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Fremont, California, May 14, 2009 – Exar Corporation (NasdaqGM: EXAR), today reported financial results for its fiscal 2009 fourth quarter ended March 29, 2009.
Net sales for the fourth quarter of fiscal 2009 were $23.9 million compared to net sales of $26.3 million for the prior quarter and $28.3 million for the fourth quarter of fiscal 2008.
The GAAP gross margin for the fourth quarter of fiscal 2009 was 42.2% compared to 40.7% for the prior quarter and 37.9% for the fourth quarter of fiscal 2008. On a non-GAAP basis, the gross margin for the fourth quarter of fiscal 2009 was 44.5% compared to 45.3% for the prior quarter and 45.3% in the fourth quarter of fiscal 2008.
The GAAP net loss for the fourth quarter of fiscal 2009 was $4.6 million, or a net loss per share of $0.11, compared to a net loss of $63.8 million, or a net loss per share of $1.49, in the prior quarter, and a net loss of $172.4 million, or a net loss per share of $3.77, for the fourth quarter of fiscal 2008. These prior period results include non-cash charges of $60.9 million for the impairment of goodwill and intangible assets, and for the acceleration of depreciation on abandoned equipment in the third quarter of fiscal 2009 and $165.2 million for the impairment of goodwill and intangible assets in the fourth quarter of fiscal 2008.
On a non-GAAP basis, the net loss was $2.1 million, or a net loss per share of $0.05, for the fourth quarter of fiscal 2009, compared to a net loss of $0.7 million, or a net loss per share of $0.02, in the previous quarter, and a net loss of $1.7 million, or a net loss per share of $0.04, in the fourth quarter of fiscal 2008.
The Company ended the fourth quarter of fiscal 2009 with cash, cash equivalents and short-term marketable securities of $256.3 million.
“Our visibility has improved and orders started to strengthen after Chinese New Year, but overall we had another challenging quarter,” said Pete Rodriguez, the Company’s president and chief executive officer. “While this was the eighth consecutive quarter in reducing operating expenses, we will continue to be cautious in how we manage the business. I am excited about our acquisition of Hifn, which will broaden our key product offerings in the growing Datacom and Storage markets. Combined with our continued focus on developing winning products, I remain confident that we will emerge stronger from this economic downturn,” remarked Mr. Rodriguez.
Business Outlook
For the first quarter of fiscal 2010 ending June 28, 2009, the Company expects that net sales will be between $30.0 million and $32.0 million, non-GAAP gross margin will be between 49% and 51% and non-GAAP operating expenses will be between $19.0 million and $21.0 million.
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 fourth quarter of fiscal 2009, today, Thursday, May 14, 2009 at 1:30 p.m. PDT To access the conference call, please dial (877) 209-9922 by 1:20 p.m. PDT and use conference ID number 998825.
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.videonewswire.com/event.asp?id=58965.
A replay of the call will be available starting at 5:00 p.m. PDT today until 11:59 p.m. PDT on May 21, 2009. To access the replay, please dial (800) 475-6701 and use conference ID number 998825.
Product Line Highlights
Interface
Exar Launches Highest Performance Universal Asynchronous Receiver Transmitter (UART) Series with VLIO Bus Interface --http://www.exar.com/Common/Content/News.aspx?id=4832
Power Management
Exar Provides New Scalable Evolutionary Solutions for Driving High Power Light Emitting Diodes (LEDs) -- http://www.exar.com/Common/Content/News.aspx?id=4972
Safe Harbor Statement
The Company’s statements about its future financial performance, changes in gross margins, revenues and operating expenses, resource allocation and its impact on future performance and product development internal initiatives, 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; adjustments in interest rates and 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 30, 2008 and Quarterly Reports on Form 10-Q for the periods ended June 29, 2008, September 28, 2008 and December 28, 2008.
