EXAR CORPORATION FREMONT, Calif., Aug. 6, 2014 /PRNewswire/ -- Exar Corporation (NYSE: EXAR) a leading provider of high-performance integrated circuits and system solutions, today reported financial results for the first quarter of fiscal year 2015, ended June 29, 2014. Non-GAAP revenue for the first quarter of fiscal year 2015 was $32.6 million, an increase of 17% from $28.0 million in the prior quarter. Revenue has been adjusted to eliminate the impact of the deferred revenue write-down under business combination accounting. GAAP revenue for the first quarter was $30.7 million.
Non-GAAP gross margin for the quarter was 48%; and Non-GAAP net income for the quarter was $0.9 million, or $0.02 per diluted share, up from $0.7 million in the prior quarter. GAAP gross margin for the quarter was 36% and GAAP net income for the quarter was a loss of $0.26 per share. GAAP results for the quarter include the impact of consolidating Integrated Memory Logic Limited (iML) as of June 4, 2014, including substantial one-time costs associated with the acquisition, amortization of intangibles, and the elimination of minority interest pending completion of the second-step merger.
"Our focus during the past twenty-four months has been on restructuring our business and developing new products through organic and inorganic means. This quarter marks a transformative point, as our sales and marketing team is demonstrating meaningful traction with both our Component Products and our System Solutions," commented Exar President and CEO, Louis DiNardo.
"Additionally, as we build an enduring business within our traditional product areas serving the industrial, networking, and communications infrastructure markets, we have augmented our offering with high-end consumer products through the recent acquisition of iML. The high-performance analog and mixed-signal products provided by iML are a logical extension of our business. iML gives us a great team, immediate scale, further diversity, with enhanced profitability," concluded Mr. DiNardo.
In the first quarter of fiscal 2015 the Company continued its aggressive introductions of new products, including:
-- XRP7720 - A quad output programmable universal power management IC
(PMIC).
-- XRP7725 - A universal power management IC compatible with Intel Node
Manager server power management technology.
-- XRP3303x - The industry's widest operation range RS-485 transceivers.
-- XR761xx - A new family of PowerBlox(TM) DC-DC regulators offering
exceptional line regulation.
-- XR811xx - A new family of universal clocks with ultra-low phase jitter
for communications, audio-video, and industrial applications.
On a Non-GAAP basis, for the second fiscal quarter of 2015, ending September 28, 2014, the Company is expecting revenue to be in the range of $40 million to $43 million, gross margin between 47% to 50%, and operating expenses of between $18 million and $20 million.
Company officials will be discussing these results in greater detail in a conference call today, Wednesday, August 6, 2014 at 1:45 p.m. PDT (4:45 p.m. EDT). To access the conference call, please dial (719) 457-2628 or (888) 505-4368. In addition, a live webcast will be available on Exar's Investor webpage. An archive of the webcast will be available Exar's Investor webpage after its conclusion.
Exar Corporation designs, develops and markets high-performance integrated circuits and system solutions for the Communications, High-End Consumer, Industrial & Embedded Systems, and Networking & Storage markets. Exar's broad product portfolio includes analog, display, LED lighting, mixed-signal, power management, connectivity, data management, and video processing solutions. Exar has locations worldwide providing real-time customer support.
Integrated Memory Logic (iML), a subsidiary of Exar Corporation, is a fabless semiconductor company, which develops and markets application specific analog, power management, and mixed-signal integrated circuits. iML ICs are optimized primarily for the display, mobile systems and lighting markets. iML is an industry leader in the field of color control management, and has an extensive portfolio of products in power management and LED drivers. iML maintains a strong footprint close to its customers and supply chain in Asia, and markets extensively to OEMs and system manufacturing houses in China, Taiwan, Korea and Japan. Founded in 1996, iML has offices in the US and Asia.
For more information about Exar, visit http://www.exar.com.
