Quantcast

Exar Corporation Announces Fourth Quarter and Fiscal 2014 Results

May 5, 2014

Company Reports Fiscal 2014 Revenue of $125.3 Million and Non-GAAP Operating Income of $11.3 Million

FREMONT, Calif., May 5, 2014 /PRNewswire/ — Exar Corporation (NYSE: EXAR), a leading supplier of high performance analog mixed-signal components, video and data management solutions, today announced financial results for the Company’s fourth quarter of fiscal year 2014 and fiscal year 2014, ended March 30, 2014. Fiscal year 2014 revenue of $125.3 million increased 3% from $122.0 million in the prior year. On a non-GAAP basis, gross margin for fiscal year 2014 was 50% versus 49% in the prior year, and non-GAAP operating income of $11.3 million was up 3% compared to $11.0 million in the prior year.

Revenue of $28.0 million for the fourth quarter of fiscal year 2014 decreased from $30.7 million in the previous quarter and $31.2 million in the same quarter a year ago. On a non-GAAP basis, fourth quarter 2014 gross margin was 46% and non-GAAP net income was $0.7 million, or $0.01 per fully diluted share. On a GAAP basis, fourth quarter net income was $0.1 million, or $0.00 earnings per share.

Louis DiNardo, the Company’s President and CEO, commented, “Our financial results for the quarter continued to be impacted by supply chain inventory exceeding demand in the networking market, as well as timing issues in certain contracts for proprietary high reliability products and technology licenses. We expect the inventory to be consumed over the next several months and a return to prior levels. Design win momentum for our new power management and connectivity products is strong and we are building a trend and momentum with new and existing customers for our video processor products.

“Our recent announcement of an agreement to acquire Integrated Memory Logic through a tender offer and merger represents a transformative transaction for Exar. The combined company will have greater scale, increased profitability and broader markets to support future growth. We expect the tender offer to be successful and that we will close the transaction during our second fiscal quarter,” concluded Mr. DiNardo

For the first quarter of fiscal year 2015 the Company expects revenue to be in the range of $28.0 to $31.0 million and expects non-GAAP gross margin to be in the range of 46% to 48%.

Company officials will be discussing these results in greater detail in a conference call today, Monday, May 5, 2014 at 7:30 a.m. PDT (10:30 a.m. EDT). To access the conference call, please dial (877) 941-2068 or (480) 629-9712. In addition, a live webcast will be available on Exar’s Investor webpage. An archive of the webcast will be available after its conclusion.

Exar Corporation designs, develops and markets high performance, analog mixed-signal integrated circuits and advanced sub-system solutions for the Networking & Storage, Industrial & Embedded Systems, and Communications Infrastructure markets. 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 or contact: investorrelations@exar.com

-Tables follow-

                                                                                  FINANCIAL COMPARISON

                                                                  (In thousands, except per share amounts) (Unaudited)

    Non-GAAP Results            THREE MONTHS ENDED                               TWELVE MONTHS ENDED
                                ------------------                               -------------------

                       MARCH 30,                     DECEMBER 29,                    MARCH 31,           MARCH 30,           MARCH 31,
                          2014                            2013                          2013                2014                2013
                      ----------                    ------------                    ----------          ----------          ----------

    Net sales                $27,987                                      $30,690                             $31,154                  $125,322       $122,026

    Gross margin                45.9%                                        48.6%                               52.7%                     49.9%          48.9%

    Income from
     operations                 $166                                       $1,748                              $4,316                   $11,331        $10,994

    Net income                  $676                                       $1,977                              $4,770                   $12,585        $13,116

    Net income per
     share

      Basic                    $0.01                                        $0.04                               $0.10                     $0.27          $0.29

      Diluted                  $0.01                                        $0.04                               $0.10                     $0.25          $0.28

    GAAP Results                THREE MONTHS ENDED                               TWELVE MONTHS ENDED
                                ------------------                               -------------------

                       MARCH 30,                     DECEMBER 29,                    MARCH 31,           MARCH 30,           MARCH 31,
                          2014                            2013                          2013                2014                2013
                      ----------                    ------------                    ----------          ----------          ----------

