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EXAR » Topics » EXAR IS A ROBUST COMPANY WITH A PROVEN TRACK RECORD

This excerpt taken from the EXAR DEFA14A filed Oct 4, 2005.

EXAR IS A ROBUST COMPANY WITH A PROVEN TRACK RECORD

 

Exar is well-positioned to continue to execute the Company’s strategic plan and enhance shareholder value:

 

  •   Exar offers the broadest portfolio of high-speed analog, digital and mixed-signal physical interface and access control products as well as the most complete product portfolio for multi-channel high performance serial communication products. Our expansive product line allows us to capitalize on the network and transmission, serial communications, and timing solutions markets, which we estimate to represent an aggregate market opportunity of approximately $1 billion.

 

  •   Exar continues to prudently invest in R&D, enabling the Company to deliver industry-first products and to both expand and enhance our product portfolio. Since 2000, Exar has introduced over 100 new products, many of which represent industry first capabilities. During this same period, Exar’s R&D investment as a percentage of revenues was significantly less than virtually all of our direct competitors.

 

  •   Exar has a long and growing list of global top-tier customers. Exar continues to strengthen its meaningful relationships with leading global technology companies including: Alcatel, Canon, Cisco, Fujitsu, Hewlett-Packard, Huawei, IBM, Lucent, Mitsubishi, Nokia, Samsung, Symbol and Tellabs, among many others. Over the past three years, we recorded nearly 1,500 design wins for existing products in our core markets. Highlights include: T1/E1 (Adtran, Alcatel, Lucent and others), T3/E3 (Cisco, Lucent, Tellabs and others), SONET/SDH (Alcatel, Huawei, Tellabs), and serial communications (Cisco, Huawei, IBM, Mitsubishi and others).

 

  •  

Exar continues to strengthen its balance sheet and improve gross margins. Exar has cash and equivalents of approximately $315 million and no debt (after giving effect to the completion of the $120 million modified Dutch Action self-tender offer). In addition, we have increased our gross margins by over 1,000 basis points over the

 

last five years – as of June 30, 2005, our gross margins were approximately 67% (after giving effect to a $200,000 write-off resulting from our recent acquisition of a significant part of Infineon Technologies’ Optical Product Line). Exar has had a positive cash flow from operations for over 18 consecutive years. Our strong financial foundation positions our company to continue to responsibly consider potentially synergistic product and technology opportunities as they become available.

 

  •   Exar continues to assess strategic transactions for the Company and has successfully capitalized on synergistic product and technology opportunities. Exar has reviewed many strategic opportunities, but has adhered to a strict financial discipline in doing so. Our recent acquisition of a significant part of Infineon Technologies’ Optical Product Line is an example of such discipline. We paid $11 million for assets for which development costs were in excess of $100 million. The transaction will be accretive to our earnings per share in the FY06 Q2 quarter, and we believe it will accelerate our entry into the high speed SONET market, strengthen our position with major OEMs, significantly advance our technical capabilities and solidify our position as a leading communications semiconductor supplier. Today, we see significant opportunities for growth in our industry and will continue to advance our strategic initiatives by prudently acquiring complementary technologies and/or products in adjacent and/or expanding markets and by pursuing partnerships, alliances and other collaborative arrangements.

 

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