-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LZg2j9X/KyOI/HdYkeLnjaMwvezcQhuzlmeGj/U9OaWpS+MPZX6yakiOD+1gEGRL p/+2J9p2+XXbO38u1maoxw== 0001047469-98-040640.txt : 19981116 0001047469-98-040640.hdr.sgml : 19981116 ACCESSION NUMBER: 0001047469-98-040640 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EXAR CORP CENTRAL INDEX KEY: 0000753568 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 941741481 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14225 FILM NUMBER: 98747400 BUSINESS ADDRESS: STREET 1: 2222 QUME DR STREET 2: PO BOX 49007 CITY: SAN JOSE STATE: CA ZIP: 95131 BUSINESS PHONE: 4084346400 MAIL ADDRESS: STREET 1: 48720 KATO RD CITY: FREMONT STATE: CA ZIP: 94538-1167 10-Q 1 10-Q 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 September 30, 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 October 31, 1998 - -------------------------------------------------------------------------------- Common Stock, .0001 par value 9,301,545 shares net of treasury shares TABLE OF CONTENTS
Page ---- 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 4. Submission of Matters to a Vote of Security Holders . . . . 13 Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . 13 Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . 13 Signatures. . . . . . . . . . . . . . . . . . . . . . . . . 14 EXHIBITS Exhibit 27.0. . . . . . . . . . . . . . . . . . . . . . . . 15
2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS EXAR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts)
SEPTEMBER 30, MARCH 31, 1998 1998 (UNAUDITED) ------------ ---------- ASSETS CURRENT ASSETS: Cash and equivalents $ 70,833 $ 76,167 Short-term investments 3,170 3,140 Accounts receivable, net 14,687 16,764 Inventories 6,898 6,781 Prepaid expenses and other 1,791 1,521 Deferred income taxes 5,217 5,217 ------------ ---------- Total current assets 102,596 109,590 PROPERTY AND EQUIPMENT, Net 28,431 26,746 GOODWILL, Net 1,166 1,534 OTHER ASSETS 5,766 5,799 ------------ ---------- TOTAL ASSETS $ 137,959 $ 143,669 ------------ ---------- ------------ ---------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and other accrued expenses $ 7,870 $ 10,631 Accrued compensation and related benefits 3,232 8,564 Income taxes payable 2,250 - ------------ ---------- Total current liabilities 13,352 19,195 ------------ ---------- LONG-TERM LIABILITIES 694 745 ------------ ---------- 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; 10,589,611 and 10,475,503 shares outstanding 87,767 86,091 Cumulative translation adjustments 46 83 Retained earnings 55,821 51,700 Treasury stock; 1,288,066 and 977,766 shares of common stock at cost (19,721) (14,145) ------------ ---------- Total stockholders' equity 123,913 123,729 ------------ ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 137,959 $ 143,669 ------------ ---------- ------------ ----------
See notes to condensed consolidated financial statements 3 EXAR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts) - --------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------ ----------------------- 1998 1997 1998 1997 --------- --------- --------- --------- NET SALES $ 19,198 $ 25,935 $ 40,962 $ 50,334 COSTS AND EXPENSES: Cost of sales 9,146 13,335 19,212 26,282 Research and development 3,576 3,948 6,989 7,722 Selling, general and administrative 4,892 5,873 10,314 11,410 Goodwill amortization 185 293 369 585 --------- --------- --------- --------- Total costs and expenses 17,799 23,449 36,884 45,999 --------- --------- --------- --------- OPERATING INCOME 1,399 2,486 4,078 4,335 OTHER INCOME: Interest income, net 1,025 704 2,042 1,270 Other, net 399 (21) 473 23 --------- --------- --------- --------- Total other income, net 1,424 683 2,515 1,293 --------- --------- --------- --------- INCOME BEFORE INCOME TAXES 2,823 3,169 6,593 5,628 INCOME TAXES 1,068 1,229 2,472 2,206 --------- --------- --------- --------- NET INCOME $ 1,755 $ 1,940 $ 4,121 $ 3,422 --------- --------- --------- --------- --------- --------- --------- --------- NET INCOME PER SHARE: BASIC $0.19 $0.21 $0.43 $0.37 --------- --------- --------- --------- --------- --------- --------- --------- DILUTED $0.18 $0.20 $0.42 $0.36 --------- --------- --------- --------- --------- --------- --------- --------- SHARES USED IN COMPUTATION OF NET INCOME PER SHARE: BASIC 9,413 9,304 9,476 9,251 --------- --------- --------- --------- --------- --------- --------- --------- DILUTED 9,618 9,812 9,794 9,635 --------- --------- --------- --------- --------- --------- --------- ---------
See notes to condensed consolidated financial statements 4 EXAR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) - --------------------------------------------------------------------------------
