EXAR CORPORATION FREMONT, Calif., May 11, 2016 /PRNewswire/ -- Exar Corporation (NYSE: EXAR) a leading supplier of analog mixed-signal semiconductor components and system solutions serving the industrial, high-end consumer and infrastructure markets, today announced financial results for the Company's 2016 fourth quarter and fiscal year-end, which ended on March 27, 2016.
Richard L. Leza, Exar's Chairman and Interim President and CEO, commented, "We delivered solid non-GAAP results within our EPS expectation range. Revenue does not include $1.1 million of display shipments to a single direct customer, which, although shipped in the fourth quarter, did not meet revenue recognition criteria. It is reflected in our first quarter guidance. Fourth quarter non-GAAP gross margin improved approximately 150 basis points sequentially, as we benefited from favorable product mix and our strategic manufacturing cost-down initiatives." Mr. Leza continued, "In the period that I have been Interim CEO, the entire Exar team has responded to the Company's new strategic direction; and as a result of our focus, teamwork, and improved execution, non-GAAP operating income has increased 34%."
2016 Fourth Quarter and Fiscal Year-End Highlights
The following highlights the Company's financial performance on both a GAAP and supplemental non-GAAP basis. The Company provides supplemental information regarding its operating performance on a non-GAAP basis that excludes certain gains, losses, and charges, which either occur relatively infrequently or which management considers to be outside our core operating results. Non-GAAP results are not in accordance with GAAP and may not be comparable to non-GAAP information provided by other companies. Non-GAAP information should be considered a supplement to, not a substitute for, financial statements prepared in accordance with GAAP. A complete reconciliation of GAAP to non-GAAP results is attached to this press release.
Fourth Quarter Fiscal Year 2016 Highlights on a Non-GAAP Basis:
-- Fourth quarter revenues of $36.8 million decreased $0.7 million or 2%
from the previous quarter's revenue of $37.4 million, and decreased $7.1
million or 16% from the $43.9 million reported in the same quarter a
year ago.
-- Gross margin of 47.6% increased from the 46.1% reported in the previous
quarter, and decreased from the 48.7% reported in the same quarter a
year ago.
-- Operating expenses of $13.6 million decreased $0.1 million or 1% from
the previous quarter's expenses of $13.7 million, and decreased $1.9
million or 12% from the same quarter a year ago.
-- Net income of $3.8 million increased $0.4 million or 12% from the
previous quarter's net income of $3.4 million, and decreased $1.8
million or 32% from the same quarter a year ago.
-- Diluted earnings per share of $0.08 increased $0.01 per share from the
previous quarter, and decreased $0.03 per share from the same quarter a
year ago.
Fourth Quarter Fiscal Year 2016 Highlights on a GAAP Basis:
-- Fourth quarter revenues were $36.8 million.
-- Gross margin of 40.2% increased from the 39.2% reported in the previous
quarter, and decreased from the 40.9% reported in the same quarter a
year ago.
-- Operating expenses of $16.9 million decreased $4.7 million from the
previous quarter's expenses of $21.5 million, and decreased $3.4 million
from the same quarter a year ago.
-- Net loss of $2.2 million compared to the previous quarter's net loss of
$7.1 million, and a $2.9 million net loss for the same quarter a year
ago.
-- Loss per share of $0.04 compared to the previous quarter's loss per
share of $0.15, and a $0.06 loss per share for the same quarter a year
ago.
-- GAAP results were impacted by charges of (i) $3.4 million related to
amortization, (ii) $1.2 million related to stock-based compensation,
(iii) $0.8 million accrual for settlement and legal fees related to
patent litigation, and (iv) $0.6 million related to ongoing
restructuring activities and legal costs associated with the strategic
alternatives review.
Fiscal Year 2016 Highlights on a Non-GAAP Basis:
-- 2016 revenues of $151.9 million decreased $12.2 million or 7% from the
$164.1 million reported for fiscal year 2015.
-- 2016 diluted earnings per share of $0.31 increased $0.02 per share from
fiscal year 2015.
