<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For quarterly period ended December 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM _______TO _______
Commission File No. 0-14225
EXAR CORPORATION
(Exact Name of registrant as specified in its charter)
Delaware 94-1741481
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
48720 Kato Road, Fremont California 94538
- -------------------------------------------------------------------------------
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 668-7000
- -------------------------------------------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at December 31, 1998
- -------------------------------------------------------------------------------
Common Stock, .0001 par value 9,329,545 shares net of treasury shares
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements....................................3-5
Notes to Condensed Consolidated Financial Statements...........................6-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................................9-12
Item 3. Quantitative and Qualitative Disclosures About Market Risk......................12
PART II OTHER INFORMATION
Item 5. Other Information.............................................................. 13
Item 6. Exhibits and Reports on Form 8-K................................................13
Signatures......................................................................14
EXHIBITS
Exhibit 27.0....................................................................15
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, MARCH 31,
1998 1998
(UNAUDITED)
----------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 74,875 $ 76,167
Short-term investments 3,277 3,140
Accounts receivable, net 12,749 16,764
Inventories 6,536 6,781
Prepaid expenses and other 1,646 1,521
Deferred income taxes 5,217 5,217
----------------- -----------------
Total current assets 104,300 109,590
PROPERTY AND EQUIPMENT, Net 27,640 26,746
GOODWILL, Net 630 1,534
OTHER ASSETS 5,809 5,799
----------------- -----------------
TOTAL ASSETS $ 138,379 $ 143,669
----------------- -----------------
----------------- -----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,144 $ 7,534
Accrued compensation and related benefits 2,864 8,564
Other accrued expenses 3,328 3,097
Income taxes payable 2,316 -
----------------- -----------------
Total current liabilities 12,652 19,195
----------------- -----------------
LONG-TERM LIABILITIES 684 745
----------------- -----------------
STOCKHOLDERS' EQUITY:
Preferred stock; $.0001 par value; 2,250,000 shares authorized;
no shares outstanding - -
Common stock; $.0001 par value; 25,000,000 shares authorized;
10,616,211 and 10,475,503 shares outstanding 88,125 86,091
Cumulative translation adjustments 234 83
Retained earnings 56,405 51,700
Treasury stock; 1,288,066 and 977,766 shares of common stock at cost (19,721) (14,145)
----------------- -----------------
Total stockholders' equity 125,043 123,729
----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 138,379 $ 143,669
----------------- -----------------
----------------- -----------------
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE>
EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET SALES $ 15,808 $ 26,577 $ 56,770 $ 76,910
COSTS AND EXPENSES:
Cost of sales 7,292 13,455 26,504 39,737
Research and development 3,360 3,953 10,349 11,675
Selling, general and administrative 4,475 5,982 14,789 17,392
Goodwill amortization 146 293 515 878
Restructuring and other charges 731 -- 731 --
------------ ------------ ------------ ------------
Total costs and expenses 16,004 23,683 52,888 69,682
------------ ------------ ------------ ------------
OPERATING INCOME (LOSS) (196) 2,894 3,882 7,228
OTHER INCOME:
Interest income, net 1,110 837 3,152 2,065
Other, net 72 7 545 73
------------ ------------ ------------ ------------
Total other income, net 1,182 844 3,697 2,138
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 986 3,738 7,579 9,366
INCOME TAXES 402 1,431 2,874 3,637
------------ ------------ ------------ ------------
NET INCOME $ 584 $ 2,307 $ 4,705 $ 5,729
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
NET INCOME PER SHARE:
BASIC $0.06 $0.25 $0.50 $0.62
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
DILUTED $0.06 $0.23 $0.49 $0.59
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
SHARES USED IN COMPUTATION OF
NET INCOME PER SHARE:
BASIC 9,303 9,365 9,418 9,289
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
DILUTED 9,436 9,933 9,675 9,734
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE>
EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
NINE MONTHS ENDED
DECEMBER 31,
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,705 $ 5,729
Reconciliation of net income to net cash provided
by operating activities:
Depreciation and amortization 3,812 4,342
Changes in operating assets and liabilities:
Accounts receivable 4,015 (2,440)
