Exar Corporation Reports Fiscal 2010 First Quarter Results

FREMONT, Calif., July 30 /PRNewswire-FirstCall/ -- Exar Corporation (Nasdaq:
EXAR), today reported financial results for its fiscal 2010 first quarter
ended June 28, 2009.

Net sales for the first quarter of fiscal 2010 were $30.9 million compared to
net sales of $23.9 million for the prior quarter and $32.2 million for the
first quarter of fiscal 2009.

The GAAP gross margin for the first quarter of fiscal 2010 was 41.6% compared
to 42.2% for the prior quarter and 44.9% for the first quarter of fiscal 2009.

On a non-GAAP basis, the gross margin for the first quarter of fiscal 2010 was
52.1% compared to 44.5% for the prior quarter and 48.8% for the first quarter
of fiscal 2009.

The GAAP net loss for the first quarter of fiscal 2010 was $12.9 million, or a
net loss per share of $0.30, compared to a net loss of $4.6 million, or a net
loss per share of $0.11, in the prior quarter, and a net loss of $2.5 million,
or a net loss per share of $0.06, for the first quarter of fiscal 2009. These
results include acquisition-related costs of $4.5 million in the first quarter
of fiscal 2010 as compared to $0.8 million in the prior quarter and $0.7
million for the first quarter of fiscal 2009.

On a non-GAAP basis, the net loss was $3.1 million, or a net loss per share of
$0.07, for the first quarter of fiscal 2010, compared to a net loss of $2.1
million, or a net loss per share of $0.05, in the previous quarter, and net
income of $0.8 million, or net earnings per share of $0.02, for the first
quarter of fiscal 2009.

The Company ended the first quarter of fiscal 2010 with cash, cash equivalents
and short-term marketable securities of $221.5 million.

"The stability of our business has improved but we are still below our
pre-downturn order levels," said Pete Rodriguez, the Company's president and
chief executive officer. "In mid-June we completed the acquisition of Galazar
Networks which strengthens and extends our solutions for the TDM and carrier
Ethernet communications infrastructure markets. We are also on track with our
integration and product plans for Hifn. I am encouraged by the addition of the
high value solutions of these newly acquired teams to our growing list of
design wins and winning product releases," stated Mr. Rodriguez.

Business Outlook

For the second quarter of fiscal 2010, the Company expects that net sales will
be between $31.0 million and $33.0 million, non-GAAP gross margin will be
between 50% and 52% and non-GAAP operating expenses will be between $20.0
million and $21.0 million.

The Company's statements about its future financial performance or operating
plans are based on current information and expectations and the Company
undertakes no duty to update such statements. These statements are
forward-looking and actual results could differ materially due to various
risks and uncertainties, some of which are described herein.

Results Conference Call

The Company invites investors, financial analysts, and the general public to
listen to its conference call discussing the Company's financial results for
the first quarter of fiscal 2010, today, Thursday, July 30, 2009 at 1:30 p.m.
PDT. To access the conference call, please dial (800) 230-1085 by 1:20 p.m.
PDT and use conference ID number 107238.

In addition, a live webcast will also be available. To access the webcast,
please go to the Company's Investor Relations Homepage at:
http://www.exar.com/news/investornews.aspx.

A taped replay of the conference call will be available starting at 5:00 p.m.
PDT the day of the call until 11:59 p.m. PDT on August 6, 2009. To access the
replay, please dial (800) 475-6701 and use conference ID number 107238.