    Net sales                $27,987                                      $30,690                             $31,154                  $125,322       $122,026

    Gross margin                30.1%                                        41.8%                               49.1%                     40.4%          45.6%

    Income (loss)
     from operations           $(311)                                     $(3,321)                             $1,309                   $(3,701)         $(583)

    Net income (loss)           $147                                      $(1,634)                             $1,672                    $5,801         $2,882

    Net income (loss)
     per share

      Basic                    $0.00                                       $(0.03)                              $0.04                     $0.12          $0.06

      Diluted                  $0.00                                       $(0.03)                              $0.04                     $0.12          $0.06

                                                                             Supplemental Sales Information

                                                                               (In thousands) (Unaudited)

    By End Market               THREE MONTHS ENDED                               TWELVE MONTHS ENDED
                                ------------------                               -------------------

                       MARCH 30,                     DECEMBER 29,                    MARCH 31,           MARCH 30,           MARCH 31,
                          2014                            2013                          2013                2014                2013
                      ----------                    ------------                    ----------          ----------          ----------

    Industrial &
     Embedded Systems        $19,588            70%                       $18,429            60%              $15,265   49%             $72,458   58%  $63,395   52%

    Networking &
     Storage                   3,310            12%                         7,104            23%                9,346   30%              30,594   25%   32,737   27%

    Communications
     Infrastructure            5,046            18%                         5,089            17%                6,231   20%              21,808   17%   24,966   20%

    Other                         43             -                             68             -                   312    1%                 462    -       928    1%
                                 ---           ---                            ---           ---                   ---  ---                  ---  ---       ---  ---

    Net Sales                $27,987           100%                       $30,690           100%              $31,154  100%            $125,322  100% $122,026  100%

Except for historical information contained herein, this press release and matters discussed on the conference call contain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. In particular, the statements regarding the demand for our products and the anticipated trends in our sales and profits are forward-looking statements. The forward-looking statements are dependent on certain risks and uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed herein. The Company urges investors to review in detail the risks and uncertainties and other factors described in its Securities and Exchange Commission, or SEC, filings, including, but not limited to, under the captions “Risk Factors”, “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our public reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2013 and the Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, 2013, September 29, 2013, and December 29, 2013 which are on file with the SEC and are available on our Investor webpage and on the SEC website at www.sec.gov. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

The Company’s non-GAAP measures exclude charges related to stock-based compensation, amortization of acquired intangible assets and inventory step-up, impairment charges, restructuring charges and exit costs, provisions for dispute resolutions, merger and acquisition and related integration costs, certain income tax benefits and credits, certain warranty charges, net change in the fair value of contingent consideration, and related income tax effects on certain excluded items. The Company excludes these items primarily because they are significant special expense and gain estimates, which management separates for consideration when evaluating and managing business operations. The Company’s management uses non-GAAP net income and non-GAAP earnings per share to evaluate its current operating results and financial results and to compare them against historical financial results. Additionally, we disclose below the non-GAAP measure of free cash flow, which is derived from our net cash provided (used) by operations, less purchases of fixed assets and IP, plus proceeds from the sale of IP. Management believes these non-GAAP measures are useful to investors because they are frequently used by securities analysts, investors and other interested parties in evaluating the Company and provides further clarity on its profitability.

In addition, the Company believes that providing investors with these non-GAAP measurements enhances their ability to compare the Company’s business against that of its many competitors who employ and disclose similar non-GAAP measures. This financial measure may be different from non-GAAP methods of accounting and reporting used by the Company’s competitors to the extent their non-GAAP measures include or exclude other items. The presentation of this additional information should not be considered a substitute for net income or net income per diluted share or other measures prepared in accordance with GAAP.

