EXAR CORPORATION FREMONT, Calif., May 12, 2015 /PRNewswire/ -- Exar Corporation (NYSE: EXAR) a leading supplier of analog mixed-signal semiconductor components and system solutions serving the industrial and embedded, high-end consumer and infrastructure markets, today announced financial results for the Company's fourth fiscal quarter and fiscal year 2015, which ended on March 29, 2015.
Fiscal 2015 Financial Highlights and Outlook
For the fourth fiscal quarter, the Company reported revenue of $43.9 million, an increase of 57% versus the prior year, and non-GAAP earnings per diluted share of $0.11. For the fourth fiscal quarter, GAAP loss per diluted share was ($0.06).
For fiscal year 2015, the Company reported Non-GAAP revenue of $164.1 million, an increase of 31% versus the prior year, and non-GAAP earnings per diluted share of $0.29. Non-GAAP revenue has been adjusted to eliminate the impact of deferred revenue write-down under business combination accounting. GAAP revenue for fiscal year 2015 was $162.1 million. GAAP loss per diluted share was ($0.95).
Louis DiNardo, Exar's President and CEO, commented, "Our March quarter results reflect the great discipline and awareness our team has with regard to market conditions. Exar delivered solid earnings in a softening semiconductor environment. We will continue to align our field inventory with market conditions by reducing distribution inventory this quarter. Operating expenses and manufacturing overhead remain well controlled."
For the first quarter ending June 28, 2015, the Company expects revenue to be in the range of $40.0 million to $43.0 million, and non-GAAP EPS on a fully diluted basis to be in the range of $0.10 to $0.12.
Exar also today announced that its Board of Directors has unanimously decided to undertake a comprehensive review of strategic alternatives to enhance value for stockholders. Exar intends to conduct a thorough review and evaluation of strategic alternatives. Cowen and Company, LLC is acting as financial advisor, and O'Melveny & Myers LLP is acting as legal counsel, to Exar in connection with its review of strategic alternatives.
"Following a detailed evaluation over the past several months, our Board of Directors has determined that it is prudent to undertake a wide review of strategic options to see which alternatives provide the best means to maximize stockholder value," said Mr. DiNardo. "Regardless of the outcome of the strategic alternatives review, the entire Exar team remains fully committed to meeting the needs of our customers and continuing to provide industry-leading solutions."
Conference Call and Prepared Remarks
Exar is providing a copy of prepared remarks in combination with its press release. These remarks are offered to provide stockholders and analysts with additional time and detail for analyzing results in advance of the Company's quarterly conference call. The remarks will be available at Exar's Investor webpage in conjunction with the press release.
As previously scheduled, the conference call will begin today, May 12, 2015 at 4:45 pm EDT (1:45 p.m. PDT). The prepared remarks will not be read on the call. To access the conference call, please dial (719) 325-2454 or (888) 455-2263. In addition, a live webcast will be available on Exar's Investor webpage.
An archive of the conference call webcast will be available on Exar's Investor webpage after the conference call's conclusion.
About Exar
Exar Corporation designs, develops and markets high performance integrated circuits and system solutions for the industrial & embedded systems communications, high-end consumer and infrastructure 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.
For more information, visit http://www.exar.com.
