Exar Corporation Announces 2016 Fourth Quarter and Fiscal Year-End Financial Results

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: [email protected]

For Investor Relations Contact: 

Ryan Benton, SVP and CFO
Phone: (510) 668-7201
Email: [email protected]

Laura Guerrant-Oiye, Investor Relations
Phone: (510) 668-7201
Email: [email protected]

-Tables follow-

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.

SOURCE Exar Corporation

Related Links

http://www.exar.com