Exar Corporation Reports Fiscal 2011 Second Quarter Results
FREMONT, Calif., Oct. 28 /PRNewswire-FirstCall/ -- Exar Corporation (Nasdaq: EXAR) today reported financial results for its fiscal 2011 second quarter ended September 26, 2010.
Net sales for the second quarter of fiscal 2011 were $37.2 million compared to net sales of $39.6 million for the prior quarter and $31.6 million for the second quarter of fiscal 2010.
The GAAP gross margin for the second quarter of fiscal 2011 was 46.4% compared to 47.5% for the prior quarter and 44.6% in the second quarter of fiscal 2010.
On a non-GAAP basis, gross margin for the second quarter of fiscal 2011 was 50.8% compared to 52.1% for the prior quarter and 51.5% in the second quarter of fiscal 2010.
The GAAP net loss for the second quarter of fiscal 2011 was $4.5 million, or $0.10 net loss per share, compared to a net loss of $7.4 million, or $0.17 net loss per share, in the prior quarter, and a net loss of $8.2 million, or $0.19 net loss per share, for the second quarter of fiscal 2010.
On a non-GAAP basis, net income was breakeven for the second quarter of fiscal 2011, compared to a net loss of $0.8 million, or $0.02 net loss per share, in the previous quarter and a net loss of $2.7 million, or $0.06 net loss per share, in the second quarter of fiscal 2010.
The Company ended the second quarter of fiscal 2011 with cash, cash equivalents and short-term marketable securities of $208.2 million.
"While our second quarter 2011 revenue was impacted by lower demand from telecommunications and networking customers, continued strength from the industrial segment enabled positive EBITDA and breakeven net income both on a non-GAAP basis," said Pete Rodriguez, the Company's president and chief executive officer. "During the quarter, we continued to build a strong foundation of design wins for our leading products, we significantly reduced operating expenses and we made progress on several operational initiatives that will positively impact gross margin in the next fiscal year."
For the third quarter of fiscal 2011 ending December 26, 2010, the Company projects that net sales will be between $36 million and $38 million. The non-GAAP gross margin is currently expected to be between 49% and 51%. Operating expenses are currently expected to be between $20.5 million and $21.5 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 second quarter of fiscal 2011, today, Thursday, October 28, 2010 at 1:30 p.m. PDT. To access the conference call, please dial (800) 700-7860 by 1:20 p.m. PDT and use conference ID number 174874. 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 3:00 p.m. PDT the day of the call until 11:59 p.m. PDT on November 4, 2010. To access the replay, please dial (800) 475-6701 and use conference ID number 174874.
Product Line Highlights:
Interface |
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Communications |
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DataCom and Storage |
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Power Management |
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Safe Harbor Statement
The Company's statements about its future financial performance, changes in gross margins, net sales and operating expenses, operational initiatives, 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 28, 2010 and the Quarterly Report on Form 10-Q for the period ended June 27, 2010.
