Attached files
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| 8-K - FORM 8-K - EXAR CORP | exar20140128_8k.htm |
Exhibit 99.1
Press Release
Exar Corporation Announces Third Quarter Fiscal 2014 Results
Accelerating New Product Introductions and Design Wins Expected to Drive Future Growth
Fremont, CA, January 29, 2014 – Exar Corporation (NYSE: EXAR), a leading supplier of high performance analog mixed-signal components and data management solutions, today announced financial results for the Company’s third quarter of fiscal year 2014, ended December 29, 2013. Revenue of $30.7 million for the third quarter of fiscal year 2014 decreased from $34.0 million in the previous quarter and $31.0 million in the same quarter a year ago. On a non-GAAP basis, gross margin was 49% and non-GAAP net income was $2.0 million, or $0.04 per fully diluted share. On a GAAP basis, gross margin was 42% and net loss was $1.6 million, or $0.03 loss per share.
Louis DiNardo, the Company’s President and CEO, commented, “As anticipated, our financial results for the quarter were impacted by supply chain inventory exceeding demand in the networking market. We expect the inventory to be consumed over the next several months and a return to growth in this vibrant market based on our strong position at major OEMs. Design win momentum for our compression and security products is robust and new customers are expected to begin production this quarter. As a result, we are building an outstanding diverse customer base in both the structured and unstructured data compression markets, as well as in network security.
“Our core business in the industrial market remains strong and has been enhanced by the addition of new high performance analog products. Additionally, the products and revenue associated with our recent acquisition of Stretch, Inc. will provide meaningful new customer engagements and revenue in the large and growing surveillance market in the near-term,” concluded Mr. DiNardo.
For the fourth quarter of fiscal year 2014 the Company expects total revenue to be in the range of $30.0 to $32.0 million and expects non-GAAP gross margin to be in the range of 48% to 50%.
Recent Product and Business Developments:
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● |
Breakthrough Power Management Module XRP9710 and XR9711 provide a fully integrated multiple output power supply. | |
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● |
Industry leading Compression and Security Coprocessor XR9200 delivers 40gbps operation with a PCIe Gen 3 interface for compression and hardware-accelerated encryption. | |
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● |
High Performance Low Drop Out Regulator XR6274 operates to down to 1 Volt with less than 100mV dropout at 2 amps. | |
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● |
Acquisition of Stretch, Inc. supports high definition video security solutions for high definition serial data interface. |
Company officials will be discussing these results in greater detail in a conference call today, Wednesday, January 29, 2014 at 1:45 p.m. PDT (4:45 p.m. EDT). To access the conference call, please dial (877) 941-1427 or (480) 629-9664. 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, high-performance analog and mixed-signal products, 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 |
NINE MONTHS ENDED |
||||||||||||||||||
|
DECEMBER 29, 2013 |
SEPTEMBER 29, 2013 |
DECEMBER 30, 2012 |
DECEMBER 29, 2013 |
DECEMBER 30, 2012 |
||||||||||||||||
|
Net sales |
$ | 30,690 | $ | 34,018 | $ | 30,999 | $ | 97,335 | $ | 90,872 | ||||||||||
|
Gross margin |
48.6 | % | 52.0 | % | 49.0 | % | 51.0 | % | 47.7 | % | ||||||||||
|
Income from operations |
$ | 1,748 | $ | 4,849 | $ | 3,560 | $ | 11,165 | $ | 6,678 | ||||||||||
|
Net income |