                                                                   EXAR CORPORATION AND SUBSIDIARIES

                                                            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                (In thousands, except per share amounts)

                                                                              (Unaudited)

                               THREE MONTHS ENDED                                 TWELVE MONTHS ENDED
                              ------------------                                -------------------

                                  MARCH 30,           DECEMBER 29,                                          MARCH 31,          MARCH 30,          MARCH 31,

                                                2014                       2013                                          2013               2014               2013
                                                ----                       ----                                          ----               ----               ----

    Net sales                                $18,913                    $21,846                                       $22,646            $89,595            $85,856

    Net sales,
     related
     party                                     9,074                      8,844                                         8,508             35,727             36,170

                   Total net
                    sales                     27,987                     30,690                                        31,154            125,322            122,026
                                              ------                     ------                                        ------            -------            -------

    Cost of
     sales:

      Cost of
       sales (1)                              11,491                     12,393                                        11,097             48,067             45,943

      Cost of
       sales,
       related
       party                                   4,119                      3,556                                         3,819             15,738             16,716

      Amortization
       of purchased
       intangible
       assets and
       inventory
       step-up
       cost                                    2,254                      1,898                                           801              7,600              3,379

      Warranty
       reserve                                     -                          -                                             -              1,440                  -

      Impairment
       of
       intangible
       assets                                  1,636                          -                                             -              1,636                  -

       Restructuring
       charges and
       exit costs                                 65                         17                                           141                187                301

                   Total cost
                    of sales                  19,565                     17,864                                        15,858             74,668             66,339
                                              ------                     ------                                        ------             ------             ------

    Gross profit                               8,422                     12,826                                        15,296             50,654             55,687
                                               -----                     ------                                        ------             ------             ------

    Operating
     expenses:

      Research and
       development(2)                          6,803                      6,929                                         5,778             27,048             22,376

      Selling,
       general and
       administrative
       (3)                                     7,496                      8,829                                         8,465             33,055             32,531

       Restructuring
       charges and
       exit costs,
       net                                     1,438                         74                                          (366)             2,827              1,253

      Merger and
       acquisition
       costs                                   1,014                        257                                           110              1,880                110

      Net change
       in fair
       value of
       contingent
       consideration                          (8,018)                        58                                             -            (10,455)                 -

                   Total
                    operating
                    expenses                   8,733                     16,147                                        13,987             54,355             56,270

    Income
     (loss) from
     operations                                 (311)                    (3,321)                                        1,309             (3,701)              (583)

    Other income
     and
     expense,
     net:

       Interest
        income and
        other, net                               523                        321                                           535              1,503              2,441

       Interest
        expense                                  (39)                       (39)                                          (37)              (156)              (165)

       Impairment
        of long
        term
        investment                              (323)                         -                                             -               (323)                 -
                                                ----                        ---                                           ---               ----                ---

                  Total other
                   income and
                   expense,
                   net                           161                        282                                           498              1,024              2,276

    Income
     (loss)
     before
     income
     taxes                                      (150)                    (3,039)                                        1,807             (2,677)             1,693

    Provision
     for
     (benefit
     from)
     income
     taxes                                      (297)                    (1,405)                                          135             (8,478)            (1,189)
                                                ----                     ------                                           ---             ------             ------

    Net income
     (loss)                                     $147                    $(1,634)                                       $1,672             $5,801             $2,882
                                                ====                    =======                                        ======             ======             ======

    Net income
     (loss) per
     share:

      Basic                                    $0.00                     $(0.03)                                        $0.04              $0.12              $0.06
                                               =====                     ======                                         =====              =====              =====

      Diluted                                  $0.00                     $(0.03)                                        $0.04              $0.12              $0.06
                                               =====                     ======                                         =====              =====              =====

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

      Basic                                   47,328                     47,529                                        46,219             47,291             45,809
                                              ======                     ======                                        ======             ======             ======

      Diluted                                 48,778                     47,529                                        47,379             48,823             46,476
                                              ======                     ======                                        ======             ======             ======

    (1)Equity
     compensation
     included in
     cost of
     sales                                      $195                       $165                                          $180               $714               $400

    (2)Equity
     compensation
     included in
     R&D                                         579                        566                                           352              1,974                790

    (3)  Equity
     compensation
     included in
     SG&A                                        811                      1,826                                         1,246              6,164              3,511

                                      EXAR CORPORATION AND SUBSIDIARIES

                                    CONDENSED CONSOLIDATED BALANCE SHEETS

                                               (In thousands)

                                                 (Unaudited)