-Tables follow-
FINANCIAL COMPARISON
(In thousands, except per share amounts) (Unaudited)
Non-GAAP Results THREE MONTHS ENDED
------------------
JUNE 29, 2014 MARCH 30, 2014 JUNE 30, 2013
------------- -------------- -------------
Industrial & Embedded Systems $18,867 58% $19,588 70% $16,498 51%
Consumer 5,332 16% 43 0% 246 1%
Communications Infrastructure 5,090 16% 5,046 18% 5,976 18%
Networking & Storage 3,338 10% 3,310 12% 9,907 30%
----- --- ----- --- ----- ---
Net Sales $32,627 100% $27,987 100% $32,627 100%
Gross Profit $15,732 48.2% $12,837 45.9% $17,050 52.3%
Operating Expenses $15,040 46.1% $12,671 45.3% $12,482 38.3%
Income from operations $692 2.1% $166 0.6% $4,568 14.0%
Net income $860 2.6% $676 2.4% $4,797 14.7%
Net income per share
Basic $0.02 $0.01 $0.10
Diluted $0.02 $0.01 $0.10
GAAP Results THREE MONTHS ENDED
------------------
JUNE 29, 2014 MARCH 30, 2014 JUNE 30, 2013
------------- -------------- -------------
Industrial & Embedded Systems $18,867 61% $19,588 70% $16,498 51%
Consumer 3,424 11% 43 0% 246 1%
Communications Infrastructure 5,090 17% 5,046 18% 5,976 18%
Networking & Storage 3,338 11% 3,310 12% 9,907 30%
----- --- ----- --- ----- ---
Net Sales $30,719 100% $27,987 100% $32,627 100%
Gross Profit $10,956 35.7% $8,422 30.1% $15,477 47.4%
Operating Expenses $22,308 72.6% $8,733 31.2% $14,930 45.8%
Income (loss) from operations $(11,352) -37.0% $(311) -1.1% $547 1.7%
Net income (loss) $(12,105) -39.4% $147 0.5% $806 2.5%
Net income (loss) per share
Basic $(0.26) $0.00 $0.02
Diluted $(0.26) $0.00 $0.02
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 30, 2014 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, the write-down of deferred revenue under business combination accounting, 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
------------------
JUNE 29, MARCH 30, JUNE 30,
2014 2014 2013
---- ---- ----
Net sales $21,698 $18,913 $23,858
Net sales, related party 9,021 9,074 8,769
Total net sales 30,719 27,987 32,627
------ ------ ------
Cost of sales:
Cost of sales (1) 12,353 11,491 11,812
Cost of sales, related party 3,838 4,119 3,907
Amortization of purchased intangible assets and inventory step-up cost 3,545 2,254 1,350
Impairment of intangible assets - 1,636 -
Restructuring charges and exit costs 27 65 81
Total cost of sales 19,763 19,565 17,150
------ ------ ------
Gross profit 10,956 8,422 15,477
------ ----- ------
Operating expenses:
Research and development(2) 8,243 6,803 6,180
Selling, general and administrative (3) 10,077 7,496 7,354
Restructuring charges and exit costs, net 369 1,438 931
Merger and acquisition costs 4,050 1,014 465
Net change in fair value of contingent consideration (431) (8,018) -
Total operating expenses 22,308 8,733 14,930
Income (loss) from operations (11,352) (311) 547
Other income and expense, net:
Interest income and other, net 290 523 287
Interest expense (486) (39) (37)
Impairment of long term investment - (323) -
--- ---- ---
Total other income and expense, net (196) 161 250
Income (loss) before income taxes (11,548) (150) 797
Provision for (benefit from) income taxes 692 (297) (9)
--- ---- ---
Net income (loss) before noncontrolling interest (12,240) 147 806
Net loss attributable to noncontrolling interest 135 - -
--- --- ---
Net income (loss) attributable to Exar $(12,105) $147 $806
======== ==== ====
Net income (loss) per share:
Basic $(0.26) $0.00 $0.02
====== ===== =====
Diluted $(0.26) $0.00 $0.02
====== ===== =====
Shares used in the computation of net income (loss) per share:
Basic 47,236 47,328 46,805
====== ====== ======
Diluted 47,236 48,778 48,085
====== ====== ======
(1) Equity compensation included in cost of sales $260 $195 $142
(2) Equity compensation included in R&D 812 579 140
(3) Equity compensation included in SG&A 2,055 811 805
EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
JUNE 29, MARCH 30, JUNE 30,
2014 2014 2013
---- ---- ----
ASSETS
Current assets:
Cash and cash equivalents $149,161 $14,614 $36,458
Short-term marketable securities - 152,420 169,333
Accounts receivable (net of allowances of $1,029, $1,178 and $673) 26,596 15,023 15,811
Accounts receivable, related party (net of allowances of $599, $608 and $318) 2,524 3,309 3,203
