Exar: Fiscal 2Q10 Financial Results

(in US$ millions)	2Q09	2Q10	6 mo. 09	6 mo. 10
Revenues	32.7	31.6	65.0	62.5
*Growth*		-3%		*-4%*
Net income (loss)	(2.2)	(8.2)	(4.6)	(21.0)

Exar Corporation reported financial results for its fiscal 2010 second quarter ended September 27, 2009.

Net sales for the second quarter of fiscal 2010 were $31.6 million compared to net sales of $30.9 million for the prior quarter and $32.7 million for the second quarter of fiscal 2009.

The GAAP gross margin for the second quarter of fiscal 2010 was 44.6% compared to 41.6% for the prior quarter and 45.8% for the second quarter of fiscal 2009.

On a non-GAAP basis, the gross margin for the second quarter of fiscal 2010 was 51.5% compared to 52.1% for the prior quarter and 49.3% for the second quarter of fiscal 2009.

The GAAP net loss for the second quarter of fiscal 2010 was $8.2 million, or a net loss per share of $0.19, compared to a net loss of $12.9 million, or a net loss per share of $0.30, in the prior quarter, and a net loss of $2.2 million, or a net loss per share of $0.05, for the second quarter of fiscal 2009. These results include acquisition-related costs of $0.8 million in the second quarter of fiscal 2010 as compared to $4.5 million in the prior quarter.

On a non-GAAP basis, the net loss was $2.7 million, or a net loss per share of $0.06, for the second quarter of fiscal 2010, compared to a net loss of $3.1 million, or a net loss per share of $0.07, in the prior quarter, and net income of $1.9 million, or net earnings per share of $0.04, for the second quarter of fiscal 2009.

The Company ended the second quarter of fiscal 2010 with cash, cash equivalents and short-term marketable securities of $221.4 million.

"We saw sequential double-digit percentage revenue improvement in all product lines, except in our communications portfolio where we experienced a significant reduction due to two products. As a result, our quarter-to-quarter revenue growth was limited to less than five percent," said Pete Rodriguez, the Company’s president and chief executive officer. "We have successfully integrated Hifn and Galazar and are on track to release new products and exceed cost synergy targets. During the quarter we introduced two devices at the Digital Power Forum and a new deduplication solution for enterprise storage applications. These products have had excellent customer response and we believe will start generating revenue in the current quarter."

Business Outlook
For the third quarter of fiscal 2010, the Company expects that net sales will be between $32.0 million and $34.0 million, non-GAAP gross margin will be between 51% and 53% and non-GAAP operating expenses will be between $19.5 million and $20.5 million.