$ | 1,977 | $ | 5,135 | $ | 4,047 | $ | 11,909 | $ | 8,346 | ||||||||||
|
Net income per share |
||||||||||||||||||||
|
Basic |
$ | 0.04 | $ | 0.11 | $ | 0.09 | $ | 0.25 | $ | 0.18 | ||||||||||
|
Diluted |
$ | 0.04 | $ | 0.10 | $ | 0.09 | $ | 0.24 | $ | 0.18 | ||||||||||
|
GAAP Results |
THREE MONTHS ENDED |
NINE MONTHS ENDED |
||||||||||||||||||
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DECEMBER 29, 2013 |
SEPTEMBER 29, 2013 |
DECEMBER 30, 2012 |
DECEMBER 29, 2013 |
DECEMBER 30, 2012 |
||||||||||||||||
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Net sales |
$ | 30,690 | $ | 34,018 | $ | 30,999 | $ | 97,335 | $ | 90,872 | ||||||||||
|
Gross margin |
41.8 | % | 40.9 | % | 45.8 | % | 43.4 | % | 44.4 | % | ||||||||||
|
Income (loss) from operations |
$ | (3,321 | ) | $ | (616 | ) | $ | (353 | ) | $ | (3,390 | ) | $ | (1,892 | ) | |||||
|
Net income (loss) |
$ | (1,634 | ) | $ | 6,482 | $ | 1,523 | $ | 5,654 | $ | 1,210 | |||||||||
|
Net income (loss) per share |
||||||||||||||||||||
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Basic |
$ | (0.03 | ) | $ | 0.14 | $ | 0.03 | $ | 0.12 | $ | 0.03 | |||||||||
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Diluted |
$ | (0.03 | ) | $ | 0.13 | $ | 0.03 | $ | 0.12 | $ | 0.03 | |||||||||
Supplemental Sales Information
(In thousands)
(Unaudited)
|
By End Market |
THREE MONTHS ENDED |
NINE MONTHS ENDED |
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DECEMBER 29, 2013 |
SEPTEMBER 29, 2013 |
DECEMBER 30, 2012 |
DECEMBER 29, 2013 |
DECEMBER 30, 2012 |
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Industrial & Embedded Systems |
$ | 18,429 | 60 | % | $ | 17,943 | 53 | % | $ | 16,119 | 52 | % | $ | 52,870 | 55 | % | $ | 48,130 | 53 | % | ||||||||||||||||||||
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Networking & Storage |
7,104 | 23 | % | 10,273 | 30 | % | 9,300 | 30 | % | 27,284 | 28 | % | 23,391 | 26 | % | |||||||||||||||||||||||||
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Communications Infrastructure |
5,089 | 17 | % | 5,697 | 17 | % | 5,270 | 17 | % | 16,762 | 17 | % | 18,735 | 20 | % | |||||||||||||||||||||||||
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Other |
68 | - | 105 | - | 310 | 1 | % | 419 | - | 616 | 1 | % | ||||||||||||||||||||||||||||
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Net Sales |
$ | 30,690 | 100 | % | $ | 34,018 | 100 | % | $ | 30,999 | 100 | % | $ | 97,335 | 100 | % | $ | 90,872 | 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 and September 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, 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 |
NINE MONTHS ENDED |
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DECEMBER 29, |
SEPTEMBER 29, |
DECEMBER 30, |
DECEMBER 29, |
DECEMBER 30, |
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2013 |
2013 |
2012 |
2013 |
2012 |
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Net sales |
$ | 21,846 | $ | 24,978 | $ | 22,235 | $ | 70,682 | $ | 63,210 | ||||||||||
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Net sales, related party |
8,844 | 9,040 | 8,764 | 26,653 | 27,662 | |||||||||||||||
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Total net sales |
30,690 | 34,018 | 30,999 | 97,335 | 90,872 | |||||||||||||||
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Cost of sales: |
||||||||||||||||||||
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Cost of sales (1) |
12,393 | 12,371 | 11,922 | 36,576 | 34,846 | |||||||||||||||
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Cost of sales, related party |
3,556 | 4,156 | 4,005 | 11,619 | 12,897 | |||||||||||||||
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Amortization of purchased intangible assets and inventory step-up |
1,898 | 2,098 | 801 | 5,346 | 2,578 | |||||||||||||||
