10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedJune 29, 2014

OR

☐ 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 incorporation or organization)	(I.R.S. Employer Identification Number)

48720 Kato Road, Fremont, CA 94538

(Address of principal executive offices, Zip Code)

(510) 668-7000

(Registrant’s telephone number, including area code)

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  ☒     No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ☒    No  ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer    ☐            Accelerated filer    ☒

Non-accelerated filer    ☐          (Do not check if a smaller reporting company)         Smaller reporting company    ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of shares outstanding of the Registrant’s Common Stock was 47,344,916 as of August 6, 2014.

EXAR CORPORATION AND SUBSIDIARIES

INDEX TO

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 29, 2014

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets (Unaudited)	3
	Condensed Consolidated Statements of Operations (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 6.	Exhibits	55
	Signatures	56
	Index to Exhibits	57

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EXAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)

	June 29,			March 30,
	2014			2014
ASSETS
Current assets:
Cash and cash equivalents	$	123,161		$	14,614
Restricted cash		26,000			—
Short-term marketable securities		—			152,420
Accounts receivable (net of allowances of $1,029 and $1,178)		26,596			15,023
Accounts receivable, related party (net of allowances of $599 and $608)		2,524			3,309
Inventories		31,988			28,982
Other current assets		5,717			3,549
Total current assets		215,986			217,897
Property, plant and equipment, net		20,644			21,280
Goodwill		45,017			30,410
Intangible assets, net		109,041			31,390
Other non-current assets		1,448			1,240
Total assets	$	392,136		$	302,217
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	15,883		$	15,488
Accrued compensation and related benefits		6,271			4,174
Deferred income and allowances on sales to distributors		3,737			1,765
Deferred income and allowances on sales to distributors, related party		9,962			9,349
Short-term debt financing		65,000			—
Other current liabilities		16,257			11,370
Total current liabilities		117,110			42,146
Long-term lease financing obligations		40			70
Other non-current obligations		10,651			6,626
Total liabilities		127,801			48,842
Commitments and contingencies (Notes 14, 15 and 16)
Stockholders' equity:
Common stock, $.0001 par value; 100,000,000 shares authorized; 47,272,056 and 47,336,005 shares outstanding		112			5
Additional paid-in capital		512,284			508,116
Accumulated other comprehensive loss		(25	)		(1,079	)
Accumulated deficit		(265,773	)		(253,667	)
Total Exar Corporation stockholders' equity		246,598			253,375
Non-controlling interests		17,737			—
Total stockholders' equity		264,335			253,375
Total liabilities and stockholders’ equity	$	392,136		$	302,217

See accompanying Notes to Condensed Consolidated Financial Statements.

3

EXAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended
	June 29,			June 30,
	2014			2013
Sales:
Net sales	$	21,698		$	23,858
Net sales, related party		9,021			8,769
Total net sales		30,719			32,627
Cost of sales:
Cost of sales		12,353			11,812
Cost of sales, related party		3,838			3,907
Amortization of purchased intangible assets and inventory step-up cost		3,545			1,350
Restructuring charges and exit costs		27			81
Total cost of sales		19,763			17,150
Gross profit		10,956			15,477
Operating expenses:
Research and development		8,243			6,180
Selling, general and administrative		10,077			7,354
Merger and acquisition costs		4,050			465
Restructuring charges and exit costs		369			931
Net change in fair value in contingent consideration		(431	)		—
Total operating expenses		22,308			14,930
Income (loss) from operations		(11,352	)		547
Other income and expense, net:
Interest income and other, net		290			287
Interest expense		(486	)		(37	)
Total other income and expense, net		(196	)		250
Income (loss) before income taxes		(11,548	)		797
Provision for (benefit from) income taxes		692			(9	)
Net income (loss)		(12,240	)		806
Less: Net income attributable to non-controlling interests		135			—
Net income (loss) attributable to Exar Corporation	$	(12,105	)	$	806
Net income (loss) per share:
Basic	$	(0.26	)	$	0.02
Diluted		(0.26	)		0.02
Shares used in the computation of net income (loss) per share:
Basic		47,236			46,805
Diluted		47,236			48,085

See accompanying Notes to Condensed Consolidated Financial Statements.

4

EXAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

	Three Months Ended
	June 29,			June 30,
	2014			2013
Net income (loss)	$	(12,105	)	$	806
Changes in market value of investments:
Changes in unrealized losses		199			(584	)
Reclassification adjustment for net realized gains (losses)		26			(59	)
Release of tax provision for unrealized gains		828			—
Net change in market value of investments		1,053			(643	)
Comprehensive income (loss)		(11,052	)		163
Less: comprehensive income attributable to non-controlling interests		135			—
Comprehensive income (loss) attributable to Exar Corporation	$	(10,917	)	$	163

See accompanying Notes to Condensed Consolidated Financial Statements.

5

EXAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended
	June 29,			June 30,
	2014			2013
Cash flows from operating activities:
Net income (loss)	$	(12,240	)	$	806
Reconciliation of net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		3,309			2,850
Stock-based compensation expense		3,127			1,087
Release of deferred tax valuation allowance		828			—
Net change in fair value of contingent consideration		(431	)		—
Changes in operating assets and liabilities:
Accounts receivable and accounts receivable, related party		(692	)		(3,026	)
Inventories		944			39
Other current and non-current assets		(1,460	)		184
Accounts payable		(3,824	)		3,101
Accrued compensation and related benefits		(538	)		141
Other current and non-current liabilities		255			(4,647	)
Deferred income and allowance on sales to distributors and related party distributor		2,585			448
Net cash provided by (used in) operating activities		(8,137	)		983
Cash flows from investing activities:
Purchases of property, plant and equipment and intellectual property, net		(551	)		(349	)
Purchases of short-term marketable securities		(9,296	)		(63,332	)
Proceeds from maturities of short-term marketable securities		3,997			10,457
Proceeds from sales of short-term marketable securities		158,412			73,666
Acquisition of Integrated Memory Logic, net of cash received		(72,659	)		—
Restricted cash		(26,000	)		—
Other disposal (investment) activities		—			125
Net cash provided by investing activities		53,903			20,567
Cash flows from financing activities:
Proceeds from issuance of common stock		1,380			1,497
Purchase of stock for withholding taxes on vested restricted stock		(569	)		(977	)
Issuance of debt		91,000			—
Repayment of debt		(26,000	)		—
Repurchase of common stock		(3,000	)		—
Payments of lease financing obligations		(30	)		(330	)
Net cash provided by financing activities		62,781			190
Net increase in cash and cash equivalents		108,547			21,740
Cash and cash equivalents at the beginning of period		14,614			14,718
Cash and cash equivalents at the end of period	$	123,161		$	36,458
Supplemental disclosure of cash flow and non-cash information
Issuance of common stock in connection with Hifn acquisition & others		—			10
Cash paid for income taxes		21			62
Cash paid for interest		486			37
Release of restricted stock upon vesting		408			—

See accompanying Notes to Condensed Consolidated Financial Statements.

6

EXAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

Description of Business— Exar Corporation was incorporated in California in 1971 and reincorporated in Delaware in 1991. Exar Corporation and its subsidiaries (“Exar” or “we”) is a fabless semiconductor company that designs, develops and markets high-performance integrated circuits and system solutions for the Communications, High-End Consumer, Industrial & Embedded Systems, and Networking & Storage markets. Exar's broad product portfolio includes analog, display, LED lighting, mixed-signal, power management, connectivity, data management, and video processing solutions.

Basis of Presentation and Use of Management Estimates—The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 30, 2014 as filed with the SEC. In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, that we believe are necessary for a fair statement of Exar’s financial position as of June 29, 2014 and our results of operations for the three months ended June 29, 2014 and June 30, 2013, respectively. These condensed consolidated financial statements are not necessarily indicative of the results to be expected for the entire year.

The financial statements include management’s estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of sales and expenses during the reporting periods. Actual results could differ from those estimates, and material effects on operating results and financial position may result.

Our fiscal years consist of 52 or 53 weeks. In a 52-week year, each fiscal quarter consists of 13 weeks. Fiscal years 2015 and 2014 both consist of 52 weeks.

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2013, the FASB issued amended standards that provided explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward or a tax credit carryforward exists. Under the amended standards, the unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward. These amended standard updates are effective for our interim period beginning after December 15, 2013 and applied prospectively with early adoption permitted. The adoption of this guidance did not have any material impact on our financial position, results of operations or cash flows.

In May 2014, the FASB issued a new standard, Revenue from Contracts with Customers, to clarify the principles for recognizing revenue to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards (“IFRS”) that would (1) provide a more robust framework for addressing revenue recognition; (2) improve comparability of revenue recognition practice across entities, industries, jurisdictions, and capital markets; and (3) provide more useful information to users of financial statements through improved disclosure requirements. This standard is effective for annual reporting periods beginning after December 15, 2016. Exar is currently evaluating the effect the adoption of this standard will have, if any, on our consolidated financial position, results of operations or cash flows.

In June 2014, the FASB issued amended standards to provide explicit guidance on the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. Under the amended standards, a performance target that affects vesting and that could be achieved after the requisite service period should be treated as a performance condition and therefore, should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. This standard is effective for annual reporting periods beginning after December 15, 2015. Exar is currently evaluating the effect the adoption of this standard will have, if any, on our consolidated financial position, results of operations or cash flows.

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NOTE 3.    BUSINESS COMBINATIONS

We periodically evaluate potential strategic acquisitions to broaden our product offering and build upon our existing library of intellectual property, human capital and engineering talent, in order to expand our capabilities in the areas in which we operate or to acquire complementary businesses.

We account for each business combination by applying the acquisition method, which requires (1) identifying the acquiree; (2) determining the acquisition date; (3) recognizing and measuring the identifiable assets acquired, the liabilities assumed, and any non-controlling interest we have in the acquiree at their acquisition date fair value; and (4) recognizing and measuring goodwill or a gain from a bargain purchase.

Assets acquired and liabilities assumed in a business combination that arise from contingencies are recognized at fair value on the acquisition date if fair value can be determined during the measurement period. If fair value cannot be determined, we typically account for the acquired contingencies using existing guidance for a reasonable estimate.

To establish fair value, we measure the price that would be received for an asset or paid to transfer a liability in an ordinary transaction between market participants. The measurement assumes the highest and best use of the asset by the market participants that would maximize the value of the asset or the group of assets within which the asset would be used at the measurement date, even if the intended use of the asset is different.

Acquisition related costs, including finder’s fees, advisory, legal, accounting, valuation and other professional or consulting fees are accounted for as expenses in the periods in which the costs are incurred and the services are received, with the exception that the costs to issue debt or equity securities are recognized in accordance with other applicable GAAP.

Acquisition of Integrated Memory Logic

On June 3, 2014, we acquired approximately 92% of outstanding shares of  Integrated Memory Logic Limited (“iML”), a leading provider of analog mixed-signal solutions for the flat panel display market. The iML acquisition supports Exar's strategy of building a large scale diversified analog mixed-signal business. iML’s results of operations and estimated fair value of assets acquired and liabilities assumed were included in our condensed consolidated financial statements beginning June 4, 2014.

Consideration

In June 2014, we acquired approximately 92% of iML outstanding shares for $206.4 million in cash. We expect to pay an additional $17.9 million in cash in exchange for the remaining approximately 8% of outstanding shares, at which time iML will become a wholly owned subsidiary. When iML becomes a wholly owned subsidiary of Exar, it is anticipated that we will assume iML’s employee then outstanding options, preliminarily valued at approximately $3.3 million, and will be converted into an option to purchase a number of Exar’s common stock. The number of shares of Exar’s common stock, as well as the exercise price of the options will be determined based upon an agreed upon option exchange ratio outlined in the merger agreement by and between IML and Exar’s subsidiary, Image Sub Limited dated April 26, 2014. The option exchange ratio is calculated based upon (i) the ratio of the purchase price per share of iML’s stock and Exar’s stock price, and (ii) for those options denominated in Taiwanese dollars, the then currency exchange rates.

In accordance with Accounting Standard Codification (“ASC”) 805, Business Combinations, the acquisition of approximately 92% of iML’s outstanding shares was recorded as a purchase business acquisition since iML was considered a business. Under the purchase method of accounting, the fair value of the consideration was allocated to net assets acquired. The fair value of purchased identifiable intangible assets was determined using discounted cash flow models from operating projections prepared by management using an internal rate of return of 16.9%. The excess of the preliminary fair value of consideration paid over the preliminary fair values of net assets acquired and identifiable intangible assets resulted in recognition of goodwill of approximately $14.6 million. Goodwill is primarily from expected synergies resulting from combining the operations of iML with that of Exar and is not deductible for tax purposes.

The total purchase consideration for iML will be approximately $227.6 million and will be comprised of the following items (in thousands):

Acquisition of approximately 68.3 million shares of iML at NT$91.00 per share in cash	$	206,411
Fair value of non-controlling interest shares		17,872
Fair value of iML employee options to be assumed		3,327
Total purchase price	$	227,610

Preliminary Purchase Price Allocation

The allocation of the total preliminary purchase price to iML’s tangible and identifiable intangible assets and liabilities assumed was based on their estimated fair values at the date of acquisition.

8

The preliminary fair value allocated to each of the major classes of tangible and identifiable intangible assets acquired and liabilities assumed in the iML acquisition was as follows (in thousands):

	Amount
Identifiable tangible assets (liabilities)
Cash	$	133,752
Accounts receivable		10,096
Inventories		3,950
Other current assets		608
Property, plant and equipment		480
Other assets		308
Accrued expenses		(8,137	)
Accounts payable		(4,219	)
Long-term liabilities		(3,595	)
Total identifiable tangible assets (liabilities), net		133,243
Identifiable intangible assets		79,760
Total identifiable assets, net		213,003
Goodwill		14,607
Fair value of total consideration transferred	$	227,610

The following table sets forth the components of identifiable intangible assets acquired in connection with the iML acquisition (in thousands):

	Fair Value
Developed technologies	$	55,570
In-process research and development		8,040
Distributor relationships		5,980
Customer relationships		9,050
Trade names		1,120
Total identifiable intangible assets	$	79,760

In valuing specific components of the acquisition, that includes deferred taxes and intangibles, required us to make estimates that may be adjusted in the future, if new information is obtained about circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. Thus, the purchase price allocation is considered preliminary and dependent upon the finalization of the valuation of assets acquired and liabilities assumed, including income tax effects. Final determination of these estimates could result in an adjustment to the preliminary purchase price allocation, with an offsetting adjustment to goodwill.

Acquisition Related Costs

Acquisition related costs, or deal costs, relating to iML are included in the merger and acquisition costs and interest expense line on the condensed consolidated statement of operations for the first fiscal quarter of 2015 and were approximately $4.2 million.

Unaudited Pro Forma Financial Information

The following unaudited pro forma condensed financial information presents the combined revenue of Exar and iML as if the acquisition had occurred as of March 31, 2014 (in thousands).

	Three months ended June 29, 2014			Three months ended June 30, 2013
Net sales		41,286			49,177
Net loss	$	(7,675	)	$	(722	)
Less: Net loss attributable to non-controlling interests		(105	)		(122	)
Net loss attributable to Exar Corporation	$	(7,570	)	$	(600	)
Earnings per share
Basic	$	(0.16	)	$	(0.01	)
Diluted	$	(0.16	)	$	(0.01	)

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The pro forma financial information includes (1) amortization charges from acquired intangible assets of $2.4 million for the three months ended June 29, 2014 and June 30, 2013, respectively; (2) amortization charges from inventory fair value adjustment of $1.5 million and $2.5 million for the three months ended June 29, 2014 and June 30, 2013, respectively; (3) the estimated stock-based compensation expense related to the stock options assumed of $0.2 million and $0.1 million for the three months ended June 29, 2014 and June 30, 2013, respectively; (4) the elimination of historical intangible assets of $92,000 for the three months ended June 29, 2014 and June 30, 2013, respectively; (5) the elimination of historical stock-based compensation charges recorded by iML of $0.2 million and $0.5 million for the three months ended June 29, 2014 and June 30, 2013, respectively, as a result of the cancellation of all outstanding options on the acquisition date; (6) the elimination of acquisition related costs of $8.2 million for the three months ended June 29, 2014; (7) the elimination of $1.8 million revenue and the related $0.9 million costs released from deferred margin for the three months ended June 29, 2014; (8) the elimination of $2.0 million revenue and the related $0.9 million costs released from the deferred margin for the three months ended June 30, 2013; and (9) the related tax provision of $0.2 million and $0.9 million for the three months ended June 29, 2014 and June 30, 2013, respectively. The unaudited pro forma condensed financial information is not intended to represent or be indicative of the condensed results of operations of Exar that would have been reported had the acquisition been completed as of the beginning of the periods presented, and should not be taken as representative of the future consolidated results of operations of Exar.

Acquisition of Stretch

On January 14, 2014, we completed the acquisition of Stretch, Inc. (“Stretch”), a provider of software configurable processors supporting the video surveillance market previously located in Sunnyvale, California. The transaction provides Exar with the technology to deliver an end-to-end high-definition solution for both digital and analog transmission of data from the camera to the DVR or NVR in surveillance applications. Stretch’s results of operations and estimated fair value of assets acquired and liabilities assumed were included in our condensed consolidated financial statements beginning January 14, 2014.

In accordance with Accounting Standard Codification (“ASC”) 805, Business Combinations, the total consideration paid for Stretch was first allocated to the net tangible liabilities assumed based on the estimated fair values of the assets and liabilities at the acquisition date. The excess of the fair value of the consideration paid over the fair value of Stretch’s net tangible liabilities assumed and identifiable intangible assets acquired resulted in the recognition of goodwill of $0.7 million primarily related to expected synergies to be achieved in connection with the acquisition. The goodwill is deductible over 15 years for tax purposes. The table below shows the allocation of the purchase price to tangible and intangible assets acquired and liabilities assumed (in thousands):

	Amount
Tangible assets	$	2,937
Intangible assets		7,010
Goodwill		667
Liabilities assumed		(10,604	)
Fair value of total consideration transferred	$	10

Acquisition of Cadeka

On July 5, 2013, we completed the acquisition of substantially all of the assets of Cadeka Technologies (Cayman) Holding Ltd., a privately held company organized under the laws of the Cayman Islands and all the outstanding stock of the subsidiaries of Cadeka, including the equity of its wholly owned subsidiary Cadeka Microcircuits, LLC, a Colorado limited liability company (“Cadeka”). With locations in Loveland, Colorado, Shenzhen and Wuxi, China, Cadeka designs, develops and markets high precision analog integrated circuits for use in industrial and high reliability applications. Cadeka’s results of operations and estimated fair value of assets acquired and liabilities assumed were included in our condensed consolidated financial statements beginning July 5, 2013. The pro forma effects of the portion of the Cadeka operations assumed through the transaction on our results of operations during fiscal 2014 were considered immaterial.

In accordance with ASC 805, Business Combinations, the total consideration paid for Cadeka was first allocated to the net tangible liabilities assumed based on the estimated fair values of the assets and liabilities at the acquisition date. The excess of the fair value of the consideration paid over the fair value of Cadeka’s net tangible liabilities assumed and identifiable intangible assets acquired resulted in the recognition of goodwill of $19.4 million primarily related of expected synergies from combining the operations of Cadeka with that of Exar and the release of deferred tax liabilities. The goodwill is not expected to be tax deductible.

The table below shows the allocation of the purchase price to tangible and intangible assets acquired and liabilities assumed (in thousands):

	Amount
Tangible assets	$	3,286
Intangible assets		20,380
Goodwill		19,387
Liabilities assumed		(8,216	)
Fair value of total consideration transferred	$	34,837

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NOTE 4. BALANCE SHEET DETAILS

Our inventories consisted of the following as of the dates indicated (in thousands):

	June 29, 2014		March 30, 2014
Work-in-process and raw materials	$	20,597	$	13,555
Finished goods		11,391		15,427
Total inventories	$	31,988	$	28,982

Our property, plant and equipment consisted of the following as of the dates indicated below (in thousands):

	June 29, 2014			March 30, 2014
Land	$	6,660		$	6,660
Building		17,287			16,787
Machinery and equipment		43,108			40,675
Software and licenses		17,815			17,549
Property, plant and equipment, total		84,870			81,671
Accumulated depreciation and amortization		(64,226	)		(60,391	)
Total property, plant and equipment, net	$	20,644		$	21,280

Our other current liabilities consisted of the following as of the dates indicated (in thousands):

	June 29, 2014		March 30, 2014
Accrued acquisition costs	$	3,514	$	—
Short-term lease financing obligations		2,348		2,671
Accrued manufacturing expenses, royalties and licenses		2,094		1,639
Accrued restructuring charges and exit costs		1,971		2,214
Accrued legal and professional services		1,576		1,453
Accrued income tax		1,420		74
Purchase consideration holdback		1,006		1,256
Accrued sales and marketing expenses		564		666
Fair value of earn out liability – short-term		—		490
Other		1,764		907
Total other current liabilities	$	16,257	$	11,370

Our other non-current obligations consisted of the following (in thousands) as of the dates indicated:

	June 29, 2014		March 30, 2014
Long-term taxes payable	$	4,427	$	794
Fair value of earn out liability – long-term		3,912		3,853
Accrued retention bonus		1,575		1,181
Deferred tax liability		608		614
Accrued restructuring charges and exit costs		109		155
Other		20		29
Total other non-current obligations	$	10,651	$	6,626

NOTE 5. FAIR VALUE

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. GAAP describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

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Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Our cash and investment instruments are classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

The fair value of contingent consideration arising from the acquisitions of Altior Inc. (“Altior”) and Cadeka Microcircuits LLC (“Cadeka”) are classified within Level 3 of the fair value hierarchy since it is based on a probability-based approach that includes significant unobservable inputs.

There were no transfers between Level 1, Level 2, and Level 3 during the fiscal quarter ended June 29, 2014.

As of June 29, 2014, we sold all of our short term investments to fund the iML acquisition. The following table summarizes our other investments assets and liabilities as June 29, 2014 (in thousands):

	June 29, 2014
	Level 1		Level 2		Level 3		Total
Assets:
Common shares of CounterPath	$	—	$	99	$	—	$	99
Liabilities:
Acquisition-related contingent consideration – Altior	$	—	$	—	$	3,022	$	3,022
Acquisition-related contingent consideration – Cadeka		—		—		890		890
Total liabilities	$	—	$	99	$	3,912	$	4,011

As of March 30, 2014, our investment assets and liabilities, measured at fair value on a recurring basis, were as follows (in thousands):

	March 30, 2014
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	4,636	$	—	$	—	$	4,636
U.S. government and agency securities		9,378		13,134		—		22,512
State and local government securities		—		2,772		—		2,772
Corporate bonds and securities		5		71,248		—		71,253
Asset-backed securities		—		27,635		—		27,635
Mortgage-backed securities		—		28,248		—		28,248
Total investment assets	$	14,019	$	143,037	$	—	$	157,056
Liabilities:
Acquisition-related contingent consideration – Altior	$	—	$	—	$	2,973	$	2,973
Acquisition-related contingent consideration – Cadeka		—		—		1,370		1,370
Total liabilities	$	—	$	—	$	4,343	$	4,343

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Our cash, cash equivalents and short-term marketable securities as of the dates indicated below were as follows (in thousands):

	June 29, 2014		March 30, 2014
Cash and cash equivalents
Cash at financial institutions	$	123,161	$	9,978
Restricted cash		26,000		—
Cash equivalents
Money market funds		—		4,636
Total cash and cash equivalents	$	149,161	$	14,614
Available-for-sale securities
U.S. government and agency securities	$	—	$	22,512
State and local government securities		—		2,772
Corporate bonds and securities		—		71,253
Asset-backed securities		—		27,635
Mortgage-backed securities		—		28,248
Total short-term marketable securities	$	—	$	152,420

Our marketable securities include U.S. government and agency securities, state and local government securities, corporate bonds and securities, asset-backed and mortgage-backed securities and certificate of deposit. We classify investments as available-for-sale at the time of purchase and re-evaluate such designation as of each balance sheet date. We amortize premiums and accrete discounts to interest income over the life of the investment. Our available-for-sale securities, which we intend to sell as necessary to meet our liquidity requirements, are classified as cash equivalents if the maturity date is 90 days or less from the date of purchase and as short-term marketable securities if the maturity date is greater than 90 days from the date of purchase. As of June 29, 2014, $26.0 million of short term certificate deposit was used as collateral against our CTBC bridge loan and classified as restricted cash. See Note 9-“Short-term Debt”.

All marketable securities are reported at fair value based on the estimated or quoted market prices as of each balance sheet date, with unrealized gains or losses, net of tax effect, recorded in the condensed consolidated statements of other comprehensive income except those unrealized losses that are deemed to be other than temporary which are reflected in the impairment charges on investments line item on the condensed consolidated statements of operations.

We received approximately 93,000 common shares of CounterPath Corporation (“CounterPath”) through the Skypoint dissolution, of which we estimated the fair value using the market value of common shares as determined by trading on the Nasdaq CM market. These securities have been classified to Level 2 as of June 29, 2014 and recorded in the other non-current assets line item on the condensed consolidated balance sheet. We believe the fair value inputs of CounterPath do not meet all of the criteria for Level 1 classification primarily due to the low trading volume of the stock. See Note 7–“Long-term Investments” for the discussion on Skypoint.

The fair value of contingent consideration was determined based on probability-based approach which includes projected revenues, percentage probability of occurrence and discount rate to present value payments. A significant increase (decrease) in the projected revenue, discount rate or probability of occurrence in isolation could result in a significantly higher (lower) fair value measurement. We calculate the fair value of the contingent consideration on a quarterly basis based on a collaborative effort of our operations and financial accounting groups based on additional information as it becomes available. Any change in the fair value adjustment is recorded in the earnings of that period.

Realized gains (losses) on the sale of marketable securities are determined by the specific identification method and are reflected in the interest income and other net, line item on the condensed consolidated statements of operations.

Our net realized gains (losses) on marketable securities for the periods indicated below were as follows (in thousands):

	Three Months Ended
	June 29, 2014			June 30, 2013
Gross realized gains	$	264		$	218
Gross realized losses		(238	)		(277	)
Net realized gain (losses)	$	26		$	(59	)

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The following table summarizes our investments in marketable securities as March 30, 2014 (in thousands):

	March 30, 2014
	Amortized Cost		Unrealized Gross Gains (1)		Unrealized Gross Losses (1)			Fair Value
Money market funds	$	4,636	$	—	$	—		$	4,636
U.S. government and agency securities		22,550		1		(39	)		22,512
State and local government securities		2,762		10		—			2,772
Corporate bonds and securities		71,309		32		(88	)		71,253
Asset-backed securities		27,661		22		(48	)		27,635
Mortgage-backed securities		28,362		24		(138	)		28,248
Total investments	$	157,280	$	89	$	(313	)	$	157,056

—————

(1) Gross of tax impact of $828

Our asset-backed securities are comprised primarily of premium tranches of vehicle loans and credit card receivables, while our mortgage-backed securities are primarily from Federal agencies. We do not own auction rate securities nor do we own securities that are classified as subprime.

Management determines the appropriate classification of cash equivalents or short-term marketable securities at the time of purchase and reevaluates such classification as of each balance sheet date. The investments are adjusted for amortization of premiums and accretion of discounts to maturity and such accretion/amortization, which is immaterial for the period presented, is included in the interest income and other, net line in the condensed statements of operations. Cash equivalents and short-term marketable securities are reported at fair value with the related unrealized gains and losses included in the accumulated other comprehensive losses line in the condensed consolidated balance sheets.

We periodically review our investments in unrealized loss positions for other-than-temporary impairments. This evaluation includes, but is not limited to, significant quantitative and qualitative assessments and estimates regarding credit ratings, collateralized support, the length of time and significance of a security’s loss position, our intent not to sell the security, and whether it is more likely than not that we will not have to sell the security before recovery of its cost basis. For the three months ended June 29, 2014, no investments were identified with other-than-temporary declines in value.

The amortized cost and estimated fair value of cash equivalents and marketable securities classified as available-for-sale by expected maturity as of March 30, 2014 (in thousands):

	March 30, 2014
	Amortized Cost		Fair Value
Less than 1 year	$	49,539	$	49,504
Due in 1 to 5 years		107,741		107,552
Total	$	157,280	$	157,056

The following table summarizes the gross unrealized losses and fair values of our investments in an unrealized loss position as of March 30, 2014, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	March 30, 2014
	Less than 12 months					12 months or greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government and agency securities	$	18,245	$	(39	)	$	—	$	—		$	18,245	$	(39	)
Corporate bonds and securities		48,379		(87	)		596		(1	)		48,975		(88	)
Asset-backed securities		7,118		(12	)		5,478		(36	)		12,596		(48	)
Mortgage-backed securities		19,682		(120	)		983		(18	)		20,665		(138	)
Total	$	93,424	$	(258	)	$	7,057	$	(55	)	$	100,481	$	(313	)

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The fair value of contingent consideration was determined based on a probability-based approach which includes projected revenues, percentage probability of occurrence and discount rate to present value payments. A significant increase (decrease) in the projected revenue, discount rate or probability of occurrence in isolation could result in a significantly higher (lower) fair value measurement. 

The following table presents quantitative information about the inputs and valuation methodologies used for our fair value measurements classified in Level 3 of the fair value hierarchy as of June 29, 2014.

