FREMONT, Calif., Jan. 23, 2013 /PRNewswire/ -- Exar Corporation (Nasdaq: 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 2013.

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The Company reported revenue of $31.0 million, up from $30.6 million in the second quarter of fiscal year 2013. Non-GAAP net income of $4.0 million increased 42% from $2.9 million in the prior quarter and improved $6.0 million from a loss of $1.9 million in the third quarter of fiscal year 2012. Non-GAAP gross margin was 49.0%, a 223 basis points improvement from the prior quarter, and up 60 basis points compared to the same quarter a year ago. Non-GAAP net income per fully-diluted share was $0.09, up from $0.06 in the prior quarter, and a $0.13 improvement from a non-GAAP net loss of $0.04 in the third quarter of fiscal year 2012.

On a GAAP basis, net income for the third quarter of fiscal year 2013 was $1.5 million, up from $0.3 million in the prior quarter, and a $6.3 million improvement from a loss of $4.7 million in the third quarter of fiscal year 2012. GAAP gross margin increased to 45.8%. GAAP net income per fully-diluted share for the third quarter of fiscal year 2013 was $0.03, compared to $0.01 in the prior quarter, and a loss of $0.11 in the third quarter of fiscal year 2012. Free cash flow for the third quarter of fiscal year 2013 was $3.6 million, up from $1.8 million in the prior quarter, and improved from a negative $3.2 million in the third quarter of fiscal year 2012.

"Our third fiscal quarter results demonstrate continued profitable growth in a difficult market environment. On a non-GAAP basis we achieved 11% operating profit and 13% net profit. While overall revenue growth was modest, our growth in networking and storage for big data analytics remains robust. This growth, coupled with gross margin expansion and a continued focus on prudent spending, drove a 60% sequential increase in non-GAAP operating income. Free cash flow of $3.6 million for the quarter represents improvements of $1.8 million and $6.8 million as compared to the prior quarter and third quarter of 2012 respectively," commented company President and CEO Louis DiNardo.

For the fourth quarter of fiscal year 2013 ending March 31, 2013, the Company expects revenue in the range of $31.0 million to $32.0 million. Gross margin on a non-GAAP basis is expected to be in the range of 49% to 51%, and non-GAAP net income per fully-diluted share is expected to be in the range of $0.08 to $0.10.



    GAAP FINANCIAL COMPARISON
    (In millions, except per share amounts)
    (Unaudited)

                                                               THREE MONTHS ENDED                        NINE MONTHS ENDED
                                                               ------------------                        -----------------
                                            DECEMBER 30,        SEPTEMBER 30,            JANUARY 1,              DECEMBER 30,        JANUARY 1,
                                                          2012                     2012                    2012                2012               2012
                                                          ----                     ----                    ----                ----               ----
    Net sales                                            $31.0                    $30.6                   $29.7               $90.9             $102.8
    Gross margin                                          45.8%                    43.5%                   45.0%               44.4%              45.6%
    Loss from operations                                 $(0.4)                   $(0.4)                  $(5.4)              $(1.9)             $(9.1)
    Net income (loss)                                     $1.5                     $0.3                   $(4.7)               $1.2              $(7.2)
    Net income (loss) per share
    Basic                                                $0.03                    $0.01                  $(0.11)              $0.03             $(0.16)
    Diluted                                              $0.03                    $0.01                  $(0.11)              $0.03             $(0.16)


    NON-GAAP FINANCIAL COMPARISON
    (In millions, except per share amounts)
    (Unaudited)

                                                              THREE MONTHS ENDED                    NINE MONTHS ENDED
                                                              ------------------                    -----------------
                                            DECEMBER 30,        SEPTEMBER 30,            JANUARY 1,              DECEMBER 30,        JANUARY 1,
                                                          2012                     2012                    2012                2012               2012
                                                          ----                     ----                    ----                ----               ----
    Net sales                                            $31.0                    $30.6                   $29.7               $90.9             $102.8
    Gross margin                                          49.0%                    46.7%                   48.4%               47.7%              48.7%
    Income (loss) from
     operations                                           $3.6                     $2.2                   $(2.4)               $6.7              $(1.5)

    Net income (loss)                                     $4.0                     $2.9                   $(1.9)               $8.3               $0.2
    Net income (loss) per share
    Basic                                                $0.09                    $0.06                  $(0.04)              $0.18              $0.00
    Diluted                                              $0.09                    $0.06                  $(0.04)              $0.18               0.00

Fiscal Year 2013 Third Quarter 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 third quarter of fiscal year 2013, today, Wednesday, January 23, 2013 at 1:30 p.m. PST. To access the conference call, please dial 800-230-1085 after 1:20 p.m. PST. In addition, a live webcast will be available on the Company's Investor webpage. A taped replay of the conference call will be available starting at 3:00 p.m. PST. To access the replay, please dial 800-475-6701 and use conference ID number 279343.

