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Exar Reports First Quarter Fiscal 1999 Operating Results

Tuesday, July 21, 1998
FREMONT, California, July 21, 1998 - Exar Corporation (Nasdaq: EXAR) today reported operating results for first quarter fiscal 1999. Revenue for the first quarter was $21.8 million compared to first quarter fiscal 1998 revenue of $24.4 million. Net income for the first quarter was $2.4 million or $0.24 per share compared to $1.5 million or $0.16 per share for the first fiscal quarter of 1998.

First quarter revenue decreased 13.3% from $25.1 million in the preceding quarter. Net income in the first quarter decreased 4.0% from pro forma net income (before unusual charges) in the fourth quarter of $2.5 million. Gross margin in the first quarter increased to 53.8% from 51.4% in the preceding quarter, and 46.9% in the first quarter of fiscal 1998.

"Revenue was softer than anticipated in the first quarter, particularly in Japan, however, we showed a strong improvement in EPS (50%) year-on-year," said Donald L. Ciffone, president and chief executive officer, Exar Corporation. "Despite lower revenue, we were able to continue improvement in margins due to a richer than expected product mix and improved operating efficiencies. We also experienced significant sequential design win growth over the prior quarter in our focus markets."

During the quarter, the Communications division introduced new data communications products: the XR16C2850, the industry's first dual UART targeted at networking and telecommunications equipment applications, and a new multi-product family of dual-channel UARTS for a wide range of data communications applications. The division secured design wins with two key European suppliers for E1 products, and overall design win activity in the communications segment remained strong.

The Video & Imaging division introduced new low power converter products in the quarter including a new family of 3V digital-to-analog converters for a wide range of digital calibration devices, and analog-to-digital converters for scanning and imaging applications. The division secured scanner design wins for Exar's new family of imaging subsystems introduced to the market in April, including a win with one of the leading Taiwanese scanner manufacturers.

During the quarter, Exar also announced a new distribution agreement with Pioneer-Standard Electronics, Inc., the third largest distributor in North America, to distribute Exar products in the United States, Mexico and Canada. Pioneer extends Exar's reach in focus markets, particularly communications, with a strong technical support capability.

Except for the historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties, including industry and market conditions impacting price, availability of raw materials and inventory, manufacturing costs and yields, transition issues related to transfer of the Company's test operations, competitive factors 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 report on Form 10-K for the year ended March 31, 1998.

Exar Corporation designs, develops and markets innovative, system-oriented analog and mixed-signal integrated circuits for video & imaging, communications and silicon sensing markets. The Company, based in Fremont, CA, had fiscal 1998 revenues of $102.0 million and employs about 365 people worldwide.

EXAR CORPORATION AND SUBSIDIARIES

EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 
(In thousands, except per share amounts)
(Unaudited)
 Three Months Ended
 June 30,
 19981997
   
NET SALES$21,764$24,398
   
COSTS AND EXPENSES:  
Cost of sales10,06612,946
Research and development3,4123,774
Selling, general and administrative5,4225,538
Goodwill amortization185292
 19,08522,550
 
INCOME FROM OPERATIONS2,6791,848
   
OTHER INCOME, NET1,091611
   
INCOME BEFORE INCOME TAXES3,7702,459
 
INCOME TAXES1,404976
 
NET INCOME$ 2,366$ 1,483
 
 
Basic net income per share$ .25$ .16
 
Diluted net income per share$ .24$ .16
 
Shares used in computation of basic  
net income per share9,5399,199
Shares used in computation of diluted  
net income per share9,9709,458
 
 
EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(In thousands)
 June 30,March 31,
 1998 1998
 (Unaudited)
ASSETS 
 
Current assets: 
Cash and short-term investments$ 77,177$ 79,307
Accounts receivable, net15,86416,764
Inventories6,9716,781
Other current assets6,7516,738
Total Current Assets106,763109,590
 
Property and equipment, net27,36726,746
Other assets7,1397,333
 
 $ 141,269$ 143,669
 
LIABILITIES AND STOCKHOLDERS' EQUITY 
 
Total current liabilities$ 13,351$ 19,195
Non-current liabilities712745
Stockholders’ equity127,206123,729
 
 $ 141,269$ 143,669
 
Linda Prosser, VP, Marketing Communications

Media Contact
Marketing Communications
  marcom[at]exar.com