As of June 29, 2014	Fair Value (in thousands)		Valuation Technique	Significant Unobservable Input	Range
Acquisition-related contingent consideration – Altior	$	3,022	Combination of income and market approach	Revenue (in ‘000’s)	$6,725	-	$20,175
				Probability of Achievement	1%	-	66%
Acquisition-related contingent consideration – Cadeka	$	890	Combination of income and market approach	Revenue (in ‘000’s)	$8,400	-	$18,000
				Probability of Achievement	2%	-	30%

We calculate the fair value of the contingent consideration on a quarterly basis based on additional information as it becomes available. Any change in the fair value adjustment is recorded in the earnings of that period.

The change in the fair value of our Altior purchase consideration liability is as follows (in thousands):

	Amount
As of March 30, 2014	$	2,973
Adjustment to purchase consideration		49
As of June 29, 2014	$	3,022

The change in the fair value of our Cadeka purchase consideration liability is as follows (in thousands):

	Amount
As of March 30, 2014	$	1,370
Adjustment to purchase consideration		(480	)
As of June 29, 2014	$	890

In the first quarter of fiscal 2015, the fair value of the contingent consideration for Altior acquisition increased by $49,000 due to the impact of change in present value of the amount payable due to passage of time. Contingent consideration for Cadeka acquisition decreased by $480,000 due to change in timing of achieving revenue targets and passage of time.

NOTE 6. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. We evaluate goodwill for impairment on an annual basis or whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. We conduct our annual impairment analysis in the fourth quarter of each fiscal year. Impairment of goodwill is tested at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. Estimations and assumptions regarding the number of reporting units, future performances, results of our operations and comparability of our market capitalization and net book value will be used. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and a second step is performed to measure the amount of impairment loss. Because we have one single operating segment and one chief operating decision maker, our President and Chief Executive Officer (“CEO”), we utilize an entity-wide approach to assess goodwill for impairment. As of June 29, 2014, no events or changes in circumstances suggest that the carrying amount for goodwill may not be recoverable and therefore we did not perform an interim goodwill impairment analysis.

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The changes in the carrying amount of goodwill for first fiscal quarter of 2015 and 2014 were as follows (in thousands):

	June 29, 2014		March 30, 2014
Beginning balance	$	30,410	$	10,356
Goodwill additions		14,607		20,054
Ending balance	$	45,017	$	30,410

Goodwill additions during the first quarter of fiscal 2015 consisted of $14.6 million residual allocation from the iML acquisition purchase price accounting. The goodwill additions during fiscal 2014 consist of $19.4 million and $0.7 million residual allocation from the Cadeka and Stretch acquisition purchase price accounting, respectively.

Intangible Assets

Our purchased intangible assets as of the dates indicated below were as follows (in thousands):

	June 29, 2014							March 30, 2014
	Carrying Amount		Accumulated Amortization			Net Carrying Amount		Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortized intangible assets:
Existing technology		118,781	$	(39,357	)	$	79,424	$	63,043	$	(37,510	)	$	25,533
Customer relationships		15,145		(3,082	)		12,063		6,095		(2,762	)		3,333
Distributor relationships		7,244		(1,322	)		5,922		1,264		(1,260	)		4
Patents/Core technology		3,459		(3,395	)		64		3,459		(3,378	)		81
Trade names		1,330		(82	)		1,248		210		(51	)		159
Total intangible assets subject to amortization		145,959		(47,238	)		98,721		74,071		(44,961	)		29,110
In-process research and development		10,320		—			10,320		2,280		—			2,280
Total	$	156,279		(47,238	)		109,041		76,351		(44,961	)		31,390

Long-lived assets are amortized on a straight-line basis over their respective estimated useful lives. Existing technology is amortized over two to nine years. Customer relationships are amortized over five to seven years. Distributor relationships are amortized over six to seven years. Patents/core technology is amortized over five to six years. Trade names are amortized over three to six years. We expect the amortization of IPR&D to start in fiscal 2015. We evaluate the remaining useful life of our long-lived assets that are being amortized each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the long-lived asset is amortized prospectively over the remaining useful life.

Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets (or asset group) may not be fully recoverable. Whenever events or changes in circumstances suggest that the carrying amount of long-lived assets may not be recoverable, we estimate the future cash flows expected to be generated by the assets (or asset group) from its use or eventual disposition. If the sum of the expected future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. Significant management judgment is required in the grouping of long-lived assets and forecasts of future operating results that are used in the discounted cash flow method of valuation. If our actual results, or the plans and estimates used in future impairment analyses are lower than the original estimates used to assess the recoverability of these assets, we could incur additional impairment charges.

As of June 29, 2014, there were no indicators that required us to perform an intangible assets impairment review. Due to the decline in forecasted revenue related to certain acquired intangible assets, we recorded $1.6 million impairment charges in the fourth quarter of fiscal 2014.

The aggregate amortization expenses for our intangible assets for the periods indicated below were as follows (in thousands):

	Three Months Ended
	June 29, 2014		June 30, 2013
Amortization expense	$	2,277	$	1,544

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The total future amortization expenses for our purchased intangible assets are summarized below (in thousands):

Amortization Expense (by fiscal year)
2015 (9 months remaining)	$	11,901
2016		15,339
2017		14,406
2018		14,193
2019		12,993
2020 and thereafter		29,889
Total future amortization	$	98,721

NOTE 7. LONG-TERM INVESTMENT

In July 2001, Exar became a Limited Partner in the Skypoint Telecom Fund II (US), LP. (“Skypoint Fund”), a venture capital fund focused on investments in communications infrastructure companies. We accounted for this non-marketable equity investment under the cost method in the other non-current assets in the consolidated balance sheet. The partnership was dissolved and the fund distributed stock of investee companies to Exar during first quarter of fiscal 2015.

We regularly review and determine whether the investment is other-than-temporarily impaired, in which case the investment is written down to its impaired value.

As of the dates indicated below, our long-term investment balance, which is included in the “Other non-current assets” line item on the condensed consolidated balance sheets, consisted of the following (in thousands):

	June 29, 2014		March 30, 2014
Beginning balance	$	946	$	1,288
Net distributions		—		(19	)
Impairment charges		—		(323	)
Ending balance	$	946	$	946

The carrying amount of approximately $0.9 million as of June 29, 2014 reflects the net of the capital contributions, capital distributions and cumulative impairment charges. During the term of the fund we have made $4.8 million in capital contributions to Skypoint Fund since we became a limited partner in July 2001. As of June 29, 2014, we do not have any further capital commitments.

Impairment

We evaluate our long-term investment for impairment on an annual basis or whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. We conduct our annual impairment analysis in the fourth quarter of each fiscal year by comparing the carrying amount to the fair value of the underlying investments. If the carrying amount exceeds its fair value, long term-investment is considered impaired and a second step is performed to measure the amount of impairment loss. We analyzed the fair value of the remaining underlying investments of Skypoint Fund and as a result, no impairment was recorded during the first quarter of fiscal 2015 and 2014. We recorded approximately $0.3 million impairment charges in the fourth quarter of fiscal 2014.

NOTE 8.      RELATED PARTY TRANSACTION

Alonim Investments Inc. (“Alonim”) owns approximately 7.6 million shares, or approximately 16%, of our outstanding common stock as of June 29, 2014. As such, Alonim is our largest stockholder.

Related party contributions as a percentage of our total net sales for the periods indicated below were as follows:

	Three Months Ended
	June 29, 2014			June 30, 2013
Alonim		29	%		27	%

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Related party receivables as a percentage of our net accounts receivable were as follows as of the dates indicated below:

	June 29, 2014			March 30, 2014
Alonim		9	%		18	%

Related party expenses for marketing promotional materials reimbursed were not significant for either the three months ended June 29, 2014 or June 30, 2013, respectively.

NOTE 9. SHORT-TERM DEBT

As part of the acquisition of iML, we entered into short-term financing agreements with Stifel Financial Corporation (“Stifel”) and CTBC Bank Corporation (USA) (“CTBC”) to provide bridge financing for the acquisition.

As of the date indicated below, our short-term debts principal balances, which is included in the Other current liabilities line item on the condensed consolidated balance sheets, consisted of the following (in thousands):

	June 29, 2014
Stifel	$	65,000
Repayment		(26,000	)
CTBC		26,000
Total short-term debt	$	65,000

Stifel

On May 27, 2014 (the “Initial Funding Date”), Exar entered into a bridge credit agreement (the “Credit Agreement”) certain lenders party and Stifel Financial Corp., as Administrative Agent. The Credit Agreement provided Exar with a bridge term loan credit facility in an aggregate principal amount of up to $90.0 million (the “Bridge Facility”).

Interest on loans made under the Bridge Facility accrues, at Exar’s option, at a rate per annum equal to (1) the Base Rate (as defined below) plus (a) during the first 90 days following the Initial Funding Date, 7.5% and (b) thereafter, 8.5% or (2) 1-month LIBOR plus (a) during the first 90 days following the Initial Funding Date, 8.5% and (b) thereafter, 9.5%. The “Base Rate” is equal to, for any day, a rate per annum equal to the highest of (a) the prime rate in effect on such day, (b) the federal funds effective rate in effect on such day plus 0.50%, and (c) 1 month LIBOR plus 1.00%. The Base Rate is subject to a floor of 2.5%, and LIBOR is subject to a floor of 1.5%. The interest rate for June, 2014 was 8.65%.

Exar had drawn $50.0 million and $15.0 million on May 27, 2014 and May 29, 2014, respectively to fund the acquisition of approximately 92% of iML’s outstanding shares. We repaid $26.0 million of the debt in June 2014 through a loan from CTBC with lower interest rate. As of July, 2014, the Stifel loan has been completely paid off through an intercompany loan from iML. See Note 19 – Subsequent Event”.

CTBC

On June 9, 2014 we entered into a Business Loan Agreement with CTBC to provide a loan for $26.0 million to partially pay off the Stifel loan. This loan bears an interest rate of 3.25% and matures on December 9, 2014. Interest payments are due monthly with the entire principal due not later than December 9, 2014.

All obligations of Exar under the Business Loan Agreement are unconditionally guaranteed by iML through a $26.0 million short-term certificate deposit with the same institution.

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Interest

As of the date indicated below, interest on our short-term debt, which is included in the “Interest expense” line item on the condensed consolidated statement of operations, consisted of the following (in thousands):

	June 29, 2014
Stifel	$	402
CTBC		45
Total interest expense	$	447

NOTE 10. COMMON STOCK REPURCHASES

From time to time, we acquire outstanding common stock in the open market to partially offset dilution from our equity award programs, to increase our return on our invested capital and to bring our cash to a more appropriate level for Exar.

On August 28, 2007, we announced the approval of a share repurchase plan (“2007 SRP”) and authorized the repurchase of up to $100.0 million of our common stock.

On July 9, 2013, we announced the approval of a share repurchase program under which we were authorized to repurchase an additional $50.0 million of our common stock. The repurchase program does not have a termination date, and may be modified, extended or terminated at any time. We intend to retire all shares repurchased under the stock repurchase plan. The purchase price for the repurchased shares of Exar is reflected as a reduction of common stock and additional paid-in capital. We may continue to repurchase our common stock under the repurchase plan, which would reduce our cash, cash equivalents and/or short-term marketable securities available to fund future operations and to meet other liquidity requirements.

Stock repurchase activities during first quarter of fiscal 2015 and fiscal 2014 were indicated below (in thousands, except per share amounts):

	Total number of Shares Purchased		Average Price Paid Per Share (or Unit)		Amount Paid for Purchase
Balances, March 31, 2013		9,564	$	9.22	$	88,189
Repurchases – August 25 to September 29, 2013		153		13.07		1,999
Repurchases – September 30 to October 27, 2013		73		13.63		1,001
Repurchases – November 24 to December 29, 2013		83		12.09		1,000
Repurchases – December 30, 2013 to January 26, 2014		122		11.61		1,417
Repurchases – January 27 to February 23, 2014		324		11.05		3,583
Balances, March 30, 2014		10,319	$	9.22	$	97,189
Repurchases – March 31 to April 27, 2014		273		10.98		3,000
Balances, June 29, 2014		10,592	$	9.46	$	100,189

—————

Note: The average price paid per share is based on the total price paid by Exar, which includes applicable broker fees.

NOTE 11. RESTRUCTURING CHARGES AND EXIT COSTS

2015 Restructuring Charges and Exit Costs

During the first quarter of fiscal 2015, we incurred $0.4 million restructuring charges and exit costs mainly due to severance benefit payments made.

2014 Restructuring Charges and Exit Costs

During the first quarter of fiscal 2014, we incurred $1.0 million restructuring charges and exit costs. The charges include $0.9 million of severance benefits and $0.1 million of costs related to the preparation for the sale of Exar campus in Fremont, California.

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Our restructuring liabilities were included in the other current liabilities and other non-current obligations lines within our condensed consolidated balance sheets. The following table summarizes the activities affecting the liabilities as of the dates indicated below (in thousands):

	March 30, 2014		Additions/ adjustments		Non-cash charges			Payments			June 29, 2014
Lease termination costs and others	$	1,615	$	60	$	(77	)	$	(92	)	$	1,506
Severance		754		336		—			(516	)		574
Total	$	2,369	$	396	$	(77	)	$	(608	)	$	2,080

	April 1, 2013		Additions/ adjustments		Non-cash charges			Payments			March 30, 2014
Lease termination costs and others	$	2,860	$	570	$	(57	)	$	(1,758	)	$	1,615
Severance		426		2,444		—			(2,116	)		754
Total	$	3,286	$	3,014	$	(57	)	$	(3,874	)	$	2,369

NOTE 12. STOCK-BASED COMPENSATION

Employee Stock Participation Plan (“ESPP”)

Our ESPP permits employees to purchase common stock through payroll deductions at a purchase price that is equal to 95% of our common stock price on the last trading day of each three-calendar-month offering period. Our ESPP is non-compensatory.

The following table summarizes our ESPP transactions during the fiscal period presented (in thousands, except per share amounts):

	As of June 29, 2014		Three Months Ended June 29, 2014
	Shares of Common Stock		Shares of Common Stock		Weighted Average Price
Authorized to issue		4,500
Reserved for future issuance		1,365
Issued				7	$	11.26

Equity Incentive Plans

We currently have two equity incentive plans, in which shares are available for future issuance, the Exar Corporation 2006 Equity Incentive Plan (the “2006 Plan”) and the Sipex Corporation (“Sipex”) 2006 Equity Incentive Plan (the “Sipex Plan”), the latter of which was assumed in connection with the August 2007 acquisition of Sipex.

The 2006 Plan authorizes the issuance of stock options, stock appreciation rights, restricted stock, stock bonuses and other forms of awards granted or denominated in common stock or units of common stock, as well as cash bonus awards. Restricted stock units ("RSU”) granted under the 2006 Plan are counted against authorized shares available for future issuance on a basis of two shares for every RSU issued. The 2006 Plan allows for performance-based vesting and partial vesting based upon the level of performance. Grants under the Sipex Plan are only available to former Sipex’s employees or employees of Exar hired after the Sipex acquisition. At our annual meeting on September 15, 2010, our stockholders approved an amendment to the 2006 Plan to increase the aggregate share limit under the 2006 Plan by an additional 5.5 million shares to 8.3 million shares. At June 29, 2014, there were 0.7 million shares available for future grant under all our equity incentive plans.

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Stock Option Activities

Our stock option transactions during the three months ended June 29, 2014 are summarized as follows:

	Outstanding			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)		In-the-money Options Vested and Exercisable (in thousands)
Balance at March 30, 2014		7,213,848		$	8.98		5.02	$	21,301		2,170
Granted		45,700			10.87
Exercised		(105,751	)		6.99
Cancelled		(133	)		15.67
Forfeited		(385,098	)		10.12
Balance at June 29, 2014		6,768,566		$	8.96		4.84	$	16,701		2,277
Vested and expected to vest, June 29, 2014		6,284,514		$	8.84		4.75	$	16,137
Vested and exercisable, June 29, 2014		2,526,817		$	7.68		3.55	$	8,955

The aggregate intrinsic values in the table above represent the total pre-tax intrinsic value, which is based on the closing price of our common stock of $11.08 and $11.71 as of June 29, 2014 and March 30, 2014, respectively. These are the values which would have been received by option holders if all option holders exercised their options on that date.

In January 2012, we granted 480,000 performance-based stock options to our CEO. The options are scheduled to vest in four equal annual installments at the end of fiscal years 2013 through 2016 if certain predetermined market based financial measures are met. If the financial measures are not met, each installment will be rolled over to the subsequent fiscal year. In January 2014, we granted 140,000 performance-based stock options to our CEO. The options are scheduled to vest at the end of fiscal year 2017 if certain predetermined financial measures are met. We recorded $112,000 and $65,000 of compensation expense for these options in the three months ended June 29, 2014 and June 30, 2013, respectively.

Options exercised for the periods indicated below were as follows (in thousands):

	Three months Ended
	June 29, 2014		June 30, 2013
Intrinsic value of options exercised	$	430	$	822

RSU Activities

Our RSU transactions during the three months ended June 29, 2014 are summarized as follows:

	Shares			Weighted Average Grant- Date Fair Value		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Unvested at March 30, 2014		1,177,126		$	10.94		1.62	$	13,784
Granted		150,813			12.87
Issued and released		(147,648	)		9.80
Cancelled		(59,332	)		11.84
Unvested at June 29, 2014		1,120,959		$	11.30		1.61	$	12,420
Vested and expected to vest, June 29, 2014		965,301					1.54	$	10,696

The aggregate intrinsic value of RSUs represents the closing price per share of our stock at the end of the periods presented, multiplied by the number of unvested RSUs or the number of vested and expected to vest RSUs, as applicable, at the end of each period.

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For RSUs, stock-based compensation expense was calculated based on our stock price on the date of grant, multiplied by the number of RSUs granted. The grant date fair value of RSUs less estimated forfeitures was recognized on a straight-line basis, over the vesting period.

In March 2012, we granted 300,000 performance-based RSUs (“PRSUs”) to our CEO. The PRSUs are scheduled to start vesting in three equal installments at the end of fiscal year 2013 through 2015 with three year vesting periods if certain predetermined financial measures are met. If the financial measures are not met, each installment will be forfeited at the end of its respective fiscal year. We recorded $734,000 and $52,000 of compensation expense for these awards in the three months ended June 29, 2014 and June 30, 2013, respectively.

In the first quarter of fiscal 2014, we granted 50,000 PRSUs to certain executives. The PRSUs were scheduled to vest in three equal installments at the end of fiscal year 2014 with a three-year vesting period if certain performance measures are met. We recorded stock compensation recovery of $120,000 in the three month ended June 29, 2014 as a result of partially meeting the performance measurements by the executives and recorded $47,000 of stock compensation expense for these awards in the three months ended June 30, 2013.

In July 2013, as part of the acquisition of Cadeka, we agreed to pay retention bonus to certain former Cadeka employees and the bonus will be settled in RSUs subject to fulfillment of the service period. We recorded $394,000 of compensation expense for these awards in the three months ended June 29, 2014. The expense is reported in the other non-current obligations line in the condensed consolidated balance sheet as the total amount of bonus is to be settled in variable number of RSUs at the completion of the requisite service period. Such non-cash compensation expense is recorded as part of stock compensation expense in the condensed consolidated statement of operations.

In August 2013, we announced the Fiscal Year 2014 Management Incentive Program (“2014 Incentive Program”). Under this program, each participant’s award is denominated in stock and subject to achievement of certain financial performance goals and the participant’s annual Management by Objective goals. The expense is reported in the other current liabilities line in the condensed consolidated balance sheet as the total amount of bonus is to be settled in variable number of RSUs at the completion of the requisite service period. Such non-cash compensation expense is recorded as part of stock compensation expense in the condensed consolidated statement of operations. We recorded $5,000 of compensation expense for these awards in the three months ended June 29, 2014.

In October 2013, we granted 70,000 PRSUs to certain executives. The first 50% of the PRSUs are scheduled to start vesting in three equal installments at the end of fiscal year 2015 with a three-year vesting period if certain performance measures are met. The second 50% of the PRSUs are scheduled to start vesting in three equal installments at the end of fiscal year 2016 with a three-year vesting period if certain performance measures are met. We recorded $178,000 of compensation expense for these awards in the three months ended June 29, 2014.

In January 2014, we granted 82,500 PRSUs to certain former Stretch employees. The PRSUs are scheduled to start vesting in three equal installments at the end of fiscal year 2015 with a three-year vesting period if certain performance measures are met. We recorded $0 of compensation expense in the three months ended June 29, 2014 related to these PRSUs as the vesting of such PRSUs was not deemed probable.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense related to stock options and RSUs during the fiscal periods presented below (in thousands):

	Three Months Ended
	June 29, 2014		June 30, 2013
Cost of sales	$	260	$	142
Research and development		812		140
Selling, general and administrative		2,055		805
Total Stock-based compensation expense	$	3,127	$	1,087

The amount of stock-based compensation cost capitalized in inventory was immaterial for all periods presented.

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Unrecognized Stock-Based Compensation Expense

The following table summarizes unrecognized stock-based compensation expense related to stock options and RSUs for the period indicated below:

	June 29, 2014
	Amount (in thousands)		Weighted Average Expected Remaining Period (in years)
Options	$	9,349		2.5
Performance Options		606		2.0
RSUs		5,650		2.2
PRSUs		1,882		2.3
Total Unrecognized Stock-based compensation expense	$	17,487

Valuation Assumptions

We estimate the fair value of stock options on the date of grant using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based compensation represent our estimates, but these estimates involve inherent uncertainties and the application of management’s judgment which include the expected term of the stock-based awards, stock price volatility and forfeiture rates. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future.

We used the following weighted average assumptions to calculate the fair values of options granted during the fiscal periods presented:

	Three Months Ended
	June 29, 2014			June 30, 2013
Expected term of options (years)		4.5			4.4
Risk-free interest rate		1.3	%		0.6	%
Expected volatility		32	%		35	%
Expected dividend yield		─			─
Weighted average estimated fair value	$	3.12		$	3.20

NOTE 13. NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share excludes dilution and is computed by dividing net income (loss) attributable to Exar by the weighted average number of common shares outstanding for the applicable period. Diluted earnings per share reflects the potential dilution that would occur if outstanding stock options or warrants to purchase common stock were exercised for common stock, using the treasury stock method, and the common stock underlying outstanding RSUs was issued.

The following table summarizes our loss per share for the periods indicated below (in thousands, except per share amounts):

	Three Months Ended
	June 29, 2014			June 30, 2013
Net income (loss) attributable to Exar Corporation	$	(12,105	)	$	806
Shares used in computation of net income (loss) per share:
Basic		47,236			46,805
Effect of options and awards		─			1,280
Diluted		47,236			48,085
Net income (loss) per share:
Basic	$	(0.26	)	$	0.02
Diluted	$	(0.26	)	$	0.02

All outstanding stock options and RSUs are potentially dilutive securities. As of June 29, 2014, all outstanding stock options and RSUs were excluded from the computation of diluted net income per share because they were determined to be anti-dilutive. As of June 30, 2013, stock options and RSUs of 1.0 million were excluded from the computation of diluted net income per share because they were determined to be anti-dilutive.

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NOTE 14. LEASE FINANCING OBLIGATIONS

We have acquired engineering design tools (“Design Tools”) under capital leases. We acquired Design Tools of $0.9 million in July 2012 under a three-year license, $4.5 million in December 2011 under a three-year license, $5.8 million in October 2011 under a three-year license, and $1.0 million in June 2010 under a three-year license, all of which were accounted for as capital leases and recorded in the property, plant and equipment, net line item in the condensed consolidated balance sheets. The obligations related to the Design Tools were included in other current liabilities and long-term lease financing obligations in our condensed consolidated balance sheets as of June 29, 2014 and March 30, 2014, respectively. The effective interest rates for the Design Tools range from 2.0% to 7.25%.

Amortization expense related to the Design Tools, which was recorded using the straight-line method over the remaining useful life for the periods indicated below was as follows (in thousands):

	Three Months Ended
	June 29, 2014		June 30, 2013
Amortization expense	$	800	$	866

Future minimum lease and sublease income payments for the lease financing obligations as of June 29, 2014 are as follows (in thousands):

Fiscal Years	Design Tools
2015 (9 months remaining)	$	2,369
2016		59
2017		10
2018		6
Total minimum lease payments		2,444
Less: amount representing interest		56
Present value of minimum lease payments		2,388
Less: short-term lease financing obligations		2,348
Long-term lease financing obligations	$	40

Interest expense for the lease financing obligation for the periods indicated below was as follows (in thousands):

	Three Months Ended
	June 29, 2014		June 30, 2013
Interest expense	$	39	$	37

In the course of our business, we enter into arrangements accounted for as operating leases related to rental of office space. Rent expenses for all operating leases for the periods indicated below were as follows (in thousands):

	Three Months Ended
	June 29, 2014		June 30, 2013
Rent expense	$	332	$	196

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Our future minimum lease payments for the lease operating obligations as of June 29, 2014 are as follows (in thousands):

Fiscal Years	Facilities
2015 (9 months remaining)	$	1,178
2016		1,105
2017		508
2018		159
Total minimum lease payments	$	2,950

NOTE 15.      COMMITMENTS AND CONTINGENCIES

In 1986, Micro Power Systems Inc. (“MPSI”), a subsidiary that we acquired in June 1994, identified low-level groundwater contamination at its principal manufacturing site. The area and extent of the contamination appear to have been defined. MPSI previously reached an agreement with a prior tenant to share in the cost of ongoing site investigations and the operation of remedial systems to remove subsurface chemicals and well closure activities. In April 2012, the San Francisco Bay Regional Water Quality Control Board (“RWQCB”) approved our application for low-threat closure and rescinded the previous cleanup order. All monitoring well closure activities on the site and adjacent/neighboring sites have been completed. We have finalized and executed access, environmental indemnity and tolling agreements, and deed restriction covenants with the property owner. The required deed restriction has been recorded. We are awaiting final determination from RWQCB.

Outstanding liabilities for remediation activities were immaterial for all periods presented.

In early 2012, we received correspondences from the California Department of Toxic Substance Control (“DTSC”) regarding its ongoing investigation of hazardous wastes and hazardous waste constituents at a former regulated treatment facility in San Jose, California. In 1985, MPSI made two separate permitted hazmat deliveries to a licensed and regulated site for treatment. DTSC has requested that former/current property owners and companies, currently in excess of 50, that had hazardous waste treated at the site participate in further site assessment and limited remediation activities. We have entered into various agreements with other named generators, former property owners and DTSC limited to the investigation of the sites’ condition and evaluation, and selection of appropriate remedial measures. The designated environmental consulting firm is moving forward with the agreed preliminary site assessment and periodic status reporting. Given that this matter is in the early stages of investigation and discussions are ongoing, we are unable to ascertain our exposure, if any.

In a letter dated March 27, 2012, Exar was notified by the Alameda County Water District (“ACWD”) of the recent detection of volatile organic compounds at a site adjacent to a facility that was previously owned and occupied by Sipex. The letter was also addressed to prior and current property owners and tenants (collectively “Property Owners”). ACWD requested that the Property Owners carry out further site investigation activities to determine if the detected compounds are emanating from the site or simply flowing under it. In June 2012, the Property Owners filed with ACWD a report of its investigation/characterization activities and analytical data obtained. Accumulated data suggests that compounds of concern in groundwater appear to be from an offsite source. ACWD is investigating alternative upgradient sites. Given that this investigation is ongoing, we are unable to ascertain our exposure, if any.

We warrant all custom products and application specific products, including cards and boards, against defects in materials and workmanship for a period of 12 months, and occasionally we may provide an extended warranty from the delivery date. We warrant all of our standard products against defects in materials and workmanship for a period of 90 days from the date of delivery. Reserve requirements are recorded in the period of sale and are based on an assessment of the products sold with warranty, historical warranty costs incurred and customer/product specific circumstances. Our liability is generally limited, at our option, to replacing, repairing, or issuing a credit (if it has been paid for). Our warranty does not cover damage which results from accident, misuse, abuse, improper line voltage, fire, flood, lightning or other damage resulting from modifications, repairs or alterations performed other than by us, or resulting from failure to comply with our written operating and maintenance instructions.

Warranty expense has historically been immaterial for our products. The warranty liability related to our product sales as of September 29, 2013 of $1.4 million was established for the return of certain older generation data compression products shipped in prior years.

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As of the dates indicated below, our warranty reserve balance, which is included in the “Other current liabilities” line item on the condensed consolidated balance sheets, consisted of the following (in thousands):

	June 29, 2014		March 30, 2014
Beginning balance	$	1,074	$	50
Provisions for warranties issued		17		1,480
Settlements/adjustments		—		(456	)
Ending balance	$	1,091	$	1,074

In the ordinary course of business, we may provide for indemnification of varying scope and terms to customers, vendors, lessors, business partners, purchasers of assets or subsidiaries, and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of agreements or representations and warranties made by us, services to be provided by us, intellectual property infringement claims made by third parties or, matters related to our conduct of the business. In addition, we have entered into indemnification agreements with our directors and certain of our executive officers that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or executive officers. We maintain director and officer liability insurance, which may cover certain liabilities arising from our obligation to indemnify our directors and officers, and former directors and officers of acquired companies, in certain circumstances.

It is not possible to determine the aggregate maximum potential loss under these indemnification agreements due to the unique facts and circumstances involved in each particular agreement and claims. Such indemnification agreements might not be subject to maximum loss clauses. Historically, we have not incurred material costs as a result of obligations under these agreements and we have not accrued any liabilities related to such indemnification obligations in our condensed consolidated financial statements.