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, acquired in-process research and development expenses, acquisition related costs, separation costs of executive officers, accelerated depreciation on abandoned equipment, goodwill and other intangible asset impairment, impairment charges on investments, income tax effects, a charge to establish deferred tax asset valuation allowance, and an income tax benefit from the closure of federal tax audit. 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, datacom and storage applications. For nearly 40 years, Exar’s comprehensive knowledge of end-user markets along with the underlying analog, mixed signal and digital technology has enabled innovative solutions that meet the needs of the evolving connected world. Exar’s product portfolio includes power management and interface components, communications products, storage optimization solutions, network security and applied service processors. Exar has locations worldwide providing real-time customer support to drive rapid product development. For more information about Exar, visit: http://www.exar.com.
# # # #
Contact:
J. Scott Kamsler
Sr. Vice President and CFO
510-668-7110
EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)
MARCH 29, MARCH 30,
2009 2008
---- ----
ASSETS
Current assets:
Cash and cash equivalents $89,002 $122,016
Short-term marketable securities 167,341 146,844
Accounts receivable (net of
allowances of $572 and $714) 7,452 9,943
Accounts receivable, related party (net of
allowances of $736 and $1,421) 1,796 3,712
Inventories 15,678 14,201
Interest receivable and prepaid expenses 3,274 3,889
Deferred income taxes, net 62 507
--- ---
Total current assets 284,605 301,112
Property, plant and equipment, net 42,549 46,130
Goodwill - 47,626
Intangible assets, net 7,359 26,019
Other non-current assets 1,876 3,333
----- -----
Total assets $336,389 $424,220
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,391 $8,801
Accrued compensation and related benefits 4,773 5,744
Deferred income and allowances on
sales to distributors 3,208 3,253
Deferred income and allowances on sales to
distributors, related party 7,040 9,118
Other accrued expenses 7,014 8,136
----- -----
Total current liabilities 27,426 35,052
Long-term lease financing obligations 15,633 16,379
Other non-current obligations 1,236 1,712
----- -----
Total liabilities 44,295 53,143
------ ------
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; 43,036,271 and
43,928,762 shares issued and outstanding
at March 29,2009 and March 30, 2008,
respectively (net of treasury shares) 4 4
Additional paid-in capital 710,787 702,218
Accumulated other comprehensive income 802 1,873
Treasury stock at cost, 19,924,369 and
18,288,021 shares at March 29, 2009
and March 30, 2008, respectively (248,983) (235,538)
Accumulated deficit (170,516) (97,480)
-------- -------
Total stockholders' equity 292,094 371,077
------- -------
Total liabilities and stockholders' equity $336,389 $424,220
======== ========
EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH DECEMBER MARCH MARCH MARCH
29, 28, 30, 29, 30,
2009 2008 2008 2009 2008
---- ---- ---- ---- ----
Net sales $15,667 $17,201 $18,356 $74,620 $67,925
Net sales, related
party 8,187 9,104 9,906 40,498 21,818
----- ----- ----- ------ ------
Total net sales 23,854 26,305 28,262 115,118 89,743
------ ------ ------ ------- ------
Cost of sales:
Cost of sales 8,472 10,821 10,798 41,811 33,773
Cost of sales,