Inventories 245 (95)
Prepaid expenses and other (388) (436)
Accounts payable (3,390) (2,751)
Accrued compensation and related benefits (5,700) 2,650
Other accrued expenses 231 468
Income taxes payable 2,579 3,380
----------- -----------
Net cash provided by operating activities 6,109 10,847
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (4,287) (2,931)
Proceeds from sales of equipment 485 7,353
Purchases of short-term investments (137) (2,120)
Sales of short-term investments - 4,000
Purchase of long-term investments - (3,000)
Other assets (10) (133)
----------- -----------
Net cash provided by (used in) investing activities (3,949) 3,169
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term liabilities (61) (117)
Proceeds from issuance of common stock 2,033 3,910
Acquisition of common stock (5,575) -
----------- -----------
Net cash provided by (used in) financing activities (3,603) 3,793
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 151 363
----------- -----------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (1,292) 18,172
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 76,167 48,479
----------- -----------
CASH AND EQUIVALENTS AT END OF PERIOD $ 74,875 $ 66,651
----------- -----------
----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes $ 543 $ 351
----------- -----------
----------- -----------
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE>
EXAR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
QUARTER AND NINE MONTHS ENDED DECEMBER 31, 1998 AND 1997
(In thousands, except per share amounts)
- -------------------------------------------------------------------------------
NOTE 1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements include the
accounts of Exar Corporation and its wholly-owned subsidiaries ("Exar" or the
"Company"). Such financial statements have been prepared in conformity with
generally accepted accounting principles consistent with those reflected in the
Company's 1998 annual report on Form 10-K, and include all adjustments
(consisting only of normal, recurring adjustments) necessary for a fair
presentation of financial position, results of operations and cash flows. The
results of operations for the three and nine months ended December 31, 1998 are
not necessarily indicative of the results of operations to be expected for the
full year. These financial statements should be read in conjunction with the
audited financial statements for the fiscal year ended March 31, 1998 included
in the Company's annual report to security holders furnished to the Securities
and Exchange Commission pursuant to Rule 14a-3(b) in connection with the
Company's 1998 Annual Meeting of Stockholders.
Exar designs, develops and markets analog and mixed-signal application specific
integrated circuits for use in the communications, video and imaging and in
other selected product areas. Principal markets include North America, Asia and
Europe.
NOTE 2. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or
market and consist of the following:
<TABLE>
<CAPTION>
December 31, March 31,
1998 1998
-------------- -------------
<S> <C> <C>
Work-in-process $ 3,874 $ 4,579
Finished goods 2,662 2,202
-------------- -------------
$ 6,536 $ 6,781
-------------- -------------
-------------- -------------
</TABLE>
6
<PAGE>
NOTE 3. NET INCOME PER SHARE
SFAS 128 requires a dual presentation of basic and diluted EPS. Basic EPS
excludes dilution and is computed by dividing net income by the weighted average
of common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
------------ ------------ ---------- -----------
<S> <C> <C> <C> <C>
NET INCOME $ 584 $ 2,307 $ 4,705 $ 5,729
------------ ------------ ---------- -----------
------------ ------------ ---------- -----------
SHARES USED IN COMPUTATION:
Weighted average common shares outstanding used in
computation of basic net income per share 9,303 9,365 9,418 9,289
Dilutive effect of stock options 133 568 257 445
------------ ------------ ---------- -----------
Shares used in computation of diluted net income per share 9,436 9,933 9,675 9,734
------------ ------------ ---------- -----------
------------ ------------ ---------- -----------
BASIC NET INCOME PER SHARE $ 0.06 $ 0.25 $ 0.50 $ 0.62
------------ ------------ ---------- -----------
------------ ------------ ---------- -----------
DILUTED NET INCOME PER SHARE $ 0.06 $ 0.23 $ 0.49 $ 0.59
------------ ------------ ---------- -----------
------------ ------------ ---------- -----------
</TABLE>
Options to purchase 1,402,407 and 109,300 shares of common stock at prices
ranging from $16.09 to $37.25 were outstanding as of December 31, 1998 and 1997,
respectively, but not included in the computation of diluted net income per
share because the options' exercise prices were greater than the average market
price of the common shares as of such dates and, therefore, would be
antidilutive under the treasury stock method.