About Exar

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, 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.

Forward-Looking Statements

This press release contains 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. The forward-looking statements contained in this press release and in related comments by our management, our use of the words "expect," "anticipate," "possible," "potential," "target," "believe," "commit," "intend," "continue," "may," "would," "could," "should," "project," "projected," "positioned" or similar expressions is intended to identify forward-looking statements that represent our current judgment about possible future events. This may include statements about future financial and operating results, economic growth rates, industry and market conditions, potential synergies and cost savings, the ability to drive growth and expand customer and partner relationships, changes in gross margins, revenues and operating expenses, manufacturing yields or operations, product development initiatives, design win conversion and other such statements. These statements are not guarantees of any event or future performance, involve risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed herein. In any forward-looking statement in which the Company expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis at the time expressed, but there can be no assurance that the statement or expectation or belief will result or be achieved or accomplished. Information concerning risk factors is detailed in the Company's SEC reports, including the Annual Report on Form 10-K for the year ended April 1, 2012 and the Quarterly Report on Form 10-Q for the quarters ended July 1, 2012, and September 30, 2012.

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. In this press release and in related comments by management, we are disclosing non-GAAP gross profit, non-GAAP operating expenses, non-GAAP operating income or loss, non-GAAP net income or loss, and non-GAAP basic and diluted net income or loss per share, which are adjusted to exclude from our GAAP results all stock-based compensation expense, amortization of acquired intangible assets, restructuring charges and exit costs, provision for dispute resolution, certain income tax credits, and related income tax effects on certain excluded items. We are also disclosing 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. 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. 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. A reconciliation of the non-GAAP numbers to the most comparable GAAP numbers is provided in the tables included with this press release.


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

                                               THREE MONTHS ENDED                                     NINE MONTHS ENDED
                                               ------------------                                     -----------------
                                            DECEMBER 30,               SEPTEMBER 30,                                               JANUARY 1,          DECEMBER 30,          JANUARY 1,
                                                                 2012                         2012                                               2012                  2012                2012
                                                                 ----                         ----                                               ----                  ----                ----



    Net sales                                                 $22,235                      $21,528                                            $20,749               $63,210             $71,732
    Net sales, related party                                    8,764                        9,094                                              8,930                27,662              31,045
                   Total net sales                             30,999                       30,622                                             29,679                90,872             102,777
                                                               ------                       ------                                             ------                ------             -------

    Cost of sales:
      Cost of sales                                            11,922                       12,054                                             11,130                34,846              38,128
      Cost of sales, related party                              4,005                        4,380                                              4,299                12,897              14,867
      Amortization of purchased
       intangible assets                                          801                          858                                                905                 2,578               2,715
      Restructuring charges and
       exit costs                                                  79                            -                                                  -                   160                 152
                                                                  ---                          ---                                                ---                   ---                 ---
                   Total cost of sales                         16,807                       17,292                                             16,334                50,481              55,862
    Gross profit                                               14,192                       13,330                                             13,345                40,391              46,915
                                                               ------                       ------                                             ------                ------              ------
    Operating expenses:
      Research and development                                  5,376                        5,773                                              8,871                16,598              26,989
      Selling, general and
       administrative                                           8,645                        7,639                                              9,334                24,066              28,249
      Restructuring charges and
       exit costs                                                 524                          291                                                  -                 1,619                 173
      Separation costs                                              -                            -                                                575                     -                 575
                   Total operating expenses                    14,545                       13,703                                             18,780                42,283              55,986
    Income (loss) from operations                                (353)                        (373)                                            (5,435)               (1,892)             (9,071)

    Other income and expense,
     net:
       Interest income and other,
        net                                                       586                          674                                                593                 1,906               2,019
       Interest expense                                           (56)                         (38)                                               (60)                 (128)               (181)
                                                                  ---                          ---                                                ---                  ----                ----
                  Total other income and
                   expense, net                                   530                          636                                                533                 1,778               1,838

    Income (loss) before income
     taxes                                                        177                          263                                             (4,902)                 (114)             (7,233)
    Provision for (benefit from)
     income taxes                                              (1,346)                           -                                               (169)               (1,324)                  3
                                                               ------                          ---                                               ----                ------                 ---

    Net income (loss)                                          $1,523                         $263                                            $(4,733)               $1,210             $(7,236)
                                                               ======                         ====                                            =======                ======             =======
    Net income (loss) per share:
      Basic                                                     $0.03                        $0.01                                             $(0.11)                $0.03              $(0.16)
                                                                =====                        =====                                             ======                 =====              ======
      Diluted                                                   $0.03                        $0.01                                             $(0.11)                $0.03              $(0.16)
                                                                =====                        =====                                             ======                 =====              ======