NOTE 16.      LEGAL PROCEEDINGS

From time to time, we are involved in various claims, legal actions and complaints arising in the normal course of business. We are not a named party to any ongoing lawsuit or formal proceeding that, in the opinion of our management, is likely to have a material adverse effect on our financial position, results of operations or cash flows.

In fiscal year 2014, two former employees of Exar’s French subsidiary asserted claims against that subsidiary for alleged unfair dismissal in the French Labor Courts. We believe that the former employees were terminated in accordance with the requirements of French law and that the former employees’ claims are not supported by evidence. The matters have been scheduled for hearing on October 10, 2014 and October 22, 2014, respectively. We dispute the claims and we intend to vigorously protect our interests. We do not believe an adverse outcome will have a material impact on our financial position, results of operations or cash flow

NOTE 17. INCOME TAXES

During the three months ended June 29, 2014, we recorded an income tax expense of approximately $0.7 million. The income tax expense was primarily related to the allocation of tax expense between continuing operations and other comprehensive income when applying the exception to the ASC 740 intraperiod allocation rule upon liquidation of our available for sale security portfolio. During the three months ended June 30, 2013, we recorded an income tax benefit of approximately $9,000. The income tax benefit was primarily due to income tax benefits in certain non-US operations.

During the three months ended June 29, 2014, the unrecognized tax benefits increased by $2.7 million to $16.9 million primarily related to the acquisition of iML. If recognized, $14.2 million of these unrecognized tax benefits (net of federal benefit) would be recorded as a reduction of future income tax provision before consideration of changes in valuation allowance.

Estimated interest and penalties related to the income taxes are classified as a component of the provision for income taxes in the condensed consolidated statement of operations. Accrued interest and penalties consisted of the following as of the dates indicated (in thousands):

	June 29, 2014		March 30, 2014
Accrued interest and penalties	$	1,189	$	83

Our major tax jurisdictions are the United States federal and various states, Canada, China, Hong Kong, Taiwan, the Cayman Islands and certain other foreign jurisdictions. The fiscal years 2003 through 2013 remain open and subject to examinations by the appropriate governmental agencies in the United States and over varying periods in certain of our foreign jurisdictions.

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ASU No. 2013-11 – U.S. GAAP previously did not include explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. On a jurisdictional basis, Accounting Standard Update (“ASU”) No. 2013-11 generally requires an unrecognized tax benefit to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Exar has properly applied this guidance to its required disclosures. The adoption of this guidance did not have any material impact on our financial position, results of operations or cash flows.

NOTE 18. SEGMENT AND GEOGRAPHIC INFORMATION

We operate in one reportable segment, which is comprised of one operating segment. We design, develop and market high performance analog mixed-signal integrated circuits and advanced sub-system solutions for the Industrial & Embedded Systems, Communications Infrastructure markets, High-End Consumer, and Networking & Storage.

Our net sales by end market were summarized as follows as of the dates indicated below (in thousands):

	Three Months Ended
	June 29, 2014		June 30, 2013
Industrial & Embedded Systems	$	18,867	$	16,498
Communications Infrastructure		5,090		5,976
High-End Consumer		3,424		246
Networking & Storage		3,338		9,907
Total net sales	$	30,719	$	32,627

Our foreign operations are conducted primarily through our wholly-owned subsidiaries in Canada, China, France, Germany, Japan, Malaysia, South Korea, Taiwan and the United Kingdom. Our principal markets include North America, Europe and the Asia Pacific region. Net sales by geographic areas represent direct sales principally to original equipment manufacturers (“OEM”), or their designated subcontract manufacturers, and to distributors (affiliated and unaffiliated) who buy our products and resell to their customers.

Our net sales by geographic area for the periods indicated below were as follows (in thousands):

	Three Months Ended
	June 29, 2014		June 30, 2013
China	$	10,759	$	10,953
United States		6,226		10,468
Singapore		3,591		3,396
Germany		2,956		2,780
Europe (excluding Germany)		1,453		689
Japan		1,309		1,226
Rest of world		4,425		3,115
Total net sales	$	30,719	$	32,627

Substantially all of our long-lived assets at each of June 29, 2014 and June 30, 2013 were located in the United States.

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The following distributors and customer accounted for 10% or more of our net sales in the periods indicated:

	Three Months Ended
	June 29, 2014			June 30, 2013
Distributor A		29	%		27	%
Distributor B		10	%		*
Distributor C		10	%		11	%
Customer B		*			15	%

—————

* Net sales for this distributor or customer for this period were less than 10% of our net sales.

No other distributor or customer accounted for 10% or more of the net sales for the three months ended June 29, 2014 and June 30, 2013, respectively.

The following distributors accounted for 10% or more of our net accounts receivable as of the dates indicated:

	June 29, 2014			March 30, 2014
Distributor E		11	%		*
Distributor B		10	%		17	%
Distributor D		10	%		14	%
Distributor A		*			16	%
Distributor C		*			12	%

—————

* Accounts receivable for this distributor for this period were less than 10% of total account balance.

No other distributor or customer accounted for 10% or more of the net accounts receivable as of June 29, 2014 and June 30, 2013, respectively.

NOTE 19.      SUBSEQUENT EVENTS

Exar had drawn $50.0 million and $15.0 million on May 27, 2014 and May 29, 2014, respectively from Stifel to fund the acquisition of approximately 92% of iML’s outstanding shares. We repaid $26.0 million of the debt in June 2014 through a loan from CTBC with lower interest rate. Subsequent to the end of the quarter we paid off the loan through an intercompany loan from iML.

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ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations, as well as information contained in “Part II, Item 1A.” below and elsewhere in this Quarterly Report on Form 10-Q, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are generally written in the future tense and/or may generally be identified by words such as “will,” “may,” “should,” “would,” “could,” “expect,” “suggest,” “possible,” “potential,” “target,” “commit,” “continue,” “believe,” “anticipate,” “intend,” “project,” “projected,” “positioned,” “plan,” or other similar words. Forward-looking statements contained in this Quarterly Report include, among others, statements made in Part II, Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Summary” and elsewhere regarding (1) our future strategies and target markets, (2) our future revenues, gross profits and margins, (3) our future research and development (“R&D”) efforts and related expenses, (4) our future selling, general and administrative expenses (“SG&A”), (5) our cash and cash equivalents, short-term marketable securities and cash flows from operations being sufficient to satisfy working capital requirements and capital equipment needs for at least the next 12 months, (6) our ability to continue to finance operations with cash flows from operations, existing cash and investment balances, and some combination of long-term debt and/or lease financing and sales of equity securities, (7) the possibility of future acquisitions and investments, (8) our ability to accurately estimate our assumptions used in valuing stock-based compensation, (9) our ability to estimate and reconcile distributors’ reported inventories to their activities, (10) our ability to estimate future cash flows associated with long-lived assets, and (11) the volatile global economic and financial market conditions. These statements reflect our current views with respect to future events and our potential financial performance and are subject to risks and uncertainties that could cause our business, operating results and financial condition to differ materially and adversely from what is projected or implied by any forward- looking statement included in this Quarterly Report. Factors that could cause actual results to differ materially from those stated herein include, but are not limited to: the information contained under the caption “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II, Item 1A. Risk Factors,” as well as those risks discussed in our Annual Report on Form 10-K for the fiscal year ended March 30, 2014. We disclaim any obligation to update information in any forward-looking statement, except as required by law.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the condensed consolidated financial statements and notes thereto, included in this Quarterly Report and our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended March 30, 2014, as filed with the Securities and Exchange Commission (“SEC”). Our results of operations for the three months ended June 29, 2014 are not necessarily indicative of results to be expected for any future period.

Business Overview

Exar Corporation (“Exar” or “we”) designs, develops and markets high-performance integrated circuits and system solutions for the Communications, High-End Consumer, Industrial & Embedded Systems, and Networking & Storage markets. Exar's broad product portfolio includes analog, display, LED lighting, mixed-signal, power management, connectivity, data management, and video processing solutions. Our comprehensive knowledge of end-user markets along with the underlying analog, mixed signal and digital technology has enabled us to provide innovative solutions designed to meet the needs of the evolving connected world. Applying both analog and digital technologies, our products are deployed in a wide array of applications such as industrial, instrumentation and medical equipment, networking and telecommunication systems, servers, enterprise storage systems, set top boxes and digital video recorders. We provide customers with a breadth of component products and sub-system solutions based on advanced silicon integration.

We market our products worldwide with sales offices and personnel located throughout the Americas, Europe, and Asia. Our products are sold in the United States through a number of manufacturers’ representatives and distributors. Internationally, our products are sold primarily through various regional and country specific distributors, as well as manufacturers’ representatives. Globally, these channel partners are assisted and managed by our regional sales teams. In addition to our regional sales teams, we also employ a worldwide team of field application engineers to work directly with our customers.

Our international sales are denominated in U.S. dollars. Our international related operating expenses expose us to fluctuations in currency exchange rates because our foreign operating expenses are denominated in foreign currencies while our sales are denominated in U.S. dollars. Our operating results are subject to fluctuations as a result of several factors that could materially and adversely affect our future profitability as described in “Part II, Item 1A. Risk Factors—Our Financial Results May Fluctuate Significantly Because Of A Number Of Factors, Many Of Which Are Beyond Our Control.”

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First Quarter of Fiscal 2015 Executive Summary

Net sales of $30.7 million for the first quarter of fiscal 2015 increased $2.7 million or 10% from the fourth quarter of fiscal 2014. The increase was primarily due to inclusion of June revenue generated by the newly acquired Integrated Memory Logic Limited (“iML”) business subsequent to the closing of the tender offering. We incurred a net loss of $12.2 million increased $12.4 million for the quarter, compared to the $0.2 million net profit in the fourth quarter of fiscal 2014. The increase in net loss was primarily due to iML related acquisition expense, amortization of acquired intangible assets and amortization of inventory fair value adjustment. Loss per share of $0.26 per share in the first quarter of fiscal 2015 decreased $0.26 per share from the fourth quarter of fiscal 2014.  Excluding the nonrecurring expenses, we believe we are effectively managing our operating expenses while continuing to invest an appropriate amount in research and development projects for future products.

Critical Accounting Policies and Estimates 

There have been no significant changes to our critical accounting policies during the three months ended June 29, 2014, as compared to the previous disclosures in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 30, 2014.

Results of Operations 

Our Statements of Operations data and percentage of revenue were as follows for the periods presented (in millions, except percentages):

	Quarter ended
	June 29, 2014			June 30 , 2013			Change
Net Sales	$	30,719		$	32,627		$	(1,908	)	(6	)%
Cost of sales:
Cost of sales		12,353			11,812			541		5	%
Cost of sales-related party		3,838			3,907			(69	)	(2	)%
Amortization of purchased intangible assets and inventory step up costs		3,545			1,350			2,195		163	%
Restructuring charges and exit costs		27			81			(54	)	(67	)%
Total cost of sales		19,763			17,150			2,613		15	%
Gross profit		10,956			15,477			(4,521	)	(29	)%
Operating expenses:
Research and development		8,243			6,180			2,063		33	%
Selling, general and administrative		10,077			7,354			2,723		37	%
Merger and acquisition costs		4,050			465			3,585		771	%
Restructuring charges and exit costs		369			931			(562	)	(60	)%
Change in fair value of contingent consideration		(431	)		—			(431	)	(100	)%
Total operating expenses		22,308			14,930			7,378		49	%
Income (loss) from operations		(11,352	)		547			(11,899	)	2,175	%
Interest income and other, net		290			287			3		1	%
Interest expense		(486	)		(37	)		449		1,214	%
Income (loss) before income taxes		(11,548	)		797			(12,345	)	(1,549	)%
Provision for (benefit from) income taxes		692			(9	)		701		7,789	%
Net income (loss)	$	(12,240	)	$	806		$	(13,046	)	(1,619	)%
Less: Net income attributable to non-controlling interests		135			—			135		100	%
Net income (loss) attributable to Exar Corporation		(12,105	)		806			(12,911	)	(1,602	)%

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Revenue

Our net sales by end market in dollars and as a percentage of net sales were as follows for the periods presented (in thousands, except percentages):

	Three Months Ended
	June 29, 2014				June 30, 2013				Change
Net Sales:
Industrial & Embedded Systems	$	18,867	61	%	$	16,498	51	%		14	%
Communications Infrastructure		5,090	17	%		5,976	18	%		(15	)%
High-End Consumer		3,424	11	%		246	1	%		1,292	%
Networking & Storage		3,338	11	%		9,907	30	%		(66	)%
Total	$	30,719	100	%	$	32,627	100	%

Geographically, our net sales in dollars and as a percentage of total net sales were as follows for the periods presented (in thousands, except percentages):

	Three Months Ended
	June 29, 2014				June 30, 2013				Change
Net Sales:
Asia	$	19,448	63	%	$	18,450	57	%		5	%
Americas		6,862	22	%		10,708	33	%		(36	)%
Europe		4,409	15	%		3,469	10	%		27	%
Total	$	30,719	100	%	$	32,627	100	%

Revenue for the three months ended June 29, 2014 decreased $1.9 million, or 6%, as compared to the same period a year ago. The decrease was mainly due to significant lower sale volume of our main products supporting the networking & storage market which resulted in lower sales of $5.4 million and average selling price erosion of $1.4 million of the products supporting the communication infrastructure market. The decrease was offset by $5.0 million increase of sales in other markets due to business obtained through recent acquisitions.

Revenue from Americas decreased $3.8 million, or 36% as compared to the same period a year ago. The decrease was primarily due to the lower sales volume of our main products supporting the networking & storage market. Revenue in Asia and Europe increased by $0.9 million and $1.0 million, respectively, as compared to the same period a year ago. The revenue increases were mainly due to business obtained through recent acquisitions.

Gross Profit

Gross profit as a percentage of net sales for the three months ended June 29, 2014 decreased by approximately 12% as compared to the same period a year ago. The decrease in gross profit percentage was primarily due to reduced sales volume of higher margin products and increased amortization expense of acquired intangible assets and inventory adjustment.

We believe that gross profit will fluctuate as a percentage of sales and in absolute dollars due to, among other factors, the inclusion of the amortization of the costs of acquired intangibles, product and manufacturing costs, our ability to leverage fixed operational costs, shipment volumes, competitive pricing pressure on our products, and currency fluctuations.

Research and Development (“R&D”)

R&D expenses for the three months ended June 29, 2014 increased $2.1 million, or 33%, as compared to the same period a year ago. The increase was primarily due to inclusion of iML’s operations, a $0.7 million increase in stock-based compensation expenses and a headcount increase from 124 for the three months ended June 30, 2013 to 135 for the three months ended June 29, 2014.

We have a contractual agreement under which certain of our R&D costs are eligible for reimbursement. Reimbursements under this arrangement are offset against R&D expenses. For the first quarters of fiscal 2015 and 2014, we offset $0.3 million and $0.5 million of R&D expenses in connection with this agreement, respectively.

We believe that R&D expenses will increase in absolute dollars due to, among other factors, the inclusion of costs associated with acquired operations, increased investment in software development, variable compensation, incentives, annual merit increases and fluctuations in reimbursements under a research and development contract.

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Selling, General and Administrative (“SG&A”)

SG&A expenses for the three months ended June 29, 2014 increased $2.7 million, or 37%, as compared with the same period a year ago. The increase was primarily due to the inclusion of iML’s operations, and $1.3 million increase in stock-based compensation expense.

We believe that SG&A expenses will increase in absolute dollars due to, among other factors, the inclusion of costs associated with acquired operations, variable commissions, legal costs, variable compensation, incentives and annual merit increases.

Merger and acquisition costs 

Merger and acquisition costs for the three months ended June 29, 2014 increased $3.6 million, or 771%, as compared with the same period a year ago. The increase was primarily due to transaction costs incurred for iML acquisition in first fiscal quarter of 2015.

Restructuring Charges and Exit Costs

During the first quarter of fiscal 2015, we incurred $0.4 million restructuring charges and exit costs mainly due to severance benefit payments made. See “Note 11 – Restructuring Charges and Exit Costs.”

Interest Income and Other, Net

Interest income and other, net primarily consists of interest income, foreign exchange gains or losses and realized gains or losses on marketable securities.

Interest income and other, net during the three months ended June 29, 2014 remained consistent as compared to the same period a year ago.

Interest Expense

Interest expense for the three months ended June 29, 2014 increased $0.4 million, or 1,214%, as compared to the same period a year ago. The increase was primarily due to a $0.4 million interest expense incurred in the first quarter of fiscal 2015 as a result of $65.0 million of short term debt borrowed from Stifel Financial Corporation and CTBC Bank Corporation (USA).

Interest expenses recorded for the Design Tools capital lease obligations were $39,000 and $37,000 for the three months ended June 29, 2014 and June 30, 2013, respectively.

Provision for Income Taxes

During the three months ended June 29, 2014, we recorded an income tax expense of approximately $0.7 million. The income tax expense was primarily related to the allocation of tax expense between continuing operations and other comprehensive income when applying the exception to the ASC 740 intraperiod allocation rule upon liquidation of our available for sale security portfolio.  During the three months ended June 30, 2013, we recorded an income tax benefit of approximately $9,000. The income tax benefit was primarily due to income tax benefits in certain non-US operations.

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Liquidity and Capital Resources

	Three Months Ended
	June 29, 2014			June 30, 2013
	(dollars in thousands)
Cash and cash equivalents	$	123,161		$	36,458
Restricted cash		26,000			─
Short-term marketable securities	─				169,333
Total cash, cash equivalents, and short-term investments	$	149,161		$	205,791
Percentage of total assets		38	%		70	%
Net cash provided by (used in) operating activities	$	(8,137	)	$	983
Net cash provided by investing activities		53,903			20,567
Net cash provided by financing activities		62,781			190
Net increase in cash and cash equivalents	$	108,547		$	21,740

Fiscal Year 2015

Our net loss was approximately $12.2 million for the three months ended June 29, 2014. After adjustments for non-cash items and changes in working capital, we used $8.1 million of cash from operating activities.

Significant non-cash charges included:

● depreciation and amortization expenses of $3.3 million;

● stock-based compensation expense of $3.1 million; and

● release $0.8 million of the deferred tax valuation allowance due to liquidation of our short term investments.

Working capital changes included:

● a $0.7 million increase in accounts receivable primarily due to timing of shipments made and timing of collections from customers;

● a $3.8 million decrease in accounts payable primarily due to timing of payments made;

● a $2.6 million increase in deferred income due to timing of products selling through the distribution channels; and

● a $1.5 million net increase in other current and noncurrent assets due to estimated tax payments made by iML.

In the three months ended June 29, 2014, net cash used in investing activities was $53.9 million. Proceeds of $162.4 million from sales and maturities were offset by $9.3 million purchase of investments, $0.6 million used for purchases of property, plant and equipment and intellectual property, $26.0 million of restricted cash and net of $72.7 million used for the acquisition of iML.

In the three months ended June 29, 2014, net cash provided by financing activities reflects $65.0 million short term debt received from Stifel and CTBC and $0.8 million of net proceeds received from our employee stock plans offset by $3.0 million used to repurchase of common stock.

As part of the acquisition of iML, we entered into short-term financing agreements with Stifel Financial Corporation (“Stifel”) and CTBC Bank Corporation (USA) (“CTBC”) to provide bridge financing for the acquisition. As of June 29, 2014, the loan outstanding balances with Stifel and CTBC were $39.0 million and $26.0 million, respectively. Subsequent to the end of the quarter we have paid off the Stifel loan through an intercompany loan from iML. The $26.0 million CTBC loan was cash-collateralized by a short-term certificate deposit with the same institution.

If our operating results deteriorate during the remainder of fiscal year 2015, either as a result of a decrease in customer demand, or severe pricing pressures from our customers or our competitors, or for other reasons, our ability to generate positive cash flow from operations may be jeopardized. In that case, we may be forced to use our cash and cash equivalents or seek additional financing from third parties to fund our operations. We believe that cash generated from operations, together with existing sources of liquidity, will satisfy our projected working capital and other cash requirements for at least the next 12 months.

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Fiscal Year 2014

Our net income was approximately $0.8 million for the three months ended June 30, 2013. After adjustments for non-cash items and changes in working capital, we generated $1.0 million of cash from operating activities.

Significant non-cash charges included:

● depreciation and amortization expenses of $2.9 million; and

● stock-based compensation expense of $1.1 million.

Working capital changes included:

● a $3.0 million increase in accounts receivable primarily due to the increase in shipments in the latter part of the quarter; and

● a $4.6 million decrease in other current liabilities due to full payment of a $3.0 million dispute resolution liability and pay down of liabilities relating to manufacturing expenses, royalties and licenses offset by a $3.1 million increase in accounts payable primarily due to the timing of payments.

In the three months ended June 30, 2013, net cash provided by investing activities was $20.6 million. Proceeds of $84.0 million from sales and maturities of investments and $0.1 million from sale of intellectual property were offset by $63.3 million purchase of investments and $0.3 million used for purchases of property, plant and equipment and intellectual property.

In the three months ended June 30, 2013, net cash provided by financing activities reflects $0.5 million of net proceeds received from our employee stock plans offset by $0.3 million repayment of lease financing obligations.

Recent Accounting Pronouncements

Please refer to “Part I, Item 1. Financial Statements” and “Notes to Condensed Consolidated Financial Statements, Note 2 – Recent Accounting Pronouncements.”

Off-Balance Sheet Arrangements

We have not utilized special purpose entities to facilitate off-balance sheet financing arrangements. However, we have, in the normal course of business, entered into agreements which impose warranty obligations with respect to our products or which obligate us to provide indemnification of varying scope and terms to customers, vendors, lessors and business partners, our directors and executive officers, purchasers of assets or subsidiaries, and other parties with respect to certain matters. These arrangements may constitute “off-balance sheet transactions” as defined in Section 303(a)(4) of Regulation S-K. Please see “Note 15–Commitments and Contingencies” to the condensed consolidated financial statements for further discussion of our product warranty liabilities and indemnification obligations.

As discussed in “Note 15–Commitments and Contingencies,” during the normal course of business, we make certain indemnities and commitments under which we may be required to make payments in relation to certain transactions. These indemnities include non-infringement of patents and intellectual property, indemnities to our customers in connection with the delivery, design, manufacture and sale of our products, indemnities to our directors and officers in connection with legal proceedings, indemnities to various lessors in connection with facility leases for certain claims arising from such facility or lease and indemnities to other parties to certain acquisition agreements. The duration of these indemnities and commitments varies, and in certain cases, is indefinite. We believe that substantially all of our indemnities and commitments provide for limitations on the maximum potential future payments we could be obligated to make. However, we are unable to estimate the maximum amount of liability related to our indemnities and commitments because such liabilities are contingent upon the occurrence of events which are not reasonably determinable.

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Contractual Obligations and Commitments

Our contractual obligations and commitments at June 29, 2014 were as follows (in thousands):

	Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 Years		3-5 years		More than 5 years
Purchase commitments (1)	$	20,443	$	17,264	$	833	$	718	$	1,628
Lease obligations (2)		2,950		1,483		1,403		64		—
Total	$	23,393	$	18,747	$	2,236	$	782	$	1,628

—————

(1)	We place purchase orders with wafer foundries, back end suppliers and other vendors as part of our normal course of business. We expect to receive and pay for wafers, capital equipment and various service contracts over the next 12  months from our existing cash balances.
(2)	Operating lease payments including real property leases for our worldwide offices.

Other commitments

As of June 29, 2014, our unrecognized tax benefits were $16.9 million, of which $4.4 million was classified as other non-current obligations. We believe that it is reasonably possible that the amount of gross unrecognized tax benefits related to the resolution of income tax matters could be reduced by approximately $0.3 million during the next 12 months as the statute of limitations expires. See “Note 17 – Income Taxes.”

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of potential economic loss principally arising from adverse changes in the fair value of financial instruments. The major components of market risk affecting us are interest rate risk and foreign currency exchange rate risk.

Foreign Currency Fluctuations. We are exposed to foreign currency fluctuations primarily through our foreign operations. This exposure is the result of foreign operating expenses and cash balances being denominated in foreign. Operational currency requirements are typically forecasted for a one-month period. If there is a need to hedge this risk, we may enter into transactions to purchase currency in the open market or enter into forward currency exchange contracts.

Except as the foreign exchange rate risk, there have been no material changes in the quantitative or qualitative aspect of our market risk profile since March 30, 2014.  For additional information regarding our exposure to certain market risks, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the year ended March 30, 2014.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures (“Disclosure Controls”)

Disclosure Controls, as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are controls and procedures designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods as specified in the SEC’s rules and forms. In addition, Disclosure Controls are designed to ensure the accumulation and communication of information required to be disclosed in reports filed or submitted under the Exchange Act to our management, including the Chief Executive Officer (our principal executive officer) (the “CEO”) and Chief Financial Officer (our principal financial and accounting officer) (the “CFO”), to allow timely decisions regarding required disclosures.

 We evaluated the effectiveness of the design and operation of our Disclosure Controls, as defined by the rules and regulations of the SEC (the “Evaluation”), as of the end of the period covered by this Quarterly Report on Form 10-Q. This Evaluation was performed under the supervision and with the participation of management, including our CEO, as principal executive officer, and CFO, as principal financial and accounting officer.

Attached as Exhibits 31.1 and 31.2 of this Quarterly Report on Form 10-Q are the certifications of the CEO and the CFO, respectively, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the “Certifications”). This section of the Quarterly Report on Form 10-Q provides information concerning the Evaluation referred to in the Certifications and should be read in conjunction with the Certifications.

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Based on the Evaluation, our CEO and CFO have concluded that our Disclosure Controls are effective at the reasonable assurance level as of June 29, 2014.

Inherent Limitations on the Effectiveness of Disclosure Controls

Our management, including the CEO and CFO, does not expect that our Disclosure Controls will prevent all errors and all fraud. Disclosure Controls, no matter how well conceived, managed, utilized and monitored, can provide only reasonable assurance that the objectives of such controls are met. Therefore, because of the inherent limitation of Disclosure Controls, no evaluation of such controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The disclosure in “Notes to Condensed Consolidated Financial Statements, Note 16– Legal Proceedings” contained in “Part I, Item 1. Financial Statements” is hereby incorporated by reference.

ITEM 1A.      RISK FACTORS

The following factors describe risks and uncertainties that could adversely affect our business, financial condition, results of operations, and the market price of our common stock. The risks and uncertainties described below should not be considered to be a complete statement of all potential risks and uncertainties that we face. Additional risks and uncertainties not presently known to us or that we do not currently consider material may also harm our business, financial condition, results of operations or the market price of our common stock. Past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.

Our financial results may fluctuate significantly because of a number of factors, many of which are beyond our control.

Our financial results may fluctuate significantly as a result of a number of factors, many of which are difficult or impossible to control or predict, which include:

• the continuing effects of economic uncertainty;

• the cyclical nature of the general economy and the semiconductor industry;

• difficulty in predicting revenues and ordering the correct mix of components from suppliers due to limited visibility into customers and channel partners;

• changes in the mix of product sales as our margins vary by product;

• fluctuations in the capitalization and amortization of unabsorbed manufacturing costs;

• the impact of our revenue recognition policies on reported results;

• warranty costs related to our product sales;

• the reduction, rescheduling, cancellation or timing of orders by our customers, distributors and channel partners; 

• management of customer, subcontractor, logistic provider and/or channel inventory;

• delays in shipments from our foundries and subcontractors causing supply shortages;

• inability of our foundries and subcontractors to provide quality products, in adequate quantities and in a timely manner;

• dependency on products with few customers and/or distributors;

• volatility of demand for systems sold by our large customers, which in turn, introduces demand volatility for our products;

• demand disruption if customers change or modify their complex subcontract manufacturing supply chain;

• disruption in customer demand due to technical or quality issues with our devices or components in their system;

• the inability of our customers or their sub-contract manufacturers to obtain components from their other suppliers;

• disruption in sales or distribution channels;

• our ability to maintain and expand distributor relationships;

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• changes in sales, design and implementation cycles for our products;

• the ability of our suppliers and customers to remain solvent, obtain financing or fund capital expenditures as a result of the recent global economic slowdown;

• risks associated with entering new or mature markets;

• the announcement or introduction of products by existing competitors or new competitors;

• loss of market share by us or by our customers;

• competitive pressures on selling prices or product availability;

• pressures on selling prices overseas due to foreign currency exchange fluctuations;

• erosion of average selling prices coupled with the inability to sell newer products with higher average selling prices, resulting in lower overall revenue and margins;

• delays in product releases;

• market and/or customer acceptance of our products;

• consolidation among our competitors, our customers and/or our customers’ customers;

• changes in our customers’ end user concentration or requirements;

• loss of one or more major customers;

• significant changes in ordering pattern by major customers;

• our or our channel partners’ or logistic providers’ ability to maintain and manage appropriate inventory levels;

• the availability and cost of materials, services or processing capabilities, including foundry, assembly and test capacity, needed from our foundries and other manufacturing suppliers;

• disruptions in our or our customers’ supply chain due to natural disasters, fire, outbreak of communicable diseases, labor disputes, civil unrest or other such reasons;

• delays in successful transfer of products or manufacturing processes to or between our subcontractors;

• fluctuations in the product quality or manufacturing output, yields, and capacity of our suppliers;

• fluctuation in suppliers’ capacity due to reorganization, relocation or shift in business focus, financial constraints, or other reasons;

• problems, costs, or delays that we may face in shifting our products to smaller geometry process technologies and in achieving higher levels of design and device integration;

• our ability to successfully introduce and transfer into production new products and/or integrate new technologies;

• excess inventory levels or unanticipated inventory write-downs if expected orders fail to materialize or inventory becomes obsolete;

• increased manufacturing costs;

• higher mask tooling costs associated with advanced technologies;

• the amount and timing of our investment in research and development;

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• costs and business disruptions associated with stockholder or regulatory issues;

• the timing and amount of employer payroll tax to be paid on our employees’ gains on the exercise of equity grants;

• an inability to generate profits to utilize net operating losses (“NOLs”) prior to their statutory expiration;

• increased costs and time associated with compliance with new accounting rules or new regulatory requirements;

• changes in accounting or other regulatory rules, such as the requirement to record assets and liabilities at fair value;

• write-off of some or all of our goodwill and other intangible assets;

• fluctuations in interest rates and/or market values of our marketable securities;

• litigation costs associated with the defense of suits brought or complaints made against us or enforcement of our rights;

• change in fair value of contingent consideration; and/or

• changes in or continuation of certain tax provisions.

