 was 50.2% compared to 44.6% for the prior quarter and 40.7% in the third quarter of fiscal 2009.
On a non-GAAP basis, the gross margin for the third quarter of fiscal 2010 was 54.1% compared to 51.5% for the prior quarter and 45.3% in the third quarter of fiscal 2009.
The GAAP net loss for the third quarter of fiscal 2010 was $3.8 million, or $0.09 net loss per share, compared to a net loss of $8.2 million, or $0.19 net loss per share in the prior quarter, and a net loss of $63.8 million, or $1.49 net loss per share, for the third quarter of fiscal 2009.
On a non-GAAP basis, the net income was $0.1 million for the third quarter of fiscal 2010, compared to net loss of $2.7 million, or $0.06 net loss per share, in the previous quarter, and a net loss of $0.7 million, or $0.02 net loss per share, in the third quarter of fiscal 2009.
The Company ended the third quarter of fiscal 2010 with cash, cash equivalents and short-term marketable securities of $218.3 million.
"Revenue and gross margins continued to improve. We achieved breakeven non-GAAP net income and met our short term goal of returning to positive non-GAAP EBITDA. We expect continued improvement in both revenue and gross margins in the current quarter," said Pete Rodriguez, the Company's president and chief executive officer. "We released thirty-five new products in calendar 2009 and are excited about market reaction to our new products, especially Power XR. We believe these new products will continue to gain traction and increasingly contribute to the Company's expected revenue growth."
For the fourth quarter of fiscal 2010 ending March 28, 2010, the Company projects that net sales will be between $35 million and $37 million. The non-GAAP gross margin is expected to be between 54% and 56%. Operating expenses are expected to be between $19.5 million and $20.5 million on a non-GAAP basis.
The Company's statements about its future financial performance or operating plans are based on current information and expectations and the Company undertakes no duty to update such statements. These statements are forward-looking and actual results could differ materially due to various risks and uncertainties, some of which are described herein.
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 2010, today, Thursday, January 28, 2010 at 1:30 p.m. PST. To access the conference call, please dial (800) 230-1951 by 1:20 p.m. PST and use conference ID number 143156. In addition, a live webcast will also be available.
To access the webcast, please go to the Company's Investor Relations Homepage at: http://www.exar.com. A replay of the call will be available starting at 5:00 p.m. PST this afternoon until 11:59 p.m. PST on February 4, 2010. To access the replay, please dial (800) 475-6701 and use conference ID number 143156.
Product Line Highlights:
Power Management
http://www.exar.com/Common/Content/News.aspx?id=5560
http://www.exar.com/Common/Content/News.aspx?id=5858
DataCom and Storage
http://www.exar.com/Common/Content/News.aspx?id=5572
http://www.exar.com/Common/Content/News.aspx?id=5570
Interface
http://www.exar.com/Common/Content/News.aspx?id=5640
http://www.exar.com/Common/Content/News.aspx?id=5638
http://www.exar.com/Common/Content/News.aspx?id=5738
Safe Harbor Statement
The Company's statements about its future financial performance, changes in gross margins, net sales and operating expenses, resource allocation and its impact on future performance and product development initiatives, design win conversion, distribution and OEM trends, supply chain issues among others, 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 customer and distributor relationships; limited visibility associated with customer or distributor demand for the Company's products; the possible loss of, or decrease in orders from, an important customer; cash balances; vendor capacity, quality or throughput constraints; successful integration of acquired businesses; possible disruption in commercial activities as a consequence of terrorist activity, natural disasters, armed conflict or health issues; successful development, market acceptance and demand for the Company's products, including those for which the Company has achieved design wins; competitive factors, such as pricing or competing solutions; customer ordering patterns; accounting considerations related to impairment analyses or acquisition related issues; the level of inventories maintained at the Company's OEMs and distributors; and the Company's successful execution of internal performance plans, 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 29, 2009 and the Quarterly Reports on Form 10-Q for the periods ended June 28, 2009 and September 27, 2009.
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 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 income (loss), and non-GAAP diluted earnings (loss) per share, which are adjusted to exclude from our GAAP results all stock-based compensation expense, amortization of acquired intangible assets, fair value adjustment of acquired inventories, acquisition-related costs, separation costs of executive officers, acceleration of depreciation on abandoned equipment, goodwill and other intangible asset impairment, 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.
About Exar
Exar Corporation delivers highly differentiated silicon, software and subsystem solutions for industrial, consumer, and enterprise applications. For nearly 40 years, Exar's comprehensive knowledge of end-user markets along with the underlying analog/mixed signal and digital technologies has enabled innovative solutions that meet the needs of the evolving connected world. Exar's technology portfolio includes solutions for power management, serial interfaces, packet-based and TDM wireline communications, enterprise storage optimization, and data security. Exar has locations worldwide providing real-time customer support to drive rapid product development. For more information about Exar, visit: www.exar.com.
EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)
DECEMBER 27, MARCH 29,
2009 2009
ASSETS
Current assets:
Cash and cash equivalents $22,166 $89,002
Short-term marketable securities 196,090 167,341
Accounts receivable (net of allowances
of $567 and $572) 13,164 7,452
Accounts receivable, related party (net
of allowances of $492 and $736) 4,472 1,796
Inventories 13,623 15,678
Other current assets 4,975 3,274
Deferred income taxes, net 289 62
Total current assets 254,779 284,605
Property, plant and equipment, net 43,858 42,549
Goodwill 2,621 -
Intangible assets, net 24,917 7,359
Other non-current assets 4,851 1,876
Total assets $331,026 $336,389
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $8,198 $5,391
Accrued compensation and related benefits 5,533 4,773
Deferred income and allowances on sales
to distributors 3,742 3,208
Deferred income and allowances on sales
to distributors, related party 9,353 7,040
Other accrued expenses 9,849 7,014
Total current liabilities 36,675 27,426
Long-term lease financing obligations 14,527 15,633
Other non-current obligations 3,977 1,236
Total liabilities 55,179 44,295
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;
43,794,381 and 43,036,271 shares
issued and outstanding
at December 27, 2009 and March 29,
2009, respectively (net of
treasury shares) 4 4
Additional paid-in capital 718,651 710,787
Accumulated other comprehensive income 1,491 802
Treasury stock at cost, 19,924,369
shares at December 27, 2009 and
March 29, 2009 (248,983) (248,983)
Accumulated deficit (195,316) (170,516)
Total stockholders' equity 275,847 292,094
Total liabilities and stockholders'
equity $331,026 $336,389
EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER SEPTEMBER DECEMBER DECEMBER DECEMBER
27, 2009 27, 2009 28, 2008 27, 2009 28, 2008
Net sales $24,458 $23,118 $17,201 $70,686 $58,953
Net sales,
related
party 9,473 8,470 9,104 25,695 32,311
Total net
sales 33,931 31,588 26,305 96,381 91,264
Cost of sales:
Cost of
sales 11,273 11,843 10,821 36,005 33,339
Cost of
sales,
related
party 4,505 4,088 3,998 12,381 15,053
Amortization of
purchased
intangible
assets 1,108 1,567 782 4,015 2,693
Total cost
of sales 16,886 17,498 15,601 52,401 51,085
Gross
profit 17,045 14,090 10,704 43,980 40,179
Operating
expenses:
Research and
development 11,674 12,288 8,092 36,256 24,317
Goodwill and
other intangible
asset impairment - - 59,676 - 59,676
Selling, general
and
administrative 10,688 11,375 9,099 37,175 30,146
Total operating
expenses 22,362 23,663 76,867 73,431 114,139
Loss from
operations (5,317) (9,573) (66,163) (29,451) (73,960)
Other income and
expense, net:
Interest income
and other, net 1,835 1,700 2,570 5,289 7,775
Interest expense (323) (326) (266) (973) (927)
Impairment
charges on
investments - (245) (34) (317) (1,488)
Total other
income and
expense, net 1,512 1,129 2,270 3,999 5,360
Loss before income
taxes (3,805) (8,444) (63,893) (25,452) (68,600)
Benefit from income
taxes (43) (281) (70) (652) (129)
Net loss $(3,762) $(8,163) $(63,823) $(24,800) $(68,471)
Loss per share:
Basic loss per
share $(0.09) $(0.19) $(1.49) $(0.57) $(1.60)
Diluted loss per
share $(0.09) $(0.19) $(1.49) $(0.57) $(1.60)
Shares used in the
computation of
loss per share:
Basic 43,648 43,550 42,889 43,504 42,866
Diluted 43,648 43,550 42,889 43,504 42,866
Note: Certain amounts previously reported above have been reclassified to
conform to the current periods' presentation.