Fiscal Year 2016 Highlights on a GAAP Basis:
-- 2016 revenues of $149.4 million decreased $12.7 million or 8% from the
$162.1 million reported for fiscal year 2015.
-- 2016 loss per share of $0.33 compared to a $0.95 loss per share for
fiscal year 2015.
Ryan Benton, Exar's Senior Vice President and Chief Financial Officer, stated, "We finished fiscal year 2016 solidly and are entering fiscal year 2017 well positioned, with strategic focus, discipline, and strong momentum on multiple fronts. In addition to strong free cash flow for the fourth quarter of $4.3 million, we recently signed an agreement for the sale and leaseback of our corporate facility for a sale price of $26.0 million. This transaction is part of our larger strategy to focus on our core competencies, maximize Exar's operating cash and redeploy assets toward our fundamental goal of increasing shareholder value."
2017 First Quarter Non-GAAP Guidance
For the 2017 first quarter ending July 3, 2016, the Company expects revenue to be up 7% to 12% sequentially, non-GAAP gross margin to be in the range of 47% to 49%, and non-GAAP EPS on a fully diluted basis to be in the range of $0.09 to $0.13.
Exar noted that the first quarter of 2017 is comprised of fourteen weeks, as opposed to the usual thirteen weeks, and is reflected in the guidance.
Conference Call and Prepared Remarks
Exar is providing a copy of prepared remarks in conjunction 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 11, 2016 at 4:45 p.m. EDT (1:45 p.m. PDT). To access the conference call, please dial (918) 534-8424 or (844) 359-0802. The passcode for the live call is 89428379. 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, 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.
Forward-Looking Statements Safe Harbor Disclosure
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 Company entering fiscal year 2017 with strong momentum on multiple fronts, and the Company's financial outlook expectations for the first quarter ending July 3, 2016, respectively, are forward-looking statements. The forward-looking statements are subject to 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 (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 periodic reports on Form 10-K and Form 10-Q, which are on file with the SEC and available on our Investor webpage and on the SEC website at www.sec.gov. Additional risks include 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.
For more information, visit http://www.exar.com
For Press Inquiries Contact: press@exar.com
For Investor Relations Contact:
Ryan Benton, SVP and CFO
Phone: (510) 668-7201
Email: investorrelations@exar.com
Laura Guerrant-Oiye, Investor Relations
Phone: (510) 668-7201
Email: laura.guerrant@exar.com
-Tables follow-
FINANCIAL COMPARISON
(In thousands, except per share amounts) (Unaudited)
Non-GAAP Results THREE MONTHS ENDED TWELVE MONTHS ENDED
------------------ -------------------
MARCH 27, 2016 DECEMBER 27, 2015 MARCH 29, 2015 MARCH 27, 2016 MARCH 29, 2015
-------------- ----------------- -------------- -------------- --------------
Industrial $17,453 47% $18,339 49% $20,021 46% $74,292 49% $79,050 48%
High-End Consumer 12,085 33% 13,207 35% 16,072 36% 51,991 34% 53,968 33%
Infrastructure 7,237 20% 5,893 16% 7,764 18% 25,595 17% 31,103 19%
----- --- ----- --- ----- --- ------ --- ------ ---
Net Sales $36,775 100% $37,439 100% $43,857 100% $151,878 100% $164,121 100%
Gross Profit $17,489 47.6% $17,264 46.1% $21,348 48.7% $71,719 47.2% $79,334 48.3%
Operating Expenses $13,609 37.0% $13,728 36.7% $15,490 35.3% $56,132 37.0% $64,730 39.4%