If we are unable to grow or secure and convert a significant portion of our design wins into revenue, our business, financial condition and results of operations would be materially and adversely impacted.

We continue to secure design wins for new and existing products. Such design wins are necessary for revenue growth. However, many of our design wins may never generate revenues if end-customer projects are unsuccessful in the market place, the end-customer terminates the project, which may occur for a variety of reasons, or the end-customer selects a competitive solution. Mergers, consolidations, changing market requirements and cost reduction activities among our customers may lead to termination of certain projects before the associated design win generates revenue. If design wins do generate revenue, the time lag between the design win and meaningful revenue is typically between six months to longer than eighteen months. If we fail to grow and convert a significant portion of our design wins into substantial revenue, our business, financial condition and results of operations could be materially and adversely impacted. Under continued uncertain global economic conditions, our design wins could be delayed even longer than the typical lag period and our eventual revenue could be less than anticipated from products that were introduced within the last eighteen to thirty-six months, which would likely materially and adversely affect our business, financial condition and results of operations.

Global capital, credit market, employment, and general economic and political conditions, and resulting declines in consumer confidence and spending, could have a material adverse effect on our business, operating results and financial condition.

Because our customers, suppliers and other business partners are in many countries around the world, we must monitor general global conditions for impact on our business. Economies throughout global regions continue to be volatile and, in many countries, inconsistent with trends in the U.S. or other stable economies. In Europe uncertainty continues regarding the ability of certain countries to service their level of debt. In recent quarters in China and certain other Asian countries, growth has continued but at a slower pace than earlier in the recovery. Unstable political conditions in individual countries or across regions can also impact our business.

We cannot predict the timing, severity or duration of any economic slowdown or pace of recovery or the impact of any such events on our vendors, customers or us. If the economy or markets in which we operate deteriorate from current levels, many related factors could have a material adverse effect on our business, operating results, and financial condition, including the following:

• slower spending by our target markets and economic fluctuations may result in reduced demand for our products, reduced orders for our products, order cancellations, lower revenues, increased inventories, and lower gross margins;

• if recent restructuring activities insufficiently lower our operating expense or we fail to execute on our growth strategy, our restructuring efforts may not be successful and we may not be able to realize the cost savings and other anticipated benefits; 

• if we further reduce our workforce or curtail or redirect research and development efforts, it may adversely impact our ability to respond rapidly to product development or growth opportunities;

• we may be unable to predict the strength or duration of market conditions or the effects of consolidation of our customers or competitors in their industries, which may result in project delays or cancellations;

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• we may be unable to find suitable investments that are safe or liquid, or that provide a reasonable return resulting in lower interest income or longer investment horizons, and disruptions to capital markets or the banking system may also impair the value of investments or bank deposits we currently consider safe or liquid;

• the failure of financial institution counterparties to honor their obligations to us under credit instruments could jeopardize our ability to rely on and benefit from those instruments, and our ability to replace those instruments on the same or similar terms may be limited under poor market conditions;

• continued volatility in the markets and prices for commodities, such as gold, and raw materials we use in our products and in our supply chain, could have a material adverse effect on our costs, gross margins, and profitability;

• if distributors of our products experience declining revenues, experience difficulty obtaining financing in the capital and credit markets to purchase our products or experience severe financial difficulty, it could result in insolvency, reduced orders for our products, order cancellations, inability to timely meet payment obligations to us, extended payment terms, higher accounts receivable, reduced cash flows, greater expenses associated with collection efforts and increased bad debt expenses;

• if contract manufacturers or foundries of our products or other participants in our supply chain experience difficulty obtaining financing in the capital and credit markets to purchase raw materials or to finance general working capital needs, it may result in delays or non-delivery of shipments of our products;

• potential shutdowns on a temporary or permanent basis or over capacity constraints by our third-party foundry, assembly and test subcontractors could result in longer lead-times, higher buffer inventory levels and degraded on-time delivery performance; and/or

• the current macroeconomic environment also limits our visibility into future purchases by our customers and renewals of existing agreements, which may necessitate changes to our business model.

If we fail to develop, introduce or enhance products that meet evolving needs or which are necessitated by technological advances, or we are unable to grow revenue in our served markets, then our business, financial condition and results of operations could be materially and adversely impacted.

The markets for our products are characterized by a number of factors, some of which are listed below:

• changing or disruptive technologies;

• evolving and competing industry standards;

• changing customer requirements;

• increasing price pressure from lower priced solutions;

• increasing product development costs;

• finite market windows for product introductions;

• design-to-production cycles;

• increasing functional integration;

• competitive solutions, or competitors with stronger customer engagement or broader product offering;

• fluctuations in capital equipment spending levels and/or deployment;

• rapid adjustments in customer demand and inventory;

• moderate to slow growth;

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• frequent product introductions and enhancements; and/or

• changing competitive landscape (due to consolidation, financial viability, etc.).

Our growth depends in large part on our continued development and timely release of new products for our core markets. We must: (1) anticipate customer and market requirements and changes in technology and industry standards; (2) properly define, develop and introduce new products on a timely basis; (3) gain access to and use technologies in a cost-effective manner; (4) have suppliers produce quality products consistent with our requirements; (5) continue to expand and retain our technical and design expertise; (6) introduce and cost-effectively deliver new products in line with our customer product introduction requirements; (7) differentiate our products from our competitors’ offerings; and (8) gain customer acceptance of our products. In addition, we must continue to have our products designed into our customers’ future products and maintain close working relationships with key customers to define and develop new products that meet their evolving needs. Moreover, we must respond in a rapid and cost-effective manner to shifts in market demands to increased functional integration and other changes. Migration from older products to newer products may result in earnings volatility as revenues from older products decline and revenues from newer products begin to grow.

Products for our customers’ applications are subject to continually evolving industry standards and new technologies. Our ability to compete will depend in part on our ability to identify and ensure compliance with these industry standards. The emergence of new standards could render our products incompatible with other products that meet those standards. We could be required to invest significant time, effort and expense to develop and qualify new products to ensure compliance with industry standards.

The process of developing and supporting new products is complex, expensive and uncertain, and if we fail to accurately predict, understand and execute to our customers’ changing needs and emerging technological trends, our business, financial condition and results of operations may be harmed. In addition, we may make significant investments to define new products according to input from our customers who may choose a competitor’s or an internal solution or cancel their projects. We may not be able to identify new product opportunities successfully, develop and bring to market new products, achieve design wins, ensure when and which design wins actually get released to production, or respond effectively to technological changes or product announcements by our competitors. In addition, we may not be successful in developing or using new technologies or may incorrectly anticipate market demand and develop products that achieve little or no market acceptance. Our pursuit of technological advances may require substantial time and expense and may ultimately prove unsuccessful. Failure in any of these areas may materially and adversely harm our business, financial condition and results of operations.

We derive a substantial portion of our revenues from distributors, especially from our two primary distributors, Future Electronics Inc. (“Future”), a related party, and Arrow Electronics, Inc. (“Arrow”). Our revenues would likely decline significantly if our primary distributors elected not to or we were unable to effectively promote or sell our products or if they elected to cancel, reduce or defer purchases of our products.

Future and Arrow have historically accounted for a significant portion of our revenues and they are our two primary distributors worldwide. We anticipate that sales of our products to these distributors will continue to account for a significant portion of our revenues. The loss of either Future or Arrow as a distributor, for any reason, or a significant reduction in orders from either of them would materially and adversely affect our business, financial condition and results of operations.

Sales to Future and Arrow are made under agreements that provide protection against price reduction for their inventory of our products. As such, we could be exposed to significant liability if the inventory value of the products held by Future and Arrow declined dramatically. Our distributor agreements with Future and Arrow do not contain minimum purchase commitments. As a result, Future and Arrow could cease purchasing our products with short notice or cease distributing our products. In addition, they may defer or cancel orders without penalty, which would likely cause our revenues to decline and materially and adversely impact our business, financial condition and results of operations.

We have made, and in the future may make, acquisitions and significant strategic equity investments, which may involve a number of risks. If we are unable to address these risks successfully, such acquisitions and investments could have a material adverse effect on our business, financial condition and results of operations.

We have undertaken a number of strategic acquisitions, have made strategic investments in the past, and may make further strategic acquisitions and investments from time to time in the future. The risks involved with these acquisitions and investments include:

• the possibility that we may not receive a favorable return on our investment or incur losses from our investment or the original investment may become impaired;

• revenues or synergies could fall below projections or fail to materialize as assumed;

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• failure to satisfy or set effective strategic objectives;

• the possibility of litigation arising from or in connection with these acquisitions;

• our assumption of known or unknown liabilities or other unanticipated events or circumstances;

• the possibility of planned acquisitions failing to materialize and not realizing anticipated benefits; and/or

• the diversion of management’s attention from day-to-day operations of the business and the resulting potential disruptions to the ongoing business.

Additional risks involved with acquisitions include:

• consequences associated with the recordation or application of various domestic and/or foreign tax regulations;

• exposure to foreign exchange risk associated with acquisition consideration denominated in foreign currencies;

• difficulties in integrating and managing various functional areas such as sales, engineering, marketing, and operations;

• difficulties in incorporating or leveraging acquired technologies and intellectual property rights in new products;

• difficulties or delays in the transfer of product manufacturing flows and supply chains of acquired businesses;

• failure to retain and integrate key personnel;

• failure to retain and maintain relationships with existing customers, distributors, channel partners and other parties;

• failure to manage and operate multiple geographic locations both effectively and efficiently;

• failure to coordinate research and development activities to enhance and develop new products and services in a timely manner that optimize the assets and resources of the combined company;

• difficulties in creating uniform standards, controls (including internal control over financial reporting), procedures, policies and information systems;

• unexpected capital equipment outlays and continuing expenses related to technical and operational integration;

• difficulties in entering markets or retaining current markets in which we have limited or no direct prior experience or where competitors in such markets may have stronger market positions;

• insufficient revenues to offset increased expenses associated with acquisitions;

• under-performance problems with an acquired company;

• issuance of common stock that would dilute our current stockholders’ percentage ownership;

• reduction in liquidity and interest income on lower cash balances;

• recording of goodwill and intangible assets that will be subject to periodic impairment testing and potential impairment charges against our future earnings;

• incurring amortization expenses related to certain intangible assets; and/or

• incurring large and immediate write-offs of assets.

Strategic equity investments also involve risks associated with third parties managing the funds and the risk of poor strategic choices or execution of strategic or operating plans.

We may not address these risks successfully without substantial expense, delay or other operational or financial problems, or at all. Any delays or other such operations or financial problems could materially and adversely impact our business, financial condition and results of operations.

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Our business may be materially and adversely impacted if we fail to effectively utilize and incorporate acquired technologies.

We have acquired and may in the future acquire intellectual property in order to expand our serviceable markets, accelerate our time to market, and to gain market share for new and existing products. Acquisitions of intellectual property may involve risks relating to, among other things, valuation of innovative capabilities, successful technical integration into new products, loss of key technical personnel, compliance with contractual obligations, market acceptance of new product features or capabilities, and achievement of planned return on investment. Successful technical integration in particular requires a variety of capabilities that we may not currently have, such as available technical staff with sufficient time to devote to integration, the requisite skills to understand the acquired technology and the necessary support tools to effectively utilize the technology. The timely and efficient integration of acquired technology may be adversely impacted by inherent design deficiencies or application requirements. The potential failure of or delay in product introduction utilizing acquired intellectual property could lead to an impairment of capitalized intellectual property acquisition costs, which could materially and adversely impact our business, financial condition and results of operations.

Our pending acquisition of iML may significantly impact our business and operations, as well as our total debt outstanding.

On April 27, 2014, we entered into a definitive agreement to acquire Integrated Memory Logic Limited (“iML”), a leading provider of analog mixed-signal solutions for the flat panel display market based in Taipei, Taiwan. We acquired 92% of the capital stock of iML by way of a tender offer on May 29, 2014, and we intend to consummate a second-step merger to acquire the remaining 8% of the capital stock of iML, although there can be no assurance given as to the timing or occurrence of the second-step merger. Our acquisition of iML has resulted in us incurring a substantial amount of additional debt. Such additional debt may have a significant impact upon on our business and operations.

We may not successfully evaluate, utilize or integrate the acquired products, technologies or personnel, or accurately forecast the financial impact of the acquisition, including accounting charges or the impact on our existing business. For example, customers of Exar and iML may not continue to use Exar and iML to the same extent as they would have if iML had remained an independent company, or they may cancel existing agreements. Accordingly, we may not realize the potential benefits of the acquisition.

In addition to these risks, the integration of iML into Exar will be a time-consuming and expensive process and will require us to bear ongoing costs associated with maintaining and supporting the existing iML technology platforms. We may lose key iML employees as a result of the acquisition, which would increase our costs and challenges in supporting the acquired technology. If our integration effort is not successful, if we do not estimate associated costs accurately or if we cannot effectively manage costs, we may not realize anticipated synergies or other benefits of the iML acquisition, or it may take longer to realize these benefits than we currently expect, either of which could materially harm our business or results of operations.

Furthermore, operating decisions may impact existing products and platforms. If any of these decisions are expected to potentially result in the limitation or discontinuation of use of certain assets, we would expect accelerated depreciation and potential impairment of assets including property and equipment, software and website development costs, intangible assets or goodwill.

Finally, any changes in the operating structure of the business post acquisition may result in changes in asset groups, segments, or reporting units which could also result in certain asset impairments.

As a result of our acquisition of iML, we are now subject to additional risks related to iML’s business.

As a result of acquiring iML, we are subject to additional risks specific to iML’s business, including the following:

• If iML fails to maintain or increase its base of customers who purchase its products, iML’s business, results of operations and financial condition would be materially and adversely affected;

• iML may not be able to expand into new geographical markets, adjacent markets in the flat panel display industry or new industry verticals as a result of restrictions in its existing contracts;

• If iML’s security measures are compromised, customers may curtail or stop using iML’s products;

• iML utilizes certain key technologies third parties and may be unable to replace those technologies if they become obsolete, unavailable or incompatible with its products;

• The software underlying iML’s products may be subject to undetected errors, defects or bugs which could adversely affect its business;

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• iML may be unable to maintain or grow its base of customers or increase its revenue from its existing customers, in which case its business, results of operations and financial condition will be harmed; and

• iML may not timely and effectively scale and adapt its existing technologies and infrastructure to ensure that its products remain competitive.

Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from making payments on the debt.

In our acquisition of iML, we incurred a substantial amount of additional debt in the form of new senior secured credit facilities. We may also incur additional indebtedness in the future. Our ability to generate sufficient cash flow from operations to make scheduled payments on our debt will depend on a range of economic, competitive and business factors, many of which are outside our control. Our business may not generate sufficient cash flow from operations to meet our debt service and other obligations, and currently anticipated cost savings and operating improvements may not be realized on schedule, or at all. If we are unable to meet our expenses and debt service and other obligations, we may need to refinance all or a portion of our indebtedness on or before maturity, sell assets or raise equity. We may not be able to refinance any of our indebtedness, sell assets or raise equity on commercially reasonable terms or at all, which could cause us to default on our obligations and impair our liquidity. Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms, would have a material adverse effect on our business, financial condition and results of operations.

Our expected substantial indebtedness could have important consequences, including the following:

• it may limit our ability to borrow money for our working capital, capital expenditures, debt service requirements, strategic initiatives or other purposes;

• it may limit our ability to borrow money for our working capital, capital expenditures, debt service requirements, strategic initiatives or other purposes;

• it may make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the agreements governing such indebtedness;

• a substantial portion of our cash flow from operations will be dedicated to the repayment of our indebtedness and so will not be available for other purposes;

• it may limit our flexibility in planning for, or reacting to, changes in our operations or business;

• we will be more highly leveraged than some of our competitors, which may place us at a competitive disadvantage;

• it may make us more vulnerable to downturns in our business or the economy;

• it may restrict us from making strategic acquisitions, introducing new technologies or exploiting business opportunities; and

• it may limit, along with the restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds or dispose of assets.

Furthermore, our interest expense could increase if interest rates increase because a portion of the debt under our new senior secured credit facilities is variable-rate debt.

Despite our substantial indebtedness, we may still be able to incur significantly more debt. This could intensify the risks described above.

The terms of our new senior secured credit facilities contain restrictions on our and our subsidiaries’ ability to incur additional indebtedness. However, these restrictions are subject to a number of important qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. Accordingly, we or our subsidiaries could incur significant additional indebtedness in the future. The more leveraged we become, the more we, and in turn our securityholders, become exposed to the risks described above.

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We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness that may not be successful.

Our ability to pay principal and interest on the new senior secured credit facilities and our other debt obligations will depend upon, among other things:

• our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, many of which are beyond our control; and

• the future availability of debt financing, the availability of which depends on, among other things, our complying with the covenants in our new senior secured credit facilities.

We cannot assure you that our business will generate sufficient cash flow from operations, or that future debt financing will be available to us, in an amount sufficient to fund our liquidity needs, including the payment of principal and interest on our indebtedness.

If our cash flows and capital resources are insufficient to service our indebtedness, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. In addition, the terms of existing or future debt agreements, including our new senior secured credit facilities, may restrict us from adopting some of these alternatives. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions for fair market value or at all. Furthermore, any proceeds that we could realize from any such dispositions may not be adequate to meet our debt service obligations then due.

The terms of our new senior secured credit facilities may restrict our current and future operations, particularly our ability to respond to changes in our business or to take certain actions.

Our new senior secured credit facilities are expected to contain, and any future indebtedness of ours would likely contain, a number of restrictive covenants that will impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things:

• incur or guarantee additional debt;

• pay dividends and make other restricted payments;

• create or incur certain liens;

• make certain investments;

• engage in sales of assets and subsidiary stock;

• enter into transactions with affiliates;

• transfer all or substantially all of our assets or enter into merger or consolidation transactions; and

• make capital expenditures.

As a result of these covenants, we will be limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs.

A failure to comply with the covenants contained in our new senior secured credit facilities or our other indebtedness could result in an event of default under the facilities or the existing agreements, which, if not cured or waived, could have a material adverse effect on our business, financial condition and results of operations. In the event of any default under our senior secured credit facilities or our other indebtedness, the lenders thereunder:

• will not be required to lend any additional amounts to us;

• could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable;

• require us to apply all of our available cash to repay these borrowings; or

• prevent us from making debt service payments, any of which could result in an event of default under our indebtedness.

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If the indebtedness under our new senior secured credit facilities or our other indebtedness were to be accelerated, there can be no assurance that our assets would be sufficient to repay such indebtedness in full.

We depend on third-party subcontractors to manufacture our products. We utilize wafer foundries for processing our wafers and assembly and test subcontractors for manufacturing and testing our integrated circuit products and board assembly subcontractors for our board-level products. Any disruption in or loss of our subcontractors’ capacity to manufacture and test our products subjects us to a number of risks, including the potential for an inadequate supply of products and higher materials costs. These risks may lead to delayed product delivery or increased costs, which could materially and adversely impact our business, financial condition and results of operations.

We do not own or operate a semiconductor fabrication facility or a foundry. We utilize various foundries for different processes. Our products are based on CMOS processes, bipolar processes, BiCMOS and BCD processes. Our foundries produce semiconductors for many other companies (many of which have greater volume requirements than us), and therefore, we may not have access on a timely basis to sufficient capacity or certain process technologies and we have from time to time experienced extended lead times on some products. In addition, we rely on our foundries’ continued financial health and ability to continue to invest in smaller geometry manufacturing processes and additional wafer processing capacity.

Many of our new products are designed to take advantage of smaller geometry manufacturing processes. Due to the complexity and increased cost of migrating to smaller geometries, as well as process changes, we could experience interruptions in production or significantly reduced yields causing product introduction or delivery delays. If such delays occur, our products may have delayed market acceptance or customers may select our competitors’ products during the design process.

New and current process technologies or products can be subject to wide variations in manufacturing yields and efficiency. Our foundries or the foundries of our suppliers may experience unfavorable yield variances or other manufacturing problems that result in product introduction or delivery delays. Further, if the products manufactured by our foundries contain production defects, reliability issues or quality or compatibility problems that are significant to our customers, our reputation may be damaged and customers may cancel orders, assert product warranty or damage claims, or be reluctant to continue to buy our products, which could adversely affect our ability to retain and attract new customers. In addition, these errors and defects could interrupt or delay sales of affected products, which could materially and adversely affect our business, financial condition and results of operations.

Our foundries and test and assembly subcontractors manufacture our products on a purchase order basis. We provide our foundries with rolling forecasts of our production requirements; however, the ability of our foundries to provide wafers is limited by the foundries’ available capacity. Our third-party foundries may not allocate sufficient capacity to satisfy our requirements. In addition, we may not continue to do business with our foundries on terms as favorable as our current terms.

Furthermore, any reduction or discontinuance, either on a permanent or temporary basis, of any primary source or sources of fully processed wafers could result in a material delay in the shipment of our products, lost sales opportunities, and increased costs. Any delays or shortages would likely materially and adversely impact our business, financial condition and results of operations. In particular, the products produced from the wafers manufactured by our supplier in Hangzhou, China currently constitute a significant part of our total revenue, so any delay, reduction or elimination of our ability to obtain wafers from this supplier on competitive terms and in the requested quantities could materially and adversely impact our business, financial condition and results of operations.

Our reliance on our wafer foundries, assembly and test subcontractors and board assembly subcontractors involves the following risks, among others:

• a manufacturing disruption or reduction or elimination of any existing source(s) of semiconductor manufacturing materials or processes, which might include the potential temporary or permanent closure, product and /or process discontinuation, change of ownership, change in business conditions or relationships, change of management or consolidation by one of our foundries;

• disruption of manufacturing or assembly or test services due to vendor transition, relocation or limited capacity of the foundries or subcontractors;

• inability to obtain, develop or ensure the continuation of technologies needed to manufacture our products;

• extended time required to identify, qualify and transfer to alternative manufacturing sources for existing or new products or the possible inability to obtain an adequate alternative;

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• failure of our foundries or subcontractors to obtain raw materials and equipment;

• increasing cost of commodities, such as gold, raw materials and energy resulting in higher wafer or package costs;

• long-term financial and operating stability of the foundries or their suppliers or subcontractors and their ability to invest in new capabilities and expand capacity to meet increasing demand, to remain solvent or to obtain financing in tight credit markets;

• continuing measures taken by our suppliers such as reductions in force, pay reductions, forced time off or shut down of production for extended periods of time to reduce and/or control operating expenses in response to weakened customer demand;

• subcontractors’ inability to transition to smaller package types or new package compositions;

• a sudden, sharp increase in demand for semiconductor devices, which could strain the foundries’ or subcontractors’ manufacturing resources and cause delays in manufacturing and shipment of our products;

• manufacturing quality control or process control issues, including reduced control over manufacturing yields, production schedules and product quality;

• potential misappropriation of our intellectual property;

• disruption of transportation to and from Asia where most of our foundries and subcontractors are located;

• political, civil, labor or economic instability;

• embargoes or other regulatory limitations affecting the availability of raw materials or equipment, or changes in tax laws, tariffs, services and freight rates; and/or

• compliance with U.S., local or international regulatory requirements.

Other additional risks associated with subcontractors include:

• subcontractors imposing higher minimum order quantities for substrates;

• potential increase in assembly and test costs;

• our board level product volume may not be attractive to preferred manufacturing partners, which could result in higher pricing, extended lead times or having to qualify an alternative vendor;

• difficulties in selecting, qualifying and integrating new subcontractors;

• inventory and delivery management issues relating to hub arrangements;

• entry into “take-or-pay” agreements subjecting us to high fixed costs; and/or

• limited warranties from our subcontractors for products assembled and tested for us.

If we are unable to accurately forecast demand for our products, we may be unable to efficiently manage our inventory.

Due to the absence of substantial non-cancelable backlog, we typically plan our production and inventory levels based on customer forecasts, internal evaluation of customer demand and current backlog, which can fluctuate substantially. Due to a number of factors such as customer changes in delivery schedules and quantities actually purchased, cancellation of orders, distributor returns or price reductions, our backlog at any particular date is not necessarily indicative of actual sales for any succeeding period. The still unsettled, uncertain and weak economy may increase the risk of purchase order cancellations or delays, product returns and price reductions. We may not be able to meet our expected revenue levels or results of operations if there is a reduction in our order backlog for any particular period and we are unable to replace those anticipated sales during the same period. Our forecast accuracy can be adversely affected by a number of factors, including inaccurate forecasting by our customers, changes in market conditions, new part introductions by our competitors, loss of previous design wins, adverse changes in our scheduled product order mix and demand for our customers’ products or models. As a consequence of these factors and other inaccuracies inherent in forecasting, inventory imbalances periodically occur that result in surplus amounts of some of our products and shortages of others. Such shortages can adversely impact customer relations and surpluses can result in larger-than-desired inventory levels, either of which can materially and adversely impact our business, financial condition and results of operations. Due to the unpredictability of global economic conditions and increased difficulty in forecasting demand for our products, we could experience an increase in inventory levels.

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In instances where we have hub agreements with certain vendors, the inability of our partners to provide accurate and timely information regarding inventory and related shipments of the inventory may impact our ability to maintain the proper amount of inventory at the hubs, forecast usage of the inventory and record accurate revenue recognition which could materially and adversely impact our business, financial conditions and the results of operations.

If our distributors or sales representatives stop selling or fail to successfully promote our products, our business, financial condition and results of operations could be materially and adversely impacted.

We sell many of our products through sales representatives and distributors, many of which sell directly to OEMs, contract manufacturers and end customers. Our non-exclusive distributors and sales representatives may carry our competitors’ products, which could adversely impact or limit sales of our products. Additionally, they could reduce or discontinue sales of our products or may not devote the resources necessary to sell our products in the volumes and within the time frames that we expect. Our agreements with distributors contain limited provisions for return of our products, including stock rotations whereby distributors may return a percentage of their purchases from us based upon a percentage of their most recent three or six months of shipments. In addition, in certain circumstances upon termination of the distributor relationship, distributors may return some portion of their prior purchases. The loss of business from any of our significant distributors or the delay of significant orders from any of them, even if only temporary, could materially and adversely impact our business, financial conditions and results of operations.

Moreover, we depend on the continued viability and financial resources of these distributors and sales representatives, some of which are small organizations with limited working capital. In turn, these distributors and sales representatives are subject to general economic and semiconductor industry conditions. We believe that our success will continue to depend on these distributors and sales representatives. If some or all of our distributors and sales representatives experience financial difficulties, or otherwise become unable or unwilling to promote and sell our products, our business, financial condition and results of operations could be materially and adversely impacted.

Certain of our distributors may rely heavily on the availability of short-term capital at reasonable rates to fund their ongoing operations. If this capital is not available, or is only available on onerous terms, certain distributors may not be able to pay for inventory received or we may experience a reduction in orders from these distributors, which would likely cause our revenue to decline and materially and adversely impact our business, financial condition and results of operations.

We depend in part on the continued service of our key engineering and executive management personnel and our ability to identify, hire, incentivize and retain qualified personnel. If we lose key employees or fail to identify, hire, incentivize and retain these individuals, our business, financial condition and results of operations could be materially and adversely impacted.

Our future success depends on the continued service of our key design, engineering, technical, sales, marketing and executive personnel and our ability to identify, hire, motivate and retain such qualified personnel, as well as effectively and quickly replace key personnel with qualified successors with competitive incentive compensation packages.

Under certain circumstances, including a company acquisition, significant restructuring or business downturn, current and prospective employees may experience uncertainty about their future roles with us. Volatility or lack of positive performance in our stock price and the ability or willingness to offer meaningful competitive equity compensation and incentive plans or in amounts consistent with market practices may also adversely affect our ability to retain and incentivize key employees. In addition, competitors may recruit our employees, as is common in the high tech sector. If we are unable to retain personnel that are critical to our future operations, we could face disruptions in operations, loss of existing customers, loss of key information, expertise or know-how, unanticipated additional recruiting and training costs, and potentially higher compensation costs.

Competition for skilled employees having specialized technical capabilities and industry-specific expertise is intense and continues to be a considerable risk inherent in the markets in which we compete. At times, competition for such employees has been particularly notable in California and the PRC. Further, the PRC historically has different managing principles from Western style management and financial reporting concepts and practices, as well as different banking, computer and other control systems, making the successful identification and employment of qualified personnel particularly important, and hiring and retaining a sufficient number of such qualified employees may be difficult. As a result of these factors, we may experience difficulty in establishing and maintaining management, legal and financial controls, collecting financial data, books of account and records and instituting business practices that meet Western standards and regulations, which could materially and adversely impact our business, financial condition and results of operations.

