exar corporate presentation external€¦ · data deduplication solutions. 10 gigabit ethernet nic...

Investor PresentationStifel Nicolaus – Technology, Communications & Internet Conference 2011

Presented by:Pete RodriguezKevin Bauer

February 10, 2011

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February 10, 2011Stifel Nicolaus Technology, Communications

& Internet Conference 2011

Cautionary RemarksForward-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 recession, industry and market conditions, potential merger 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 March 28, 2010 and Quarterly Report on Form 10-Q for the fiscal quarters ended June 27, 2010, September 26, 2010 and December 26, 2010.

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 gross margin, non-GAAP research and development expenses, non-GAAP selling, general and administrative expenses, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP net income (loss), and non-GAAP diluted earnings (loss) per share, which are adjusted to exclude from our GAAP results all stock-based compensation expense, amortization of acquired intangible assets, fair value adjustment of acquired inventories, acquisition-related costs, separation costs of executive officers, acceleration of depreciation on abandoned equipment, goodwill and other intangible asset impairment, impairment charges on investments, and 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 following the semiconductor industry. 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.

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Broad Supplier with Global Presence• Fabless Semiconductor

– 39 years of EXcellence And Reliability

– More than 90mm units shipped per quarter

– ~550 employees worldwide

• 20.8%/yr Revenue Growth (FY07 to FY11 CAGR)

– DEC-10 Qtr Revenue = $35.4M (+14% FYTD)

– ~$202M Cash

– No Debt

– ~$220M NOL’s

– ~$32M other Net Tangible Assets

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Powering Connectivity

Delivering High-Value Solutions that:

Manage (Compress, Dedupe, Secure, Transport) Data

Optimize (Connect, Data Center Virtualization, Power) Systems

Leveraging Our Core Expertise in:

Silicon Design

System Architecture

Software

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Communications

Broad Market PenetrationNetworking and Storage

Consumer

Portable GamingDisplayMedia GatewayStorage

SecurityHVAC

Lighting ControlMotor ControlAdapter Cards

Factory Automation

Wired InfrastructureWireless

InfrastructureSwitches/Routers

Data Center/ServerSAN/NAS/DAS Primary StorageSAN Switches/Directors

Industrial

http://www.rca.com/product/viewmodellist/browseproduct/0,2589,CI700301,00.html?

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‐

5

10

15

20

25

30

2006 2007 2008 2009 2010 2011 2012 2013

Communications Interface Power Networking & Storage Exar SAM

Served Available Market Expansion

Linley, Databeans, iSupply (Calendar years)

B$ B$

B$

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EXAR Annual Revenue

FY11 guidance range provided on 1/25/11; FY12 is analyst consensus as of 1/26/11

$200M

$175M

$150M

$125M

$100M

$75M

$50M

$25M

$0MFY06 FY07 FY08 FY09 FY10 FY11 FY12

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Product LinesDatacom & Storage

Data Encryption & Compression SolutionsData Deduplication Solutions10 Gigabit Ethernet NIC Solutions

Communications

Carrier Ethernet and Optical Transport (OTN)SONET / SDH SolutionsT / E Telecom Carrier Solutions

Power PowerXR

Standard LinearDC/DC Conversion

Interface

UART and Bridge SolutionsSerial Transceiver Solutions

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Datacom & Storage Product Portfolio

Applied Service Processors

Express Cards

10Gb Ethernet Cards

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Express DX & 10GbE PCIe NIC Cards

Enterprise Data Reduction and Security• Reduce Storage Costs by minimizing data

• Protect user’s data with minimal overhead

• Maximize TCO with more CPU cycles for workloads and reduced power

Unlocking Virtualized Server’s Potential• Eliminate CPU overhead & maximize I/O

performance in the Data Center

• Deterministic, hardware-enforced IOQoS™

• 100% more VMs per Server by avoiding over-provisioning

Hardware-OptimizedHigh Performance

Power EfficientScalable

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Datacom & Storage Revenue & Growth

FY11 FY12 FY13+

Datacom and StorageMillions $

$0 $2 $4 $6 $8

$10

Sep-09 Qtr

Dec-09 Qtr

Mar-10 Qtr

Jun-10 Qtr

Sep-10 Qtr

Dec-10 Qtr

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Communications Product PortfolioT / E / J Carrier SDH / SONET OTN

Timing

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Optical Transport Network

Space, Power, and Cost Efficient• Single chip implementation, replaces multiple FPGAs