Product Line Highlights

Interface

Exar Launches Industry's Fastest Universal Asynchronous Receiver Transmitter
(UART) Series with USB 2.0 Compliant Bus Interface
http://www.exar.com/Common/Content/News.aspx?id=4832http://www.exar.com/Common/Content/News.aspx?id=5392

Power Management

Exar Adds High Speed 3.3V RS-485 and RS-422 Family to Expanding Serial
Transceiver Portfolio--
http://www.exar.com/Common/Content/News.aspx?id=5190

Exar Provides Simplest Full Color Spectrum LED Lighting Solution
http://www.exar.com/Common/Content/News.aspx?id=5314

Communications

Exar Adds Highly Integrated T1-E1-J1 Eight-Channel Devices to Communications
Portfolio
http://www.exar.com/Common/Content/News.aspx?id=5352

Hifn Solutions

Hifn Delivers Plug-and-Play Data Deduplication for Windows(R) Servers
http://www.exar.com/Common/Content/News.aspx?id=5016

Safe Harbor Statement

The Company's statements about its future financial performance, changes in
gross margins, net sales and operating expenses, resource allocation and its
impact on future performance and product development initiatives, design win
conversion, distribution and OEM trends, supply chain issues among others, are
forward-looking statements that involve risks and uncertainties. These risks
and uncertainties include global financial volatility, economic recession, and
industry and market conditions, such as customer and distributor
relationships; limited visibility associated with customer or distributor
demand for the Company's products; the possible loss of, or decrease in orders
from, an important customer; adjustments in interest rates and cash balances;
vendor capacity, quality or throughput constraints; successful integration of
acquired businesses; possible disruption in commercial activities as a
consequence of terrorist activity, natural disasters, armed conflict or health
issues; successful development, market acceptance and demand for the Company's
products, including those for which the Company has achieved design wins;
competitive factors, such as pricing or competing solutions; customer ordering
patterns; accounting considerations related to impairment analyses or
acquisition related issues; the level of inventories maintained at the
Company's OEMs and distributors; and the Company's successful execution of
internal performance plans, as well as the other risks detailed from time to
time in the Company's SEC reports, including the Annual Report on Form 10-K
for the year ended March 29, 2009.

Generally Accepted Accounting Principles

The Company reports its financial results in accordance with GAAP.
Additionally, the Company supplements reported GAAP financials with non-GAAP
measures which are included in related press releases and reports furnished to
the SEC, copies of which are available at the Company's website:
http://www.exar.com or the SEC's website at: http://www.sec.gov. For the
periods presented, we are disclosing non-GAAP gross margin, non-GAAP research
and development expenses, non-GAAP selling, general and administrative
expenses, non-GAAP operating expenses, non-GAAP operating loss, non-GAAP net
income (loss), and non-GAAP diluted earnings (loss) per share, which are
adjusted to exclude from our GAAP results all stock-based compensation
expense, amortization of acquired intangible assets, fair value adjustment of
acquired inventories, acquisition-related costs, separation costs of executive
officers, impairment charges on investments, and income tax effects. These
non-GAAP measures are presented in part to enhance the understanding of the
Company's historical financial performance and comparability between reporting
periods. The Company believes the non-GAAP presentation, when shown in
conjunction with the corresponding GAAP measures, provide relevant and useful
information to analysts, investors, management and other interested parties
following the semiconductor industry. For its internal purposes, the Company
uses the foregoing non-GAAP measures to evaluate performance across reporting
periods, determine certain employee benefits as well as plan for and forecast
the Company's future periods. These non-GAAP measures are not in accordance
with, or an alternative for measures prepared in accordance with GAAP, and may
be different from non-GAAP measures used by other companies. In addition,
these non-GAAP measures are not based on any comprehensive set of accounting
rules or principles. The Company believes that non-GAAP measures have
limitations in that they do not reflect all of the amounts associated with the
Company's results of operations as determined in accordance with GAAP. These
measures should only be used to evaluate the Company's results of operations
in conjunction with the corresponding GAAP measures.

About Exar

Exar Corporation delivers highly differentiated silicon, software and
subsystem solutions for industrial, consumer, and enterprise applications. For
nearly 40 years, Exar's comprehensive knowledge of end-user markets along with
the underlying analog/mixed signal and digital technologies has enabled
innovative solutions that meet the needs of the evolving connected world.
Exar's technology portfolio includes solutions for power management, serial
interfaces, packet-based and TDM wireline communications, enterprise storage
optimization, and data security. Exar has locations worldwide providing
real-time customer support to drive rapid product development. For more
information about Exar, visit: www.exar.com.

EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)

JUNE 28, MARCH 29,
2009 2009
---- ----
ASSETS

Current assets:
Cash and cash equivalents $41,915 $89,002
Short-term marketable securities 179,553 167,341
Accounts receivable (net of allowances of
$516 and $572) 11,894 7,452
Accounts receivable, related party (net of
allowances of $356 and $736) 2,456 1,796
Inventories 15,584 15,678
Other current assets 4,836 3,274
Deferred income taxes, net 361 62
--- --
Total current assets 256,599 284,605

Property, plant and equipment, net 43,342 42,549
Goodwill 2,621 -
Intangible assets, net 28,067 7,359
Other non-current assets 3,339 1,876
----- -----

Total assets $333,968 $336,389
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $5,233 $5,391
Accrued compensation and related benefits 5,425 4,773
Deferred income and allowances on sales to
distributors 3,444 3,208
Deferred income and allowances on sales to
distributors, related party 7,340 7,040
Other accrued expenses 11,675 7,014
------ -----
Total current liabilities 33,117 27,426

Long-term lease financing obligations 15,217 15,633
Other non-current obligations 1,630 1,236
----- -----

Total liabilities 49,964 44,295
------ ------

Total stockholders' equity
Preferred stock, $.0001 par value; 2,250,000
shares authorized; no shares outstanding - -
Common stock, $.0001 par value; 100,000,000
shares authorized; 43,515,088 and
43,036,271 shares issued and outstanding at
June 28, 2009 and March 29, 2009,
respectively (net of treasury shares) 4 4
Additional paid-in capital 715,159 710,787
Accumulated other comprehensive income 1,215 802
Treasury stock at cost, 19,924,369 shares at
June 28, 2009 and March 29, 2009,
respectively (248,983) (248,983)
Accumulated deficit (183,391) (170,516)
-------- --------
Total stockholders' equity 284,004 292,094
------- -------
Total liabilities and stockholders' equity $333,968 $336,389
======== ========

EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

THREE MONTHS ENDED
------------------
JUNE 28, MARCH 29, JUNE 29,
2009 2009 2008
---- ---- ----

Net sales $23,110 $15,667 $20,171
Net sales, related
party 7,752 8,187 12,040
----- ----- ------
Total net sales 30,862 23,854 32,211
------ ------ ------

Cost of sales:
Cost of sales 12,889 8,472 10,939
Cost of sales, related
party 3,788 4,880 5,847
Amortization of
purchased intangible
assets 1,340 436 955
----- --- ---
Total cost of sales 18,017 13,788 17,741

Gross profit 12,845 10,066 14,470
------ ------ ------

Operating expenses:
Research and
development 12,294 7,512 8,092
Selling, general and
administrative 15,112 8,816 11,301
------ ----- ------
Total operating
expenses 27,406 16,328 19,393
Loss from operations (14,561) (6,262) (4,923)

Other income, net:
Interest income and
other, net 1,754 1,918 2,670
Interest expense (324) (326) (331)
Impairment charges on
investments (72) (301) -
--- ---- -
Total other income and
expense, net 1,358 1,291 2,339

Loss before income
taxes (13,203) (4,971) (2,584)
Benefit from income
taxes (328) (406) (123)
---- ---- ----

Net loss $(12,875) $(4,565) $(2,461)
======== ======= =======

Loss per share:
Basic loss per share $(0.30) $(0.11) $(0.06)
====== ====== ======

Diluted loss per share $(0.30) $(0.11) $(0.06)
====== ====== ======

Shares used in the
computation of loss
per share:

Basic 43,314 42,950 42,973
====== ====== ======

Diluted 43,314 42,950 42,973
====== ====== ======

EXAR CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(In thousands, except per share amounts)
(Unaudited)