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Warranty Reserve |
- | 1,440 | - | 1,440 | - | |||||||||||||||
|
Restructuring charges and exit costs |
17 | 24 | 79 | 122 | 160 | |||||||||||||||
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Total cost of sales |
17,864 | 20,089 | 16,807 | 55,103 | 50,481 | |||||||||||||||
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Gross profit |
12,826 | 13,929 | 14,192 | 42,232 | 40,391 | |||||||||||||||
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Operating expenses: |
||||||||||||||||||||
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Research and development (2) |
6,929 | 7,136 | 5,376 | 20,245 | 16,598 | |||||||||||||||
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Selling, general and administrative (3) |
8,829 | 9,376 | 8,645 | 25,559 | 24,066 | |||||||||||||||
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Restructuring charges and exit costs, net |
74 | 384 | 524 | 1,389 | 1,619 | |||||||||||||||
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Merger and acquisition costs |
257 | 144 | - | 866 | - | |||||||||||||||
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Net change in fair value of contingent consideration |
58 | (2,495 | ) | - | (2,437 | ) | - | |||||||||||||
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Total operating expenses |
16,147 | 14,545 | 14,545 | 45,622 | 42,283 | |||||||||||||||
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Income (loss) from operations |
(3,321 | ) | (616 | ) | (353 | ) | (3,390 | ) | (1,892 | ) | ||||||||||
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Other income and expense, net: |
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Interest income and other, net |
321 | 372 | 586 | 980 | 1,906 | |||||||||||||||
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Interest expense |
(39 | ) | (41 | ) | (56 | ) | (117 | ) | (128 | ) | ||||||||||
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Total other income and expense, net |
282 | 331 | 530 | 863 | 1,778 | |||||||||||||||
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Income (loss) before income taxes |
(3,039 | ) | (285 | ) | 177 | (2,527 | ) | (114 | ) | |||||||||||
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Provision for (benefit from) income taxes |
(1,405 | ) | (6,767 | ) | (1,346 | ) | (8,181 | ) | (1,324 | ) | ||||||||||
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Net income (loss) |
$ | (1,634 | ) | $ | 6,482 | $ | 1,523 | $ | 5,654 | $ | 1,210 | |||||||||
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Net income (loss) per share: |
||||||||||||||||||||
|
Basic |
$ | (0.03 | ) | $ | 0.14 | $ | 0.03 | $ | 0.12 | $ | 0.03 | |||||||||
|
Diluted |
$ | (0.03 | ) | $ | 0.13 | $ | 0.03 | $ | 0.12 | $ | 0.03 | |||||||||
|
Shares used in the computation of net income (loss) per share: |
||||||||||||||||||||
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Basic |
47,529 | 47,496 | 45,925 | 47,277 | 46,228 | |||||||||||||||
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Diluted |
47,529 | 49,150 | 46,438 | 48,815 | 46,623 | |||||||||||||||
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(1) Equity compensation included in cost of sales |
$ | 165 | $ | 212 | $ | 106 | $ | 519 | $ | 220 | ||||||||||
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(2) Equity compensation included in R&D |
566 | 689 | 328 | 1,395 | 437 | |||||||||||||||
|
(3) Equity compensation included in SG&A |
1,826 | 2,722 | 968 | 5,353 | 2,266 | |||||||||||||||
EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)
|
DECEMBER 29, |
SEPTEMBER 29, |
MARCH 31, |
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|
2013 |
2013 |
2013 |
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ASSETS |
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Current assets: |
