EXAR A NEW DIRECTION Mixed Signal and Data Management Solutions for - - PowerPoint PPT Presentation

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. 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.

, and December 30, 2012.

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 Results* Q1FY13 Results* Q2FY13 Results* Q3FY13 Results* Q4FY13 Results* FY’13 Results* Long-Term Model*

Revenue $131M $29.3M $30.6M $31.0M $31.2M $122M ≈$45M Gross Margin 47% 47% 47% 49% 53% 49% 53% - 55% Operating Expense 52% 44% 40% 38% 39% 40% 32% - 34% Operating Inc/ (Loss) (5%) 3% 7% 11% 14% 9% ≈23% EPS

• $0.10

$0.03 $0.06 $0.09 $0.10 $0.28 $0.20 - $0.25

*Non-GAAP Results

7

Operating Income/Loss*

• $6,500
• $3,750
• $1,000

$1,750 $4,500 Q3-08 Q1-09 Q3-09 Q1-10 Q3-10 Q1-11 Q3-11 Q1-12 Q3-12 Q1-13 Q3-13 $4,316 $3,560 $2,225 $893

• $5,384
• $2,448

$774 $134

• $5,438
• $3,079
• $1,232
• $1,967

$87

• $1,544
• $4,249
• $4,744
• $3,725
• $2,930
• $404
• $1,528
• $4,968
• $6,155

Q3-13 Q1-13 Q2-13 Q4-12

*Quarterly Non-GAAP Results

$k Q4-13

$0 $125,000 $250,000 $375,000 $500,000 2007 2008 2009 2010 2011 2012 2013 150 300 450 600 Title

Revenue Per Employee Trend

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% 54% 16% 9%

Power Connectivity Data Compression Communications

*Fiscal Year 2013

End Market Contribution*

30% 49% 20%

Networking Industrial Communications Other

*Fiscal Year 2013

Geographic Contribution*

27% 59% 14%

Americas Asia Europe

*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

POWERXR

Exar Programmable PowerSuite 5.0

Exar Programmable Power

SINGLE INPUT - FOUR OUTPUT ANALOG FEATURES

EXAR 147

# OF COMPONENTS

33

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

$0 $2.25 $4.50 $6.75 $9.00 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413

$M

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

1" 10" 100" 1000" 10000" 100000" 1000000" 10000000" 1" 2" 3" 4" 5" 6" 7" 8" 9" 10" 11"

CPU v. Storage IOPS

Input Output Operations per Second

STORAGE

120X Increase Bottleneck

CPU

12,000X Increase

Data Compression Application

Off-Load Processor and Software Compression Engine with PCIe Interface

WAN 1GbE/10GbE Exar DX1845 PCIe PCIe PCIe PCIe EXAR DX1845 CLOUD ENTERPRISE CPU SUB-SYSTEM

Panther I

First Generation Compression/Security Engine with PCIe Interface

Transform Engine Hash Encryption Compression DMA PCIe 4x Flash Ctlr GPIO RNG Public Key Engine PK Mgr

Panther II

2nd Generation Compression and Security Engine with PCIe and FPGA Interface

Transform Engine Hash Encryption Compression Public Key Engine DMA PCIe 4x Flash Ctlr GPIO RNG Config FPGA Control External FPGA Interlacken Interface

Data Compression/Security Revenue

$0 $1.75 $3.50 $5.25 $7.00 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413

$M Legacy Security Processor Compression Engine

Altior Acquistion

• AltraFlex
• GZIP Compression/

Acceleration Board - 10Gbps to 15Gbps

• CeDeFS Software
• Application Transparent

Compression Software

• AltraStar
• AltraFlex + CeDeFs tuned to

Hadoop/MapReduce Hardware Software Software Hardware

Exar Altior +

Hardware Software

=

Altior CeDeFS OEM Solution

Applications Native Linux Kernel CeDeFS Native Linux FS Storage Volume

Panther I, II or Altior

PCIe Card

CeDeFS is a kernel plug-in at the file system layer that

• nce installed will compress ALL files independent of

application. This solves a major challenge for OEM customer that currently integrate at the application. WIth CeDeFS integration is no longer necessary. CeDeFS will run on Panther I or Panther II or the existing Altior cards. The solution is Plug-n-Play and is transparent to the operating systems once installed.

Hadoop File System

AltraHadoop CeDeFS

!

Connectivity

• Bridges
• UARTs
• USB
• PCIe
• I2C
• Transceivers
• Differential
• Serial

Connectivity Products

Total Available Market (TAM)

$150M $500M $300M $1,500M

UARTs Transceivers Bridges Digital

Connectivity Products

UARTS, Bridges and Transceivers

Embedded Industrial Point-of-Sale Comm Computing Servers Consumer Value Volume

Connectivity Application

UART and Transceiver

UART UART RS232 RS485 RS232 RS485 Distance EQUIPMENT

Connectivity Revenue

$0 $5.25 $10.50 $15.75 $21.00 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413

$M

Exar Summary

Core Assets, Markets and Products

Power Management Data Management Connectivity Networking Industrial Communications Management Team - Strong Record of Success Brand Recognition - 40 Years of History Customers - 14,000 Worldwide Channel Partners - Future, Arrow and WT Balance Sheet ≈ $200M Cash

Exar Success Model

FY’12 Results* Q1FY13 Results* Q2FY13 Results* Q3FY13 Results* Q4FY13 Results* FY’13 Results* Long-Term Model*

Revenue $131M $29.3M $30.6M $31.0M $31.2M $122M ≈$45M Gross Margin 47% 47% 47% 49% 53% 49% 53% - 55% Operating Expense 52% 44% 40% 38% 39% 40% 32% - 34% Operating Inc/ (Loss) (5%) 3% 7% 11% 14% 9% ≈23% EPS

• $0.10

$0.03 $0.06 $0.09 $0.10 $0.28 $0.20 - $0.25

*Non-GAAP Results

Thank you

Louis DiNardo President and CEO and Ryan Benton Chief Financial Officer