-Tables follow-
FINANCIAL COMPARISON
(In thousands, except per share amounts) (Unaudited)
Non-GAAP Results THREE MONTHS ENDED TWELVE MONTHS ENDED
------------------ -------------------
MARCH 29, 2015 DECEMBER 28, 2014 MARCH 30, 2014 MARCH 29, 2015 MARCH 30, 2014
-------------- ----------------- -------------- -------------- --------------
Industrial &
Embedded Systems $20,021 46% $20,506 46% $19,588 70% $79,050 48% $72,458 58%
High-End Consumer 16,072 36% 16,202 37% 43 - % 53,968 33% 462 - %
Infrastructure 7,764 18% 7,607 17% 8,356 30% 31,103 19% 52,402 42%
----- --- ----- --- ----- --- ------ --- ------ ---
Net Sales $43,857 100% $44,315 100% $27,987 100% $164,121 100% $125,322 100%
Gross Profit $21,348 48.7% $21,971 49.6% $12,837 45.9% $79,334 48.3% $62,496 49.9%
Operating Expenses $15,490 35.3% $16,403 37.0% $12,671 45.3% $64,730 39.4% $51,165 40.8%
Income from
operations $5,858 13.4% $5,568 12.6% $166 0.6% $14,604 8.9% $11,331 9.0%
Net income $5,642 12.9% $5,415 12.2% $676 2.4% $14,420 8.8% $12,585 10.0%
Net income per
share
Basic $0.12 $0.11 $0.01 $0.31 $0.27
Diluted $0.11 $0.11 $0.01 $0.29 $0.25
GAAP Results THREE MONTHS ENDED TWELVE MONTHS ENDED
------------------ -------------------
MARCH 29, 2015 DECEMBER 28, 2014 MARCH 30, 2014 MARCH 29, 2015 MARCH 30, 2014
-------------- ----------------- -------------- -------------- --------------
Industrial &
Embedded Systems $20,021 46% $20,506 46% $19,588 70% $79,050 49% $72,458 58%
High-End Consumer 16,072 36% 16,202 37% 43 - % 51,897 32% 462 - %
Infrastructure 7,764 18% 7,607 17% 8,356 30% 31,103 19% 52,402 42%
----- --- ----- --- ----- --- ------ --- ------ ---
Net Sales $43,857 100% $44,315 100% $27,987 100% $162,050 100% $125,322 100%
Gross Profit $17,948 40.9% $16,890 38.1% $8,422 30.1% $49,926 30.8% $50,654 40.4%
Operating Expenses $20,294 46.3% $23,425 52.9% $8,733 31.2% $92,989 57.4% $54,355 43.4%
Loss from
operations $(2,346) -5.3% $(6,535) -14.7% $(311) -1.1% $(43,063) -26.6% $(3,701) -3.0%
Net income (loss) $(2,914) -6.6% $(6,599) -14.9% $147 0.5% $(44,970) -27.8% $5,801 4.6%
Net income (loss)
per share
Basic $(0.06) $(0.14) $0.00 $(0.95) $0.12
Diluted $(0.06) $(0.14) $0.00 $(0.95) $0.12
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, future opportunities that are available to the Company, existence of any viable strategic alternatives and whether any future decisions by the Company will enhance stockholder value, 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. For a discussion of these risks and uncertainties, 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, the "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 and the Quarterly Reports on Form 10-Q for the quarters ended June 29, 2014, September 28, 2014 and December 28, 2014 which are on file with the SEC and are available on our Investor webpage and on the SEC website at www.sec.gov, and the risks and uncertainties of whether any strategic alternative will be identified by the Board of Directors, whether it will be pursued, whether it will receive Board of Directors and stockholder approval if necessary, whether it will be consummated and, if consummated, whether it will enhance value for all stockholders of Exar. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
There can be no assurance that Exar's review of strategic alternatives will result in any specific action. Exar does not currently intend to disclose further developments with respect to this process unless and until its Board of Directors approves a specific action or otherwise concludes the review of strategic alternatives.
The Company's non-GAAP measures exclude charges related to stock-based compensation, amortization of acquired intangible assets and inventory step-up, impairment charges, technology licenses, 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 TWELVE MONTHS ENDED
------------------ -------------------
MARCH 29, DECEMBER 28, MARCH 30, MARCH 29, MARCH 30,
2015 2014 2014 2015 2014
---- ---- ---- ---- ----