related party 4,880 3,998 5,244 19,933 10,406
Amortization of
purchased
intangible assets 436 782 1,515 3,129 5,452
--- --- ----- ----- -----
Total cost of
sales 13,788 15,601 17,557 64,873 49,631
------ ------ ------ ------ ------
Gross profit 10,066 10,704 10,705 50,245 40,112
------ ------ ------ ------ ------
Operating expenses:
Research and
development 7,512 8,092 8,259 31,829 30,660
Acquired in-
process research
and development - - - - 8,800
Goodwill and other
intangible asset
impairment - 59,676 165,191 59,676 165,191
Selling, general and
administrative 8,816 9,099 11,793 38,962 37,899
----- ----- ------ ------ ------
Total operating
expenses 16,328 76,867 185,243 130,467 242,550
Loss from
Operations (6,262) (66,163) (174,538) (80,222) (202,438)
Other income, net:
Interest income
and other, net 1,918 2,570 3,266 9,693 16,037
Interest expense (326) (266) (344) (1,253) (771)
Impairment charges
on investments (301) (34) (142) (1,789) (591)
---- --- ---- ------ ----
Total other
income and
expense, net 1,291 2,270 2,780 6,651 14,675
Loss before income
taxes (4,971) (63,893) (171,758) (73,571) (187,763)
Provision (benefit)
for income taxes (406) (70) 640 (535) 8,116
---- --- --- ---- -----
Net loss $(4,565) $(63,823) $(172,398) $(73,036) $(195,879)
======= ======== ========= ======== =========
Loss per share:
Basic loss per
share $(0.11) $(1.49) $(3.77) $(1.70) $(4.55)
====== ====== ====== ====== ======
Diluted loss per
share $(0.11) $(1.49) $(3.77) $(1.70) $(4.55)
====== ====== ====== ====== ======
Shares used in the
computation of loss
per share:
Basic 42,950 42,889 45,712 42,887 43,090
====== ====== ====== ====== ======
Diluted 42,950 42,889 45,712 42,887 43,090
====== ====== ====== ====== ======
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 TWELVE MONTHS ENDED
MARCH DECEMBER MARCH MARCH MARCH
29, 28, 30, 29, 30,
2009 2008 2008 2009 2008
---- ---- ---- ---- ----
GAAP gross margin 42.2% 40.7% 37.9% 43.6% 44.7%
Stock-based
compensation 0.5% 0.5% 0.5% 0.5% 0.7%
Amortization of
acquired
intangible
assets 1.8% 3.0% 5.4% 2.7% 6.1%
Fair value
adjustment of
acquired
inventories - - 1.5% - 2.5%
Acquisition-
related costs - - 0.1% 0.1% 0.1%
Acceleration of
depreciation
on abandoned
equipment - 1.1% - 0.3% -
--- --- --- --- ---
Non-GAAP gross
margin 44.5% 45.3% 45.3% 47.2% 54.0%
==== ==== ==== ==== ====
GAAP research
and development
expenses $7,512 $8,092 $8,259 $31,829 $30,660
Stock-based
compensation 383 392 270 1,614 1,207
Amortization of
acquired
intangible
assets 72 200 - 798 -
Acquisition-
related costs - - 131 - 393
Acceleration of
depreciation
on abandoned
equipment - 437 - 437 -
--- --- --- --- ---
Non-GAAP research
and development
expenses $7,057 $7,063 $7,858 $28,980 $29,060
====== ====== ====== ======= =======
GAAP selling,
general and
administrative
expenses $8,816 $9,099 $11,793 $38,962 $37,899
Stock-based
compensation 713 768 884 2,725 3,366
Amortization of
acquired
intangible
assets 44 122 266 490 936
Acquisition-
related costs 778 - 717 1,319 1,992
Separation
costs of
executive
officers - - - - 465
Acceleration of
depreciation
on abandoned
equipment - 437 - 437 -
--- --- --- --- ---
Non-GAAP selling,
general and
administrative
expenses $7,281 $7,772 $9,926 $33,991 $31,140
====== ====== ====== ======= =======
GAAP operating
expenses $16,328 $76,867 $185,243 $130,467 $242,550
Stock-based
compensation 1,096 1,160 1,154 4,339 4,573
Amortization of
acquired
intangible
assets 116 322 266 1,288 936
Acquired in-
process