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Our employees are employed “at-will,” which means that they can terminate their employment at any time. Our international locations are subject to local labor laws, which are often significantly different from U.S. labor laws and which may under certain conditions, result in large separation costs upon termination. Further, employing individuals in international locations is subject to other risks inherent in international operations, such as those discussed with respect to international sales below, among others. The failure to recruit and retain, as necessary, key design engineers and technical, sales, marketing and executive personnel could materially and adversely impact our business, financial condition and results of operations.

Stock-based awards are critical to our ability to recruit, retain and motivate highly skilled talent. In making employment decisions, particularly in the semiconductor industry and the geographies where our employees are located, a key consideration of current and potential employees is the value of the equity awards they receive in connection with their employment. If we are unable to offer employment packages with a competitive equity award component, our ability to attract highly skilled employees would be harmed. In addition, volatility in our stock price could result in a stock option’s exercise price exceeding the market value of our common stock or a deterioration in the value of restricted stock units granted, thus lessening the effectiveness of stock-based awards for retaining and motivating employees. Similarly, decreases in the number of unvested in-the-money stock options held by existing employees, whether because our stock price has declined, options have vested, or because the size of follow-on option grants has decreased, may make it more difficult to retain and motivate employees. Because of the number of shares available under our 2006 Equity Incentive Plan is inadequate to provide for future equity awards and incentives, we are seeking stockholder approval of the 2014 Equity Incentive Plan at our 2014 Annual Meeting of Stockholders. Without such stockholder approval, we may not continue to successfully attract and retain key employees, which could have an adverse effect on our business, financial condition and results of operations.

Because a significant portion of our total assets were, and may again be with future potential acquisitions, represented by goodwill and other intangible assets, which are subject to mandatory annual impairment evaluations, we could be required to write-off some or all of our goodwill and other intangible assets, which could materially and adversely impact our business, financial condition and results of operations.

A significant portion of the purchase price for any business combination may be allocated to identifiable tangible and intangible assets and assumed liabilities based on estimated fair values at the date of consummation. As required by U.S. generally accepted accounting principles, the excess purchase price, if any, over the fair value of these assets less liabilities typically would be allocated to goodwill. We evaluate goodwill for impairment on an annual basis or whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. We conduct our annual analysis of our goodwill at the reporting unit level in the fourth quarter of our fiscal year.

The assessment of goodwill and other intangible assets impairment is a subjective process. Estimations and assumptions regarding the number of reporting units, future performance, results of our operations and comparability of our market capitalization and net book value will be used. Changes in estimates and assumptions could impact fair value resulting in an impairment, which could materially and adversely impact our business, financial condition and results of operations.

Because some of our integrated circuit and board level products have lengthy sales cycles, we may experience substantial delays between incurring expenses related to product development and the revenue derived from these products.

A portion of our revenue is derived from selling integrated circuits and board level products to end customer equipment vendors. Due to their product development cycle, we have typically experienced at least an eighteen-month time lapse between our initial contact with a customer and realizing volume shipments. In such instances, we first work with customers to achieve a design win, which may take six months or longer. Our customers then complete their design, test and evaluation process and begin to ramp-up production, a period which typically lasts an additional six months. The customers of equipment manufacturers may also require a period of time for testing and evaluation, which may cause further delays. As a result, a significant period of time may elapse between our research and development efforts and realization of revenue, if any, from volume purchasing of our products by our customers. Due to the length of the end customer equipment vendors’ product development cycle, the risks of project cancellation by our customers, price erosion or volume reduction are common aspects of such engagements.

The complexity of our products may lead to errors and defects, which could subject us to significant costs or damages and adversely affect market acceptance of our products.

Although we, our customers and our suppliers rigorously test our products, they may contain undetected errors, performance weaknesses or errors or defects when first introduced, or as new versions are released when manufacturing or process changes are made. If any of our products contain design or production defects, reliability issues or quality or compatibility problems that are significant to our customers, our reputation may be damaged and customers may be reluctant to continue to design in or buy our products, which could adversely affect our ability to retain and attract new customers. In addition, these errors or defects could interrupt or delay sales of affected products, which could materially and adversely affect our business, financial condition and results of operations.

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If errors or defects are discovered after commencement of commercial production, we may be required to make significant expenditures of capital and other resources to resolve the problems. This could result in significant additional development costs and the diversion of technical and other resources from our other business development efforts. We could also incur significant costs to repair or replace defective products or may agree to be liable for certain damages incurred. These costs or damages could have a material adverse effect on our business, financial condition and results of operations.

If we are unable to compete effectively with existing or new competitors, we will experience fewer customer orders, reduced revenues, reduced gross margins and lost market share.

We compete in markets that are intensely competitive, and which are subject to both rapid technological change, continued price erosion and changing business terms with regard to risk allocation. Our competitors include many large domestic and foreign companies that may have substantially greater financial, market share, technical and management resources, name recognition and leverage than we have. As a result, they may be able to adapt more quickly to new or emerging technologies and changes in customer requirements or to devote greater resources to promote the sale of their products.

We have experienced increased competition at the design stage, where customers evaluate alternative solutions based on a number of factors, including price, performance, product features, technologies, and availability of long-term product supply and/or roadmap guarantee. Additionally, we experience, and may in the future experience, in some cases, severe pressure on pricing from competitors or on-going cost reduction expectations from customers. Such circumstances may make some of our products unattractive due to price or performance measures and result in the loss of our design opportunities or a decrease in our revenue and margins.

Also, competition from new companies, including those from emerging economy countries, with significantly lower costs could affect our selling price and gross margins. In addition, if competitors in Asia continue to reduce prices on commodity products, it would adversely affect our ability to compete effectively in that region. Specifically, we have licensed rights to a supplier in China to market our commodity connectivity products, which could reduce our sales in the future should they become a meaningful competitor. Loss of competitive position could result in price reductions, fewer customer orders, reduced revenues, reduced gross margins and loss of market share, any of which would adversely affect our operating results and financial condition.

Furthermore, many of our existing and potential customers internally develop solutions which attempt to perform all or a portion of the functions performed by our products. To remain competitive, we continue to evaluate our manufacturing operations for opportunities for additional cost savings and technological improvements. If we or our contract partners are unable to successfully implement new process technologies and to achieve volume production of new products at acceptable yields, our business, financial condition and results of operations may be materially and adversely affected.

Our stock price is volatile.

The market price of our common stock has fluctuated significantly at times. In the future, the market price of our common stock could be subject to significant fluctuations due to, among other reasons:

• our anticipated or actual operating results;

• announcements or introductions of new products by us or our competitors;

• technological innovations by us or our competitors;

• investor perception of the semiconductor sector;

• loss of or changes to key executives;

• product delays or setbacks by us, our customers or our competitors;

• potential supply disruptions;

• sales channel interruptions;

• concentration of sales among a small number of customers;

• conditions in our customers’ markets and the semiconductor markets;

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• the commencement and/or results of litigation;

• changes in estimates of our performance by securities analysts;

• decreases in the value of our investments or long-lived assets, thereby requiring an asset impairment charge against earnings;

• repurchasing shares of our common stock;

• announcements of merger or acquisition transactions; and/or

• general global economic and capital market conditions.

In the past, securities and class action litigation has been brought against companies following periods of volatility in the market prices of their securities. We may be the target of one or more of these class action suits, which could result in significant costs and divert management’s attention, thereby materially and adversely impacting our business, financial condition and results of operations.

In addition, at times the stock market has experienced extreme price, volume and value fluctuations that affect the market prices of the stock of many high technology companies, including semiconductor companies, that are unrelated or disproportionate to the operating performance of those companies. Any such fluctuations may harm the market price of our common stock.

Occasionally, we enter into agreements that expose us to potential damages that exceed the value of the agreement.

We have given certain customers increased indemnification protection for product deficiencies or intellectual property infringement that is in excess of our standard limited warranty and indemnification provisions and could result in costs that are in excess of the original contract value. In an attempt to limit this liability, we have purchased insurance coverage to partially offset some of these potential additional costs; however, our insurance coverage could be insufficient in terms of amount and/or coverage to prevent us from suffering material losses if the indemnification amounts are large enough or if there are coverage issues.

As of June 29, 2014, affiliates of Future, Alonim Investments Inc. and two of its affiliates (collectively “Alonim”), beneficially own approximately 16% of our common stock and Soros Fund Management LLC, as principal investment manager for Quantum Partners LP (“Soros”), beneficially owns approximately 11% of our common stock. As such, Alonim and Soros are our largest stockholders. These substantial ownership positions provide the opportunity for Alonim and Soros to significantly influence matters requiring stockholder approval, which may or may not be in our best interests or the interest of our other stockholders. In addition, Alonim is an affiliate of Future and an executive officer of Future is on our board of directors, which could lead to actual or perceived influence from Future.

Alonim and Soros each own a significant percentage of our outstanding shares. Due to such ownership, Alonim and Soros, acting independently or jointly, have not in the past, but may in the future, exert strong influence over actions requiring the approval of our stockholders, including the election of directors, many types of change of control transactions and amendments to our charter documents. Further, if one of these stockholders were to sell or even propose to sell a large number of their shares, the market price of our common stock could decline significantly.

Although we have no reason to believe it to be the case, the interests of these significant stockholders could conflict with our best interests or the interests of the other stockholders. For example, the significant ownership percentages of these two stockholders could have the effect of delaying or preventing a change of control or otherwise discouraging a potential acquirer from obtaining control of us, regardless of whether the change of control is supported by us and our other stockholders. Conversely, by virtue of their percentage ownership of our stock, Alonim and/or Soros could facilitate a takeover transaction that our board of directors and/or other stockholders did not approve.

Further, Future, our largest distributor, is an affiliate of Alonim, and Pierre Guilbault, executive vice president and chief financial officer of Future, is a member of our board of directors. These relationships could also result in actual or perceived attempts to influence management or take actions beneficial to Future which may or may not be beneficial to us or in our best interests. Future could attempt to obtain terms and conditions more favorable than those we would typically provide to other distributors because of its relationship with us. Any such actual or perceived preferential treatment could materially and adversely affect our business, financial condition and results of operations.

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Earthquakes and other natural disasters, may damage our facilities or those of our suppliers and customers.

The occurrence of natural disasters in certain regions, such as the natural disasters in Asia, could adversely impact our manufacturing and supply chain, our ability to deliver products on a timely basis (or at all) to our customers and the cost of or demand for our products. Our corporate headquarters in Fremont, California is located near major earthquake faults that have experienced seismic activity and is approximately 170 miles from a nuclear power plant. In addition, some of our other offices, customers and suppliers are in locations which may be subject to similar natural disasters. In the event of a major earthquake or other natural disaster near our offices, our operations could be disrupted. Similarly, a major earthquake or other natural disaster, such as the earthquakes in Japan or flooding in Thailand, affecting one or more of our major customers or suppliers could adversely impact the operations of those affected, which could disrupt the supply or sales of our products and harm our business, financial condition and results of operations.

Any error in our sell-through revenue recognition judgment or estimates could lead to inaccurate reporting of our net sales, gross profit, deferred income and allowances on sales to distributors and net income.

Sell-through revenue recognition is highly dependent on receiving pertinent and accurate data from our distributors in a timely fashion. Distributors provide us periodic data regarding the product, price, quantity and end customer when products are resold as well as the quantities of our products they still have in stock. We must use estimates and apply judgment to reconcile distributors’ reported inventories to their activities. Any error in our judgment could lead to inaccurate reporting of our net sales, gross profit, deferred income and allowances on sales to distributors and net income, which could have an adverse effect on our business, financial condition and results of operations.

A breach of our security systems may have a material adverse effect on our business.

Our information systems are designed to maintain and protect our customers’, suppliers’ and employees’ confidential and business intelligence data as well as our proprietary information and technology. We may experience cyber-attacks and other security breaches, and as a result, unauthorized parties may obtain access to our information systems. Cyber-attacks and security vulnerabilities could lead to reduced revenue, increased costs, liability claims or harm our or business partners’ competitive position. Any significant system or network disruption, including but not limited to, new system implementations, computer viruses or worms, security breaches or unexpected energy blackouts could have a material adverse impact on our operations, sales and operating results. Maintaining the security integrity of our enterprise network is paramount for us, our customers and our suppliers. We have implemented measures to manage, monitor and detect our risks related to such disruptions, but despite precautionary efforts such disruptions could still occur and negatively impact our operations and financial results. In addition, we may incur additional costs to remedy any damages caused by these disruptions or security breaches.

We may be unable to protect our intellectual property rights, which could harm our competitive position.

Our ability to compete is affected by our ability to protect our intellectual property rights. We rely on a combination of patents, trademarks, copyrights, mask work registrations, trade secrets, confidentiality procedures and non-disclosure and licensing arrangements to protect our intellectual property rights. Despite these efforts, we may be unable to protect our proprietary information. Such intellectual property rights may not be recognized or if recognized, may not be commercially feasible to enforce or there may not be an effective judicial remedy. Moreover, our competitors may independently develop technology that is substantially similar or superior to our technology.

More specifically, our pending patent applications or any future applications may not be approved, and any issued patents may not provide us with competitive advantages or may be challenged by third parties. If challenged, our patents may be found to be invalid or unenforceable, and the patents of others may have an adverse effect on our ability to do business. Furthermore, others may independently develop similar products or processes, duplicate our products or processes or design around any patents that may be issued to us.

We could be required to pay substantial damages or could be subject to various equitable remedies if it were proven that we infringed the intellectual property rights of others.

As a general matter, semiconductor companies may from time to time become involved with ongoing litigation regarding patents and other intellectual property rights. If a third party were to prove that our technology infringed its intellectual property rights, we could be required to pay substantial damages for past infringement and could be required to pay license fees or royalties on future sales of our products. If we were required to pay such license fees whenever we sold our products, such fees could exceed our revenue. In addition, if it was proven that we willfully infringed a third party’s proprietary rights, we could be held liable for three times the amount of the damages that we would otherwise have to pay. Such intellectual property litigation could also require us to:

• stop selling, incorporating or using our products that use the infringed intellectual property;

52

• obtain a license to make, sell or use the relevant technology from the owner of the infringed intellectual property, which license may not be available on commercially reasonable terms, if at all; and/or

• redesign our products so as not to use the infringed intellectual property, which may not be technically or commercially feasible.

The defense of infringement claims and lawsuits, regardless of their outcome, would likely be expensive and could require a significant portion of management’s time. In addition, rather than litigating an infringement matter, we may determine that it is in our best interests to settle the matter. Terms of a settlement may include the payment of damages and our agreement to license technology in exchange for a license fee and ongoing royalties. These fees could be substantial. If we were required to pay damages or otherwise became subject to equitable remedies, our business, financial condition and results of operations would suffer. Similarly, if we were required to pay license fees to third parties based on a successful infringement claim brought against us, such fees could exceed our revenue.

Our results of operations could vary as a result of the methods, estimates and judgments we use in applying our accounting policies.

The methods, estimates and judgments we use in applying our accounting policies have a significant impact on our results of operations. Such methods, estimates and judgments are, by their nature, subject to substantial risks, uncertainties, assumptions and changes in rulemaking by regulatory bodies; and factors may arise over time that lead us to change our methods, estimates, and judgments. Changes in those methods, estimates and judgments could materially and adversely impact our business, financial condition and results of operations.

Our revenue reporting is highly dependent on receiving pertinent and accurate data from our distributors in a timely fashion. Distributors provide us periodic data regarding the product, price, quantity and end customer when products are resold as well as the quantities of our products they still have in stock. We must use estimates and apply judgment to reconcile distributors’ reported inventories to their activities. Any error in our judgment could lead to inaccurate reporting of our net sales, gross profit, deferred income and allowances on sales to distributors and net income.

We estimate the fair value of stock options on the date of grant using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based compensation represent our estimates, but these estimates involve inherent uncertainties and the application of management judgments, which include the expected term of the stock-based awards, stock price volatility and forfeiture rates. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future.

On an on-going basis, we use estimates and judgment to evaluate valuation of inventories, income taxes, intangible assets, goodwill, long-lived assets and contingent consideration liabilities in preparing our condensed consolidated financial statements. Actual results could differ from these estimates and material effects on operating results and financial position may result.

The final determination of our income tax liability may be materially different from our income tax provision, which could have an adverse effect on our results of operations.

Our future effective tax rates may be adversely affected by a number of factors including:

• the jurisdictions in which profits are determined to be earned and taxed;

• the resolution of issues arising from tax audits with various tax authorities;

• changes in the valuation of our deferred tax assets and liabilities;

• adjustments to estimated taxes upon finalization of various tax returns;

• increases in expenses not deductible for tax purposes, including write-offs of acquired in-process research and development and impairment of goodwill in connection with acquisitions;

• changes in available tax credits;

• changes in stock-based compensation expense;

• changes in tax laws or the interpretation of such tax laws and changes in generally accepted accounting principles; and/or

• the repatriation of non-U.S. earnings for which we have not previously provided for U.S. taxes.

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Any significant increase in our future effective tax rates could adversely impact net income for future periods. In addition, the U.S. Internal Revenue Service (“IRS”) and other tax authorities regularly examine our income tax returns. Our business, financial condition and results of operations could be materially and adversely impacted if these assessments or any other assessments resulting from the examination of our income tax returns by the IRS or other taxing authorities are not resolved in our favor.

We have acquired significant NOL carryforwards as a result of our acquisitions. The utilization of acquired NOL carryforwards is subject to the IRS’s complex limitation rules that carry significant burdens of proof. Limitations include certain levels of a change in ownership. As a publicly traded company, such change in ownership may be out of our control. Our eventual ability to utilize our estimated NOL carryforwards is subject to IRS scrutiny and our future results may not benefit as a result of potential unfavorable IRS rulings.

Our engagement with foreign customers could cause fluctuations in our operating results, which could materially and adversely impact our business, financial condition and results of operations.

International sales have accounted for, and will likely continue to account for a significant portion of our revenues, which subjects us to the following risks, among others:

• changes in or compliance with regulatory requirements;

• tariffs, embargoes, directives and other trade barriers which impact our or our customers’ business operations;

• timing and availability of export or import licenses;

• disruption of services due to political, civil, labor or economic instability;

• disruption of services due to natural disasters outside the United States;

• disruptions to customer operations outside the United States due to the outbreak of communicable diseases;

• difficulties in accounts receivable collections;

• difficulties in staffing and managing foreign subsidiary and branch operations;

• difficulties in managing sales channel partners;

• difficulties in obtaining governmental approvals for our products;

• limited intellectual property protection;

• foreign currency exchange fluctuations;

• the burden of complying with foreign laws and treaties;

• contractual or indemnity issues that are materially different from our standard sales terms; and/or

• potentially adverse tax consequences.

In addition, because sales of our products have been denominated primarily in U.S. dollars, increases in the value of the U.S. dollar as compared with local currencies could make our products more expensive to customers in the local currency of a particular country resulting in pricing pressures on our products. Increased international activity in the future may result in foreign currency denominated sales. Furthermore, because some of our customers’ purchase orders and agreements are governed by foreign laws, we may be limited in our ability, or it may be too costly for us, to enforce our rights under these agreements and to collect damages, if awarded.

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We may be exposed to additional credit risk as a result of concentrated customer revenue.

From time to time one of our customers has contributed more than 10% of our quarterly net sales. A number of our customers are OEMs, or the manufacturing subcontractors of OEMs, which might result in an increase in concentrated credit risk with respect to our trade receivables and therefore, if a large customer were to be unable to pay, it could materially and adversely impact our business, financial condition and results of operations.

Compliance with new regulations regarding the use of conflict minerals could adversely impact the supply and cost of certain metals used in manufacturing our products.

In August 2012, the SEC issued final rules for compliance with Section 1502 of the Dodd-Frank Act, and outlined what U.S. publicly-traded companies have to disclose regarding their use of conflict minerals in their products. According to the rule, companies that utilize any of the 3TG (tin, tantalum, tungsten and gold) and other listed minerals in their products need to conduct a reasonable country of origin inquiry to determine if the minerals are coming from the conflict zones in and around the Democratic Republic of Congo. The implementation of these new regulations may limit the sourcing and availability of some metals used in the manufacture of our products and may affect our ability to obtain products in sufficient quantities or at competitive prices. Our customers, including our OEM customers, may require that our products contain only conflict mineral free 3TG, and our revenues and margins may be harmed if we are unable to meet this requirement at a reasonable price, or at all, or are unable to pass through any increased costs associated with meeting this requirement. Furthermore, as we acquired approximately 92% of the capital stock of iML by way of a tender offer on May 29, 2014, and are evaluating iML’s use, if any, of conflict minerals in its products. We may suffer reputational harm with our customers and other stakeholders if our products (including iML’s products) are not conflict mineral free or if we are unable to sufficiently verify the origins of the 3TG contained in our products through the due diligence procedures that we implement. We could incur significant costs to the extent that we are required to make changes to products, processes or sources of supply due to the foregoing requirements or pressures.

ITEM 6. EXHIBITS

(a)Exhibits required by Item 601 of Regulation S-K

See the Exhibit Index, which follows the signature page to this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q of Exar Corporation to be signed on its behalf by the undersigned thereunto duly authorized.

		EXAR CORPORATION (Registrant)
August 8, 2014	By	/s/ Ryan A. Benton
		Ryan A. Benton Senior Vice President and Chief Financial Officer (On the Registrant’s Behalf and as Principal Financial and Accounting Officer)

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INDEX TO EXHIBITS

		Incorporated by Reference
Exhibit Number	Exhibit	Form	File No.	Exhibit	Filing Date	Filed Herewith
2.1	Form of Merger Agreement	8-K	0-14225	2.1	4/30/2014
2.2	Form of Tender Agreement	8-K	0-14225	2.2	4/30/2014
10.1	Bridge Credit Agreement, dated May 27, 2014	8-K	0-14225	10.1	5/30/2014
10.2	Form of Parent Agreement	8-K	0-14225	10.1	4/30/2014
10.3	Form of Tender Agreement	8-K	0-14225	10.2	4/30/2014
10.4	Fiscal Year 2015 Management Incentive Plan					X
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a)					X
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a)					X
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
101.INS	XBRL Instance Document					X
101.SCH	XBRL Taxonomy Extension Schema Document					X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document					X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document					X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document					X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document					X

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EX-10

Exhibit 10.4

PLAN DOCUMENT

Fiscal Year 2015

Management Incentive Program

1.0

Summary

The Exar Corporation (the “Company”) Fiscal Year 2015 Management Incentive Program (the “Program”) is primarily a stock based incentive program designed to motivate participants to achieve the Company’s financial, operational and strategic goals and to reward them for performance against those goals. Incentives granted under the Program are denominated in shares of the Company’s common stock and are subject to the attainment of the Company’s performance goals as established by the Compensation Committee of the Board of Directors (the “Board”) for the fiscal year.

2.0	Eligibility
	Participants are approved solely at the discretion of the Compensation Committee when acting on behalf of the full Board. All executive officers are eligible to be considered for participation. The President/CEO may recommend that additional employees of the Company and its subsidiaries participate in the Program, subject to the approval of the Compensation Committee.

3.0	Change in Status
	Participants who give notice of termination or who terminate employment, voluntarily or involuntarily, prior to the date of payout are not eligible for payment.
	Employees who are on a Leave of Absence in excess of 60 calendar days during the Program year shall have their target award prorated by the amount of time actually worked plus 60 days.

4.0

Administration

The Compensation Committee is ultimately responsible for administering the Program, and has designated the Management Committee, consisting of the President/CEO, the Senior Vice President/CFO, and the Vice President of Human Resources to administer the Program, provided that the Compensation Committee shall make all determinations with respect to incentives granted to executive officers under the Program. The Compensation Committee, in its sole discretion, may amend or terminate the Program, or any part thereof, at any time and for any reason without prior notice.

5.0 Definitions

5.1     The Salary

The “Salary” is the annual base salary, as established at the start of the fiscal year, or at the time of Program entry, exclusive of bonuses, incentive payments or awards, auto allowance, or any such extras or perquisites over base pay.

5.2     The Target Share Award

A participant’s “Target Share Award” is expressed as the total number of shares the participant is eligible to receive at 100% payout. The Target Share Award is calculated by multiplying the participant’s Salary by a pre-approved target incentive percentage and dividing the result by the closing value of Exar’s stock price as of the first trade date of the Program fiscal year. For Fiscal Year 2015 this amount is $11.95. Each participant’s Target Share Award is subject to adjustment based on a number of factors including corporate and individual performance and modifiers (see below), and/or by the Compensation Committee upon the occurrence of a stock split, reorganization or other similar event affecting the Company’s common stock in accordance with the principles set forth in the terms of the Company’s Equity Incentive Plan.

5.3     Maximum Award

No participant may receive an award greater than 150% of the “Target Share Award”.

5.4     Target Pool Earned

At the end of the fiscal year, the Compensation Committee will determine the percentage of the target pool earned for all participants by assessing the Company’s financial performance against financial goals for revenue and non-GAAP operating income (EBIT), before cash profit sharing, as established by the Board of Directors. Funding of the target pool will occur only if 90% of the revenue and 80% of the Non-GAAP operating income (EBIT), before cash profit sharing, are achieved.

5.5     Modifiers

5.5.1     Company Modifier

The Final Share Award is weighted 70% on Company Performance.

5.5.2      Individual Performance Modifier

The Final Share Award is weighted 30% on Individual Performance. The President/CEO will assess the performance of each individual participant in the Program at the conclusion of the fiscal year based upon specific contributions and achievement of pre-established individual objectives. Based on individual performance, a performance factor will be assigned to the final calculation.

For the President/CEO, a performance factor will be determined by the Compensation Committee based on pre-approved individual objectives.

5.6     Final Share Award

The final number of shares to be awarded to each participant shall be determined by the President/CEO by multiplying the participant’s Target Share Award by the Target Pool Earned and various Modifiers.

The final number of shares to be awarded to the President/CEO shall be determined by the Compensation Committee by multiplying the participant’s Target Share Award by the Target Pool Earned and various Modifiers

5.7     Cash Award

Each participant has the option of electing to receive up to 20% of his/her Target Share Award in the form of cash, in lieu of fully vested restricted stock units (see Exhibit 1). This election is valid only if made in writing at the time of invitation into the Program, and is irrevocable for the fiscal year. The cash portion of the award is not adjusted for stock performance during the fiscal year and is the first component calculated when determining the Final Award. Cash Awards are distributed during the same period that Share Awards are granted.

6.0 Other Program Provisions

6.1     Tax Withholding

Shares issued in respect of an award hereunder are subject to applicable taxes at the time of payment, and payment of such taxes is the responsibility of the participant. Subject to the terms of the Plans, upon any distribution of shares of the Company’s common stock in payment of an award hereunder, the Company may reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of whole shares, valued at their then fair market value (with the “fair market value” of such shares determined in accordance with the applicable provisions of the Plans, to satisfy any withholding obligations of the Company or its subsidiaries with respect to such distribution of shares at the minimum applicable withholding rates). In the event that the Company cannot legally satisfy such withholding obligations by such reduction of shares, or in the event of a cash payment or any other withholding event in respect of an award hereunder, the Company (or a subsidiary) shall be entitled to require a cash payment by or on behalf of the participant and/or to deduct from other compensation payable to the participant any sums required by federal, state or local tax law to be withheld with respect to such distribution or payment.

6.2     Restrictions on Transfer

Neither the participant’s award hereunder, nor any interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily.

6.3     Termination of Employment

Notwithstanding any other provision herein, a participant must be employed with the Company or one of its subsidiaries on the date on which shares are issued in payment of awards under the Program to be eligible to receive payment with respect to his or her award. If a participant’s employment with the Company or a subsidiary terminates for any reason (whether voluntarily or involuntarily, due to his death or disability, or otherwise) prior to the payment date, the participant’s award under the Program will terminate and the participant will have no further rights with respect thereto or in respect thereof.

6.4     No Right to Continued Employment

Participation in the Program does not constitute a guarantee of employment or interfere in any way with the right of the Company (or any subsidiary) to terminate a participant’s employment or to change the participant’s compensation or other terms of employment at any time. There is no commitment or obligation on the part of the Company (or any subsidiary) to continue any incentive program (similar to the Program or otherwise) in any future fiscal year.

6.5     No Stockholder Rights

The participant shall have no rights as a stockholder of the Company, no dividend rights and no voting rights, with respect to his or her award hereunder and any shares underlying or issuable in respect of such award until such shares are actually issued to and held of record by the participant. No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the stock certificate.

6.6     Adjustments

The Compensation Committee may, in its sole discretion, adjust performance measures, performance goals, relative weights of the measures, and other provisions of the Plan to the extent (if any) it determines that the adjustment is necessary or advisable to preserve the intended incentives and benefits to reflect (1) any material change in corporate capitalization, any material corporate transaction (such as a reorganization, combination, separation, merger, acquisition, or any combination of the foregoing), or any complete or partial liquidation of the Company, (2) any change in accounting policies or practices, or (3) the effects of any special charges to the Company’s earnings, or (4) any other similar special circumstances.

Exhibit 1

Fiscal Year 2015 Incentive Program Payment Election Form

I elect to receive _______% (up to 20%) of my initial Target Award (before share conversion) in the form of cash and acknowledge that this is a one-time, irrevocable election in effect for the duration of the Fiscal Year 2015 Incentive Program.

If electing to receive a portion of your final award in the form of cash, please return this form to Human Resources no later than Friday, August 1^st. Otherwise, your total award will be paid in the form of fully vested restricted stock units (RSU’s).