Inventories 31,988 28,982 19,391
Other current assets 5,717 3,549 2,853
----- ----- -----
Total current assets 215,986 217,897 247,049
Property, plant and equipment, net 20,644 21,280 22,953
Goodwill 45,017 30,410 10,356
Intangible assets, net 109,041 31,390 11,804
Other non-current assets 1,448 1,240 1,489
----- ----- -----
Total assets $392,136 $302,217 $293,651
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $15,883 $15,488 $12,556
Accrued compensation and related benefits 6,271 4,174 3,765
Deferred income and allowances on sales to distributors 3,737 1,765 2,040
Deferred income and allowances on sales to distributors, related party 9,962 9,349 10,282
Short-term debt financing 65,000 - -
Other current liabilities 16,257 11,370 10,642
------ ------ ------
Total current liabilities 117,110 42,146 39,285
Long-term lease financing obligations 40 70 1,012
Other non-current obligations 10,651 6,626 11,130
------ ----- ------
Total liabilities 127,801 48,842 51,427
Stockholders' equity:
Exar Corporation stockholders' equity 246,598 253,375 242,224
Noncontrolling interest 17,737 - -
------ --- ---
Total stockholders' equity 264,335 253,375 242,224
------- ------- -------
Total liabilities and stockholders' equity $392,136 $302,217 $293,651
======== ======== ========
EXAR CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(In thousands, except per share amounts)
(Unaudited)
THREE MONTHS ENDED
------------------
JUNE 29, MARCH 30, JUNE 30,
2014 2014 2013
---- ---- ----
GAAP net sales $30,719 $27,987 $32,627
Deferred revenue write-down 1,908 - -
Non-GAAP net sales $32,627 $27,987 $32,627
======= ======= =======
GAAP gross profit $10,956 $8,422 $15,477
GAAP gross margin 35.7% 30.1% 47.4%
Stock-based compensation 260 195 142
Amortization of purchased intangible assets and inventory step-up cost 3,545 2,254 1,350
Deferred revenue write-down and associated costs 944 - -
Impairment Charges - 1,901 -
Restructuring charges and exit costs 27 65 81
Non-GAAP gross profit $15,732 $12,837 $17,050
======= ======= =======
Non-GAAP gross margin 48.2% 45.9% 52.3%
==== ==== ====
GAAP operating expenses $22,308 $8,733 $14,930
Stock-based compensation - R&D 812 579 140
Stock-based compensation - SG&A 2,055 811 805
Amortization of purchased intangible assets 413 238 107
Restructuring charges and exit costs, net 369 1,438 931
Merger and acquisition costs 4,050 1,014 465
Net change in fair value of contingent consideration (431) (8,018) -
Non-GAAP operating expenses $15,040 $12,671 $12,482
======= ======= =======
GAAP operating income (loss) $(11,352) $(311) $547
Stock-based compensation 3,127 1,585 1,087
Amortization of purchased intangible assets and inventory step-up cost 3,958 2,492 1,457
Deferred revenue write-down and associated costs 944 - -
Impairment Charges - 1,901 -
Restructuring charges and exit costs, net 396 1,503 1,012
Merger and acquisition costs 4,050 1,014 465
Net change in fair value of contingent consideration (431) (8,018) -
Non-GAAP operating income $692 $166 $4,568
==== ==== ======
GAAP net income (loss) $(12,105) $147 $806
Stock-based compensation 3,127 1,585 1,087
Amortization of purchased intangible assets and inventory step-up cost 3,958 2,492 1,457
Deferred revenue write-down and associated costs 944 - -
Impairment Charges - 2,224 -
Restructuring charges and exit costs, net 396 1,503 1,012
Merger and acquisition costs 4,497 1,014 465
Net change in fair value of contingent consideration (431) (8,018) -
Net loss attributable to noncontrolling interest (135) - -
Income tax effects 609 (271) (30)
Non-GAAP net income attributable to Exar $860 $676 $4,797
==== ==== ======
GAAP net income (loss) per share
Basic $(0.26) $0.00 $0.02
Diluted $(0.26) $0.00 $0.02
Non-GAAP net income (loss) per share
Basic $0.02 $0.01 $0.10
Diluted $0.02 $0.01 $0.10
Shares used in the computation of Non-GAAP net income (loss) per share:
Basic 47,236 47,328 46,805
====== ====== ======
Diluted 49,826 50,220 48,557
====== ====== ======
Net cash provided (used) by operations $(8,137) $1,708 $983
Less purchases of fixed assets and IP (551) (983) (349)
Add proceeds from sale of IP - - 125
Free cash flow $(8,688) $725 $759
======= ==== ====
SOURCE Exar Corporation
