Exar Corporation Announces Third Quarter Fiscal Year 2016 Financial Results

FREMONT, Calif., Feb. 3, 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 third fiscal quarter of 2016, which ended on December 27, 2015. 

Richard Leza, Exar's Chairman and interim President and CEO, commented, "As expected, we delivered solid non-GAAP results within our revenue and EPS expectation ranges. Non-GAAP gross margin improved sequentially as we start to see the benefits of our strategic manufacturing cost-down initiatives and this improvement was augmented by further reductions in operating expenses." Mr. Leza continued, "Our new focused initiatives have restored confidence in the Exar brand, paving the way for revenue growth and higher levels of profitability. This strategy has resulted in improved engagements with our top customers, incremental and improved design activity, and increased profitability."

Third Quarter Fiscal Year 2016 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 from continuing operations is attached to this press release.

Third Quarter Fiscal Year 2016 Highlights on a Non-GAAP Basis:

• Quarterly revenues of $37.4 million increased $0.2 million or 1% from the previous quarter's revenue of $37.2 million and decreased $6.9 million or 16% from $44.3 million reported a year ago.
• Gross margin of 46.1% increased from the 45.6% from the previous quarter and decreased from the 49.6% reported a year ago.
• Operating expenses of $13.7 million decreased $0.3 million or 2% from the previous quarter's expenses of $14.1 million and $2.7 million or 16% from the same quarter a year ago.
• Net income of $3.4 million increased $0.6 million or 23% from the previous quarter's net income of $2.8 million and decreased $2.0 million or 37% from the third quarter of fiscal year 2015.
• Diluted earnings per share of $0.07 increased $0.01 per share from the previous quarter and decreased from $0.11 per share in the third quarter of fiscal year 2015.

Third Quarter Fiscal Year 2016 Highlights on a GAAP Basis:

• Quarterly revenues for the third quarter of fiscal year 2016 were $37.4 million.
• Gross margin of 39.2% increased from the 38.1% reported in the third quarter of fiscal year 2015 and increased from the 36.4% reported a quarter ago.
• Operating expenses of $21.5 million decreased $1.9 million from the same quarter a year ago and increased $3.6 million from the previous quarter's expenses of $17.9 million.
• Net loss of $7.1 million compared to the previous quarter's $4.2 million net loss and a $6.6 million net loss a year ago.
• Loss per share of $0.15 compared with $0.09 a quarter ago and $0.14 a year ago.
• GAAP results were impacted by charges of (i) $6.4 million related to amortization and impairment of intangibles, (ii) $1.5 million accrual for settlement and legal fees related to patent litigation, (iii) $1.5 million related to ongoing restructuring activities and (iv) $1.0 million related to stock-based compensation.

Fourth Quarter of Fiscal Year 2016 Non-GAAP Guidance

Mr. Leza continued, "While the macroeconomic environment has given the industry mixed signals, we expect the fiscal year 2016 to finish strong. Our fourth quarter guidance reflects our improved focus and better execution."

For the fourth quarter ending March 27, 2016, the Company expects revenue to be flat to up 5% sequentially, non-GAAP gross margin to be in the range of 47% to 49%, and non-GAAP EPS on a fully diluted basis to increase to the range of $0.08 to $0.10. 

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, February 3, 2016 at 4:45 p.m. EST (1:45 p.m. PST). To access the conference call, please dial (918) 534-8424 or (844) 359-0802.  The passcode for the live call is 19280332. 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 impact of new focused initiatives paving the way for revenue growth and higher levels of profitability, and the Company's financial outlook expectations for the fourth quarter and year ending March 27, 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 Annual Report on Form 10-K for the fiscal year ended March 29, 2015, which is on file with the SEC and 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.

For more information, visit http://www.exar.com.

-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, 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