||||||||||||
|
Cash and cash equivalents |
$ | 21,070 | $ | 10,051 | $ | 14,718 | ||||||
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Short-term marketable securities |
154,702 | 174,862 | 190,587 | |||||||||
|
Accounts receivable (net of allowances of $570 and $944) |
21,699 | 17,236 | 12,614 | |||||||||
|
Accounts receivable, related party (net of allowances of $462 and $346) |
1,685 | 3,223 | 3,374 | |||||||||
|
Inventories |
24,950 | 19,841 | 19,430 | |||||||||
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Assets held for sale |
13,083 | 13,083 | - | |||||||||
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Other current assets |
3,645 | 3,474 | 3,177 | |||||||||
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Total current assets |
240,834 | 241,770 | 243,900 | |||||||||
|
Property, plant and equipment, net |
8,784 | 9,153 | 24,100 | |||||||||
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Goodwill |
29,573 | 29,573 | 10,356 | |||||||||
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Intangible assets, net |
28,063 | 30,054 | 13,338 | |||||||||
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Other non-current assets |
1,442 | 1,482 | 1,474 | |||||||||
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Total assets |
$ | 308,696 | $ | 312,032 | $ | 293,168 | ||||||
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LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||||||
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Current liabilities: |
||||||||||||
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Accounts payable |
$ | 14,824 | $ | 12,782 | $ | 9,455 | ||||||
|
Accrued compensation and related benefits |
4,352 | 3,770 | 3,624 | |||||||||
|
Deferred income and allowances on sales to distributors |
1,861 | 2,150 | 2,399 | |||||||||
|
Deferred income and allowances on sales to distributors, related party |
8,017 | 9,056 | 9,475 | |||||||||
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Other current liabilities |
11,151 | 14,375 | 15,215 | |||||||||
|
Total current liabilities |
40,205 | 42,133 | 40,168 | |||||||||
|
Long-term lease financing obligations |
106 | 456 | 1,342 | |||||||||
|
Other non-current obligations |
11,530 | 12,550 | 11,204 | |||||||||
|
Total liabilities |
51,841 | 55,139 | 52,714 | |||||||||
|
Stockholders' equity |
256,855 | 256,893 | 240,454 | |||||||||
|
Total liabilities and stockholders' equity |
$ | 308,696 | $ | 312,032 | $ | 293,168 | ||||||
EXAR CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(In thousands, except per share amounts)
(Unaudited)
|
THREE MONTHS ENDED |
NINE MONTHS ENDED |
|||||||||||||||||||
|
DECEMBER 29, |
SEPTEMBER 29, |
DECEMBER 30, |
DECEMBER 29, |
DECEMBER 30, |
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2013 |
2013 |
2012 |
2013 |
2012 |
||||||||||||||||
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Net Sales |
$ | 30,690 | $ | 34,018 | $ | 30,999 | $ | 97,335 | $ | 90,872 | ||||||||||
|
GAAP gross profit |
$ | 12,826 | $ | 13,929 | $ | 14,192 | $ | 42,232 | $ | 40,391 | ||||||||||
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GAAP gross margin |
41.8 | % | 40.9 | % | 45.8 | % | 43.4 | % | 44.4 | % | ||||||||||
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Stock-based compensation |
165 | 212 | 106 | 519 | 220 | |||||||||||||||
|
Amortization of purchased intangible assets and inventory step-up |
1,898 | 2,098 | 801 | 5,346 | 2,534 | |||||||||||||||
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Warranty Reserve |
- | 1,440 | - | 1,440 | - | |||||||||||||||
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Restructuring charges and exit costs |
17 | 24 | 79 | 122 | 160 | |||||||||||||||
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Non-GAAP gross profit |
$ | 14,906 | $ | 17,703 | $ | 15,178 | $ | 49,659 | $ | 43,305 | ||||||||||