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 SEPTEMBER DECEMBER DECEMBER DECEMBER
27, 2009 27, 2009 28, 2008 27, 2009 28, 2008
GAAP gross
margin 50.2% 44.6% 40.7% 45.6% 44.0%
Stock-based
compensation 0.3% 0.5% 0.5% 0.4% 0.5%
Amortization of
acquired
intangible
assets 3.3% 5.0% 3.0% 4.2% 3.0%
Fair value
adjustment of
acquired
inventories 0.3% 1.4% - 2.4% -
Acquisition-
related costs - 0.1% - - 0.1%
Acceleration of
depreciation
on abandoned
equipment - - 1.1% - 0.3%
Non-GAAP gross
margin 54.1% 51.5% 45.3% 52.6% 48.0%
GAAP research and
development
expenses $11,674 $12,288 $8,092 $36,256 $24,317
Stock-based
compensation 467 748 392 1,701 1,231
Amortization of
acquired
intangible
assets 635 635 200 1,858 726
Acquisition-
related costs 128 192 - 877 -
Acceleration of
depreciation on
abandoned
equipment - - 437 - 437
Non-GAAP research
and development
expenses $10,444 $10,713 $7,063 $31,820 $21,923
GAAP selling,
general and
administrative
expenses $10,688 $11,375 $9,099 $37,175 $30,146
Stock-based
compensation 751 767 768 2,225 2,012
Amortization
of acquired
intangible
assets 178 179 122 499 446
Acquisition-
related costs 297 620 - 4,843 541
Separation
costs of
executive
officers - - - 162 -
Acceleration
of depreciation
on abandoned
equipment - - 437 - 437
Non-GAAP selling,
general and
administrative
expenses $9,462 $9,809 $7,772 $29,446 $26,710
GAAP operating
expenses $22,362 $23,663 $76,867 $73,431 $114,139
Stock-based
compensation 1,218 1,515 1,160 3,926 3,243
Amortization of
acquired
intangible
assets 813 814 322 2,357 1,172
Acquisition-
related costs 425 812 - 5,720 541
Separation costs
of executive
officers - - - 162 -
Acceleration of
depreciation on
abandoned
equipment - - 874 - 874
Goodwill and
other
intangible
asset
impairment - - 59,676 - 59,676
Non-GAAP
operating
expenses $19,906 $20,522 $14,835 $61,266 $48,633
GAAP operating
loss $(5,317) $(9,573) $(66,163) $(29,451) $(73,960)
Stock-based
compensation 1,335 1,666 1,278 4,310 3,727
Amortization
of acquired
intangible
assets 1,921 2,381 1,105 6,372 3,865
Fair value
adjustment of
acquired
inventories 92 447 - 2,326 -
Acquisition-
related costs 425 830 - 5,744 656
Separation costs of
executive
officers - - - 162 -
Acceleration
of depreciation
on abandoned
equipment - - 1,174 - 1,174
Goodwill
and other
intangible
asset impairment - - 59,676 - 59,676
Non-GAAP operating
loss $(1,544) $(4,249) $(2,930) $(10,537) $(4,862)
GAAP net loss $(3,762) $(8,163) $(63,823) $(24,800) $(68,471)
Stock-based
compensation 1,335 1,666 1,278 4,310 3,727
Amortization of
acquired
intangible
assets 1,921 2,381 1,105 6,372 3,865
Fair value
adjustment
of acquired
inventories 92 447 - 2,326 -
Acquisition-
related costs 425 830 - 5,744 656
Separation costs
of executive
officers - - - 162 -
Acceleration of
depreciation
on abandoned
equipment - - 1,174 - 1,174
Goodwill and
other intangible
asset
impairment - - 59,676 - 59,676
Impairment
charges on
investments - 245 34 317 1,488
Income tax
effects 107 (136) (103) (181) (122)
Non-GAAP net
income (loss) $118 $(2,730) $(659) $(5,750) $1,993
GAAP loss per
share $(0.09) $(0.19) $(1.49) $(0.57) $(1.60)
Stock-based
compensation 0.03 0.04 0.03 0.10 0.09
Amortization
of acquired
intangible
assets 0.04 0.05 0.03 0.15 0.09
Fair value
adjustment
of acquired
inventories - 0.01 - 0.05 -
Acquisition-
related costs 0.01 0.02 - 0.13 0.02
Separation costs
of executive
officers - - - 0.00 -
Acceleration of
depreciation
on abandoned
equipment - - 0.03 - 0.03
Goodwill and
other
intangible
asset
impairment - - 1.39 - 1.39
Impairment
charges on
investments - 0.01 0.00 0.01 0.03
Non-GAAP diluted
earnings (loss)
per share $0.00 $(0.06) $(0.02) $(0.13) $0.05
Shares used in
earnings (loss)
per share ---
GAAP 43,648 43,550 42,889 43,504 42,866
The effect of
dilutive
potential
common shares
due to
reporting
Non-GAAP
net income 314 - - - -
The effect
of removing
stock-based
compensation
expense
under SFAS
123R for
Non-GAAP
presentation
purpose (109) - - - -
Shares used
in diluted
earnings
per share ---
Non-GAAP 43,853 43,550 42,889 43,504 42,866
Notes: Certain amounts may not total due to rounding.
Certain amounts previously reported above have been reclassified to
conform to the current periods' presentation.
SOURCE Exar Corporation
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