    Shares used in the
     computation of net income
     (loss) per share:
      Basic                                                    45,925                       45,720                                             44,830                46,228              44,726
                                                               ======                       ======                                             ======                ======              ======
      Diluted                                                  46,438                       46,046                                             44,830                46,623              44,726
                                                               ======                       ======                                             ======                ======              ======


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

                                                                  DECEMBER 30,                        APRIL 1,
                                                                                   2012                      2012 (1)
                                                                                   ----                       -------
                           ASSETS

    Current assets:
    Cash and cash equivalents                                                   $15,334                        $8,714
    Short-term marketable securities                                            185,784                       187,668
    Accounts receivable (net of
     allowances of $769 and $781,
     respectively)                                                               12,865                         8,454
    Accounts receivable, related party
     (net of allowances of $785 and
     $815, respectively)                                                          2,176                         2,918
    Inventories                                                                  18,720                        18,374
    Other current assets                                                          3,835                         3,124
                                                                                  -----                         -----
    Total current assets                                                        238,714                       229,252

    Property, plant and equipment, net                                           23,743                        27,793
    Goodwill                                                                      3,184                         3,184
    Intangible assets, net                                                        6,793                         9,755
    Other non-current assets                                                      1,386                         1,668
                                                                                  -----                         -----

    Total assets                                                               $273,820                      $271,652
                                                                               ========                      ========

            LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
    Accounts payable                                                            $10,079                        $7,823
    Accrued compensation and related
     benefits                                                                     4,255                         3,918
    Deferred income and allowances on
     sales to distributors                                                        2,786                         3,410
    Deferred income and allowances on
     sales to distributors, related
     party                                                                        8,384                         9,608
    Other current liabilities                                                    11,174                        13,615
                                                                                 ------                        ------
                 Total current liabilities                                       36,678                        38,374

    Long-term lease financing
     obligations                                                                  1,598                         3,771
    Other non-current obligations                                                 3,679                         6,215
                                                                                  -----                         -----

    Total liabilities                                                            41,955                        48,360

    Stockholders' equity                                                        231,865                       223,292
                                                                                -------                       -------
    Total liabilities and stockholders'
     equity                                                                    $273,820                      $271,652
                                                                               ========                      ========


    (1) Due to the correction of an immaterial error in the fourth quarter fiscal of 2012, the
     balances at April 1, 2012 of Accumulated deficit decreased by $741 thousand and Additional paid-
     in capital decreased by $741 thousand. Total Stockholders' equity remained the same.


                                                                             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 30,                SEPTEMBER 30,                                                   JANUARY 1,          DECEMBER 30,          JANUARY 1,
                                                  2012                         2012                                                   2012                  2012                 2012
                                                  ----                         ----                                                   ----                  ----                 ----

     Net Sales                                 $30,999                      $30,622                                                $29,679               $90,872             $102,777
                                               =======                      =======                                                =======               =======             ========

     GAAP gross profit                         $14,192                      $13,330                                                $13,345               $40,391              $46,915
     GAAP gross margin                            45.8%                        43.5%                                                  45.0%                 44.4%                45.6%
       Stock-based
        compensation                               106                          129                                                    104                   220                  232
       Amortization of
        acquired intangible
        assets                                     801                          853                                                    905                 2,534                2,715
       Restructuring
        charges and exit
        costs                                       79                            -                                                      -                   160                  152
    Non-GAAP gross
     profit                                    $15,178                      $14,312                                                $14,354               $43,305              $50,014
                                               =======                      =======                                                =======               =======              =======
    Non-GAAP gross
     margin                                       49.0%                        46.7%                                                  48.4%                 47.7%                48.7%
                                                  ====                         ====                                                   ====                  ====                 ====

    GAAP operating
     expenses                                  $14,545                      $13,703                                                $18,780               $42,283              $55,986
       Stock-based
        compensation                             1,296                        1,218                                                  1,229                 2,703                3,162
       Amortization of
        acquired intangible
        assets                                     107                          107                                                    174                   334                  522
       Restructuring
        charges and exit
        costs                                      524                          291                                                    575                 1,619                  748
       Provison for dispute
        resolution                               1,000                            -                                                      -                 1,000                    -
    Non-GAAP operating
     expenses                                  $11,618                      $12,087                                                $16,802               $36,627              $51,554
                                               =======                      =======                                                =======               =======              =======