7
<PAGE>
NOTE 4. COMPREHENSIVE INCOME
In the first quarter of fiscal year 1999, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income," which
requires an enterprise to report, by major components and as a single total, the
change in net assets during the period from nonowner sources. For the three and
nine months ended December 31, 1998 and 1997, comprehensive income, which was
comprised of the Company's net income for the periods and changes in cumulative
translation adjustments, was as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
NET INCOME $584 $2,307 $4,705 $5,729
OTHER COMPREHENSIVE INCOME, NET OF TAX-
Cumulative translation adjustments 121 (94) 97 233
------ ------ ------ ------
COMPREHENSIVE INCOME $705 $2,213 $4,802 $5,962
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
NOTE 5. RESTRUCTURING AND OTHER CHARGES
In the third quarter of fiscal 1999, the Company sold its Silicon
Microstructures business unit to OSI Systems, Inc. ("OSI") for $2.6 million,
with additional contingent performance-based payments of up to $3.9 million over
the next two years. The resulting restructuring charge of $.7 million represents
the loss on the sale of the assets sold, severance costs related to the
termination of 38 employees and other disposition related expenses. The
restructuring action was substantially completed during the third quarter of
fiscal 1999 and was financed through the use of cash.
NOTE 6. RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which establishes annual and interim
reporting standards for an enterprise's business segments and related
disclosures about its products, services, geographic areas and major customers.
The Company has not yet determined its business segments for purposes of these
disclosures. Adoption of this statement will not impact the Company's
consolidated financial position, results of operations or cash flows. The
Company will adopt this statement in its financial statements for the year
ending March 31, 1999.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which defines derivatives, requires that all
derivatives be carried at fair value, and provides for hedging accounting when
certain conditions are met. This statement is effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. On a forward looking basis,
although the Company has not fully assessed the implications of this new
statement, the Company does not believe adoption of this statement will have a
material impact on the Company's financial position or results of operations.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for the historical information contained herein, the following discussion
contains forward looking statements that involve risks and uncertainties. The
Company's actual results could differ materially from those discussed here.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in this section, as well as in the sections entitled
"Business" and "Risk Factors" in the Company's 1998 Form 10-K, filed with the
Securities and Exchange Commission on June 19, 1998.
GENERAL - The Company derives revenue principally from the sale of integrated
circuits for use in communications, video and imaging and other selected areas.
The Company has wholly-owned subsidiaries in Japan, Taiwan, France and the
United Kingdom to support its sales operations in the Far East and Europe.
RESULTS OF OPERATIONS - Net sales for the third quarter of fiscal 1999 were
$15.8 million compared to $26.6 million for the corresponding period in fiscal
1998, a decrease of approximately 41%. Net sales for the nine month period ended
December 31, 1998 decreased by approximately 26% to $56.8 million compared to
$76.9 million for the corresponding period in fiscal 1998. These decreases were
primarily due to the sale of the Company's silicon microstructures business unit
and related product lines, weaker turns business (business booked and shipped in
the same quarter), as well as decreases in sales of discontinued consumer and
custom products in the Company's legacy product lines. Sales of these
discontinued legacy products are expected to further decline over the next
several quarters. The abrupt closure of one of the Company's third-party fab
suppliers during the third quarter of fiscal 1999 had a further negative impact
of $.7 million on the Company's revenue from legacy products. This closure is
expected to result in a further decline in revenue from legacy products of
approximately $1.3 million in the fourth quarter of fiscal 1999 and
approximately $1 million per quarter through fiscal 2000.
Cost of goods sold for the third quarter and the first nine months of fiscal
1999 decreased to approximately 46% and 47% of net sales, respectively, compared
to 51% and 52% of net sales for the same periods in fiscal 1998. The decrease is
due to a greater mix of the Company's newer analog and mixed-signal products
which tend to have higher gross margins than many of the Company's more mature
products. The Company's gross margins from sales of integrated circuits vary
depending on competition from other manufacturers, the volume of products
manufactured and sold, the Company's ability to achieve certain manufacturing
efficiencies and the cost of material procured from the Company's suppliers.
Margins of any particular product may erode over time.
Research and development expenses in the third quarter and first nine months of
fiscal 1999 represented approximately 21% and 18% of net sales, respectively
compared to 15% of net sales in the corresponding periods in fiscal 1998.
Research and development expenses in the third quarter and first nine months of
fiscal 1999 decreased by approximately 15% and 11%, respectively, compared to
the same periods in fiscal 1998. The decrease in research and development
expenses is attributable to the Company's control of operating expenses in
response to decreased revenues, lower employee benefits costs and to the
restructuring activities associated with the sale of the Company's silicon
microstructures business unit. (See Note 5 to Notes to Condensed Consolidated
Financial Statements.)
