Exar Corporation Reports Fiscal 2012 Fourth Quarter Results

Fiscal Year End 2012 Results and Completion of Planned Restructuring

News provided by

Exar Corporation

May 03, 2012, 04:05 ET

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

21%

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