THREE MONTHS ENDED
------------------
JUNE 28, MARCH 29, JUNE 29,
2009 2009 2008
---- ---- ----

GAAP gross margin 41.6% 42.2% 44.9%
Stock-based compensation 0.4% 0.5% 0.6%
Amortization of acquired
intangible assets 4.3% 1.8% 3.0%
Fair value adjustment of
acquired inventories 5.8% - -
Acquisition-related
costs - - 0.4%
-- -- ---
Non-GAAP gross margin 52.1% 44.5% 48.8%
==== ==== ====

GAAP research and
development expenses $12,294 $7,512 $8,092
Stock-based compensation 486 383 358
Amortization of acquired
intangible assets 588 72 263
Acquisition-related
costs 557 - -
--- -- --
Non-GAAP research and
development expenses $10,663 $7,057 $7,471
======= ====== ======

GAAP selling, general
and administrative
expenses $15,112 $8,816 $11,301
Stock-based compensation 707 713 809
Amortization of acquired
intangible assets 142 44 162
Acquisition-related
costs 3,926 778 541
Separation costs of
executive officers 162 -
--- -- --
Non-GAAP selling,
general and
administrative expenses $10,175 $7,281 $9,789
======= ====== ======

GAAP operating expenses $27,406 $16,328 $19,393
Stock-based compensation 1,193 1,096 1,167
Amortization of acquired
intangible assets 730 116 425
Acquisition-related
costs 4,483 778 541
Separation costs of
executive officers 162 - -
--- -- --
Non-GAAP operating
expenses $20,838 $14,338 $17,260
======= ======= =======

GAAP operating loss $(14,561) $(6,262) $(4,923)
Stock-based compensation 1,309 1,207 1,359
Amortization of acquired
intangible assets 2,070 552 1,380
Fair value adjustment of
acquired inventories 1,787 - -
Acquisition-related
costs 4,489 778 656
Separation costs of
executive officers 162 - -
--- -- --
Non-GAAP operating loss $(4,744) $(3,725) $(1,528)
======== ======= ========

GAAP net loss $(12,875) $(4,565) $(2,461)
Stock-based compensation 1,309 1,207 1,359
Amortization of acquired
intangible assets 2,070 552 1,380
Fair value adjustment of
acquired inventories 1,787 - -
Acquisition-related
costs 4,489 778 656
Separation costs of
executive officers 162 - -
Impairment charges on
investments 72 301 -
Income tax effects (152) (413) (161)
---- ---- ----
Non-GAAP net income
(loss) $(3,138) $(2,140) $773
======== ======= ====

GAAP loss per share $(0.30) $(0.11) $(0.06)
Stock-based compensation 0.03 0.03 0.03
Amortization of acquired
intangible assets 0.05 0.01 0.03
Fair value adjustment of
acquired inventories 0.04 - -
Acquisition-related
costs 0.10 0.02 0.02
Separation costs of
executive officers - - -
Impairment charges on
investments - 0.01 -
Income tax effects - (0.01) -
--- ----- ---
Non-GAAP diluted
earnings (loss) per
share $(0.07) $(0.05) $0.02
====== ====== =====

Shares used in earnings
(loss) per share ---
GAAP 43,314 42,950 42,973
The effect of dilutive
potential common shares
due to
reporting Non-GAAP net
income - - 260
The effect of removing
stock-based
compensation expense
under SFAS 123R for
Non-GAAP presentation
purpose - - (81)
--- --- ---
Shares used in diluted
earnings (loss) per
share --- Non-GAAP 43,314 42,950 43,152
====== ====== ======

Notes: Certain amounts may not total due to rounding. Certain amounts
previously reported above have been reclassified to conform to the
current periods' presentation.

SOURCE Exar Corporation

Kevin S. Bauer, Vice President and CFO of Exar Corporation, +1-510-668-7100