Employee Name: ___________________________________

Employee Signature: ________________________________Date: _______________________

Human Resources: _________________________________ Date: ________________________

EXAMPLE

Election:

Employee A’s salary as of March 31, 2014 is $125,000
Employee A’s target incentive percentage is 20%
Employee A’s initial Target Award (before share conversion) is $25,000
Employee A’s initial Target Share Award is 2,092 RSU’s (based on stock value of $11.95/share)Employee A elects to receive 10% or $2,500 of his initial Target Award in cash

Sample Calculations (using stock value of $11.95 per share):

1. Assuming a 100% payout, Employee A receives:

     $2,500 cash and 1,882 RSU’s

2. Assuming an 80% payout, Employee A receives:

     $2,500 cash and 1,464 RSU’s

3. Assuming a 150% payout, Employee A receives:

     $2,500 cash and 2,928 RSU’s

EX-31

EXHIBIT 31.1

PRINCIPAL EXECUTIVE OFFICER CERTIFICATION

I, Louis DiNardo, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Exar Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2014

/s/    Louis DiNardo

Louis DiNardo 

Chief Executive Officer, President and Director

(Principal Executive Officer)

EX-31

EXHIBIT 31.2

PRINCIPAL FINANCIAL OFFICER CERTIFICATION

I, Ryan A. Benton, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Exar Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2014

/s/ Ryan A. Benton

Ryan A. Benton

Senior Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Louis DiNardo, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Exar Corporation on Form 10-Q for the period ended June 29, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Exar Corporation.

Date: August 8, 2014

/s/    Louis DiNardo        

Louis DiNardo         

Chief Executive Officer, President and Director

(Principal Executive Officer)

EX-32

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Ryan A. Benton, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Exar Corporation on Form 10-Q for the period ended June 29, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Exar Corporation.

Date: August 8, 2014

/s/ Ryan A. Benton

Ryan A. Benton

Senior Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

XML

Note 17 - Income Taxes (Tables)

3 Months Ended

Jun. 29, 2014

Income Tax Disclosure [Abstract]

Schedule Of Interest And Penalty Related To Underpayment Of Tax [Table Text Block]

	June 29, 2014		March 30, 2014
Accrued interest and penalties	$	1,189	$	83

XML

Note 5 - Fair Value (Details) - Net Realized Gains (Losses) on Marketable Securities (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Net Realized Gains (Losses) on Marketable Securities [Abstract]
Gross realized gains	$ 264	$ 218
Gross realized losses	(238)	(277)
Net realized gain (losses)	$ 26	$ (59)

XML

Note 4 - Balance Sheet Details (Details) - Other Current Liabilities (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Mar. 30, 2014
Other Current Liabilities [Abstract]
Accrued acquisition costs	$ 3,514
Short-term lease financing obligations	2,348	2,671
Accrued manufacturing expenses, royalties and licenses	2,094	1,639
Accrued restructuring charges and exit costs	1,971	2,214
Accrued legal and professional services	1,576	1,453
Accrued income tax	1,420	74
Purchase consideration holdback	1,006	1,256
Accrued sales and marketing expenses	564	666
Fair value of earn out liability – short-term		490
Other	1,764	907
Total other current liabilities	$ 16,257	$ 11,370

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Note 9 - Short-Term Debt (Details) (USD $)	3 Months Ended										0 Months Ended		1 Months Ended		0 Months Ended
	Jun. 29, 2014	Jun. 29, 2014 Scenario 1 [Member] Term Loan Credit Facility [Member] Bridge Facility [Member] Initial Duration Following the Initial Funding Date [Member]	Jun. 29, 2014 Scenario 1 [Member] Term Loan Credit Facility [Member] Bridge Facility [Member] After the Initial Duration Following the Initial Funding Date [Member]	Jun. 29, 2014 Scenario 1 [Member] Term Loan Credit Facility [Member] Bridge Facility [Member]	Jun. 29, 2014 Scenario 2 [Member] Term Loan Credit Facility [Member] Bridge Facility [Member] Initial Duration Following the Initial Funding Date [Member]	Jun. 29, 2014 Scenario 2 [Member] Term Loan Credit Facility [Member] Bridge Facility [Member] After the Initial Duration Following the Initial Funding Date [Member]	Jun. 29, 2014 Scenario 2 [Member] Term Loan Credit Facility [Member] Bridge Facility [Member]	Jun. 29, 2014 Term Loan Credit Facility [Member] Bridge Facility [Member] Federal Funds Effective Swap Rate [Member]	Jun. 29, 2014 Term Loan Credit Facility [Member] Bridge Facility [Member] London Interbank Offered Rate (LIBOR) [Member]	Jun. 29, 2014 Term Loan Credit Facility [Member] Bridge Facility [Member] Base Rate [Member]	May 29, 2014 Term Loan Credit Facility [Member] Bridge Facility [Member]	May 27, 2014 Term Loan Credit Facility [Member] Bridge Facility [Member]	Jun. 30, 2014 Term Loan Credit Facility [Member] Bridge Facility [Member]	Jun. 29, 2014 Term Loan Credit Facility [Member] Bridge Facility [Member]	Jun. 30, 2014 CTBC [Member]	Jun. 09, 2014 CTBC [Member]	Jun. 29, 2014 CTBC [Member]	Jun. 29, 2014 iML [Member]	Jun. 29, 2014 Certificates of Deposit [Member]
Note 9 - Short-Term Debt (Details) [Line Items]
Debt Instrument, Face Amount (in Dollars)												$ 90,000,000
Initial Duration Following the Initial Funding Date				90 days			90 days
Debt Instrument, Basis Spread on Variable Rate		7.50%	8.50%		8.50%	9.50%		0.50%	1.00%
Debt Instrument, Interest Rate, Effective Percentage Rate Range, Minimum									1.50%	2.50%
Debt Instrument, Interest Rate, Effective Percentage														8.65%
Proceeds from Issuance of Debt (in Dollars)	91,000,000										15,000,000	50,000,000				26,000,000
Business Acquisition, Percentage of Voting Interests Acquired																		92.00%
Repayments of Debt (in Dollars)	26,000,000												26,000,000		26,000,000
Debt Instrument, Interest Rate, Stated Percentage																	3.25%
Restricted Cash and Cash Equivalents, Current (in Dollars)	$ 26,000,000																		$ 26,000,000

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Note 5 - Fair Value (Details) - Summary of Investments in Marketable Securities (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 157,280
Unrealized Gross Gains	89	[1]
Unrealized Gross Losses	(313)	[1]
Fair Value	157,056
US Government Agencies Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	22,550
Unrealized Gross Gains	1	[1]
Unrealized Gross Losses	(39)	[1]
Fair Value	22,512
US States and Political Subdivisions Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	2,762
Unrealized Gross Gains	10	[1]
Unrealized Gross Losses		[1]
Fair Value	2,772
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	71,309
Unrealized Gross Gains	32	[1]
Unrealized Gross Losses	(88)	[1]
Fair Value	71,253
Asset-backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	27,661
Unrealized Gross Gains	22	[1]
Unrealized Gross Losses	(48)	[1]
Fair Value	27,635
Collateralized Mortgage Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	28,362
Unrealized Gross Gains	24	[1]
Unrealized Gross Losses	(138)	[1]
Fair Value	28,248
Money Market Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	4,636
Unrealized Gross Gains		[1]
Unrealized Gross Losses		[1]
Fair Value	$ 4,636

[1] Gross of tax impact

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Note 12 - Stock-Based Compensation (Details) - ESPP Transactions (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Jun. 29, 2014
ESPP Transactions [Abstract]
Authorized to issue	4,500
Reserved for future issuance	1,365
Issued	7
Issued (in Dollars per share)	$ 11.26

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Note 4 - Balance Sheet Details (Details) - Inventories (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Mar. 30, 2014
Inventories [Abstract]
Work-in-process and raw materials	$ 20,597	$ 13,555
Finished goods	11,391	15,427
Total inventories	$ 31,988	$ 28,982

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Note 10 - Common Stock Repurchases (Tables)

3 Months Ended

Jun. 29, 2014

Stockholders' Equity Note [Abstract]

Schedule of Share-based Compensation, Activity [Table Text Block]

	Total number of Shares Purchased		Average Price Paid Per Share (or Unit)		Amount Paid for Purchase
Balances, March 31, 2013		9,564	$	9.22	$	88,189
Repurchases – August 25 to September 29, 2013		153		13.07		1,999
Repurchases – September 30 to October 27, 2013		73		13.63		1,001
Repurchases – November 24 to December 29, 2013		83		12.09		1,000
Repurchases – December 30, 2013 to January 26, 2014		122		11.61		1,417
Repurchases – January 27 to February 23, 2014		324		11.05		3,583
Balances, March 30, 2014		10,319	$	9.22	$	97,189
Repurchases – March 31 to April 27, 2014		273		10.98		3,000
Balances, June 29, 2014		10,592	$	9.46	$	100,189

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Note 12 - Stock-Based Compensation (Details) - Stock Option Transactions (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended	12 Months Ended
	Jun. 29, 2014	Mar. 30, 2014
Stock Option Transactions [Abstract]
Options outstanding	6,768,566	7,213,848
Weighted Average Exercise Price of Options Outstanding (in Dollars per share)	$ 8.96	$ 8.98
Weighted Average Remaining Contractual Term of Options Outstanding	4 years 306 days	5 years 7 days
Aggregate Intrinsic Value (in Dollars)	$ 16,701	$ 21,301
In the Money Options Vested and Exercisable	2,277,000	2,170,000
Vested and expected to vest, June 29, 2014	6,284,514
Vested and expected to vest, June 29, 2014 (in Dollars per share)	$ 8.84
Vested and expected to vest, June 29, 2014	4 years 9 months
Vested and expected to vest, June 29, 2014 (in Dollars)	16,137
Vested and exercisable, June 29, 2014	2,526,817
Vested and exercisable, June 29, 2014 (in Dollars per share)	$ 7.68
Vested and exercisable, June 29, 2014	3 years 200 days
Vested and exercisable, June 29, 2014 (in Dollars)	$ 8,955
Granted	45,700
Granted (in Dollars per share)	$ 10.87
Exercised	(105,751)
Exercised (in Dollars per share)	$ 6.99
Cancelled	(133)
Cancelled (in Dollars per share)	$ 15.67
Forfeited	(385,098)
Forfeited (in Dollars per share)	$ 10.12

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Note 10 - Common Stock Repurchases (Details) (USD $) In Millions, unless otherwise specified	Aug. 28, 2007 August 2007 Repurchase Plan [Member]	Jul. 09, 2013 July 2013 Repurchase Program [Member]
Note 10 - Common Stock Repurchases (Details) [Line Items]
Stock Repurchase Program, Authorized Amount	$ 100.0	$ 50.0

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Note 14 - Lease Financing Obligations (Details) - Future Minimum Lease and Sublease Income Payments for Lease Financing Obligations (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Mar. 30, 2014
Future Minimum Lease and Sublease Income Payments for Lease Financing Obligations [Abstract]
2015 (9 months remaining)	$ 2,369
2016	59
2017	10
2018	6
Total minimum lease payments	2,444
Less: amount representing interest	56
Present value of minimum lease payments	2,388
Less: short-term lease financing obligations	2,348	2,671
Long-term lease financing obligations	$ 40

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Note 5 - Fair Value (Details) - Summary of the Gross Unrealized Losses and Fair Values of Investments (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014
Note 5 - Fair Value (Details) - Summary of the Gross Unrealized Losses and Fair Values of Investments [Line Items]
Fair Value Less than 12 Months	$ 93,424
Gross Unrealized Losses Less than 12 Months	(258)
Fair Value Greater than 12 Months	7,057
Gross Unrealized Losses Greater than 12 Months	(55)
Fair Value Total	100,481
Gross Unrealized Losses Total	(313)	[1]
US Government Agencies Debt Securities [Member]
Note 5 - Fair Value (Details) - Summary of the Gross Unrealized Losses and Fair Values of Investments [Line Items]
Fair Value Less than 12 Months	18,245
Gross Unrealized Losses Less than 12 Months	(39)
Fair Value Total	18,245
Gross Unrealized Losses Total	(39)	[1]
Corporate Debt Securities [Member]
Note 5 - Fair Value (Details) - Summary of the Gross Unrealized Losses and Fair Values of Investments [Line Items]
Fair Value Less than 12 Months	48,379
Gross Unrealized Losses Less than 12 Months	(87)
Fair Value Greater than 12 Months	596
Gross Unrealized Losses Greater than 12 Months	(1)
Fair Value Total	48,975
Gross Unrealized Losses Total	(88)	[1]
Asset-backed Securities [Member]
Note 5 - Fair Value (Details) - Summary of the Gross Unrealized Losses and Fair Values of Investments [Line Items]
Fair Value Less than 12 Months	7,118
Gross Unrealized Losses Less than 12 Months	(12)
Fair Value Greater than 12 Months	5,478
Gross Unrealized Losses Greater than 12 Months	(36)
Fair Value Total	12,596
Gross Unrealized Losses Total	(48)	[1]
Collateralized Mortgage Backed Securities [Member]
Note 5 - Fair Value (Details) - Summary of the Gross Unrealized Losses and Fair Values of Investments [Line Items]
Fair Value Less than 12 Months	19,682
Gross Unrealized Losses Less than 12 Months	(120)
Fair Value Greater than 12 Months	983
Gross Unrealized Losses Greater than 12 Months	(18)
Fair Value Total	20,665
Gross Unrealized Losses Total	$ (138)	[1]

[1] Gross of tax impact

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Note 11 - Restructuring Charges and Exit Costs (Details) - Summary of Activities Affecting Liabilities (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Jun. 29, 2014	Mar. 30, 2014
Restructuring Cost and Reserve [Line Items]
Beginning balance	$ 2,369	$ 3,286
Additions/adjustments	396	3,014
Non-cash charges	(77)	(57)
Payments	(608)	(3,874)
Ending balance	2,080	2,369
Lease Contract Termination Costs [Member]
Restructuring Cost and Reserve [Line Items]
Beginning balance	1,615	2,860
Additions/adjustments	60	570
Non-cash charges	(77)	(57)
Payments	(92)	(1,758)
Ending balance	1,506	1,615
Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Beginning balance	754	426
Additions/adjustments	336	2,444
Payments	(516)	(2,116)
Ending balance	$ 574	$ 754

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Note 13 - Net Income (Loss) Per Share (Details) - Summary of Net Income (Loss) per Share (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Summary of Net Income (Loss) per Share [Abstract]
Net income (loss) attributable to Exar Corporation (in Dollars)	$ (12,105)	$ 806
Shares used in computation of net income (loss) per share:
Basic	47,236	46,805
Effect of options and awards		1,280
Diluted	47,236	48,085
Net income (loss) per share:
Basic (in Dollars per share)	$ (0.26)	$ 0.02
Diluted (in Dollars per share)	$ (0.26)	$ 0.02

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Note 12 - Stock-Based Compensation (Details) - RSU Transactions (Restricted Stock Units (RSUs) [Member], USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended	12 Months Ended
	Jun. 29, 2014	Mar. 30, 2014
Restricted Stock Units (RSUs) [Member]
Note 12 - Stock-Based Compensation (Details) - RSU Transactions [Line Items]
Shares	1,120,959	1,177,126
Weighted Average Grant-Date Fair Value (in Dollars per share)	$ 11.30	$ 10.94
Weighted Average Remaining Contractual Term (in years)	1 year 222 days	1 year 226 days
Aggregate Intrinsic Value (in thousands) (in Dollars)	$ 12,420	$ 13,784
Granted	150,813
Granted (in Dollars per share)	$ 12.87
Issued and released	(147,648)
Issued and released (in Dollars per share)	$ 9.80
Cancelled	(59,332)
Cancelled (in Dollars per share)	$ 11.84
Vested and expected to vest, June 29, 2014	965,301
Vested and expected to vest, June 29, 2014	1 year 197 days
Vested and expected to vest, June 29, 2014 (in Dollars)	$ 10,696

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Note 14 - Lease Financing Obligations (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended
	Jul. 31, 2012	Dec. 30, 2011	Oct. 31, 2011	Jun. 30, 2010	Jun. 29, 2014 Capital Lease Obligations [Member] Minimum [Member]	Jun. 29, 2014 Capital Lease Obligations [Member] Maximum [Member]
Note 14 - Lease Financing Obligations (Details) [Line Items]
Capital Lease Obligations	$ 0.9	$ 4.5	$ 5.8	$ 1.0
Capital Lease License Term	3 years	3 years	3 years	3 years
Debt Instrument, Interest Rate, Effective Percentage					2.00%	7.25%

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Note 12 - Stock-Based Compensation (Details) (USD $)	3 Months Ended			3 Months Ended		1 Months Ended	3 Months Ended				1 Months Ended	3 Months Ended				1 Months Ended			3 Months Ended	0 Months Ended	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Mar. 30, 2014	Jun. 29, 2014 Employee Stock Option [Member] Chief Executive Officer [Member]	Jun. 30, 2013 Employee Stock Option [Member] Chief Executive Officer [Member]	Mar. 31, 2012 Performance-Based RSUs [Member] Chief Executive Officer [Member]	Jun. 29, 2014 Performance-Based RSUs [Member] Chief Executive Officer [Member]	Jun. 30, 2013 Performance-Based RSUs [Member] Chief Executive Officer [Member]	Jun. 29, 2014 Performance-Based RSUs [Member] Certain Executives [Member]	Jun. 30, 2013 Performance-Based RSUs [Member] Certain Executives [Member]	Jan. 31, 2014 Performance-Based RSUs [Member] Former Stretch Employees [Member]	Jun. 29, 2014 Performance-Based RSUs [Member] Former Stretch Employees [Member]	Jun. 29, 2014 Restricted Stock Units (RSUs) [Member] Cadeka Employees [Member]	Jun. 29, 2014 Restricted Stock Units (RSUs) [Member]	Jun. 29, 2014 October 2013 PRSUs [Member] Certain Executives [Member]	Oct. 31, 2013 October 2013 PRSUs [Member] Certain Executives [Member]	Jan. 31, 2014 Chief Executive Officer [Member]	Jan. 31, 2012 Chief Executive Officer [Member]	Jun. 29, 2014 Employee Stock Participation Plan [Member]	Sep. 15, 2010 2006 Plan [Member]	Jun. 29, 2014 2014 Incentive Program [Member]
Note 12 - Stock-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent																			95.00%
Stock Based Compensation Equity Incentive Plan	2
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized (in Shares)																				5,500,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares)	4,500,000																			8,300,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares)	700,000
Share Price (in Dollars per share)	$ 11.08		$ 11.71
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in Shares)	45,700																140,000	480,000
Share Based Compensation Arrangement By Share Based Payment Award, Vesting, Number of Installments						3			3		3					3		4
Allocated Share-based Compensation Expense	$ 3,127,000	$ 1,087,000		$ 112,000	$ 65,000		$ 734,000	$ 52,000	$ (120,000)	$ 47,000		$ 0	$ 394,000		$ 178,000						$ 5,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares)						300,000			50,000		82,500			150,813		70,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period						3 years			3 years		3 years					3 years

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Note 9 - Short-Term Debt (Details) - Short-term Debts (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014
Note 9 - Short-Term Debt (Details) - Short-term Debts [Line Items]
Short-term debt	$ 65,000
Repayment	(26,000)
Stifel Financial Corp. [Member]
Note 9 - Short-Term Debt (Details) - Short-term Debts [Line Items]
Short-term debt	65,000
CTBC [Member]
Note 9 - Short-Term Debt (Details) - Short-term Debts [Line Items]
Short-term debt	$ 26,000

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Note 19 - Subsequent Events

3 Months Ended

Jun. 29, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE 19.      SUBSEQUENT EVENTS

Exar had drawn $50.0 million and $15.0 million on May 27, 2014 and May 29, 2014, respectively from Stifel to fund the acquisition of approximately 92% of iML’s outstanding shares. We repaid $26.0 million of the debt in June 2014 through a loan from CTBC with lower interest rate. Subsequent to the end of the quarter we paid off the loan through an intercompany loan from iML.

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Note 5 - Fair Value (Details) (USD $)	3 Months Ended
	Jun. 29, 2014
Note 5 - Fair Value (Details) [Line Items]
Restricted Cash and Cash Equivalents, Current	$ 26,000,000
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax	(828,000)
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities	0
CounterPath [Member]
Note 5 - Fair Value (Details) [Line Items]
Common Stock Shares Received, Dissolution (in Shares)	93,000
Altior [Member]
Note 5 - Fair Value (Details) [Line Items]
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Asset	49,000
Cadeka [Member]
Note 5 - Fair Value (Details) [Line Items]
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Asset	(480,000)
Certificates of Deposit [Member]
Note 5 - Fair Value (Details) [Line Items]
Restricted Cash and Cash Equivalents, Current	$ 26,000,000

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Note 3 - Business Combinations (Details) - Business Acquistion Purchase Price (Integrated Memory Logic Limited [Member], USD $) In Thousands, unless otherwise specified	0 Months Ended
	Jul. 03, 2014	Jun. 03, 2014
Integrated Memory Logic Limited [Member]
Note 3 - Business Combinations (Details) - Business Acquistion Purchase Price [Line Items]
Acquisition of approximately 68.3 million shares of iML at NT$91.00 per share in cash		$ 206,411
Fair value of non-controlling interest shares		17,872
Fair value of iML employee options to be assumed		3,327
Total purchase price	$ 227,610	$ 227,610

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Note 11 - Restructuring Charges and Exit Costs (Details) (USD $)	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Note 11 - Restructuring Charges and Exit Costs (Details) [Line Items]
Restructuring Charges	$ 400,000	$ 1,000,000
Severance Costs		900,000
Facility Closing [Member]
Note 11 - Restructuring Charges and Exit Costs (Details) [Line Items]
Restructuring Charges		$ 100,000

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Note 18 - Segment and Geographic Information (Details)	3 Months Ended
	Jun. 29, 2014
Segment Reporting [Abstract]
Number of Reportable Segments	1
Number of Operating Segments	1

XML

Note 14 - Lease Financing Obligations (Tables)

3 Months Ended

Jun. 29, 2014

Disclosure Text Block Supplement [Abstract]

Schedule Of Amortization Expense [Table Text Block]

	Three Months Ended
	June 29, 2014		June 30, 2013
Amortization expense	$	800	$	866

Schedule of Future Minimum Lease Payments for Capital Leases [Table Text Block]

Fiscal Years	Design Tools
2015 (9 months remaining)	$	2,369
2016		59
2017		10
2018		6
Total minimum lease payments		2,444
Less: amount representing interest		56
Present value of minimum lease payments		2,388
Less: short-term lease financing obligations		2,348
Long-term lease financing obligations	$	40

Schedule of Interest Expense [Table Text Block]

	Three Months Ended
	June 29, 2014		June 30, 2013
Interest expense	$	39	$	37

Schedule of Rent Expense [Table Text Block]

	Three Months Ended
	June 29, 2014		June 30, 2013
Rent expense	$	332	$	196

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Fiscal Years	Facilities
2015 (9 months remaining)	$	1,178
2016		1,105
2017		508
2018		159
Total minimum lease payments	$	2,950

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Note 5 - Fair Value (Details) - Investment Assets and Liabilities Measured at Fair Value on Recurring Basis (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Mar. 30, 2014
Assets:
Investment assets fair value		$ 157,056
Liabilities:
Acquisition-related contingent consideration	4,011	4,343
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Assets:
Investment assets fair value		9,378
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Investment assets fair value		13,134
US Government Agencies Debt Securities [Member]
Assets:
Investment assets fair value		22,512
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Investment assets fair value		2,772
US States and Political Subdivisions Debt Securities [Member]
Assets:
Investment assets fair value		2,772
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Assets:
Investment assets fair value		5
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Investment assets fair value		71,248
Corporate Debt Securities [Member]
Assets:
Investment assets fair value		71,253
Asset-backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Investment assets fair value		27,635
Asset-backed Securities [Member]
Assets:
Investment assets fair value		27,635
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Investment assets fair value		28,248
Collateralized Mortgage Backed Securities [Member]
Assets:
Investment assets fair value		28,248
Fair Value, Inputs, Level 1 [Member]
Assets:
Investment assets fair value		14,019
Fair Value, Inputs, Level 1 [Member] | Money Market Funds [Member]
Assets:
Investment assets fair value		4,636
Fair Value, Inputs, Level 2 [Member]
Assets:
Investment assets fair value		143,037
Liabilities:
Acquisition-related contingent consideration	99
Fair Value, Inputs, Level 3 [Member] | Altior [Member]
Liabilities:
Acquisition-related contingent consideration	3,022	2,973
Fair Value, Inputs, Level 3 [Member] | Cadeka [Member]
Liabilities:
Acquisition-related contingent consideration	890	1,370
Fair Value, Inputs, Level 3 [Member]
Liabilities:
Acquisition-related contingent consideration	3,912	4,343
Altior [Member]
Liabilities:
Acquisition-related contingent consideration	3,022	2,973
Cadeka [Member]
Liabilities:
Acquisition-related contingent consideration	890	1,370
Money Market Funds [Member]
Assets:
Investment assets fair value		$ 4,636

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Note 8 - Related Party Transaction (Details)	Jun. 29, 2014	Mar. 30, 2014
Note 8 - Related Party Transaction (Details) [Line Items]
Common Stock, Shares, Outstanding	47,272,056	47,336,005
Alonim Investments Inc. [Member]
Note 8 - Related Party Transaction (Details) [Line Items]
Common Stock, Shares, Outstanding	7,600,000
Percentage Of Common Stock Shares Outstanding	16.00%

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Note 6 - Goodwill and Intangible Assets (Details) - Changes in the Carrying Amount of Goodwill (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Jun. 29, 2014	Mar. 30, 2014
Changes in the Carrying Amount of Goodwill [Abstract]
Beginning balance	$ 30,410	$ 10,356
Goodwill additions	14,607	20,054
Ending balance	$ 45,017	$ 30,410

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Note 4 - Balance Sheet Details (Details) - Property, Plant and Equipment (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Mar. 30, 2014
Property, Plant and Equipment [Abstract]
Land	$ 6,660	$ 6,660
Building	17,287	16,787
Machinery and equipment	43,108	40,675
Software and licenses	17,815	17,549
Property, plant and equipment, total	84,870	81,671
Accumulated depreciation and amortization	(64,226)	(60,391)
Total property, plant and equipment, net	$ 20,644	$ 21,280

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Note 3 - Business Combinations

3 Months Ended

Jun. 29, 2014

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

NOTE 3.    BUSINESS COMBINATIONS

We periodically evaluate potential strategic acquisitions to broaden our product offering and build upon our existing library of intellectual property, human capital and engineering talent, in order to expand our capabilities in the areas in which we operate or to acquire complementary businesses.

We account for each business combination by applying the acquisition method, which requires (1) identifying the acquiree; (2) determining the acquisition date; (3) recognizing and measuring the identifiable assets acquired, the liabilities assumed, and any non-controlling interest we have in the acquiree at their acquisition date fair value; and (4) recognizing and measuring goodwill or a gain from a bargain purchase.

Assets acquired and liabilities assumed in a business combination that arise from contingencies are recognized at fair value on the acquisition date if fair value can be determined during the measurement period. If fair value cannot be determined, we typically account for the acquired contingencies using existing guidance for a reasonable estimate.

To establish fair value, we measure the price that would be received for an asset or paid to transfer a liability in an ordinary transaction between market participants. The measurement assumes the highest and best use of the asset by the market participants that would maximize the value of the asset or the group of assets within which the asset would be used at the measurement date, even if the intended use of the asset is different.

Acquisition related costs, including finder’s fees, advisory, legal, accounting, valuation and other professional or consulting fees are accounted for as expenses in the periods in which the costs are incurred and the services are received, with the exception that the costs to issue debt or equity securities are recognized in accordance with other applicable GAAP.

Acquisition of Integrated Memory Logic

On June 3, 2014, we acquired approximately 92% of outstanding shares of  Integrated Memory Logic Limited (“iML”), a leading provider of analog mixed-signal solutions for the flat panel display market. The iML acquisition supports Exar's strategy of building a large scale diversified analog mixed-signal business. iML’s results of operations and estimated fair value of assets acquired and liabilities assumed were included in our condensed consolidated financial statements beginning June 4, 2014.

Consideration

In June 2014, we acquired approximately 92% of iML outstanding shares for $206.4 million in cash. We expect to pay an additional $17.9 million in cash in exchange for the remaining approximately 8% of outstanding shares, at which time iML will become a wholly owned subsidiary. When iML becomes a wholly owned subsidiary of Exar, it is anticipated that we will assume iML’s employee then outstanding options, preliminarily valued at approximately $3.3 million, and will be converted into an option to purchase a number of Exar’s common stock. The number of shares of Exar’s common stock, as well as the exercise price of the options will be determined based upon an agreed upon option exchange ratio outlined in the merger agreement by and between IML and Exar’s subsidiary, Image Sub Limited dated April 26, 2014. The option exchange ratio is calculated based upon (i) the ratio of the purchase price per share of iML’s stock and Exar’s stock price, and (ii) for those options denominated in Taiwanese dollars, the then currency exchange rates.

In accordance with Accounting Standard Codification (“ASC”) 805, Business Combinations, the acquisition of approximately 92% of iML’s outstanding shares was recorded as a purchase business acquisition since iML was considered a business. Under the purchase method of accounting, the fair value of the consideration was allocated to net assets acquired. The fair value of purchased identifiable intangible assets was determined using discounted cash flow models from operating projections prepared by management using an internal rate of return of 16.9%. The excess of the preliminary fair value of consideration paid over the preliminary fair values of net assets acquired and identifiable intangible assets resulted in recognition of goodwill of approximately $14.6 million. Goodwill is primarily from expected synergies resulting from combining the operations of iML with that of Exar and is not deductible for tax purposes.