SIX MONTHS ENDED SEPTEMBER 30, 1998 1997 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 4,121 $ 3,422 Reconciliation of net income to net cash provided by operating activities: Depreciation and amortization 2,347 2,937 Changes in operating assets and liabilities: Accounts receivable 2,077 (363) Inventories (117) (2,202) Prepaid expenses and other (270) 1,950 Accounts payable and other accrued expenses (2,761) (1,395) Accrued compensation and related benefits (5,332) 1,545 Income taxes payable 2,250 - -------- -------- Net cash provided by operating activities 2,315 5,894 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (3,664) (2,353) Purchases of short-term investments (30) (104) Sales of short-term investments - 2,000 Purchase of long-term investments - (3,000) Other assets 33 242 -------- -------- Net cash used in investing activities (3,661) (3,215) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Long-term liabilities (51) (73) Proceeds from issuance of common stock 1,675 2,807 Acquisition of common stock (5,575) - -------- -------- Net cash provided by (used in) financing activities (3,951) 2,734 -------- -------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (37) 508 -------- -------- NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (5,334) 5,921 CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 76,167 48,479 -------- -------- CASH AND EQUIVALENTS AT END OF PERIOD $ 70,833 $ 54,400 -------- -------- -------- -------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for income taxes $ 250 $ 144 -------- -------- -------- --------
See notes to condensed consolidated financial statements 5 EXAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) QUARTER AND SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 - -------------------------------------------------------------------------------- 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 six months ended September 30, 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, silicon microstructures 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:
September 30, March 31, 1998 1998 ------------ ------------ Work-in-process $ 4,340 $ 4,579 Finished goods 2,558 2,202 ------------ ------------ $ 6,898 $ 6,781 ------------ ------------ ------------ ------------
6 NOTE 3. NET INCOME PER SHARE The Company has adopted Statement of Financial Accounting Standards No. 128, "Earnings Per Share," (SFAS 128). 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. Prior periods have been restated to conform with SFAS 128.
THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1998 1997 -------- -------- -------- -------- NET INCOME $ 1,755 $ 1,940 $ 4,121 $ 3,422 -------- -------- -------- -------- -------- -------- -------- -------- SHARES USED IN COMPUTATION: Weighted average common shares outstanding used in computation of basic net income per share 9,413 9,304 9,476 9,251 Dilutive effect of stock options 205 508 318 384 -------- -------- -------- -------- Shares used in computation of diluted net income per share 9,618 9,812 9,794 9,635 -------- -------- -------- -------- -------- -------- -------- -------- BASIC NET INCOME PER SHARE $ 0.19 $ 0.21 $ 0.43 $ 0.37 -------- -------- -------- -------- -------- -------- -------- -------- DILUTED NET INCOME PER SHARE $ 0.18 $ 0.20 $ 0.42 $ 0.36 -------- -------- -------- -------- -------- -------- -------- --------
Options to purchase 1,259,781 and 649,750 shares of common stock at prices ranging from $16.09 to $37.25 were outstanding as of September 30, 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 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 six months ended September 30, 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:
THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1998 1997 ------ ----- ----- ----- NET INCOME 1,755 1,940 4,121 3,422 OTHER COMPREHENSIVE INCOME, NET OF TAX: Cumulative translation adjustments 6 (32) (24) 328 ------ ----- ----- ----- COMPREHENSIVE INCOME 1,761 1,908 4,097 3,750 ------ ----- ----- ----- ------ ----- ----- -----
NOTE 5. 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 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, silicon sensing and other selected areas. The Company has wholly-owned subsidiaries in Japan, Taiwan and the United Kingdom to support its sales operations in the Far East and Europe. RESULTS OF OPERATIONS - Net sales for the second quarter of fiscal 1999 were $19.2 million compared to $25.9 million for the corresponding period in fiscal 1998, a decrease of approximately 26%. Net sales for the six month period ended September 30, 1998 decreased by approximately 19% to $41.0 million compared to $50.3 million for the corresponding period in fiscal 1998. These decreases were primarily due to 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. During the three month period ended September 30, 1998, the Company reversed $1.2 million of accrued medical benefits upon changing from a self insured plan to a fully insured plan and revising its estimate of the Company's ultimate liability. This change in estimate had a positive net impact of $.4 million on gross margin, $.4 million on research and development expenses and $.4 million on selling, general and administrative expenses. Cost of goods sold for the second quarter and the first six months of fiscal 1999 decreased to approximately 48% 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 second quarter and first six months of fiscal 1999 represented approximately 19% and 17% of net sales, respectively compared to 15% of net sales in the corresponding periods in fiscal 1998. Research and development expenses in the second quarter and first six months of fiscal 1999 decreased by approximately 9% and 10%, respectively, compared to the same periods in fiscal 1998. The decrease in research and development expenses is attributable to a decrease in employee benefits expense and to the reduction of the medical benefits accrual upon changing from a self insured plan to a fully insured plan as discussed above. Selling, general and administrative expenses, as a percentage of net sales, increased from