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 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, 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 |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
(In thousands, except share amounts) |
|||||
(Unaudited) |
|||||
SEPTEMBER 26, |
MARCH 28, |
||||
2010 |
2010 |
||||
ASSETS |
|||||
Current assets: |
|||||
Cash and cash equivalents |
$ 14,086 |
$ 25,486 |
|||
Short-term marketable securities |
194,162 |
186,598 |
|||
Accounts receivable (net of allowances of $793 and $831) |
13,857 |
13,461 |
|||
Accounts receivable, related party (net of allowances of $342 and $605) |
3,963 |
4,323 |
|||
Inventories |
22,601 |
15,000 |
|||
Other current assets |
3,177 |
5,106 |
|||
Total current assets |
251,846 |
249,974 |
|||
Property, plant and equipment, net |
41,721 |
42,941 |
|||
Goodwill |
3,184 |
3,085 |
|||
Intangible assets, net |
26,009 |
31,957 |
|||
Other non-current assets |
5,048 |
5,357 |
|||
Total assets |
$ 327,808 |
$ 333,314 |
|||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||
Current liabilities: |
|||||
Accounts payable |
$ 11,845 |
$ 9,828 |
|||
Accrued compensation and related benefits |
7,161 |
6,619 |
|||
Deferred income and allowances on sales to distributors |
5,712 |
4,227 |
|||
Deferred income and allowances on sales to distributors, related party |
11,018 |
10,650 |
|||
Other accrued expenses |
8,699 |
10,598 |
|||
Total current liabilities |
44,435 |
41,922 |
|||
Long-term lease financing obligations |
12,888 |
13,454 |
|||
Other non-current obligations |
3,838 |
3,806 |
|||
Total liabilities |
61,161 |
59,182 |
|||
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; 44,251,257 and |
|||||
43,839,514 shares issued and outstanding at September 26, 2010 |
|||||
and March 28, 2010, respectively (net of treasury shares) |
4 |
4 |
|||
Additional paid-in capital |
724,899 |
720,455 |
|||
Accumulated other comprehensive income |
1,226 |
1,282 |
|||
Treasury stock at cost, 19,924,369 shares at September 26, 2010 and March 28, 2010 |
(248,983) |
(248,983) |
|||
Accumulated deficit |
(210,499) |
(198,626) |
|||
Total stockholders' equity |
266,647 |
274,132 |
|||
Total liabilities and stockholders' equity |
$ 327,808 |
$ 333,314 |
|||
Note: Certain amounts previously reported above have been reclassified to conform to the current period presentation. |
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EXAR CORPORATION AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||
(In thousands, except per share amounts) |
|||||||||||
(Unaudited) |
|||||||||||
THREE MONTHS ENDED |
SIX MONTHS ENDED |
||||||||||
SEPTEMBER 26, |
JUNE 27, |
SEPTEMBER 27, |
SEPTEMBER 26, |
SEPTEMBER 27, |
|||||||
2010 |
2010 |
2009 |
2010 |
2009 |
|||||||
Net sales |
$ 25,885 |
$ 28,365 |
$ 23,118 |
$ 54,250 |
$ 46,228 |
||||||
Net sales, related party |
11,348 |
11,271 |
8,470 |
22,619 |
16,222 |
||||||
Total net sales |
37,233 |
39,636 |
31,588 |
76,869 |
62,450 |
||||||
Cost of sales: |
|||||||||||
Cost of sales |
13,205 |
14,079 |
11,843 |
27,284 |
24,732 |
||||||
Cost of sales, related party |
5,222 |
5,188 |
4,088 |
10,410 |
7,876 |
||||||
Amortization of purchased intangible assets |
1,515 |
1,553 |
1,567 |
3,068 |
2,907 |
||||||
Total cost of sales |
19,942 |
20,820 |
17,498 |
40,762 |
35,515 |