The total purchase consideration for iML will be approximately $227.6 million and will be comprised of the following items (in thousands):

Acquisition of approximately 68.3 million shares of iML at NT$91.00 per share in cash	$	206,411
Fair value of non-controlling interest shares		17,872
Fair value of iML employee options to be assumed		3,327
Total purchase price	$	227,610

Preliminary Purchase Price Allocation

The allocation of the total preliminary purchase price to iML’s tangible and identifiable intangible assets and liabilities assumed was based on their estimated fair values at the date of acquisition.

The preliminary fair value allocated to each of the major classes of tangible and identifiable intangible assets acquired and liabilities assumed in the iML acquisition was as follows (in thousands):

	Amount
Identifiable tangible assets (liabilities)
Cash	$	133,752
Accounts receivable		10,096
Inventories		3,950
Other current assets		608
Property, plant and equipment		480
Other assets		308
Accrued expenses		(8,137	)
Accounts payable		(4,219	)
Long-term liabilities		(3,595	)
Total identifiable tangible assets (liabilities), net		133,243
Identifiable intangible assets		79,760
Total identifiable assets, net		213,003
Goodwill		14,607
Fair value of total consideration transferred	$	227,610

The following table sets forth the components of identifiable intangible assets acquired in connection with the iML acquisition (in thousands):

	Fair Value
Developed technologies	$	55,570
In-process research and development		8,040
Distributor relationships		5,980
Customer relationships		9,050
Trade names		1,120
Total identifiable intangible assets	$	79,760

In valuing specific components of the acquisition, that includes deferred taxes and intangibles, required us to make estimates that may be adjusted in the future, if new information is obtained about circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. Thus, the purchase price allocation is considered preliminary and dependent upon the finalization of the valuation of assets acquired and liabilities assumed, including income tax effects. Final determination of these estimates could result in an adjustment to the preliminary purchase price allocation, with an offsetting adjustment to goodwill.

Acquisition Related Costs

Acquisition related costs, or deal costs, relating to iML are included in the merger and acquisition costs and interest expense line on the condensed consolidated statement of operations for the first fiscal quarter of 2015 and were approximately $4.2 million.

Unaudited Pro Forma Financial Information

The following unaudited pro forma condensed financial information presents the combined revenue of Exar and iML as if the acquisition had occurred as of March 31, 2014 (in thousands).

	Three months ended June 29, 2014			Three months ended June 30, 2013
Net sales		41,286			49,177
Net loss	$	(7,675	)	$	(722	)
Less: Net loss attributable to non-controlling interests		(105	)		(122	)
Net loss attributable to Exar Corporation	$	(7,570	)	$	(600	)
Earnings per share
Basic	$	(0.16	)	$	(0.01	)
Diluted	$	(0.16	)	$	(0.01	)

The pro forma financial information includes (1) amortization charges from acquired intangible assets of $2.4 million for the three months ended June 29, 2014 and June 30, 2013, respectively; (2) amortization charges from inventory fair value adjustment of $1.5 million and $2.5 million for the three months ended June 29, 2014 and June 30, 2013, respectively; (3) the estimated stock-based compensation expense related to the stock options assumed of $0.2 million and $0.1 million for the three months ended June 29, 2014 and June 30, 2013, respectively; (4) the elimination of historical intangible assets of $92,000 for the three months ended June 29, 2014 and June 30, 2013, respectively; (5) the elimination of historical stock-based compensation charges recorded by iML of $0.2 million and $0.5 million for the three months ended June 29, 2014 and June 30, 2013, respectively, as a result of the cancellation of all outstanding options on the acquisition date; (6) the elimination of acquisition related costs of $8.2 million for the three months ended June 29, 2014; (7) the elimination of $1.8 million revenue and the related $0.9 million costs released from deferred margin for the three months ended June 29, 2014; (8) the elimination of $2.0 million revenue and the related $0.9 million costs released from the deferred margin for the three months ended June 30, 2013; and (9) the related tax provision of $0.2 million and $0.9 million for the three months ended June 29, 2014 and June 30, 2013, respectively. The unaudited pro forma condensed financial information is not intended to represent or be indicative of the condensed results of operations of Exar that would have been reported had the acquisition been completed as of the beginning of the periods presented, and should not be taken as representative of the future consolidated results of operations of Exar.

Acquisition of Stretch

On January 14, 2014, we completed the acquisition of Stretch, Inc. (“Stretch”), a provider of software configurable processors supporting the video surveillance market previously located in Sunnyvale, California. The transaction provides Exar with the technology to deliver an end-to-end high-definition solution for both digital and analog transmission of data from the camera to the DVR or NVR in surveillance applications. Stretch’s results of operations and estimated fair value of assets acquired and liabilities assumed were included in our condensed consolidated financial statements beginning January 14, 2014.

In accordance with Accounting Standard Codification (“ASC”) 805, Business Combinations, the total consideration paid for Stretch was first allocated to the net tangible liabilities assumed based on the estimated fair values of the assets and liabilities at the acquisition date. The excess of the fair value of the consideration paid over the fair value of Stretch’s net tangible liabilities assumed and identifiable intangible assets acquired resulted in the recognition of goodwill of $0.7 million primarily related to expected synergies to be achieved in connection with the acquisition. The goodwill is deductible over 15 years for tax purposes. The table below shows the allocation of the purchase price to tangible and intangible assets acquired and liabilities assumed (in thousands):

	Amount
Tangible assets	$	2,937
Intangible assets		7,010
Goodwill		667
Liabilities assumed		(10,604	)
Fair value of total consideration transferred	$	10

Acquisition of Cadeka

On July 5, 2013, we completed the acquisition of substantially all of the assets of Cadeka Technologies (Cayman) Holding Ltd., a privately held company organized under the laws of the Cayman Islands and all the outstanding stock of the subsidiaries of Cadeka, including the equity of its wholly owned subsidiary Cadeka Microcircuits, LLC, a Colorado limited liability company (“Cadeka”). With locations in Loveland, Colorado, Shenzhen and Wuxi, China, Cadeka designs, develops and markets high precision analog integrated circuits for use in industrial and high reliability applications. Cadeka’s results of operations and estimated fair value of assets acquired and liabilities assumed were included in our condensed consolidated financial statements beginning July 5, 2013. The pro forma effects of the portion of the Cadeka operations assumed through the transaction on our results of operations during fiscal 2014 were considered immaterial.

In accordance with ASC 805, Business Combinations, the total consideration paid for Cadeka was first allocated to the net tangible liabilities assumed based on the estimated fair values of the assets and liabilities at the acquisition date. The excess of the fair value of the consideration paid over the fair value of Cadeka’s net tangible liabilities assumed and identifiable intangible assets acquired resulted in the recognition of goodwill of $19.4 million primarily related of expected synergies from combining the operations of Cadeka with that of Exar and the release of deferred tax liabilities. The goodwill is not expected to be tax deductible.

The table below shows the allocation of the purchase price to tangible and intangible assets acquired and liabilities assumed (in thousands):

	Amount
Tangible assets	$	3,286
Intangible assets		20,380
Goodwill		19,387
Liabilities assumed		(8,216	)
Fair value of total consideration transferred	$	34,837

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Note 6 - Goodwill and Intangible Assets (Details) - Purchased Intangible Assets (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Mar. 30, 2014
Amortized intangible assets:
Carrying Amount	$ 145,959	$ 74,071
Accumulated Amortization	(47,238)	(44,961)
Net Carrying Amount	98,721	29,110
Total	156,279	76,351
Total	(47,238)	(44,961)
Total	109,041	31,390
Technology-Based Intangible Assets [Member]
Amortized intangible assets:
Carrying Amount	118,781	63,043
Accumulated Amortization	(39,357)	(37,510)
Net Carrying Amount	79,424	25,533
Total	(39,357)	(37,510)
Customer Relationships [Member]
Amortized intangible assets:
Carrying Amount	15,145	6,095
Accumulated Amortization	(3,082)	(2,762)
Net Carrying Amount	12,063	3,333
Total	(3,082)	(2,762)
Distribution Rights [Member]
Amortized intangible assets:
Carrying Amount	7,244	1,264
Accumulated Amortization	(1,322)	(1,260)
Net Carrying Amount	5,922	4
Total	(1,322)	(1,260)
Patents [Member]
Amortized intangible assets:
Carrying Amount	3,459	3,459
Accumulated Amortization	(3,395)	(3,378)
Net Carrying Amount	64	81
Total	(3,395)	(3,378)
Trade Names [Member]
Amortized intangible assets:
Carrying Amount	1,330	210
Accumulated Amortization	(82)	(51)
Net Carrying Amount	1,248	159
Total	(82)	(51)
In Process Research and Development [Member]
Amortized intangible assets:
In-process research and development	$ 10,320	$ 2,280

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Note 3 - Business Combinations (Details) - Business Acquistion Purchase Price (Parentheticals) (Integrated Memory Logic Limited [Member], TWD) In Millions, except Per Share data, unless otherwise specified	Jun. 03, 2014
Integrated Memory Logic Limited [Member]
Note 3 - Business Combinations (Details) - Business Acquistion Purchase Price (Parentheticals) [Line Items]
Shares acquired	68.3
Price per share	91.00

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Note 6 - Goodwill and Intangible Assets (Tables)

3 Months Ended

Jun. 29, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill [Table Text Block]

	June 29, 2014		March 30, 2014
Beginning balance	$	30,410	$	10,356
Goodwill additions		14,607		20,054
Ending balance	$	45,017	$	30,410

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	June 29, 2014							March 30, 2014
	Carrying Amount		Accumulated Amortization			Net Carrying Amount		Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortized intangible assets:
Existing technology		118,781	$	(39,357	)	$	79,424	$	63,043	$	(37,510	)	$	25,533
Customer relationships		15,145		(3,082	)		12,063		6,095		(2,762	)		3,333
Distributor relationships		7,244		(1,322	)		5,922		1,264		(1,260	)		4
Patents/Core technology		3,459		(3,395	)		64		3,459		(3,378	)		81
Trade names		1,330		(82	)		1,248		210		(51	)		159
Total intangible assets subject to amortization		145,959		(47,238	)		98,721		74,071		(44,961	)		29,110
In-process research and development		10,320		—			10,320		2,280		—			2,280
Total	$	156,279		(47,238	)		109,041		76,351		(44,961	)		31,390

Finite-lived Intangible Assets Amortization Expense [Table Text Block]

	Three Months Ended
	June 29, 2014		June 30, 2013
Amortization expense	$	2,277	$	1,544

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

Amortization Expense (by fiscal year)
2015 (9 months remaining)	$	11,901
2016		15,339
2017		14,406
2018		14,193
2019		12,993
2020 and thereafter		29,889
Total future amortization	$	98,721

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Note 5 - Fair Value (Tables)

3 Months Ended

Jun. 29, 2014

Fair Value Disclosures [Abstract]

Fair Value, Liabilities Measured on Recurring Basis [Table Text Block]

	June 29, 2014
	Level 1		Level 2		Level 3		Total
Assets:
Common shares of CounterPath	$	—	$	99	$	—	$	99
Liabilities:
Acquisition-related contingent consideration – Altior	$	—	$	—	$	3,022	$	3,022
Acquisition-related contingent consideration – Cadeka		—		—		890		890
Total liabilities	$	—	$	99	$	3,912	$	4,011

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

	March 30, 2014
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	4,636	$	—	$	—	$	4,636
U.S. government and agency securities		9,378		13,134		—		22,512
State and local government securities		—		2,772		—		2,772
Corporate bonds and securities		5		71,248		—		71,253
Asset-backed securities		—		27,635		—		27,635
Mortgage-backed securities		—		28,248		—		28,248
Total investment assets	$	14,019	$	143,037	$	—	$	157,056
Liabilities:
Acquisition-related contingent consideration – Altior	$	—	$	—	$	2,973	$	2,973
Acquisition-related contingent consideration – Cadeka		—		—		1,370		1,370
Total liabilities	$	—	$	—	$	4,343	$	4,343

Marketable Securities [Table Text Block]

	June 29, 2014		March 30, 2014
Cash and cash equivalents
Cash at financial institutions	$	123,161	$	9,978
Restricted cash		26,000		—
Cash equivalents
Money market funds		—		4,636
Total cash and cash equivalents	$	149,161	$	14,614
Available-for-sale securities
U.S. government and agency securities	$	—	$	22,512
State and local government securities		—		2,772
Corporate bonds and securities		—		71,253
Asset-backed securities		—		27,635
Mortgage-backed securities		—		28,248
Total short-term marketable securities	$	—	$	152,420

Realized Gain (Loss) on Investments [Table Text Block]

	Three Months Ended
	June 29, 2014			June 30, 2013
Gross realized gains	$	264		$	218
Gross realized losses		(238	)		(277	)
Net realized gain (losses)	$	26		$	(59	)

Available-for-sale Securities [Table Text Block]

	March 30, 2014
	Amortized Cost		Unrealized Gross Gains (1)		Unrealized Gross Losses (1)			Fair Value
Money market funds	$	4,636	$	—	$	—		$	4,636
U.S. government and agency securities		22,550		1		(39	)		22,512
State and local government securities		2,762		10		—			2,772
Corporate bonds and securities		71,309		32		(88	)		71,253
Asset-backed securities		27,661		22		(48	)		27,635
Mortgage-backed securities		28,362		24		(138	)		28,248
Total investments	$	157,280	$	89	$	(313	)	$	157,056

Investments Classified by Contractual Maturity Date [Table Text Block]

	March 30, 2014
	Amortized Cost		Fair Value
Less than 1 year	$	49,539	$	49,504
Due in 1 to 5 years		107,741		107,552
Total	$	157,280	$	157,056

Schedule of Unrealized Loss on Investments [Table Text Block]

	March 30, 2014
	Less than 12 months					12 months or greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government and agency securities	$	18,245	$	(39	)	$	—	$	—		$	18,245	$	(39	)
Corporate bonds and securities		48,379		(87	)		596		(1	)		48,975		(88	)
Asset-backed securities		7,118		(12	)		5,478		(36	)		12,596		(48	)
Mortgage-backed securities		19,682		(120	)		983		(18	)		20,665		(138	)
Total	$	93,424	$	(258	)	$	7,057	$	(55	)	$	100,481	$	(313	)

Fair Value Inputs, Assets, Quantitative Information [Table Text Block]

As of June 29, 2014	Fair Value (in thousands)		Valuation Technique	Significant Unobservable Input	Range
Acquisition-related contingent consideration – Altior	$	3,022	Combination of income and market approach	Revenue (in ‘000’s)	$6,725	-	$20,175
				Probability of Achievement	1%	-	66%
Acquisition-related contingent consideration – Cadeka	$	890	Combination of income and market approach	Revenue (in ‘000’s)	$8,400	-	$18,000
				Probability of Achievement	2%	-	30%

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Amount
As of March 30, 2014	$	2,973
Adjustment to purchase consideration		49
As of June 29, 2014	$	3,022

	Amount
As of March 30, 2014	$	1,370
Adjustment to purchase consideration		(480	)
As of June 29, 2014	$	890

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Note 18 - Segment and Geographic Information (Details) - Major Distributors and Customer of Net Revenue (Sales Revenue, Net [Member], Customer Concentration Risk [Member])	3 Months Ended
	Jun. 29, 2014		Jun. 30, 2013
Distributor A [Member]
Revenue, Major Customer [Line Items]
Net Revenue	29.00%		27.00%
Distributor B [Member]
Revenue, Major Customer [Line Items]
Net Revenue	10.00%			[1]
Distributor C [Member]
Revenue, Major Customer [Line Items]
Net Revenue	10.00%		11.00%
Customer B [Member]
Revenue, Major Customer [Line Items]
Net Revenue		[1]	15.00%

[1] Net sales for this distributor or customer for this period were less than 10% of our net sales.

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Note 5 - Fair Value (Details) - Amortized Cost and Estimated Fair Value of Cash Equivalents and Marketable Securities (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014
Amortized Cost and Estimated Fair Value of Cash Equivalents and Marketable Securities [Abstract]
Less than 1 year	$ 49,539
Less than 1 year	49,504
Due in 1 to 5 years	107,741
Due in 1 to 5 years	107,552
Total	157,280
Total	$ 157,056

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Note 3 - Business Combinations (Details) - Fair Value Allocated to Tangible and Identifiable Intangible Assets (USD $) In Thousands, unless otherwise specified									0 Months Ended				0 Months Ended
	Jun. 29, 2014	Mar. 30, 2014	Mar. 31, 2013	Jul. 03, 2014 Developed Technology Rights [Member] Integrated Memory Logic Limited [Member]	Jul. 03, 2014 In Process Research and Development [Member] Integrated Memory Logic Limited [Member]	Jul. 03, 2014 Distribution Rights [Member] Integrated Memory Logic Limited [Member]	Jul. 03, 2014 Customer Relationships [Member] Integrated Memory Logic Limited [Member]	Jul. 03, 2014 Trade Names [Member] Integrated Memory Logic Limited [Member]	Jul. 03, 2014 Integrated Memory Logic Limited [Member]	Jun. 03, 2014 Integrated Memory Logic Limited [Member]	Jan. 14, 2014 Stretch [Member]	Jul. 05, 2013 Stretch [Member]	Jul. 05, 2013 Cadeka [Member]
Identifiable tangible assets (liabilities)
Cash									$ 133,752
Accounts receivable									10,096
Inventories									3,950
Other current assets									608
Property, plant and equipment									480
Other assets									308
Accrued expenses									(8,137)
Accounts payable									(4,219)
Long-term liabilities									(3,595)
Total identifiable tangible assets (liabilities), net									133,243		2,937	3,286
Identifiable intangible assets				55,570	8,040	5,980	9,050	1,120	79,760		7,010		20,380
Total identifiable assets, net									213,003
Goodwill	45,017	30,410	10,356						14,607		667		19,387
Liabilities assumed										(3,300)	(10,604)		(8,216)
Fair value of total consideration transferred									$ 227,610	$ 227,610	$ 10		$ 34,837

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Note 7 - Long-Term Investment (Tables)

3 Months Ended

Jun. 29, 2014

Investments Schedule [Abstract]

Investment Holdings, Schedule of Investments [Table Text Block]

	June 29, 2014		March 30, 2014
Beginning balance	$	946	$	1,288
Net distributions		—		(19	)
Impairment charges		—		(323	)
Ending balance	$	946	$	946

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Note 8 - Related Party Transaction (Tables)

3 Months Ended

Jun. 29, 2014

Total Net Sales [Member]

Note 8 - Related Party Transaction (Tables) [Line Items]

Schedule of Related Party Transactions [Table Text Block]

	Three Months Ended
	June 29, 2014			June 30, 2013
Alonim		29	%		27	%

Net Accounts Receivable [Member]

Note 8 - Related Party Transaction (Tables) [Line Items]

Schedule of Related Party Transactions [Table Text Block]

	June 29, 2014			March 30, 2014
Alonim		9	%		18	%

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Note 2 - Recent Accounting Pronouncements

3 Months Ended

Jun. 29, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2013, the FASB issued amended standards that provided explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward or a tax credit carryforward exists. Under the amended standards, the unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward. These amended standard updates are effective for our interim period beginning after December 15, 2013 and applied prospectively with early adoption permitted. The adoption of this guidance did not have any material impact on our financial position, results of operations or cash flows.

In May 2014, the FASB issued a new standard, Revenue from Contracts with Customers, to clarify the principles for recognizing revenue to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards (“IFRS”) that would (1) provide a more robust framework for addressing revenue recognition; (2) improve comparability of revenue recognition practice across entities, industries, jurisdictions, and capital markets; and (3) provide more useful information to users of financial statements through improved disclosure requirements. This standard is effective for annual reporting periods beginning after December 15, 2016. Exar is currently evaluating the effect the adoption of this standard will have, if any, on our consolidated financial position, results of operations or cash flows.

In June 2014, the FASB issued amended standards to provide explicit guidance on the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. Under the amended standards, a performance target that affects vesting and that could be achieved after the requisite service period should be treated as a performance condition and therefore, should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. This standard is effective for annual reporting periods beginning after December 15, 2015. Exar is currently evaluating the effect the adoption of this standard will have, if any, on our consolidated financial position, results of operations or cash flows.

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Note 9 - Short-Term Debt (Tables)

3 Months Ended

Jun. 29, 2014

Debt Disclosure [Abstract]

Schedule of Debt [Table Text Block]

	June 29, 2014
Stifel	$	65,000
Repayment		(26,000	)
CTBC		26,000
Total short-term debt	$	65,000

Interest Income and Interest Expense Disclosure [Table Text Block]

	June 29, 2014
Stifel	$	402
CTBC		45
Total interest expense	$	447

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Note 12 - Stock-Based Compensation (Details) - Unrecognized Stock-Based Compensation Expense Related to Stock Options and RSUs (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014
Note 12 - Stock-Based Compensation (Details) - Unrecognized Stock-Based Compensation Expense Related to Stock Options and RSUs [Line Items]
Amount	$ 17,487
Employee Stock Option [Member]
Note 12 - Stock-Based Compensation (Details) - Unrecognized Stock-Based Compensation Expense Related to Stock Options and RSUs [Line Items]
Amount	9,349
Weighted Average Expected Remaining Period	2 years 6 months
Performance Shares [Member]
Note 12 - Stock-Based Compensation (Details) - Unrecognized Stock-Based Compensation Expense Related to Stock Options and RSUs [Line Items]
Amount	606
Weighted Average Expected Remaining Period	2 years
Restricted Stock Units (RSUs) [Member]
Note 12 - Stock-Based Compensation (Details) - Unrecognized Stock-Based Compensation Expense Related to Stock Options and RSUs [Line Items]
Amount	5,650
Weighted Average Expected Remaining Period	2 years 73 days
Performance-Based RSUs [Member]
Note 12 - Stock-Based Compensation (Details) - Unrecognized Stock-Based Compensation Expense Related to Stock Options and RSUs [Line Items]
Amount	$ 1,882
Weighted Average Expected Remaining Period	2 years 109 days

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Note 18 - Segment and Geographic Information (Tables)

3 Months Ended

Jun. 29, 2014

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended
	June 29, 2014		June 30, 2013
Industrial & Embedded Systems	$	18,867	$	16,498
Communications Infrastructure		5,090		5,976
High-End Consumer		3,424		246
Networking & Storage		3,338		9,907
Total net sales	$	30,719	$	32,627

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area [Table Text Block]

	Three Months Ended
	June 29, 2014		June 30, 2013
China	$	10,759	$	10,953
United States		6,226		10,468
Singapore		3,591		3,396
Germany		2,956		2,780
Europe (excluding Germany)		1,453		689
Japan		1,309		1,226
Rest of world		4,425		3,115
Total net sales	$	30,719	$	32,627

Schedule of Revenue by Major Customers by Reporting Segments [Table Text Block]

	Three Months Ended
	June 29, 2014			June 30, 2013
Distributor A		29	%		27	%
Distributor B		10	%		*
Distributor C		10	%		11	%
Customer B		*			15	%

Schedule Of Major Distributors [Table Text Block]

	June 29, 2014			March 30, 2014
Distributor E		11	%		*
Distributor B		10	%		17	%
Distributor D		10	%		14	%
Distributor A		*			16	%
Distributor C		*			12	%

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Note 5 - Fair Value (Details) - Cash, Cash Equivalents and Short-Term Marketable Securities (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Mar. 30, 2014
Cash and cash equivalents
Cash at financial institutions	$ 123,161	$ 9,978
Restricted cash	26,000
Cash equivalents
Money market funds		4,636
Total cash and cash equivalents	149,161	14,614
Available-for-sale securities
Short-term marketable securities		152,420
US Government Agencies Debt Securities [Member]
Available-for-sale securities
Short-term marketable securities		22,512
US States and Political Subdivisions Debt Securities [Member]
Available-for-sale securities
Short-term marketable securities		2,772
Corporate Debt Securities [Member]
Available-for-sale securities
Short-term marketable securities		71,253
Asset-backed Securities [Member]
Available-for-sale securities
Short-term marketable securities		27,635
Collateralized Mortgage Backed Securities [Member]
Available-for-sale securities
Short-term marketable securities		$ 28,248

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Note 9 - Short-Term Debt (Details) - Interest on Short-term Debt (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014
Note 9 - Short-Term Debt (Details) - Interest on Short-term Debt [Line Items]
Interest expense	$ 447
Stifel Financial Corp. [Member]
Note 9 - Short-Term Debt (Details) - Interest on Short-term Debt [Line Items]
Interest expense	402
CTBC [Member]
Note 9 - Short-Term Debt (Details) - Interest on Short-term Debt [Line Items]
Interest expense	$ 45

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Mar. 30, 2014
Current assets:
Cash and cash equivalents	$ 123,161	$ 14,614
Restricted cash	26,000
Short-term marketable securities		152,420
Accounts receivable (net of allowances of $1,029 and $1,178)	26,596	15,023
Accounts receivable, related party (net of allowances of $599 and $608)	2,524	3,309
Inventories	31,988	28,982
Other current assets	5,717	3,549
Total current assets	215,986	217,897
Property, plant and equipment, net	20,644	21,280
Goodwill	45,017	30,410
Intangible assets, net	109,041	31,390
Other non-current assets	1,448	1,240
Total assets	392,136	302,217
Current liabilities:
Accounts payable	15,883	15,488
Accrued compensation and related benefits	6,271	4,174
Deferred income and allowances on sales to distributors	3,737	1,765
Deferred income and allowances on sales to distributors, related party	9,962	9,349
Short-term debt financing	65,000
Other current liabilities	16,257	11,370
Total current liabilities	117,110	42,146
Long-term lease financing obligations	40	70
Other non-current obligations	10,651	6,626
Total liabilities	127,801	48,842
Commitments and contingencies (Notes 14, 15 and 16)
Stockholders' equity:
Common stock, $.0001 par value; 100,000,000 shares authorized; 47,272,056 and 47,336,005 shares outstanding	112	5
Additional paid-in capital	512,284	508,116
Accumulated other comprehensive loss	(25)	(1,079)
Accumulated deficit	(265,773)	(253,667)
Total Exar Corporation stockholders' equity	246,598	253,375
Non-controlling interests	17,737
Total stockholders' equity	264,335	253,375
Total liabilities and stockholders’ equity	$ 392,136	$ 302,217

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Note 3 - Business Combinations (Details) - Unaudited Pro Forma Condensed Financial Information (Integrated Memory Logic Limited [Member], USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Integrated Memory Logic Limited [Member]
Note 3 - Business Combinations (Details) - Unaudited Pro Forma Condensed Financial Information [Line Items]
Net sales	$ 41,286	$ 49,177
Net loss	(7,675)	(722)
Less: Net loss attributable to non-controlling interests	(105)	(122)
Net loss attributable to Exar Corporation	$ (7,570)	$ (600)
Earnings per share
Basic (in Dollars per share)	$ (0.16)	$ (0.01)
Diluted (in Dollars per share)	$ (0.16)	$ (0.01)

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Note 17 - Income Taxes (Details) - Estimated Interest and Penalties Related to the Underpayment of Income Taxes (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Mar. 30, 2014
Estimated Interest and Penalties Related to the Underpayment of Income Taxes [Abstract]
Accrued interest and penalties	$ 1,189	$ 83

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Cash flows from operating activities:
Net income (loss)	$ (12,240)	$ 806
Reconciliation of net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	3,309	2,850
Stock-based compensation expense	3,127	1,087
Release of deferred tax valuation allowance	828
Net change in fair value of contingent consideration	(431)
Changes in operating assets and liabilities:
Accounts receivable and accounts receivable, related party	(692)	(3,026)
Inventories	944	39
Other current and non-current assets	(1,460)	184
Accounts payable	(3,824)	3,101
Accrued compensation and related benefits	(538)	141
Other current and non-current liabilities	255	(4,647)
Deferred income and allowance on sales to distributors and related party distributor	2,585	448
Net cash provided by (used in) operating activities	(8,137)	983
Cash flows from investing activities:
Purchases of property, plant and equipment and intellectual property, net	(551)	(349)
Purchases of short-term marketable securities	(9,296)	(63,332)
Proceeds from maturities of short-term marketable securities	3,997	10,457
Proceeds from sales of short-term marketable securities	158,412	73,666
Acquisition of Integrated Memory Logic, net of cash received	(72,659)
Restricted cash	(26,000)
Other disposal (investment) activities		125
Net cash provided by investing activities	53,903	20,567
Cash flows from financing activities:
Proceeds from issuance of common stock	1,380	1,497
Purchase of stock for withholding taxes on vested restricted stock	(569)	(977)
Issuance of debt	91,000
Repayment of debt	(26,000)
Repurchase of common stock	(3,000)
Payments of lease financing obligations	(30)	(330)
Net cash provided by financing activities	62,781	190
Net increase in cash and cash equivalents	108,547	21,740
Cash and cash equivalents at the beginning of period	14,614	14,718
Cash and cash equivalents at the end of period	123,161	36,458
Supplemental disclosure of cash flow and non-cash information
Cash paid for income taxes	21	62
Cash paid for interest	486	37
Release of restricted stock upon vesting	408
Hifn and Others [Member]
Supplemental disclosure of cash flow and non-cash information
Issuance of common stock in connection with Hifn acquisition & others		$ 10