• Low-power design in 65 nm process

MXP210Gx2 OTN Muxponder

Standards Compliant• Supports latest ITU-T G.709 standard

• First ASSP to support ODU0, ODUflex, & GMP

Network Transition & Convergence• Ethernet, SONET/SDH, Video, & SAN protocols

• Transition from SONET/SDH to OTN networks

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Communications Revenue & Growth

FY11 FY12 FY13+

CommunicationsMillions $

$0 $2 $4 $6 $8

$10

Sep-09 Qtr

Dec-09 Qtr

Mar-10 Qtr

Jun-10 Qtr

Sep-10 Qtr

Dec-10 Qtr

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Power Product PortfolioDC/DC Conversion

Standard Linear

Handset & Lighting

PowerXR

Hot 100 products of 2009!2010 China Innovation Award

http://www.edn.com/

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COST EFFECTIVE HIGH PERFORMANCE CONFIGURABLE POWERIntegration• Four independent programmable step-down DPWM controllers• Integrated FET drivers (4)• 3.3V / 5V on-board LDO• Reconfigurable GPIO pins & I2C interfacePerformance• Output currents up to 15A• High Efficiency ~95%• Single input supply from 4.75V to 25V• 9mA typical standby currentPower Management• Power monitoring• Full on-board protection; OTP, UVLO, OCP & OVP• Reusable design, PC design environment

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Power Revenue & Growth

Power

Millions $

FY11 FY12 FY13+

$0 $2 $4 $6 $8

$10

Sep-09 Qtr

Dec-09 Qtr

Mar-10 Qtr

Jun-10 Qtr

Sep-10 Qtr

Dec-10 Qtr

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Interface Product Portfolio

World Leader in UART Products

UART

Technology Leader in Multiprotocol Transceivers

Transceivers

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USBPCIeVLIO

UART XCVR XCVR UART

Exar Provides the Broadest Selection ofUARTs and Serial Transceivers in the Industry

8-BitPCI

I2C/SPI

USBPCIeVLIO

8-BitPCI

I2C/SPI

RS-232RS-422RS-485

Wireless

Industrial Applications Telecom Applications Consumer ApplicationsPoint-of-Sale (POS) Remote Access Servers GPS ModulesFactory Automation Network Server Management Smart PhoneTicketing Systems Repeaters HDTV

USBPCIeVLIO

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Interface Revenue & Growth

FY11 FY12 FY13+

Interface

Millions $

$0 $2 $4 $6 $8

$10 $12 $14 $16 $18 $20

Sep-09 Qtr

Dec-09 Qtr

Mar-10 Qtr

Jun-10 Qtr

Sep-10 Qtr

Dec-10 Qtr

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Fremont, CAHeadquartersDesignManufacturing Sales & Marketing

Taipei, TaiwanShenzhen, China

Tokyo, JapanBoston, MA

Montréal, Ottawa & Toronto Canada

Beijing, China Seoul, KoreaAtlanta, GA

Palatine, IL

Plano, TX

Munich, GermanyParis, France

London, UK

Shanghai, China

Singapore

Raleigh, NCRancho Bernardo, CA

Denver, CO Milan, Italy

Global Presence

Concept Production Obsolescence

• 22 Regional Component Distributors

• 5 Global & Regional System Distributors

• 28 Manufacturers Reps

http://www.nuhorizons.com/


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P&L Quarterly Targets – Non-GAAPFY4Q10

(Mar-2010)FY2Q11

(Dec-2010) 1Breakeven

(~9-12 months)2Mid Term(~1.5 yrs) 2

Long Term(~2.5 yrs) 2

Revenue $38.5M $35.4M $40M $50M $60M +Non-GAAPGross Margin

54.0% 50.0% 52.5% 55% 57.5%

Non-GAAPR&D

27.8% 32.1% 27.5% 25% 22.5%

Non-GAAPSG&A

26.0% 26.6% 25% 20% 20%

Non-GAAPOper. Income

0.2% (8.7%)1 Breakeven 10% 15%

Non-GAAPEBITDA / Margin

$2.6M7%

$(0.7)M(2%)

$2.5M6%

$7.5M15%

$12M +20%

1 Dilutive effects of Neterion Acquisition2 Dependent upon economic recovery in the markets we serve and new product ramp

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• A broad supplier of winning products in

– Communications, Datacom & Storage, Interface and Power

• Well positioned in large and growing markets

• Global presence with R&D & support in all markets

• Strong financially and investing in the future

Our focus is to return to profitability mid FY12

Summary Exar is …

Thank You for your attendance!

Appendix

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Revenue by Geography & Channel

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Reconciliation of Unaudited GAAP to Non-GAAP Results (1/2)

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Reconciliation of Unaudited GAAP to Non-GAAP Results (2/2)

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