||||||
Gross profit |
17,291 |
18,816 |
14,090 |
36,107 |
26,935 |
||||||
Operating expenses: |
|||||||||||
Research and development |
11,840 |
14,443 |
12,288 |
26,283 |
24,582 |
||||||
Selling, general and administrative |
11,083 |
12,957 |
11,375 |
24,040 |
26,487 |
||||||
Total operating expenses |
22,923 |
27,400 |
23,663 |
50,323 |
51,069 |
||||||
Loss from operations |
(5,632) |
(8,584) |
(9,573) |
(14,216) |
(24,134) |
||||||
Other income and expense, net: |
|||||||||||
Interest income and other, net |
1,578 |
1,613 |
1,700 |
3,191 |
3,454 |
||||||
Interest expense |
(316) |
(318) |
(326) |
(634) |
(650) |
||||||
Impairment charges on investments |
(62) |
- |
(245) |
(62) |
(317) |
||||||
Total other income and expense, net |
1,200 |
1,295 |
1,129 |
2,495 |
2,487 |
||||||
Loss before income taxes |
(4,432) |
(7,289) |
(8,444) |
(11,721) |
(21,647) |
||||||
Provision for (benefit from) income taxes |
27 |
125 |
(281) |
152 |
(609) |
||||||
Net loss |
$ (4,459) |
$ (7,414) |
$ (8,163) |
$ (11,873) |
$ (21,038) |
||||||
Loss per share: |
|||||||||||
Basic loss per share |
$ (0.10) |
$ (0.17) |
$ (0.19) |
$ (0.27) |
$ (0.48) |
||||||
Diluted loss per share |
$ (0.10) |
$ (0.17) |
$ (0.19) |
$ (0.27) |
$ (0.48) |
||||||
Shares used in the computation of loss per share: |
|||||||||||
Basic |
44,173 |
43,897 |
43,550 |
44,035 |
43,432 |
||||||
Diluted |
44,173 |
43,897 |
43,550 |
44,035 |
43,432 |
||||||
Note: Certain amounts previously reported above have been reclassified to conform to the current period presentation. |
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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 26, |
JUNE 27, |
SEPTEMBER 27, |
SEPTEMBER 26, |
SEPTEMBER 27, |
|||||||
2010 |
2010 |
2009 |
2010 |
2009 |
|||||||
Net Sales |
$ 37,233 |
$ 39,636 |
$ 31,588 |
$ 76,869 |
$ 62,450 |
||||||
GAAP gross profit |
$ 17,291 |
$ 18,816 |
$ 14,090 |
$ 36,107 |
$ 26,935 |
||||||
GAAP gross margin |
46.4% |
47.5% |
44.6% |
47.0% |
43.1% |
||||||
Stock-based compensation |
98 |
220 |
151 |
318 |
267 |
||||||
Amortization of acquired intangible assets |
1,515 |
1,553 |
1,567 |
3,068 |
2,907 |
||||||
Fair value adjustment of acquired inventories |
- |
42 |
447 |
42 |
2,234 |
||||||
Acquisition-related costs |
- |
- |
18 |
- |
24 |
||||||
Non-GAAP gross profit |
18,904 |
20,631 |
16,273 |
39,535 |
32,367 |
||||||
Non-GAAP gross margin |
50.8% |
52.1% |
51.5% |
51.4% |
51.7% |
||||||
GAAP research and development expenses |
$ 11,840 |
$ 14,443 |
$ 12,288 |
$ 26,283 |
$ 24,582 |
||||||
Stock-based compensation |
665 |
1,556 |
748 |
2,221 |
1,234 |
||||||
Amortization of acquired intangible assets |
1,074 |
1,074 |
635 |
2,148 |
1,223 |
||||||
Acquisition-related costs |
- |
- |
192 |
- |
749 |
||||||
Non-GAAP research and development expenses |
$ 10,101 |
$ 11,813 |
$ 10,713 |
$ 21,914 |
$ 21,376 |
||||||
GAAP selling, general and administrative expenses |
$ 11,083 |
$ 12,957 |
$ 11,375 |
$ 24,040 |
$ 26,487 |
||||||
Stock-based compensation |
751 |
1,546 |
767 |
2,297 |
1,474 |
||||||
Amortization of acquired intangible assets |
297 |
298 |
179 |
595 |
321 |
||||||
Acquisition-related costs |
- |
328 |
620 |
328 |
4,546 |
||||||
Separation costs of executive officers |
- |
- |
- |
- |
162 |
||||||
Non-GAAP selling, general and administrative expenses |