research and
development - - - - 8,800
Acquisition-
related costs 778 - 848 1,319 2,385
Separation
costs of
executive
officers - - - - 465
Acceleration of
depreciation
on abandoned
equipment - 874 - 874 -
Goodwill and
other
intangible
asset impairment - 59,676 165,191 59,676 165,191
--- ------ ------- ------ -------
Non-GAAP
operating
expenses $14,338 $14,835 $17,784 $62,971 $60,200
======= ======= ======= ======= =======
GAAP operating loss $(6,262) $(66,163) $(174,538) $(80,222) $(202,438)
Stock-based
compensation 1,207 1,278 1,282 4,934 5,196
Amortization of
acquired
intangible
assets 552 1,105 1,781 4,417 6,388
Fair value
adjustment of
acquired
inventories - - 432 - 2,231
Acquired in-
process
research and
development - - - - 8,800
Acquisition-
related costs 778 - 884 1,434 2,437
Separation
costs of
executive
officers - - - - 465
Acceleration of
depreciation
on abandoned
equipment - 1,174 - 1,174 -
Goodwill and
other
intangible
asset impairment - 59,676 165,191 59,676 165,191
--- ------ ------- ------ -------
Non-GAAP operating
loss $(3,725) $(2,930) $(4,968) $(8,587) $(11,730)
======= ======= ======= ======= ========
GAAP net loss $(4,565) $(63,823) $(172,398) $(73,036) $(195,879)
Stock-based
compensation 1,207 1,278 1,282 4,934 5,196
Amortization of
acquired
intangible
assets 552 1,105 1,781 4,417 6,388
Fair value
adjustment of
acquired
inventories - - 432 - 2,231
Acquired in-
process
research and
development - - - - 8,800
Acquisition-
related costs 778 - 884 1,434 2,437
Separation
costs of
executive
officers - - - - 465
Acceleration of
depreciation
on abandoned
equipment - 1,174 - 1,174 -
Goodwill and
other
intangible
asset impairment - 59,676 165,191 59,676 165,191
Impairment
charges on
investments 301 34 142 1,789 591
Income tax
effects (413) (103) 1,035 (535) 304
Charge to
establish
deferred tax
asset
valuation
allowance - - - - 8,323
Income tax
benefit from
the closure of
federal tax
audit - - - - (1,933)
--- --- --- --- ------
Non-GAAP net
income (loss) $(2,140) $(659) $(1,651) $(147) $2,114
======= ===== ======= ===== ======
GAAP loss per share $(0.11) $(1.49) $(3.77) $(1.70) $(4.55)
Stock-based
compensation 0.03 0.03 0.03 0.12 0.12
Amortization of
acquired
intangible
assets 0.01 0.03 0.04 0.10 0.16
Fair value
adjustment of
acquired
inventories - - 0.01 - 0.05
Acquired in-
process
research and
development - - - - 0.21
Acquisition-
related costs 0.02 - 0.02 0.03 0.06
Separation
costs of
executive
officers - - - - 0.01
Acceleration of
depreciation
on abandoned
equipment - 0.03 - 0.03 -
Goodwill and
other
intangible
asset impairment - 1.39 3.61 1.39 3.80
Impairment
charges on
investments 0.01 - - 0.04 0.01
Income tax
effects (0.01) - 0.02 (0.01) 0.01
Charge to
establish
deferred tax
asset
valuation
allowance - - - - 0.20
Income tax
benefit from
the closure of
federal tax
audit - - - - (0.04)
--- --- --- --- -----
Non-GAAP diluted
earnings (loss)
per share $(0.05) $(0.02) $(0.04) $0.00 $0.05
====== ====== ====== ===== =====
Shares used in
earnings (loss)
per share ---
GAAP 42,950 42,889 45,712 42,887 43,090
The effect of
dilutive
potential
common shares
due to
reporting
Non-GAAP
net income - - - - 540
--- --- --- --- ---
Shares used in
diluted earnings
per share ---
Non-GAAP 42,950 42,889 45,712 42,887 43,630
====== ====== ====== ====== ======
Notes: Certain amounts may not total due to rounding. Certain amounts
previously reported above have been reclassified to conform to the current
periods' presentation.