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

 

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


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