approximately 23% in the second quarter and first six months of fiscal 1998 to 26% and 25%, 9 respectively, in the corresponding periods of fiscal 1999. Selling, general and administrative expenses in the second quarter and first six months of fiscal 1999 decreased by approximately 17% and 10%, respectively, compared to the same periods in fiscal 1998. The decrease in selling, general and administrative expenses is attributable to decreased commissions expense, decreased employee benefits expense and to the reduction of the medical benefits accrual upon changing from a self insured plan to a fully insured plan as discussed above. Other income in the second quarter and first six months of fiscal 1999 increased by approximately 108% and 95%, respectively, compared to the same periods in fiscal 1998. These increases are attributable mainly to higher interest earned on increased 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 six 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 estimated remediation costs. LIQUIDITY AND CAPITAL RESOURCES - During the first six months of fiscal 1999, the Company financed its operations primarily from cash flows from operations and existing cash and short-term investments. At September 30, 1998, the Company had approximately $74.0 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 September 30, 1998. In addition, the Company has a credit facility with certain domestic and foreign banks under which it may borrow up to $25 million in support of its foreign currency transactions. At September 30, 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 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 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 business computer systems Year 2000 compliant, are scheduled for completion in the quarter ended March 31, 1999. The implementation of the Oracle programs is on schedule and approximately 80% complete. The Company has developed a contingency plan to capture data that would otherwise be processed by Oracle programs using PC based systems. A decision to implement the contingency plan, which is dependent upon the successful implementation of Oracle, is expected to be made by the end of the quarter ended December 31, 1998. This contingency plan will allow the Company to operate its critical business functions at minimum levels of efficiency until such time that an alternative solution can be developed. COSTS - The total anticipated cost of the Oracle implementation is estimated at $4.5 million to $5.5 million dollars. Approximately $4.0 million to $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 ended 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. The Company believes that the costs to address other non-critical systems have been and will continue to be immaterial to the Company's financial results of operations and cash flows. 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. 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. 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. 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, communications and silicon sensor markets and, therefore, has discontinued certain product offerings. Furthermore, the semiconductor industry is characterized 11 by economic 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 ability 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, communications and silicon sensor 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 PART II - OTHER INFORMATION ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of the Stockholders of Exar Corporation was held on September 10, 1998 in Fremont, California. At the meeting the following individuals were elected to the Board of Directors of the Company and will hold office until the 2001 Annual Meeting of Stockholders. The number of affirmative and negative votes were as follows:
Affirmative Negative ----------- --------- Mr. Donald L. Ciffone, Jr. 7,360,242 613,907 Mr. Ronald W. Guire 7,360,204 613,945
In addition, certain individuals will continue to hold office as directors of the Company until the Annual Meeting of Stockholders as follows:, Mr. George D. Wells - 1999 and Mr. Raimon L. Conlisk - 1999, Mr. James E. Dykes - 2000, Dr. Frank P. Carrubba - 2000 Other matters voted upon at the meeting and the number of affirmative and negative votes cast with respect to each such matter were as follows:
Affirmative Negative Withheld Abstained ----------- --------- --------- ---------- Resolution to approve the Amendment To the Company's 1997 Equity Incentive Plan 4,502,331 2,557,547 899,120 15,151 Resolution to approve the Amendment To the Company's 1996 Non-Employee Directors' Stock Option Plan 4,730,267 1,696,204 872,909 674,769
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 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/ Donald L. Ciffone, Jr. Date: November 13, 1998 --------------------------- Donald L. Ciffone, Jr. President Chief Executive Officer By /s/ Ronald W. Guire Date: November 13, 1998 --------------------------- Ronald W. Guire Executive Vice President, Chief Financial Officer 14 EXHIBIT INDEX
Exhibit - ------- 27.0 Financial Data Schedule.
15 EX-27 2 EXHIBIT 27
5 1,000 6-MOS MAR-31-1999 APR-01-1998 SEP-30-1998 70,833 3,170 14,687 0 6,898 102,596 28,431 0 137,959 13,352 0 0 0 68,046 55,867 137,959 40,962 40,962 19,212 36,884 0 0 0 6,593 2,472 4,121 0 0 0 4,121 .43 .42
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