EXAR A NEW DIRECTION Mixed Signal and Data Management Solutions for a Connected World
Forwar Forward-Looking Statements d-Looking Statements This presentation 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 presentation 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 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, but there can be no assurance that the statement or expectation or belief will result or be achieved or accomplished. Information concerning risk factors are 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. , and December 30, 2012. Generally Accepted Accounting Principles 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 presentation, 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, and related 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. 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.
Exar Corporation • Founded : 1971 • Headquarters : Fremont, California • Design Centers : Silicon Valley, California; Hangzhou, China and Eatontown, New Jersey; Toronto, Canada • Employees : 301 • Revenue : $122mm* • Net Margin : 15% March Quarter** • Balance Sheet : ≈ $205mm Cash, No Debt *Fiscal 2013 **Non-GAAP
Management Team • Louis DiNardo CEO 30-year Semiconductor Veteran - • ADI, LLTC, XICOR, ISIL, EXAR • Todd Smathers SVP Operations 30-year Semiconductor Veteran - • NSM, LLTC, XICOR, ISIL, EXAR • Carlos Laber SVP R&D 30-year Semiconductor Veteran - • NSM, MCRL, XICOR, ISIL, ON Semiconductor, EXAR • Steve Bakos SVP Sales 30-year Semiconductor Veteran - • NSM, LLTC, XICOR, ISIL, Conexant, EXAR • Ryan Benton CFO 20-year Finance Executive - • eFunds, ASMI, SynapSense, EXAR
Financial Performance • Fiscal Year 2013 Fourth Quarter Ending March 2013* •Revenue $31.2 million - 1% Growth Q/Q, 12% Y/Y •Gross Margin 52.7% - 373 Basis Point Increase Q/Q •Operating Income $4.3 million - 21% Increase Q/Q •EPS $0.10 - 11% Increase Q/Q *Non-GAAP Results
Exar Success Model FY’12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 FY’13 Long-Term Results* Results* Results* Results* Results* Results* Model* Revenue $131M $29.3M $30.6M $31.0M $31.2M $122M ≈ $45M 53% - Gross Margin 47% 47% 47% 49% 53% 49% 55% Operating 32% - 52% 44% 40% 38% 39% 40% Expense 34% Operating Inc/ (5%) 3% 7% 11% 14% 9% ≈ 23% (Loss) $0.20 - EPS -$0.10 $0.03 $0.06 $0.09 $0.10 $0.28 $0.25 *Non-GAAP Results
Operating Income/Loss* Q4-13 $4,316 $4,500 Q3-13 $3,560 Q2-13 $2,225 $1,750 Q1-13 $893 $774 $134 $87 $k -$404 -$1,000 -$1,232 -$1,528 -$1,544 -$1,967 -$2,448 -$2,930 -$3,079 -$3,750 -$3,725 -$4,249 -$4,744 -$4,968 -$5,384 -$5,438 Q4-12 -$6,155 -$6,500 Q3-08 Q1-09 Q3-09 Q1-10 Q3-10 Q1-11 Q3-11 Q1-12 Q3-12 Q1-13 Q3-13 *Quarterly Non-GAAP Results 7
Revenue Per Employee Trend Title $500,000 600 $375,000 450 $250,000 300 $125,000 150 $0 0 2007 2008 2009 2010 2011 2012 2013
Strategic Vision Achievement of Success Model • Serve High Growth Markets with Innovative Value-Added Solutions • High Performance Analog Mixed Signal • Data Management Solutions • Consistent Profitable Growth • Differentiation - Technology and Innovation • Diversity - Markets, Customers and Products • Appreciation in Shareholder Value • Non-GAAP EBIT Growth • GAAP EPS Growth
Market Focus • Networking and Storage • Industrial and Embedded Systems • Communications Infrastructure
Product Focus • Power Management Products • Connectivity Products • Data Management Solutions
Product Line Contribution* 21% Power 9% Connectivity 54% 16% Data Compression Communications *Fiscal Year 2013
End Market Contribution* 30% Networking 20% Industrial Communications 49% Other *Fiscal Year 2013
Geographic Contribution* 27% Americas 14% Asia Europe 59% *Fiscal Year 2013
Power Management Products • Analog Power Management • Switching Regulators • Switching Controllers • Linear Regulators • Supervisory Controllers • Programmable Power • Multiple Output Synchronous Buck Controllers
End Market Focus Served Available Market (SAM) Market Volume ASP SAM Customers Set Top Box 150M $2.00 $300M Pace, Motorola Technicolor Switches/Routers 20M $5.00 $100M Cisco, HP, Alcatel, Huawei MF Printers 10M $5.00 $50M HP, Canon, Konica, Minolta Servers 15M $10.00 $150M HP, IBM, Dell, Intel Surveillance 40M $2.00 $80M Siemens, Johnson, Pelco Patient Monitor 10M $3.00 $30M GE, Honeywell, Mindray BTS/BSC/RRH 5M $8.00 $40M NSN, Ericsson, ZTE POS 15M $2.00 $30M Ingenico, Hypercom Others 40M $2.50 $100M Auto, Gateway, Consumer TOTAL $880M
POWER XR Exar Programmable PowerSuite 5.0
Exar Programmable Power SINGLE INPUT - FOUR OUTPUT ANALOG FEATURES EXAR 147 33 # OF COMPONENTS DISCRETE SOFT-START YES DISCRETE MARGINING YES DISCRETE SEQUENCE & TRACK YES NO DYNAMIC CONTROL YES NO FAULT MANAGEMENT YES NO I2C INTERFACE YES
Power Management Revenue $9.00 $6.75 $M $4.50 $2.25 $0 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413
Data Compression and Security Hardware Acceleration and Software Solutions • Compression • Decompression • Acceleration • Encryption • Decryption
Data Compression and Security • High Growth Markets Supporting Social Networking, Industrial Internet and Financial Technology • Big Data Analytics • Enterprise • Cloud • Off-Load Processing • Lower Cost - Decrease Array Capacity • Improve System Performance - Throughput and Latency
Data Compression and Security Data Warehouse Served Available Market (SAM) Market Customers SAM Enterprise Storage EMC, Hitachi, IBM, NetApp $80M Big Data Analytics Teradata, Oracle, HP, IBM $80M Cloud Storage Amazon, Microsoft, Rackspace $100M Cloud Computing IBM, Google, Salesforce $70M Network Security Cisco, Juniper, Huawei, F5 $140M VOIP Security Acme Packet, Cisco $25M Remote Replication HP, IBM, Raytheon $30M TOTAL $525M
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