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Non-GAAP gross margin |
48.6 | % | 52.0 | % | 49.0 | % | 51.0 | % | 47.7 | % | ||||||||||
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GAAP operating expenses |
$ | 16,147 | $ | 14,545 | $ | 14,545 | $ | 45,622 | $ | 42,283 | ||||||||||
|
Stock-based compensation - R&D |
566 | 689 | 328 | 1,395 | 437 | |||||||||||||||
|
Stock-based compensation - SG&A |
1,826 | 2,722 | 968 | 5,353 | 2,266 | |||||||||||||||
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Amortization of purchased intangible assets |
208 | 247 | 107 | 562 | 334 | |||||||||||||||
|
Restructuring charges and exit costs, net |
74 | 384 | 524 | 1,389 | 1,619 | |||||||||||||||
|
Merger and acquisition costs |
257 | 144 | - | 866 | - | |||||||||||||||
|
Provision for dispute resolution |
- | - | 1,000 | - | 1,000 | |||||||||||||||
|
Net change in fair value of contingent consideration |
58 | (2,495 | ) | - | (2,437 | ) | - | |||||||||||||
|
Non-GAAP operating expenses |
$ | 13,158 | $ | 12,854 | $ | 11,618 | $ | 38,494 | $ | 36,627 | ||||||||||
|
GAAP operating income (loss) |
$ | (3,321 | ) | $ | (616 | ) | $ | (353 | ) | $ | (3,390 | ) | $ | (1,892 | ) | |||||
|
Stock-based compensation |
2,557 | 3,623 | 1,402 | 7,267 | 2,923 | |||||||||||||||
|
Amortization of purchased intangible assets and inventory step-up |
2,106 | 2,345 | 908 | 5,908 | 2,868 | |||||||||||||||
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Warranty Reserve |
- | 1,440 | - | 1,440 | - | |||||||||||||||
|
Restructuring charges and exit costs, net |
91 | 408 | 603 | 1,511 | 1,779 | |||||||||||||||
|
Merger and acquisition costs |
257 | 144 | - | 866 | - | |||||||||||||||
|
Provision for dispute resolution |
- | - | 1,000 | - | 1,000 | |||||||||||||||
|
Net change in fair value of contingent consideration |
58 | (2,495 | ) | - | (2,437 | ) | - | |||||||||||||
|
Non-GAAP operating income |
$ | 1,748 | $ | 4,849 | $ | 3,560 | $ | 11,165 | $ | 6,678 | ||||||||||
|
GAAP net income (loss) |
$ | (1,634 | ) | $ | 6,482 | $ | 1,523 | $ | 5,654 | $ | 1,210 | |||||||||
|
Stock-based compensation |
2,557 | 3,623 | 1,402 | 7,267 | 2,923 | |||||||||||||||
|
Amortization of purchased intangible assets and inventory step-up |
2,106 | 2,345 | 908 | 5,908 | 2,868 | |||||||||||||||
|
Warranty Reserve |
- | 1,440 | - | 1,440 | - | |||||||||||||||
|
Restructuring charges and exit costs, net |
91 | 408 | 603 | 1,511 | 1,779 | |||||||||||||||
|
Merger and acquisition costs |
257 | 144 | - | 866 | - | |||||||||||||||
|
Provision for dispute resolution |
- | - | 1,000 | - | 1,000 | |||||||||||||||
|
Net change in fair value of contingent consideration |
58 | (2,495 | ) | - | (2,437 | ) | - | |||||||||||||
|
Income tax effects |
(1,458 | ) | (6,812 | ) | (1,389 | ) | (8,300 | ) | (1,434 | ) | ||||||||||
|
Non-GAAP net income |
$ | 1,977 | $ | 5,135 | $ | 4,047 | $ | 11,909 | $ | 8,346 | ||||||||||
|
GAAP net income (loss) per share |
||||||||||||||||||||
|
Basic |
$ | (0.03 | ) | $ | 0.14 | $ | 0.03 | $ | 0.12 | $ | 0.03 | |||||||||
|
Diluted |
$ | (0.03 | ) | $ | 0.13 | $ | 0.03 | $ | 0.12 | $ | 0.03 | |||||||||
|
Non-GAAP net income (loss) per share |
||||||||||||||||||||
|
Basic |
$ | 0.04 | $ | 0.11 | $ | 0.09 | $ | 0.25 | $ | 0.18 | ||||||||||
|
Diluted |
$ | 0.04 | $ | 0.10 | $ | 0.09 | $ | 0.24 | $ | 0.18 | ||||||||||
|
Net cash provided (used) by operations |
$ | (5,409 | ) | $ | 3,569 | $ | 3,611 | $ | (857 | ) | $ | 3,654 | ||||||||
|
Less purchases of fixed assets and IP |
(926 | ) | (400 | ) | (147 | ) | (1,675 | ) | (1,253 | ) | ||||||||||
|
Add proceeds from sale of IP |
- | - | 125 | 125 | 250 | |||||||||||||||
|
Free cash flow |
$ | (6,335 | ) | $ | 3,169 | $ | 3,589 | $ | (2,407 | ) | $ | 2,651 | ||||||||
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