                                  MARCH 30,                         DECEMBER 29,          MARCH 31,

                                               2014                                  2013              2013
                                               ----                                  ----              ----

                    ASSETS

    Current assets:

    Cash and cash
     equivalents                            $14,614                               $21,070           $14,718

    Short-term marketable
     securities                             152,420                               154,702           190,587

    Accounts receivable
     (net of allowances of
     $1,178, $570 and
     $944)                                   15,023                                21,699            12,614

    Accounts receivable,
     related party (net of
     allowances of $608,
     $462 and $346)                           3,309                                 1,685             3,374

    Inventories                              28,982                                24,950            19,430

    Other current assets                      3,549                                 3,645             3,177
                                              -----                                 -----             -----

    Total current assets                    217,897                               227,751           243,900

    Property, plant and
     equipment, net                          21,280                                21,867            24,100

    Goodwill                                 30,410                                29,573            10,356

    Intangible assets, net                   31,390                                28,063            13,338

    Other non-current
     assets                                   1,240                                 1,442             1,474
                                              -----                                 -----             -----

    Total assets                           $302,217                              $308,696          $293,168
                                           ========                              ========          ========

               LIABILITIES AND
             STOCKHOLDERS' EQUITY

    Current liabilities:

    Accounts payable                        $15,488                               $14,824            $9,455

    Accrued compensation
     and related benefits                     4,174                                 4,352             3,624

    Deferred income and
     allowances on sales
     to distributors                          1,765                                 1,861             2,399

    Deferred income and
     allowances on sales
     to distributors,
     related party                            9,349                                 8,017             9,475

    Other current
     liabilities                             11,370                                11,151            15,215
                                             ------                                ------            ------

                 Total current
                  liabilities                42,146                                40,205            40,168

    Long-term lease
     financing obligations                       70                                   106             1,342

    Other non-current
     obligations                              6,626                                11,530            11,204
                                              -----                                ------            ------

    Total liabilities                        48,842                                51,841            52,714

    Stockholders' equity                    253,375                               256,855           240,454
                                            -------                               -------           -------

    Total liabilities and
     stockholders' equity                  $302,217                              $308,696          $293,168
                                           ========                              ========          ========

                                                                                         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 30,                      DECEMBER 29,                                              MARCH 31,          MARCH 30,           MARCH 31,

                                                           2014                                  2013                                              2013                2014                2013
                                                           ----                                  ----                                              ----                ----                ----

     Net Sales                                          $27,987                               $30,690                                           $31,154            $125,322            $122,026
                                                        =======                               =======                                           =======            ========            ========

     GAAP gross
      profit                                             $8,422                               $12,826                                           $15,296             $50,654             $55,687

     GAAP gross
      margin                                               30.1%                                 41.8%                                             49.1%               40.4%               45.6%

       Stock-based
        compensation                                        195                                   165                                               180                 714                 400

       Amortization
        of purchased
        intangible
        assets and
        inventory
        step-up
        cost                                              2,254                                 1,898                                               801               7,600               3,335

       Warranty
        reserve                                               -                                     -                                                 -               1,440                   -

       Impairment
        Charges                                           1,901                                     -                                                 -               1,901                   -

       Restructuring
        charges and
        exit costs                                           65                                    17                                               141                 187                 301

    Non-GAAP
     gross profit                                       $12,837                               $14,906                                           $16,418             $62,496             $59,723
                                                        =======                               =======                                           =======             =======             =======

    Non-GAAP
     gross margin                                          45.9%                                 48.6%                                             52.7%               49.9%               48.9%
                                                           ====                                  ====                                              ====                ====                ====

    GAAP
     operating
     expenses                                            $8,733                               $16,147                                           $13,987             $54,355             $56,270

       Stock-based
        compensation
        - R&D                                               579                                   566                                               352               1,974                 790

       Stock-based
        compensation
        - SG&A                                              811                                 1,826                                             1,246               6,164               3,511

       Amortization
        of purchased
        intangible
        assets                                              238                                   208                                               107                 800                 441

       Restructuring
        charges and
        exit costs,
        net                                               1,438                                    74                                              (366)              2,827               1,253