Net sales $33,805 $35,919 $18,913 $125,791 $89,595
Net sales, related party 10,052 8,396 9,074 36,259 35,727
Total net sales 43,857 44,315 27,987 162,050 125,322
------ ------ ------ ------- -------
Cost of sales:
Cost of sales (1) 19,012 20,113 11,491 71,139 48,067
Cost of sales, related party 3,951 3,099 4,119 14,359 15,738
Amortization of purchased
intangible assets and
inventory step-up cost 2,525 2,533 2,254 11,740 7,600
Restructuring charges and exit
costs 1,213 2,052 65 7,597 187
Impairment of intangible assets - - 1,636 8,367 1,636
Warranty reserve (792) (372) - (1,078) 1,440
Total cost of sales 25,909 27,425 19,565 112,124 74,668
------ ------ ------ ------- ------
Gross profit 17,948 16,890 8,422 49,926 50,654
------ ------ ----- ------ ------
Research and development(2) 8,534 10,035 6,803 37,181 27,048
Selling, general and
administrative (3) 10,291 11,793 7,496 43,758 33,055
Merger and acquisition costs 393 179 1,014 7,348 1,880
Restructuring charges and exit
costs, net 537 1,418 1,438 4,589 2,827
Impairment of intangible assets 539 - - 4,456 -
Net change in fair value of
contingent consideration - - (8,018) (4,343) (10,455)
Total operating expenses 20,294 23,425 8,733 92,989 54,355
Loss from operations (2,346) (6,535) (311) (43,063) (3,701)
Other income and expense, net:
Interest income and other, net 16 81 523 571 1,503
Interest expense and other, net (56) (46) (39) (1,082) (156)
Impairment of long term
investment (509) (28) (323) (544) (323)
---- --- ---- ---- ----
Total other income and expense,
net (549) 7 161 (1,055) 1,024
Loss before income taxes (2,895) (6,528) (150) (44,118) (2,677)
Provision for (benefit from)
income taxes 19 71 (297) 889 (8,478)
--- --- ---- --- ------
Net income (loss) before non-
controlling interests (2,914) (6,599) 147 (45,007) 5,801
Net income (loss) attributable
to non-controlling interests - - - (37) -
--- --- --- --- ---
Net income (loss) attributable
to Exar $(2,914) $(6,599) $147 $(44,970) $5,801
======= ======= ==== ======== ======
Net income (loss) per share:
Basic $(0.06) $(0.14) $0.00 $(0.95) $0.12
====== ====== ===== ====== =====
Diluted $(0.06) $(0.14) $0.00 $(0.95) $0.12
====== ====== ===== ====== =====
Shares used in the computation
of net income (loss) per
share:
Basic 47,516 47,119 47,328 47,253 47,291
====== ====== ====== ====== ======
Diluted 47,516 47,119 48,778 47,253 48,823
====== ====== ====== ====== ======
(1)Stock based compensation
included in Cost of sales $122 $496 $195 $1,105 $714
(2)Stock based compensation
included in R&D 537 442 579 2,661 1,974
(3)Stock based compensation
included in SG&A 2,006 3,284 811 9,848 6,164
EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)
MARCH 29, DECEMBER 28, MARCH 30,
2015 2014 2014
---- ---- ----
ASSETS
Current assets:
Cash and cash equivalents $55,233 $52,622 $14,614
Short-term marketable securities - - 152,420
Accounts receivable, net 27,459 28,688 15,023
Accounts receivable, net related
party 1,663 865 3,309
Inventories 30,767 33,066 28,982
Other current assets 3,090 5,487 3,549
----- ----- -----
Total current assets 118,212 120,728 217,897
Property, plant and equipment, net 26,077 20,673 21,280
Goodwill 44,871 44,871 30,410
Intangible assets, net 86,102 89,888 31,390
Other non-current assets 7,838 1,306 1,240
----- ----- -----
Total assets $283,100 $277,466 $302,217
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $13,526 $17,504 $15,488
Accrued compensation and related
benefits 5,649 6,283 4,174
Deferred income and allowances on
sales to distributors 3,362 3,585 1,765
Deferred income and allowances on
sales to distributors, related
party 6,982 8,110 9,349
Other current liabilities 21,287 14,387 11,370
------ ------ ------
Total current liabilities 50,806 49,869 42,146
Long-term lease financing
obligations 5,069 1,479 70
Other non-current obligations 4,393 5,405 6,626
----- ----- -----
Total liabilities 60,268 56,753 48,842
Stockholders' equity 222,832 220,713 253,375
------- ------- -------
Total liabilities and stockholders'