Income from
operations $3,880 10.6% $3,536 9.4% $5,858 13.4% $15,587 10.3% $14,604 8.9%
Net income $3,819 10.4% $3,399 9.1% $5,642 12.9% $15,064 9.9% $14,420 8.8%
Net income per
share
Basic $0.08 $0.07 $0.12 $0.31 $0.31
Diluted $0.08 $0.07 $0.11 $0.31 $0.29
GAAP Results THREE MONTHS ENDED TWELVE MONTHS ENDED
------------------ -------------------
MARCH 27, 2016 DECEMBER 27, 2015 MARCH 29, 2015 MARCH 27, 2016 MARCH 29, 2015
-------------- ----------------- -------------- -------------- --------------
Industrial $17,453 47% $18,339 49% $20,021 46% $71,792 48% $79,050 49%
High-End Consumer 12,085 33% 13,207 35% 16,072 36% 51,991 35% $51,897 32%
Infrastructure 7,237 20% 5,893 16% 7,764 18% 25,595 17% $31,103 19%
----- --- ----- --- ----- --- ------ --- ------- ---
Net Sales $36,775 100% $37,439 100% $43,857 100% $149,378 100% $162,050 100%
Gross Profit $14,773 40.2% $14,692 39.2% $17,948 40.9% $59,558 39.9% $49,926 30.8%
Operating Expenses $16,863 45.9% $21,545 57.5% $20,294 46.3% $76,091 50.9% $92,989 57.4%
Loss from
operations $(2,090) -5.7% $(6,853) -18.3% $(2,346) -5.3% $(16,533) -11.1% $(43,063) -26.6%
Net loss $(2,182) -5.9% $(7,137) -19.1% $(2,914) -6.6% $(16,026) -10.7% $(44,970) -27.8%
Net loss per share
Basic $(0.04) $(0.15) $(0.06) $(0.33) $(0.95)
Diluted $(0.04) $(0.15) $(0.06) $(0.33) $(0.95)
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 which include costs for personnel whose positions have been eliminated as part of a restructuring or are in the process of being eliminated, severance costs associated with the former CEO, accruals for and proceeds received from dispute resolutions and patent litigation, 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. However, the manner in which we calculate these non-GAAP financial measures 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 material limitation associated with the use of the non-GAAP financial measures is that the non-GAAP measures may not reflect the full economic impact of Exar's activities. Accordingly, investors are cautioned not to place undue reliance on non-GAAP information. 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 27, DECEMBER 27, MARCH 29, MARCH 27, MARCH 29,
2016 2015 2015 2016 2015
---- ---- ---- ---- ----
Net sales $29,492 $29,013 $33,805 $113,587 $125,791
Net sales, related
party 7,283 8,426 10,052 35,791 36,259
Total net sales 36,775 37,439 43,857 149,378 162,050
------ ------ ------ ------- -------
Cost of sales:
Cost of sales (1) 16,353 16,261 19,012 64,662 71,139
Cost of sales,
related party 3,082 4,025 3,951 15,929 14,359
Amortization of
purchased
intangible assets
and inventory
step-up costs 2,462 2,461 2,525 9,884 11,740
Restructuring
charges and exit
costs 105 - 1,213 845 7,597
Proceeds from legal
settlement - - - (1,500) -
Impairment of
intangibles - - - - 8,367
Reversal of
warranty reserve - - (792) - (1,078)
Total cost of sales 22,002 22,747 25,909 89,820 112,124
------ ------ ------ ------ -------
Gross profit 14,773 14,692 17,948 59,558 49,926
------ ------ ------ ------ ------
Operating expenses:
Research and
development(2) 7,197 7,230 8,534 31,403 37,181
Selling, general
and administrative
(3) 9,570 10,280 10,291 39,235 43,758
Restructuring
charges and exit
costs 96 2,228 537 3,646 4,589
Merger and
acquisition costs - - 393 - 7,348
Impairment of
intangibles - 1,807 539 1,807 4,456
Net change in fair
value of
contingent
consideration - - - - (4,343)
Total operating
expenses 16,863 21,545 20,294 76,091 92,989
Loss from
operations (2,090) (6,853) (2,346) (16,533) (43,063)