       Merger and
        acquisition
        costs                                             1,014                                   257                                               110               1,880                 110

       Provision for
        dispute
        resolution                                            -                                     -                                               436                   -               1,436

       Net change in
        fair value
        of
        contingent
        consideration                                    (8,018)                                   58                                                 -             (10,455)                  -

    Non-GAAP
     operating
     expenses                                           $12,671                               $13,158                                           $12,102             $51,165             $48,729
                                                        =======                               =======                                           =======             =======             =======

    GAAP
     operating
     income
     (loss)                                               $(311)                              $(3,321)                                           $1,309             $(3,701)              $(583)

       Stock-based
        compensation                                      1,585                                 2,557                                             1,778               8,852               4,701

       Amortization
        of purchased
        intangible
        assets and
        inventory
        step-up
        cost                                              2,492                                 2,106                                               908               8,400               3,776

       Warranty
        reserve                                               -                                     -                                                 -               1,440                   -

       Impairment
        Charges                                           1,901                                     -                                                 -               1,901                   -

       Restructuring
        charges and
        exit costs,
        net                                               1,503                                    91                                              (225)              3,014               1,554

       Merger and
        acquisition
        costs                                             1,014                                   257                                               110               1,880                 110

       Provision for
        dispute
        resolution                                            -                                     -                                               436                   -               1,436

       Net change in
        fair value
        of
        contingent
        consideration                                    (8,018)                                   58                                                 -             (10,455)                  -

    Non-GAAP
     operating
     income                                                $166                                $1,748                                            $4,316             $11,331             $10,994
                                                           ====                                ======                                            ======             =======             =======

    GAAP net
     income
     (loss)                                                $147                               $(1,634)                                           $1,672              $5,801              $2,882

       Stock-based
        compensation                                      1,585                                 2,557                                             1,778               8,852               4,701

       Amortization
        of purchased
        intangible
        assets and
        inventory
        step-up
        cost                                              2,492                                 2,106                                               908               8,400               3,776

       Warranty
        reserve                                               -                                     -                                                 -               1,440                   -

       Impairment
        Charges                                           2,224                                     -                                                 -               2,224                   -

       Restructuring
        charges and
        exit costs,
        net                                               1,503                                    91                                              (225)              3,014               1,554

       Merger and
        acquisition
        costs                                             1,014                                   257                                               110               1,880                 110

       Provision for
        dispute
        resolution                                            -                                     -                                               436                   -               1,436

       Net change in
        fair value
        of
        contingent
        consideration                                    (8,018)                                   58                                                 -             (10,455)                  -

       Income tax
        effects                                            (271)                               (1,458)                                               91              (8,571)             (1,343)

    Non-GAAP net
     income                                                $676                                $1,977                                            $4,770             $12,585             $13,116
                                                           ====                                ======                                            ======             =======             =======

    GAAP net
     income
     (loss) per
     share

      Basic                                               $0.00                                $(0.03)                                            $0.04               $0.12               $0.06

      Diluted                                             $0.00                                $(0.03)                                            $0.04               $0.12               $0.06

    Non-GAAP net
     income
     (loss) per
     share

      Basic                                               $0.01                                 $0.04                                             $0.10               $0.27               $0.29

      Diluted                                             $0.01                                 $0.04                                             $0.10               $0.25               $0.28

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

      Basic                                              47,328                                47,529                                            46,219              47,291              45,809
                                                         ======                                ======                                            ======              ======              ======

      Diluted                                            50,220                                50,400                                            48,557              50,168              47,389
                                                         ======                                ======                                            ======              ======              ======

    Net cash
     provided
     (used) by
     operations                                          $1,708                               $(5,409)                                           $3,712                $851              $7,366

       Less
        purchases of
        fixed assets
        and IP                                             (983)                                 (926)                                             (132)             (2,658)             (1,385)

       Add proceeds
        from sale of
        IP                                                                                          -                                               125                 125                 375

    Free cash
     flow                                                  $725                               $(6,335)                                           $3,705             $(1,682)             $6,356
                                                           ====                               =======                                            ======             =======              ======

SOURCE Exar Corporation


Source: PR Newswire



comments powered by Disqus