9
<PAGE>
Selling, general and administrative expenses, as a percentage of net sales,
increased from approximately 23% in the third quarter and first nine months of
fiscal 1998 to 28% and 26%, respectively, in the corresponding periods of fiscal
1999. Selling, general and administrative expenses in the third quarter and
first nine months of fiscal 1999 decreased by approximately 25% and 15%,
respectively, compared to the same periods in fiscal 1998. The decrease in
selling, general and administrative expenses is attributable to decreased
commissions expense, lower employee benefits costs and to the Company's control
of operating expenses in response to decreased revenues.
Other income in the third quarter and first nine months of fiscal 1999 increased
by approximately 40% and 73%, respectively, compared to the same periods in
fiscal 1998. These increases are attributable mainly to increases in cash and
equivalents balances as well as gains on property and equipment disposals.
The Company's provision for income taxes is based on income from operations. The
Company's effective tax rate for the first nine months of fiscal 1999 was
approximately 38% compared with the federal statutory rate of 35%. The
difference is due to non-deductible expenses, state income taxes and foreign
income, which is taxed at rates different from U.S. income tax rates, partially
offset by tax advantaged investment income and tax savings generated from
utilization of the Company's foreign sales corporation.
In 1987, one of the Company's subsidiaries identified low-level groundwater
contamination on its principal manufacturing site. Although the area of
contamination appears to have been defined, the source of the contamination has
not been identified. The Company has reached an agreement with another entity to
share in the cost of ongoing site investigations and the operation of remedial
systems to remove subsurface chemicals. The accompanying financial statements
include an accrual for the Company's approximately $.8 million share of
remaining estimated remediation costs.
LIQUIDITY AND CAPITAL RESOURCES - During the first nine months of fiscal 1999,
the Company financed its operations primarily from cash flows from operations
and existing cash and short-term investments. At December 31, 1998, the Company
had approximately $78.2 million of cash and short-term investments. The Company
has available a short term, unsecured line of credit under which it may borrow
up to $10 million, none of which was being utilized at December 31, 1998. In
addition, the Company has a credit facility with certain domestic and foreign
banks under which it may execute up to $25 million in foreign currency
transactions. At December 31, 1998, the Company had no outstanding foreign
currency forward contracts.
The Company has no material firm capital commitments.
The Company anticipates that it will finance its operations with cash flows from
operations, existing cash and short-term investment balances, borrowings under
existing bank credit lines, and some combination of long-term debt and/or lease
financing and additional sales of equity securities. The combination and sources
of capital will be determined by management based on the needs of the Company
and prevailing market conditions.
10
<PAGE>
YEAR 2000 AND PROXIMATE DATES
Many computer systems are expected to experience problems interpreting dates
around the year 2000. Following is a summary of our activities to address the
ability of our business to operate around these dates:
STATE OF READINESS AND CONTINGENCY PLANS- The Company has completed the process
of identifying the programs and infrastructure in all areas of the Company
(including manufacturing, engineering and facilities) that could be affected by
the Year 2000 issue and has developed an implementation plan to resolve the
issue. In 1997, in order to improve access to business information through
common, integrated computing systems across the Company, the Company began a
worldwide business systems replacement project with systems that use programs
primarily from Oracle Corporation (Oracle). The new systems, which are expected
to make the Company's core business computer systems Year 2000 compliant, are
scheduled for completion in the quarter ending March 31, 1999. The
implementation of the Oracle programs is on schedule and approximately 90 %
complete. In the event that the Company is unable to successfully complete the
Oracle implementation, a contingency plan has been developed to make any
remaining legacy information systems Year 2000 compliant. A decision to
implement the contingency plan is expected to be made by the end of the quarter
ending March 31, 1999. This contingency plan is intended to allow the Company to
operate its critical business functions at minimum levels of efficiency.
COSTS - The total anticipated cost of the Oracle implementation is estimated at
$5.5 million dollars. Approximately $5.0 million dollars will be capitalized and
is for the development of software and installation of hardware. Of the
remaining project costs of approximately $.5 million, the Company has expensed
approximately $.3 million in prior periods and anticipates to expense the
residual through the end of the project in the quarter ending March 31, 1999.