Other income and expense, net:
Interest income and
other, net 74 (7) 16 34 571
Interest expense (42) (69) (56) (212) (1,082)
Impairment of long
term investment - - (509) - (544)
--- --- ---- --- ----
Total other income
and expense, net 32 (76) (549) (178) (1,055)
Loss before income
taxes (2,058) (6,929) (2,895) (16,711) (44,118)
Provision for
(benefit from)
income taxes 124 208 19 (685) 889
--- --- --- ---- ---
Net loss before
noncontrolling
interest (2,182) (7,137) (2,914) (16,026) (45,007)
Net income (loss)
attributable to
noncontrolling
interest - - - - (37)
--- --- --- --- ---
Net loss
attributable to
Exar $(2,182) $(7,137) $(2,914) $(16,026) $(44,970)
======= ======= ======= ======== ========
Net loss per share:
Basic $(0.04) $(0.15) $(0.06) $(0.33) $(0.95)
====== ====== ====== ====== ======
Diluted $(0.04) $(0.15) $(0.06) $(0.33) $(0.95)
====== ====== ====== ====== ======
Shares used in the computation of net loss per share:
Basic 48,523 48,386 47,516 48,240 47,253
====== ====== ====== ====== ======
Diluted 48,523 48,386 47,516 48,240 47,253
====== ====== ====== ====== ======
(1)Stock-based
compensation
included in cost
of sales $103 $104 $122 379 $1,105
(2)Stock-based
compensation
included in R&D 293 269 537 1,216 2,661
(3)Stock-based
compensation
included in SG&A 754 669 2,006 3,986 9,848
EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
MARCH 27, DECEMBER 27, MARCH 29,
2016 2015 2015
---- ---- ----
ASSETS
Current assets:
Cash and cash equivalents $55,070 $53,449 $55,233
Accounts receivable, net 29,557 27,079 27,459
Accounts receivable, related
party, net 3,247 4,554 1,663
Inventories 28,751 28,659 30,767
Other current assets 2,133 2,018 3,090
----- ----- -----
Total current assets 118,758 115,759 118,212
Property, plant and equipment,
net 20,388 21,567 26,077
Goodwill 44,871 44,871 44,871
Intangible assets, net 70,680 74,119 86,102
Other non-current assets 676 778 7,838
--- --- -----
Total assets $255,373 $257,094 $283,100
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $13,282 $13,234 $13,526
Accrued compensation and
related benefits 3,652 4,207 5,649
Deferred income and allowances
on sales to distributors 3,077 2,479 3,362
Deferred income and allowances
on sales to distributors,
related party 4,683 4,141 6,982
Other current liabilities 11,423 12,421 21,287
------ ------ ------
Total current liabilities 36,117 36,482 50,806
Long-term lease financing
obligations 1,285 1,714 5,069
Other non-current obligations 3,422 3,420 4,393
----- ----- -----
Total liabilities 40,824 41,616 60,268
Stockholders' equity 214,549 215,478 222,832
------- ------- -------
Total liabilities and
stockholders' equity $255,373 $257,094 $283,100
======== ======== ========
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 27, DECEMBER 27, MARCH 29, MARCH 27, MARCH 29,
2016 2015 2015 2016 2015
---- ---- ---- ---- ----
GAAP net sales $36,775 $37,439 $43,857 $149,378 $162,050
Provision for
dispute - - - 2,500 -
Deferred revenue
write-down - - - - 2,071
--- --- -----
Non-GAAP net sales $36,775 $37,439 $43,857 $151,878 $164,121
======= ======= ======= ======== ========
GAAP gross profit $14,773 $14,692 $17,948 $59,558 $49,926
GAAP gross margin 40.2% 39.2% 40.9% 39.9% 30.8%
Provision for
dispute - - - 2,500 -
Amortization of
purchased
intangible assets
and inventory step-
up costs 2,462 2,461 2,525 9,884 11,740
Restructuring
charges and other
non-GAAP exit
costs, net 151 7 1,213 898 7,597
Stock-based
compensation 103 104 122 379 1,105
Proceeds from legal
settlement - - - (1,500) -
Deferred revenue
write-down and
associated costs - - - - 1,059