equity $283,100 $277,466 $302,217
======== ======== ========
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 29, DECEMBER 28, MARCH 30, MARCH 29, MARCH 30,
2015 2014 2014 2015 2014
---- ---- ---- ---- ----
GAAP net sales $43,857 $44,315 $27,987 $162,050 $125,322
Deferred revenue write-down - - $ - 2,071 -
--- --- ---------------------- ----- ---
Non-GAAP net sales $43,857 $44,315 $27,987 $164,121 $125,322
======= ======= ======= ======== ========
GAAP gross profit $17,948 $16,890 $8,422 $49,926 $50,654
GAAP gross margin 40.9% 38.1% 30.1% 30.8% 40.4%
Stock-based compensation 122 496 195 1,105 714
Amortization of purchased intangible
assets and inventory step-up 2,525 2,533 2,254 11,740 7,600
Warranty reserve (460) - - (460) 1,440
Deferred revenue write-down and
associated costs - - - 1,059 -
Impairment of intangibles - - 1,901 8,367 1,901
Restructuring charges and exit costs 1,213 2,052 65 7,597 187
Non-GAAP gross profit $21,348 $21,971 $12,837 $79,334 $62,496
======= ======= ======= ======= =======
Non-GAAP gross margin 48.7% 49.6% 45.9% 48.3% 49.9%
==== ==== ==== ==== ====
GAAP operating expenses $20,294 $23,425 $8,733 $92,989 $54,355
Stock-based compensation - R&D 537 442 579 2,661 1,974
Stock-based compensation - SG&A 2,006 3,284 811 9,848 6,164
Amortization of purchased intangible
assets and technology license 792 1,699 238 3,700 800
Impairment of intangibles 539 - - 4,456 -
Restructuring charges and exit costs, net 537 1,418 1,438 4,589 2,827
Merger and acquisition costs 393 179 1,014 7,348 1,880
Net change in fair value of contingent
consideration - - (8,018) (4,343) (10,455)
Non-GAAP operating expenses $15,490 $16,403 $12,671 $64,730 $51,165
======= ======= ======= ======= =======
GAAP operating loss $(2,346) $(6,535) $(311) $(43,063) $(3,701)
Stock-based compensation 2,665 4,222 1,585 13,614 8,852
Amortization of purchased intangible
assets, technology license and inventory
step-up 3,317 4,232 2,492 15,440 8,400
Warranty reserve (460) - - (460) 1,440
Deferred revenue write-down and
associated costs - - - 1,059 -
Impairment of intangibles 539 - 1,901 12,823 1,901
Restructuring charges and exit costs, net 1,750 3,470 1,503 12,186 3,014
Merger and acquisition costs 393 179 1,014 7,348 1,880
Net change in fair value of contingent
consideration - - (8,018) (4,343) (10,455)
Non-GAAP operating income $5,858 $5,568 $166 $14,604 $11,331
====== ====== ==== ======= =======
GAAP net income (loss) attributable to
Exar $(2,914) $(6,599) $147 $(44,970) $5,801
Stock-based compensation 2,665 4,222 1,585 13,614 8,852
Amortization of purchased intangible
assets, technology license and inventory
step-up 3,317 4,232 2,492 15,440 8,400
Warranty reserve (460) - - (460) 1,440
Deferred revenue write-down and
associated costs - - - 1,059 -
Impairment charges 1,048 28 2,224 13,367 2,224
Restructuring charges and exit costs, net 1,750 3,470 1,503 12,186 3,014
Merger and acquisition costs 393 189 1,014 8,260 1,880
Net change in fair value of contingent
consideration - - (8,018) (4,343) (10,455)
Net income attributable to non-
controlling interest - - - (37) -
Income tax effects (157) (127) (271) 304 (8,571)
Non-GAAP net income attributable to Exar $5,642 $5,415 $676 $14,420 $12,585
====== ====== ==== ======= =======
GAAP net income (loss) per share
Basic $(0.06) $(0.14) $0.00 $(0.95) $0.12
Diluted $(0.06) $(0.14) $0.00 $(0.95) $0.12
Non-GAAP net income per share
Basic $0.12 $0.11 $0.01 $0.31 $0.27
Diluted $0.11 $0.11 $0.01 $0.29 $0.25
Shares used in the computation of Non-
GAAP net income per share
Basic 47,516 47,119 47,328 47,253 47,291
Diluted 49,877 49,180 50,220 49,722 50,168
Net cash provided (used) by operations $2,370 $(5,914) $1,708 $(13,641) $851
Less purchases of fixed assets and IP (1,478) (1,791) (983) (3,925) (2,658)
Add proceeds from sale of IP - - - - 125
Free cash flow $892 $(7,705) $725 $(17,566) $(1,682)
==== ======= ==== ======== =======
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SOURCE Exar Corporation
