Exar Corporation Reports Fiscal 2010 First Quarter Results

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Fremont, California, July 30, 2009 - Exar Corporation (Nasdaq: EXAR), today reported financial results for its fiscal 2010 first quarter ended June 28, 2009.

Net sales for the first quarter of fiscal 2010 were $30.9 million compared to net sales of $23.9 million for the prior quarter and $32.2 million for the first quarter of fiscal 2009.

The GAAP gross margin for the first quarter of fiscal 2010 was 41.6% compared to 42.2% for the prior quarter and 44.9% for the first quarter of fiscal 2009.

On a non-GAAP basis, the gross margin for the first quarter of fiscal 2010 was 52.1% compared to 44.5% for the prior quarter and 48.8% for the first quarter of fiscal 2009.

The GAAP net loss for the first quarter of fiscal 2010 was $12.9 million, or a net loss per share of $0.30, compared to a net loss of $4.6 million, or a net loss per share of $0.11, in the prior quarter, and a net loss of $2.5 million, or a net loss per share of $0.06, for the first quarter of fiscal 2009. These results include acquisition-related costs of $4.5 million in the first quarter of fiscal 2010 as compared to $0.8 million in the prior quarter and $0.7 million for the first quarter of fiscal 2009.

On a non-GAAP basis, the net loss was $3.1 million, or a net loss per share of $0.07, for the first quarter of fiscal 2010, compared to a net loss of $2.1 million, or a net loss per share of $0.05, in the previous quarter, and net income of $0.8 million, or net earnings per share of $0.02, for the first quarter of fiscal 2009.

The Company ended the first quarter of fiscal 2010 with cash, cash equivalents and short-term marketable securities of $221.5 million.

"The stability of our business has improved but we are still below our pre-downturn order levels," said Pete Rodriguez, the Company's president and chief executive officer. "In mid-June we completed the acquisition of Galazar Networks which strengthens and extends our solutions for the TDM and carrier Ethernet communications infrastructure markets. We are also on track with our integration and product plans for Hifn. I am encouraged by the addition of the high value solutions of these newly acquired teams to our growing list of design wins and winning product releases," stated Mr. Rodriguez.

For the second quarter of fiscal 2010, the Company expects that net sales will be between $31.0 million and $33.0 million, non-GAAP gross margin will be between 50% and 52% and non-GAAP operating expenses will be between $20.0 million and $21.0 million.

The Company's statements about its future financial performance or operating plans are based on current information and expectations and the Company undertakes no duty to update such statements. These statements are forward-looking and actual results could differ materially due to various risks and uncertainties, some of which are described herein.

The Company invites investors, financial analysts, and the general public to listen to its conference call discussing the Company's financial results for the first quarter of fiscal 2010, today, Thursday, July 30, 2009 at 1:30 p.m. PDT. To access the conference call, please dial (800) 230-1085 by 1:20 p.m. PDT and use conference ID number 107238.

In addition, a live webcast will also be available. To access the webcast, please go to the Company's Investor Relations Homepage at:http://www.exar.com/news/investornews.aspx.

A taped replay of the conference call will be available starting at 5:00 p.m. PDT the day of the call until 11:59 p.m. PDT on August 6, 2009. To access the replay, please dial (800) 475-6701 and use conference ID number 107238.

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The Company's statements about its future financial performance, changes in gross margins, net sales and operating expenses, resource allocation and its impact on future performance and product development initiatives, design win conversion, distribution and OEM trends, supply chain issues among others, are forward-looking statements that involve risks and uncertainties. These risks and uncertainties include global financial volatility, economic recession, and industry and market conditions, such as customer and distributor relationships; limited visibility associated with customer or distributor demand for the Company's products; the possible loss of, or decrease in orders from, an important customer; adjustments in interest rates and cash balances; vendor capacity, quality or throughput constraints; successful integration of acquired businesses; possible disruption in commercial activities as a consequence of terrorist activity, natural disasters, armed conflict or health issues; successful development, market acceptance and demand for the Company's products, including those for which the Company has achieved design wins; competitive factors, such as pricing or competing solutions; customer ordering patterns; accounting considerations related to impairment analyses or acquisition related issues; the level of inventories maintained at the Company's OEMs and distributors; and the Company's successful execution of internal performance plans, as well as the other risks detailed from time to time in the Company's SEC reports, including the Annual Report on Form 10-K for the year ended March 29, 2009.

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.comor the SEC's website at:http://www.sec.gov. For the periods presented, we are disclosing non-GAAP gross margin, non-GAAP research and development expenses, non-GAAP selling, general and administrative expenses, non-GAAP operating expenses, non-GAAP operating 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, 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.

Exar Corporation delivers highly differentiated silicon, software and subsystem solutions for industrial, consumer, and enterprise applications. For nearly 40 years, Exar's comprehensive knowledge of end-user markets along with the underlying analog/mixed signal and digital technologies has enabled innovative solutions that meet the needs of the evolving connected world. Exar's technology portfolio includes solutions for power management, serial interfaces, packet-based and TDM wireline communications, enterprise storage optimization, and data security. Exar has locations worldwide providing real-time customer support to drive rapid product development. For more information about Exar, visit:www.exar.com.

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