Impairment of
intangibles - - - - 8,367
Reversal of warranty
reserve - - (460) - (460)
Non-GAAP gross
profit $17,489 $17,264 $21,348 $71,719 $79,334
======= ======= ======= ======= =======
Non-GAAP gross
margin 47.6% 46.1% 48.7% 47.2% 48.3%
==== ==== ==== ==== ====
GAAP operating
expenses $16,863 $21,545 $20,294 $76,091 $92,989
Restructuring
charges and other
non-GAAP exit
costs, net 200 2,639 537 5,792 4,589
Stock-based
compensation - R&D 293 269 537 1,216 2,661
Stock-based
compensation -
SG&A 754 669 2,006 3,986 9,848
Amortization of
purchased
intangible assets 972 935 792 3,713 3,700
Accruals for legal
settlement and
associated costs 822 1,498 - 2,521 -
Merger and
acquisition costs 213 - 393 924 7,348
Impairment of
intangibles - 1,807 539 1,807 4,456
Net change in fair
value of contingent
consideration - - - - (4,343)
Non-GAAP operating
expenses $13,609 $13,728 $15,490 $56,132 $64,730
======= ======= ======= ======= =======
GAAP operating loss $(2,090) $(6,853) $(2,346) $(16,533) $(43,063)
Amortization of
purchased
intangible assets
and inventory step-
up costs 3,434 3,396 3,317 13,597 15,440
Restructuring
charges and other
non-GAAP exit
costs, net 351 2,646 1,750 6,690 12,186
Stock-based
compensation 1,150 1,042 2,665 5,581 13,614
Provision for
dispute - - - 2,500 -
Merger and
acquisition costs 213 - 393 924 7,348
Accruals for legal
settlement and
associated costs 822 1,498 - 1,021 -
Deferred revenue
write-down and
associated costs - - - - 1,059
Impairment of
intangibles - 1,807 539 1,807 12,823
Reversal of warranty
reserve - - (460) - (460)
Net change in fair
value of contingent
consideration - - - - (4,343)
Non-GAAP operating
income $3,880 $3,536 $5,858 $15,587 $14,604
====== ====== ====== ======= =======
GAAP net loss $(2,182) $(7,137) $(2,914) $(16,026) $(44,970)
Amortization of
purchased
intangible assets
and inventory step-
up costs 3,434 3,396 3,317 13,597 15,440
Restructuring
charges and other
non-GAAP exit
costs, net 351 2,668 1,750 6,712 12,186
Stock-based
compensation 1,150 1,042 2,665 5,581 13,614
Provision for
dispute - - - 2,500 -
Merger and
acquisition costs 213 - 393 924 8,260
Accruals for legal
settlement and
associated costs 822 1,498 - 1,021 -
Deferred revenue
write-down and
associated costs - - - - 1,059
Impairment charges - 1,807 1,048 1,807 13,367
Reversal of warranty
reserve - - (460) - (460)
Net change in fair
value of contingent
consideration - - - - (4,343)
Net loss
attributable to
noncontrolling
interest - - - - (37)
Income tax effects 31 125 (157) (1,052) 304
Non-GAAP net income $3,819 $3,399 $5,642 $15,064 $14,420
====== ====== ====== ======= =======
GAAP net loss per share
Basic $(0.04) $(0.15) $(0.06) $(0.33) $(0.95)
Diluted $(0.04) $(0.15) $(0.06) $(0.33) $(0.95)
Non-GAAP net income per share
Basic $0.08 $0.07 $0.12 $0.31 $0.31
Diluted $0.08 $0.07 $0.11 $0.31 $0.29
Shares used in the computation of Non-GAAP net income per
share:
Basic 48,523 48,386 47,516 48,240 47,253
====== ====== ====== ====== ======
Diluted 49,052 49,064 49,877 49,314 49,722
====== ====== ====== ====== ======
Net cash provided
(used) by
operations $2,896 $1,081 $2,370 $4,000 $(13,641)
Less purchases of
fixed assets and IP (325) (387) (1,478) (1,279) (3,925)
Payments for legal
settlement and
associated costs 1,728 254 - 2,162 -
----- --- ---
Free cash flow $4,299 $948 $892 $4,883 $(17,566)
====== ==== ==== ====== ========
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/exar-corporation-announces-2016-fourth-quarter-and-fiscal-year-end-financial-results-300267068.html
SOURCE Exar Corporation