    GAAP operating
     income (loss)                               $(353)                       $(373)                                               $(5,435)              $(1,892)             $(9,071)
       Stock-based
        compensation                             1,402                        1,347                                                  1,333                 2,923                3,394
       Amortization of
        acquired intangible
        assets                                     908                          960                                                  1,079                 2,868                3,237
       Restructuring
        charges and exit
        costs                                      603                          291                                                    575                 1,779                  900
       Provison for dispute
        resolution                               1,000                            -                                                      -                 1,000                    -
    Non-GAAP operating
     income (loss)                              $3,560                       $2,225                                                $(2,448)               $6,678              $(1,540)
                                                ======                       ======                                                =======                ======              =======

    GAAP net income
     (loss)                                     $1,523                         $263                                                $(4,733)               $1,210              $(7,236)
       Stock-based
        compensation                             1,402                        1,347                                                  1,333                 2,923                3,394
       Amortization of
        acquired intangible
        assets                                     908                          960                                                  1,079                 2,868                3,237
       Restructuring
        charges and exit
        costs                                      603                          291                                                    575                 1,779                  900
       Provison for dispute
        resolution                               1,000                            -                                                      -                 1,000                    -
       Income tax effects                       (1,389)                          (6)                                                  (194)               (1,434)                (115)
    Non-GAAP net income
     (loss)                                     $4,047                       $2,855                                                $(1,940)               $8,346                 $180
                                                ======                       ======                                                =======                ======                 ====

    GAAP net income
     (loss) per share
      Basic                                      $0.03                        $0.01                                                 $(0.11)                $0.03               $(0.16)
      Diluted                                    $0.03                        $0.01                                                 $(0.11)                $0.03               $(0.16)

    Non-GAAP net income
     (loss) per share
      Basic                                      $0.09                        $0.06                                                 $(0.04)                $0.18                $0.00
      Diluted                                    $0.09                        $0.06                                                 $(0.04)                $0.18                $0.00


    Net cash provided
     (used) by
     operations                                 $3,611                       $2,304                                                $(2,226)               $3,654               $2,907
       Less purchases of
        fixed assets and IP                       (147)                        (646)                                                (1,016)               (1,253)              (2,658)
       Add proceeds from
        sale of IP                                 125                          125                                                      -                   250                  170
    Free cash flow                              $3,589                       $1,783                                                $(3,242)               $2,651                 $419
                                                ======                       ======                                                =======                ======                 ====


                                                                                                  EXAR CORPORATION AND SUBSIDIARIES
                                                                                                 SUPPLEMENTAL NET SALES INFORMATION


                                                 THREE MONTHS ENDED                                           NINE MONTHS ENDED
                                                 ------------------                                           -----------------
                                             DECEMBER 30,                      SEPTEMBER 30,                                                    JANUARY 1,         DECEMBER 30,       JANUARY 1,
    By Product Line                                               2012                                2012                                                 2012                 2012                    2012
                                                                  ----                                ----                                                 ----                 ----                    ----
    Connectivity                                                    56%                                 53%                                                  52%                  55%                     52%
                     Power management                               20%                                 22%                                                  22%                  21%                     21%
               Data compression and security                        16%                                 15%                                                  14%                  15%                     13%
                      Communications                                 8%                                 10%                                                  12%                   9%                     14%

                                               THREE MONTHS ENDED                                          NINE MONTHS ENDED
                                               ------------------                                          -----------------
                                             DECEMBER 30,                      SEPTEMBER 30,                                                    JANUARY 1,         DECEMBER 30,       JANUARY 1,
    By Geography                                                  2012                                2012                                                 2012                 2012                    2012
                                                                  ----                                ----                                                 ----                 ----                    ----
                           Asia                                     59%                                 58%                                                  57%                  60%                     58%
                         Americas                                   29%                                 27%                                                  31%                  26%                     28%
                           EMEA                                     12%                                 15%                                                  12%                  14%                     14%




                                                                                                EXAR CORPORATION AND SUBSIDIARIES
                                                                                    SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE

                                                                        GUIDANCE FOR THE QUARTER ENDING MARCH 31, 2013
                                                                        ----------------------------------------------
                                                                                                                                               ADJUSTMENTS
                                                                                                                                               -----------
                                                                                                                                                                   AMORTIZATION
                                                                                                                                                                   OF ACQUIRED
                                                                                                                                               STOCK-BASED          INTANGIBLE
                                                                                 NON-GAAP                                                     COMPENSATION            ASSETS             GAAP
                                                                                 --------                                                     ------------            ------             ----
    Net Sales                                                                                      0% - 3%                                                                                          0% - 3%
    Gross Margin                                                                                 49% - 51%                                   ~0.2 million        ~$0.8 million                    46% - 48%
    Net income per share                                                                     $0.08 - $0.10                                    ~1.5 million        ~$0.9 million                $0.03 - $0.05

SOURCE Exar Corporation