The costs of the Oracle implementation and the date on which the Company plans
to complete the project are based on management's best estimates, which were
derived utilizing numerous assumptions of future events including the continued
availability of certain resources, third parties' Year 2000 readiness and other
factors. Accordingly, there can be no assurance that such cost and time
estimates will prove correct. Such costs could be materially greater and time
periods materially longer than management currently estimates.
RISKS - The Company believes that with the implementation of the Oracle
software, it will be able to operate its time sensitive business-application
software programs and infrastructure into and beyond the year 2000. However, due
to the general uncertainty inherent in the Year 2000 problem, resulting in part
from the uncertainty of the Year 2000 readiness of third-party suppliers and
customers, the Company is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on the Company's
results of operations, liquidity or financial condition. Furthermore, the
Company is in the process of working with certain key suppliers and customers to
assess their year 2000 readiness. The failure by a third party to adequately
address the year 2000 issue could have a material adverse impact on such third
parties ability to furnish products and services to the Company and, therefore,
could have a material adverse effect on the Company.
FACTORS THAT MAY AFFECT FUTURE RESULTS - The Company is currently transferring
its remaining test and shipping operations to offshore sub-contractors to reduce
manufacturing expenses. In addition, the Company has refocused its product
strategy to provide analog and mixed-signal products for the video, imaging and
communications markets and, therefore, has discontinued certain product
offerings. Furthermore, the semiconductor industry is characterized by economic
11
<PAGE>
downturns resulting in diminished product demand, erosion of average selling
prices, intense competition, rapid technological change, occasional shortages of
materials, dependence upon highly skilled engineering and other personnel and
significant expenditures for product development. In addition, the cyclical
market patterns of the semiconductor industry periodically result in shortages
of wafer fabrication capacity. The Company's availability to meet future demand
for its products is dependent upon obtaining sufficient supply of raw materials
and components. The Company's operations have reflected, and may in the future
reflect, substantial fluctuation from period-to-period as a result of the above
factors, as well as general economic conditions, the timing of orders from major
customers, variations in manufacturing efficiencies, exchange rate fluctuations,
the availability and cost of products from the Company's suppliers, management
decisions to commence or discontinue certain product lines, the Company's
ability to design, introduce and manufacture new products on a cost-effective
and timely basis and other factors. Exar's future operating results could
continue to be adversely affected by the current downturn in the semiconductor
market, the Asian financial crisis or by the failure of one or more of its
customers to compete successfully in their markets. The markets for components
used in the video, imaging and communications markets are extremely price
competitive.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this item is not applicable for the Company until the
fiscal year ended March 31, 1999.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Pursuant to the Company's bylaws, stockholders who wish to bring matters or
propose nominees for director at the Company's 1999 annual meeting of
stockholders must provide specified information to the Company prior to March
15, 1999 (unless such matters are included in the Company's proxy statement
pursuant to Rule 14A-3 under the Securities Exchange Act of 1934, as amended).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit Number Description of Document
-------------- -----------------------
27.0 Financial Data Schedule
(b) During the quarter for which this report is filed, the Registrant
filed no reports on Form 8-K.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EXAR CORPORATION
By /s/ Date: February 8, 1999
-------------------------------------------------------
Donald L. Ciffone, Jr.
President
Chief Executive Officer
By /s/ Date: February 8, 1999
-------------------------------------------------------
Ronald W. Guire
Executive Vice President,
Chief Financial Officer
Secretary
14
<PAGE>
EXHIBIT INDEX
Exhibit
- -------
Page
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27.0 Financial Data Schedule ......................16
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 74,875
<SECURITIES> 3,277
<RECEIVABLES> 12,749
<ALLOWANCES> 0
<INVENTORY> 6,536
<CURRENT-ASSETS> 104,300
<PP&E> 27,640
<DEPRECIATION> 0
<TOTAL-ASSETS> 138,379
<CURRENT-LIABILITIES> 12,657
<BONDS> 0
0
0
<COMMON> 68,404
<OTHER-SE> 56,639
<TOTAL-LIABILITY-AND-EQUITY> 138,379
<SALES> 56,770
<TOTAL-REVENUES> 56,770
<CGS> 26,504
<TOTAL-COSTS> 52,888
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,579
<INCOME-TAX> 2,874
<INCOME-CONTINUING> 4,705
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,705
<EPS-PRIMARY> .50
<EPS-DILUTED> .49
</TABLE>