$ 10,035 |
$ 10,785 |
$ 9,809 |
$ 20,820 |
$ 19,984 |
||||||
GAAP operating expenses |
$ 22,923 |
$ 27,400 |
$ 23,663 |
$ 50,323 |
$ 51,069 |
||||||
Stock-based compensation |
1,416 |
3,102 |
1,515 |
4,518 |
2,708 |
||||||
Amortization of acquired intangible assets |
1,371 |
1,372 |
814 |
2,743 |
1,544 |
||||||
Acquisition-related costs |
- |
328 |
812 |
328 |
5,295 |
||||||
Separation costs of executive officers |
- |
- |
- |
- |
162 |
||||||
Non-GAAP operating expenses |
$ 20,136 |
$ 22,598 |
$ 20,522 |
$ 42,734 |
$ 41,360 |
||||||
GAAP operating loss |
$ (5,632) |
$ (8,584) |
$ (9,573) |
$ (14,216) |
$ (24,134) |
||||||
Stock-based compensation |
1,514 |
3,322 |
1,666 |
4,836 |
2,975 |
||||||
Amortization of acquired intangible assets |
2,886 |
2,925 |
2,381 |
5,811 |
4,451 |
||||||
Fair value adjustment of acquired inventories |
- |
42 |
447 |
42 |
2,234 |
||||||
Acquisition-related costs |
- |
328 |
830 |
328 |
5,319 |
||||||
Separation costs of executive officers |
- |
- |
- |
- |
162 |
||||||
Non-GAAP operating loss |
$ (1,232) |
$ (1,967) |
$ (4,249) |
$ (3,199) |
$ (8,993) |
||||||
GAAP net loss |
$ (4,459) |
$ (7,414) |
$ (8,163) |
$ (11,873) |
$ (21,038) |
||||||
Stock-based compensation |
1,514 |
3,322 |
1,666 |
4,836 |
2,975 |
||||||
Amortization of acquired intangible assets |
2,886 |
2,925 |
2,381 |
5,811 |
4,451 |
||||||
Fair value adjustment of acquired inventories |
- |
42 |
447 |
42 |
2,234 |
||||||
Acquisition-related costs |
- |
328 |
830 |
328 |
5,319 |
||||||
Separation costs of executive officers |
- |
- |
- |
- |
162 |
||||||
Impairment charges on investments |
62 |
- |
245 |
62 |
317 |
||||||
Income tax effects |
32 |
33 |
(136) |
65 |
(288) |
||||||
Non-GAAP net income (loss) |
$ 35 |
$ (764) |
$ (2,730) |
$ (729) |
$ (5,868) |
||||||
GAAP loss per share |
$ (0.10) |
$ (0.17) |
$ (0.19) |
$ (0.27) |
$ (0.48) |
||||||
Stock-based compensation |
0.03 |
0.08 |
0.04 |
0.11 |
0.07 |
||||||
Amortization of acquired intangible assets |
0.07 |
0.07 |
0.05 |
0.13 |
0.10 |
||||||
Fair value adjustment of acquired inventories |
- |
0.00 |
0.01 |
0.00 |
0.05 |
||||||
Acquisition-related costs |
- |
0.01 |
0.02 |
0.01 |
0.12 |
||||||
Separation costs of executive officers |
- |
- |
- |
- |
0.00 |
||||||
Impairment charges on investments |
0.00 |
- |
0.01 |
0.00 |
0.01 |
||||||
Income tax effects |
0.00 |
0.00 |
(0.00) |
0.00 |
(0.01) |
||||||
Non-GAAP diluted earnings (loss) per share |
$ 0.00 |
$ (0.02) |
$ (0.06) |
$ (0.02) |
$ (0.14) |
||||||
Shares used in earnings (loss) per share --- GAAP |
44,173 |
43,897 |
43,550 |
44,035 |
43,432 |
||||||
The effect of dilutive potential common shares due to reporting Non-GAAP net income |
261 |
- |
- |
- |
- |
||||||
The effect of removing stock-based compensation expense under SFAS 123R for Non-GAAP presentation purpose |
(329) |
- |
- |
- |
- |
||||||
Shares used in diluted earnings per share --- Non-GAAP |
44,105 |
43,897 |
43,550 |
44,035 |
43,432 |
||||||
Notes: Certain amounts may not total due to rounding. |
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Certain amounts previously reported above have been reclassified to conform to the current period presentation. |
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SOURCE Exar Corporation
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