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Note 15 - Commitments and Contingencies (Details) - Warranty Reserve Balance (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Jun. 29, 2014	Mar. 30, 2014	Sep. 29, 2013
Warranty Reserve Balance [Abstract]
Beginning balance	$ 1,074	$ 50	$ 1,400
Provisions for warranties issued	17	1,480
Settlements/adjustments		(456)
Ending balance	$ 1,091	$ 1,074	$ 1,400

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Note 5 - Fair Value (Details) - Change in Fair Value of Consideration Liability (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014	Mar. 29, 2014
Altior [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Consideration liability fair value		$ 2,973
Less: Adjustment to purchase consideration	49
Consideration liability fair value	3,022	2,973
Cadeka [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Consideration liability fair value		1,370
Less: Adjustment to purchase consideration	(480)
Consideration liability fair value	$ 890	$ 1,370

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Note 18 - Segment and Geographic Information (Details) - Net Sales by Geographic Area (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Note 18 - Segment and Geographic Information (Details) - Net Sales by Geographic Area [Line Items]
Net sales	$ 30,719	$ 32,627
CHINA
Note 18 - Segment and Geographic Information (Details) - Net Sales by Geographic Area [Line Items]
Net sales	10,759	10,953
UNITED STATES
Note 18 - Segment and Geographic Information (Details) - Net Sales by Geographic Area [Line Items]
Net sales	6,226	10,468
SINGAPORE
Note 18 - Segment and Geographic Information (Details) - Net Sales by Geographic Area [Line Items]
Net sales	3,591	3,396
GERMANY
Note 18 - Segment and Geographic Information (Details) - Net Sales by Geographic Area [Line Items]
Net sales	2,956	2,780
Europe (excluding Germany) [Member]
Note 18 - Segment and Geographic Information (Details) - Net Sales by Geographic Area [Line Items]
Net sales	1,453	689
JAPAN
Note 18 - Segment and Geographic Information (Details) - Net Sales by Geographic Area [Line Items]
Net sales	1,309	1,226
Rest Of World [Member]
Note 18 - Segment and Geographic Information (Details) - Net Sales by Geographic Area [Line Items]
Net sales	$ 4,425	$ 3,115

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Note 12 - Stock-Based Compensation (Tables)

3 Months Ended

Jun. 29, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Employee Stock Purchase Plan, Activity [Table Text Block]

	As of June 29, 2014		Three Months Ended June 29, 2014
	Shares of Common Stock		Shares of Common Stock		Weighted Average Price
Authorized to issue		4,500
Reserved for future issuance		1,365
Issued				7	$	11.26

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Outstanding			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)		In-the-money Options Vested and Exercisable (in thousands)
Balance at March 30, 2014		7,213,848		$	8.98		5.02	$	21,301		2,170
Granted		45,700			10.87
Exercised		(105,751	)		6.99
Cancelled		(133	)		15.67
Forfeited		(385,098	)		10.12
Balance at June 29, 2014		6,768,566		$	8.96		4.84	$	16,701		2,277
Vested and expected to vest, June 29, 2014		6,284,514		$	8.84		4.75	$	16,137
Vested and exercisable, June 29, 2014		2,526,817		$	7.68		3.55	$	8,955

Schedule of Cash Proceeds Received from Share-based Payment Awards [Table Text Block]

	Three months Ended
	June 29, 2014		June 30, 2013
Intrinsic value of options exercised	$	430	$	822

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

	Shares			Weighted Average Grant- Date Fair Value		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Unvested at March 30, 2014		1,177,126		$	10.94		1.62	$	13,784
Granted		150,813			12.87
Issued and released		(147,648	)		9.80
Cancelled		(59,332	)		11.84
Unvested at June 29, 2014		1,120,959		$	11.30		1.61	$	12,420
Vested and expected to vest, June 29, 2014		965,301					1.54	$	10,696

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

	Three Months Ended
	June 29, 2014		June 30, 2013
Cost of sales	$	260	$	142
Research and development		812		140
Selling, general and administrative		2,055		805
Total Stock-based compensation expense	$	3,127	$	1,087

Schedule of Unrecognized Compensation Cost, Nonvested Awards [Table Text Block]

	June 29, 2014
	Amount (in thousands)		Weighted Average Expected Remaining Period (in years)
Options	$	9,349		2.5
Performance Options		606		2.0
RSUs		5,650		2.2
PRSUs		1,882		2.3
Total Unrecognized Stock-based compensation expense	$	17,487

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	Three Months Ended
	June 29, 2014			June 30, 2013
Expected term of options (years)		4.5			4.4
Risk-free interest rate		1.3	%		0.6	%
Expected volatility		32	%		35	%
Expected dividend yield		─			─
Weighted average estimated fair value	$	3.12		$	3.20

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Note 7 - Long-Term Investment (Details) (USD $)	3 Months Ended			3 Months Ended
	Mar. 30, 2014	Jun. 29, 2014	Mar. 31, 2013	Jun. 29, 2014 Skypoint Fund [Member]	Jun. 30, 2013 Skypoint Fund [Member]
Note 7 - Long-Term Investment (Details) [Line Items]
Long-term Investments	$ 946,000	$ 946,000	$ 1,288,000
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures				4,800,000
Cost-method Investments, Other than Temporary Impairment	$ 300,000			$ 0	$ 0

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Note 16 - Legal Proceedings

3 Months Ended

Jun. 29, 2014

Disclosure Text Block Supplement [Abstract]

Legal Matters and Contingencies [Text Block]

NOTE 16.      LEGAL PROCEEDINGS

From time to time, we are involved in various claims, legal actions and complaints arising in the normal course of business. We are not a named party to any ongoing lawsuit or formal proceeding that, in the opinion of our management, is likely to have a material adverse effect on our financial position, results of operations or cash flows.

In fiscal year 2014, two former employees of Exar’s French subsidiary asserted claims against that subsidiary for alleged unfair dismissal in the French Labor Courts. We believe that the former employees were terminated in accordance with the requirements of French law and that the former employees’ claims are not supported by evidence. The matters have been scheduled for hearing on October 10, 2014 and October 22, 2014, respectively. We dispute the claims and we intend to vigorously protect our interests. We do not believe an adverse outcome will have a material impact on our financial position, results of operations or cash flow

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Note 13 - Net Income (Loss) Per Share (Tables)

3 Months Ended

Jun. 29, 2014

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended
	June 29, 2014			June 30, 2013
Net income (loss) attributable to Exar Corporation	$	(12,105	)	$	806
Shares used in computation of net income (loss) per share:
Basic		47,236			46,805
Effect of options and awards		─			1,280
Diluted		47,236			48,085
Net income (loss) per share:
Basic	$	(0.26	)	$	0.02
Diluted	$	(0.26	)	$	0.02

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Note 18 - Segment and Geographic Information (Details) - Net Sales by End Market (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Segment Reporting Information [Line Items]
Total net sales by end market	$ 30,719	$ 32,627
Industrial And Embedded Systems [Member]
Segment Reporting Information [Line Items]
Total net sales by end market	18,867	16,498
Communications Infrastructure [Member]
Segment Reporting Information [Line Items]
Total net sales by end market	5,090	5,976
High End Consumer [Member]
Segment Reporting Information [Line Items]
Total net sales by end market	3,424	246
Networking And Storage [Member]
Segment Reporting Information [Line Items]
Total net sales by end market	$ 3,338	$ 9,907

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Note 18 - Segment and Geographic Information

3 Months Ended

Jun. 29, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

NOTE 18. SEGMENT AND GEOGRAPHIC INFORMATION

We operate in one reportable segment, which is comprised of one operating segment. We design, develop and market high performance analog mixed-signal integrated circuits and advanced sub-system solutions for the Industrial & Embedded Systems, Communications Infrastructure markets, High-End Consumer, and Networking & Storage.

Our net sales by end market were summarized as follows as of the dates indicated below (in thousands):

	Three Months Ended
	June 29, 2014		June 30, 2013
Industrial & Embedded Systems	$	18,867	$	16,498
Communications Infrastructure		5,090		5,976
High-End Consumer		3,424		246
Networking & Storage		3,338		9,907
Total net sales	$	30,719	$	32,627

Our foreign operations are conducted primarily through our wholly-owned subsidiaries in Canada, China, France, Germany, Japan, Malaysia, South Korea, Taiwan and the United Kingdom. Our principal markets include North America, Europe and the Asia Pacific region. Net sales by geographic areas represent direct sales principally to original equipment manufacturers (“OEM”), or their designated subcontract manufacturers, and to distributors (affiliated and unaffiliated) who buy our products and resell to their customers.

Our net sales by geographic area for the periods indicated below were as follows (in thousands):

	Three Months Ended
	June 29, 2014		June 30, 2013
China	$	10,759	$	10,953
United States		6,226		10,468
Singapore		3,591		3,396
Germany		2,956		2,780
Europe (excluding Germany)		1,453		689
Japan		1,309		1,226
Rest of world		4,425		3,115
Total net sales	$	30,719	$	32,627

Substantially all of our long-lived assets at each of June 29, 2014 and June 30, 2013 were located in the United States.

The following distributors and customer accounted for 10% or more of our net sales in the periods indicated:

	Three Months Ended
	June 29, 2014			June 30, 2013
Distributor A		29	%		27	%
Distributor B		10	%		*
Distributor C		10	%		11	%
Customer B		*			15	%

* Net sales for this distributor or customer for this period were less than 10% of our net sales.

No other distributor or customer accounted for 10% or more of the net sales for the three months ended June 29, 2014 and June 30, 2013, respectively.

The following distributors accounted for 10% or more of our net accounts receivable as of the dates indicated:

	June 29, 2014			March 30, 2014
Distributor E		11	%		*
Distributor B		10	%		17	%
Distributor D		10	%		14	%
Distributor A		*			16	%
Distributor C		*			12	%

* Accounts receivable for this distributor for this period were less than 10% of total account balance.

No other distributor or customer accounted for 10% or more of the net accounts receivable as of June 29, 2014 and June 30, 2013, respectively.

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Note 8 - Related Party Transaction (Details) - Related Party Contributions to Total Net Sales (Alonim Investments Inc. [Member], Sales Revenue, Net [Member], Customer Concentration Risk [Member])	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Alonim Investments Inc. [Member] | Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Related Party Transaction [Line Items]
Alonim	29.00%	27.00%

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Note 1 - Organization and Basis of Presentation

3 Months Ended

Jun. 29, 2014

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

Description of Business— Exar Corporation was incorporated in California in 1971 and reincorporated in Delaware in 1991. Exar Corporation and its subsidiaries (“Exar” or “we”) is a fabless semiconductor company that designs, develops and markets high-performance integrated circuits and system solutions for the Communications, High-End Consumer, Industrial & Embedded Systems, and Networking & Storage markets. Exar's broad product portfolio includes analog, display, LED lighting, mixed-signal, power management, connectivity, data management, and video processing solutions.

Basis of Presentation and Use of Management Estimates—The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 30, 2014 as filed with the SEC. In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, that we believe are necessary for a fair statement of Exar’s financial position as of June 29, 2014 and our results of operations for the three months ended June 29, 2014 and June 30, 2013, respectively. These condensed consolidated financial statements are not necessarily indicative of the results to be expected for the entire year.

The financial statements include management’s estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of sales and expenses during the reporting periods. Actual results could differ from those estimates, and material effects on operating results and financial position may result.

Our fiscal years consist of 52 or 53 weeks. In a 52-week year, each fiscal quarter consists of 13 weeks. Fiscal years 2015 and 2014 both consist of 52 weeks.

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Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 29, 2014	Mar. 30, 2014
Accounts receivable, allowances	$ 1,029	$ 1,178
Common stock par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares outstanding	47,272,056	47,336,005
Related Party [Member]
Accounts receivable, allowances	$ 599	$ 608

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Note 11 - Restructuring Charges and Exit Costs

3 Months Ended

Jun. 29, 2014

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

NOTE 11. RESTRUCTURING CHARGES AND EXIT COSTS

2015 Restructuring Charges and Exit Costs

During the first quarter of fiscal 2015, we incurred $0.4 million restructuring charges and exit costs mainly due to severance benefit payments made.

2014 Restructuring Charges and Exit Costs

During the first quarter of fiscal 2014, we incurred $1.0 million restructuring charges and exit costs. The charges include $0.9 million of severance benefits and $0.1 million of costs related to the preparation for the sale of Exar campus in Fremont, California.

Our restructuring liabilities were included in the other current liabilities and other non-current obligations lines within our condensed consolidated balance sheets. The following table summarizes the activities affecting the liabilities as of the dates indicated below (in thousands):

	March 30, 2014		Additions/ adjustments		Non-cash charges			Payments			June 29, 2014
Lease termination costs and others	$	1,615	$	60	$	(77	)	$	(92	)	$	1,506
Severance		754		336		—			(516	)		574
Total	$	2,369	$	396	$	(77	)	$	(608	)	$	2,080

	April 1, 2013		Additions/ adjustments		Non-cash charges			Payments			March 30, 2014
Lease termination costs and others	$	2,860	$	570	$	(57	)	$	(1,758	)	$	1,615
Severance		426		2,444		—			(2,116	)		754
Total	$	3,286	$	3,014	$	(57	)	$	(3,874	)	$	2,369

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Note 15 - Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Mar. 30, 2014	Sep. 29, 2013	Mar. 31, 2013
Commitments and Contingencies Disclosure [Abstract]
Product Warranty Accrual	$ 1,091	$ 1,074	$ 1,400	$ 50

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Note 14 - Lease Financing Obligations (Details) - Rent Expense (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Rent Expense [Abstract]
Rent expense	$ 332	$ 196

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Document And Entity Information	3 Months Ended
	Jun. 29, 2014	Aug. 06, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	Exar Corporation
Document Type	10-Q
Current Fiscal Year End Date	--03-29
Entity Common Stock, Shares Outstanding		47,344,916
Amendment Flag	false
Entity Central Index Key	0000753568
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 29, 2014
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1

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Note 12 - Stock-Based Compensation

3 Months Ended

Jun. 29, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 12. STOCK-BASED COMPENSATION

Employee Stock Participation Plan (“ESPP”)

Our ESPP permits employees to purchase common stock through payroll deductions at a purchase price that is equal to 95% of our common stock price on the last trading day of each three-calendar-month offering period. Our ESPP is non-compensatory.

The following table summarizes our ESPP transactions during the fiscal period presented (in thousands, except per share amounts):

	As of June 29, 2014		Three Months Ended June 29, 2014
	Shares of Common Stock		Shares of Common Stock		Weighted Average Price
Authorized to issue		4,500
Reserved for future issuance		1,365
Issued				7	$	11.26

Equity Incentive Plans

We currently have two equity incentive plans, in which shares are available for future issuance, the Exar Corporation 2006 Equity Incentive Plan (the “2006 Plan”) and the Sipex Corporation (“Sipex”) 2006 Equity Incentive Plan (the “Sipex Plan”), the latter of which was assumed in connection with the August 2007 acquisition of Sipex.

The 2006 Plan authorizes the issuance of stock options, stock appreciation rights, restricted stock, stock bonuses and other forms of awards granted or denominated in common stock or units of common stock, as well as cash bonus awards. Restricted stock units ("RSU”) granted under the 2006 Plan are counted against authorized shares available for future issuance on a basis of two shares for every RSU issued. The 2006 Plan allows for performance-based vesting and partial vesting based upon the level of performance. Grants under the Sipex Plan are only available to former Sipex’s employees or employees of Exar hired after the Sipex acquisition. At our annual meeting on September 15, 2010, our stockholders approved an amendment to the 2006 Plan to increase the aggregate share limit under the 2006 Plan by an additional 5.5 million shares to 8.3 million shares. At June 29, 2014, there were 0.7 million shares available for future grant under all our equity incentive plans.

Stock Option Activities

Our stock option transactions during the three months ended June 29, 2014 are summarized as follows:

	Outstanding			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)		In-the-money Options Vested and Exercisable (in thousands)
Balance at March 30, 2014		7,213,848		$	8.98		5.02	$	21,301		2,170
Granted		45,700			10.87
Exercised		(105,751	)		6.99
Cancelled		(133	)		15.67
Forfeited		(385,098	)		10.12
Balance at June 29, 2014		6,768,566		$	8.96		4.84	$	16,701		2,277
Vested and expected to vest, June 29, 2014		6,284,514		$	8.84		4.75	$	16,137
Vested and exercisable, June 29, 2014		2,526,817		$	7.68		3.55	$	8,955

The aggregate intrinsic values in the table above represent the total pre-tax intrinsic value, which is based on the closing price of our common stock of $11.08 and $11.71 as of June 29, 2014 and March 30, 2014, respectively. These are the values which would have been received by option holders if all option holders exercised their options on that date.

In January 2012, we granted 480,000 performance-based stock options to our CEO. The options are scheduled to vest in four equal annual installments at the end of fiscal years 2013 through 2016 if certain predetermined market based financial measures are met. If the financial measures are not met, each installment will be rolled over to the subsequent fiscal year. In January 2014, we granted 140,000 performance-based stock options to our CEO. The options are scheduled to vest at the end of fiscal year 2017 if certain predetermined financial measures are met. We recorded $112,000 and $65,000 of compensation expense for these options in the three months ended June 29, 2014 and June 30, 2013, respectively.

Options exercised for the periods indicated below were as follows (in thousands):

	Three months Ended
	June 29, 2014		June 30, 2013
Intrinsic value of options exercised	$	430	$	822

RSU Activities

Our RSU transactions during the three months ended June 29, 2014 are summarized as follows:

	Shares			Weighted Average Grant- Date Fair Value		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Unvested at March 30, 2014		1,177,126		$	10.94		1.62	$	13,784
Granted		150,813			12.87
Issued and released		(147,648	)		9.80
Cancelled		(59,332	)		11.84
Unvested at June 29, 2014		1,120,959		$	11.30		1.61	$	12,420
Vested and expected to vest, June 29, 2014		965,301					1.54	$	10,696

The aggregate intrinsic value of RSUs represents the closing price per share of our stock at the end of the periods presented, multiplied by the number of unvested RSUs or the number of vested and expected to vest RSUs, as applicable, at the end of each period.

For RSUs, stock-based compensation expense was calculated based on our stock price on the date of grant, multiplied by the number of RSUs granted. The grant date fair value of RSUs less estimated forfeitures was recognized on a straight-line basis, over the vesting period.

In March 2012, we granted 300,000 performance-based RSUs (“PRSUs”) to our CEO. The PRSUs are scheduled to start vesting in three equal installments at the end of fiscal year 2013 through 2015 with three year vesting periods if certain predetermined financial measures are met. If the financial measures are not met, each installment will be forfeited at the end of its respective fiscal year. We recorded $734,000 and $52,000 of compensation expense for these awards in the three months ended June 29, 2014 and June 30, 2013, respectively.

In the first quarter of fiscal 2014, we granted 50,000 PRSUs to certain executives. The PRSUs were scheduled to vest in three equal installments at the end of fiscal year 2014 with a three-year vesting period if certain performance measures are met. We recorded stock compensation recovery of $120,000 in the three month ended June 29, 2014 as a result of partially meeting the performance measurements by the executives and recorded $47,000 of stock compensation expense for these awards in the three months ended June 30, 2013.

In July 2013, as part of the acquisition of Cadeka, we agreed to pay retention bonus to certain former Cadeka employees and the bonus will be settled in RSUs subject to fulfillment of the service period. We recorded $394,000 of compensation expense for these awards in the three months ended June 29, 2014. The expense is reported in the other non-current obligations line in the condensed consolidated balance sheet as the total amount of bonus is to be settled in variable number of RSUs at the completion of the requisite service period. Such non-cash compensation expense is recorded as part of stock compensation expense in the condensed consolidated statement of operations.

In August 2013, we announced the Fiscal Year 2014 Management Incentive Program (“2014 Incentive Program”). Under this program, each participant’s award is denominated in stock and subject to achievement of certain financial performance goals and the participant’s annual Management by Objective goals. The expense is reported in the other current liabilities line in the condensed consolidated balance sheet as the total amount of bonus is to be settled in variable number of RSUs at the completion of the requisite service period. Such non-cash compensation expense is recorded as part of stock compensation expense in the condensed consolidated statement of operations. We recorded $5,000 of compensation expense for these awards in the three months ended June 29, 2014.

In October 2013, we granted 70,000 PRSUs to certain executives. The first 50% of the PRSUs are scheduled to start vesting in three equal installments at the end of fiscal year 2015 with a three-year vesting period if certain performance measures are met. The second 50% of the PRSUs are scheduled to start vesting in three equal installments at the end of fiscal year 2016 with a three-year vesting period if certain performance measures are met. We recorded $178,000 of compensation expense for these awards in the three months ended June 29, 2014.

In January 2014, we granted 82,500 PRSUs to certain former Stretch employees. The PRSUs are scheduled to start vesting in three equal installments at the end of fiscal year 2015 with a three-year vesting period if certain performance measures are met. We recorded $0 of compensation expense in the three months ended June 29, 2014 related to these PRSUs as the vesting of such PRSUs was not deemed probable.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense related to stock options and RSUs during the fiscal periods presented below (in thousands):

	Three Months Ended
	June 29, 2014		June 30, 2013
Cost of sales	$	260	$	142
Research and development		812		140
Selling, general and administrative		2,055		805
Total Stock-based compensation expense	$	3,127	$	1,087

The amount of stock-based compensation cost capitalized in inventory was immaterial for all periods presented.

Unrecognized Stock-Based Compensation Expense

The following table summarizes unrecognized stock-based compensation expense related to stock options and RSUs for the period indicated below:

	June 29, 2014
	Amount (in thousands)		Weighted Average Expected Remaining Period (in years)
Options	$	9,349		2.5
Performance Options		606		2.0
RSUs		5,650		2.2
PRSUs		1,882		2.3
Total Unrecognized Stock-based compensation expense	$	17,487

Valuation Assumptions

We estimate the fair value of stock options on the date of grant using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based compensation represent our estimates, but these estimates involve inherent uncertainties and the application of management’s judgment which include the expected term of the stock-based awards, stock price volatility and forfeiture rates. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future.

We used the following weighted average assumptions to calculate the fair values of options granted during the fiscal periods presented:

	Three Months Ended
	June 29, 2014			June 30, 2013
Expected term of options (years)		4.5			4.4
Risk-free interest rate		1.3	%		0.6	%
Expected volatility		32	%		35	%
Expected dividend yield		─			─
Weighted average estimated fair value	$	3.12		$	3.20

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Note 12 - Stock-Based Compensation (Details) - Options Exercised (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Options Exercised [Abstract]
Intrinsic value of options exercised	$ 430	$ 822

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Note 14 - Lease Financing Obligations (Details) - Interest Expense (Design Tools [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Design Tools [Member]
Note 14 - Lease Financing Obligations (Details) - Interest Expense [Line Items]
Interest expense	$ 39	$ 37

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Sales:
Net sales	$ 21,698,000	$ 23,858,000
Net sales, related party	9,021,000	8,769,000
Total net sales	30,719,000	32,627,000
Cost of sales:
Cost of sales	12,353,000	11,812,000
Cost of sales, related party	3,838,000	3,907,000
Amortization of purchased intangible assets and inventory step-up cost	3,545,000	1,350,000
Research and development	8,243,000	6,180,000
Selling, general and administrative	10,077,000	7,354,000
Merger and acquisition costs	4,050,000	465,000
Restructuring charges and exit costs	400,000	1,000,000
Net change in fair value in contingent consideration	(431,000)
Total operating expenses	22,308,000	14,930,000
Total cost of sales	19,763,000	17,150,000
Income (loss) from operations	(11,352,000)	547,000
Other income and expense, net:
Interest income and other, net	290,000	287,000
Interest expense	(486,000)	(37,000)
Total other income and expense, net	(196,000)	250,000
Income (loss) before income taxes	(11,548,000)	797,000
Provision for (benefit from) income taxes	692,000	(9,000)
Net income (loss)	(12,240,000)	806,000
Less: Net income attributable to non-controlling interests	135,000
Net income (loss) attributable to Exar Corporation	(12,105,000)	806,000
Net income (loss) per share:
Basic (in Dollars per share)	$ (0.26)	$ 0.02
Diluted (in Dollars per share)	$ (0.26)	$ 0.02
Shares used in the computation of net income (loss) per share:
Basic (in Shares)	47,236	46,805
Diluted (in Shares)	47,236	48,085
Gross profit	10,956,000	15,477,000
Cost of Sales [Member]
Cost of sales:
Restructuring charges and exit costs	27,000	81,000
Operating Expense [Member]
Cost of sales:
Restructuring charges and exit costs	$ 369,000	$ 931,000

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Note 6 - Goodwill and Intangible Assets

3 Months Ended

Jun. 29, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 6. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. We evaluate goodwill for impairment on an annual basis or whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. We conduct our annual impairment analysis in the fourth quarter of each fiscal year. Impairment of goodwill is tested at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. Estimations and assumptions regarding the number of reporting units, future performances, results of our operations and comparability of our market capitalization and net book value will be used. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and a second step is performed to measure the amount of impairment loss. Because we have one single operating segment and one chief operating decision maker, our President and Chief Executive Officer (“CEO”), we utilize an entity-wide approach to assess goodwill for impairment. As of June 29, 2014, no events or changes in circumstances suggest that the carrying amount for goodwill may not be recoverable and therefore we did not perform an interim goodwill impairment analysis.

The changes in the carrying amount of goodwill for first fiscal quarter of 2015 and 2014 were as follows (in thousands):

	June 29, 2014		March 30, 2014
Beginning balance	$	30,410	$	10,356
Goodwill additions		14,607		20,054
Ending balance	$	45,017	$	30,410

Goodwill additions during the first quarter of fiscal 2015 consisted of $14.6 million residual allocation from the iML acquisition purchase price accounting. The goodwill additions during fiscal 2014 consist of $19.4 million and $0.7 million residual allocation from the Cadeka and Stretch acquisition purchase price accounting, respectively.

Intangible Assets

Our purchased intangible assets as of the dates indicated below were as follows (in thousands):

	June 29, 2014							March 30, 2014
	Carrying Amount		Accumulated Amortization			Net Carrying Amount		Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortized intangible assets:
Existing technology		118,781	$	(39,357	)	$	79,424	$	63,043	$	(37,510	)	$	25,533
Customer relationships		15,145		(3,082	)		12,063		6,095		(2,762	)		3,333
Distributor relationships		7,244		(1,322	)		5,922		1,264		(1,260	)		4
Patents/Core technology		3,459		(3,395	)		64		3,459		(3,378	)		81
Trade names		1,330		(82	)		1,248		210		(51	)		159
Total intangible assets subject to amortization		145,959		(47,238	)		98,721		74,071		(44,961	)		29,110
In-process research and development		10,320		—			10,320		2,280		—			2,280
Total	$	156,279		(47,238	)		109,041		76,351		(44,961	)		31,390

Long-lived assets are amortized on a straight-line basis over their respective estimated useful lives. Existing technology is amortized over two to nine years. Customer relationships are amortized over five to seven years. Distributor relationships are amortized over six to seven years. Patents/core technology is amortized over five to six years. Trade names are amortized over three to six years. We expect the amortization of IPR&D to start in fiscal 2015. We evaluate the remaining useful life of our long-lived assets that are being amortized each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the long-lived asset is amortized prospectively over the remaining useful life.

Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets (or asset group) may not be fully recoverable. Whenever events or changes in circumstances suggest that the carrying amount of long-lived assets may not be recoverable, we estimate the future cash flows expected to be generated by the assets (or asset group) from its use or eventual disposition. If the sum of the expected future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. Significant management judgment is required in the grouping of long-lived assets and forecasts of future operating results that are used in the discounted cash flow method of valuation. If our actual results, or the plans and estimates used in future impairment analyses are lower than the original estimates used to assess the recoverability of these assets, we could incur additional impairment charges.

As of June 29, 2014, there were no indicators that required us to perform an intangible assets impairment review. Due to the decline in forecasted revenue related to certain acquired intangible assets, we recorded $1.6 million impairment charges in the fourth quarter of fiscal 2014.

The aggregate amortization expenses for our intangible assets for the periods indicated below were as follows (in thousands):

	Three Months Ended
	June 29, 2014		June 30, 2013
Amortization expense	$	2,277	$	1,544

The total future amortization expenses for our purchased intangible assets are summarized below (in thousands):

Amortization Expense (by fiscal year)
2015 (9 months remaining)	$	11,901
2016		15,339
2017		14,406
2018		14,193
2019		12,993
2020 and thereafter		29,889
Total future amortization	$	98,721

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Note 5 - Fair Value

3 Months Ended

Jun. 29, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE 5. FAIR VALUE

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. GAAP describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Our cash and investment instruments are classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

The fair value of contingent consideration arising from the acquisitions of Altior Inc. (“Altior”) and Cadeka Microcircuits LLC (“Cadeka”) are classified within Level 3 of the fair value hierarchy since it is based on a probability-based approach that includes significant unobservable inputs.

There were no transfers between Level 1, Level 2, and Level 3 during the fiscal quarter ended June 29, 2014.

As of June 29, 2014, we sold all of our short term investments to fund the iML acquisition. The following table summarizes our other investments assets and liabilities as June 29, 2014 (in thousands):

	June 29, 2014
	Level 1		Level 2		Level 3		Total
Assets:
Common shares of CounterPath	$	—	$	99	$	—	$	99
Liabilities:
Acquisition-related contingent consideration – Altior	$	—	$	—	$	3,022	$	3,022
Acquisition-related contingent consideration – Cadeka		—		—		890		890
Total liabilities	$	—	$	99	$	3,912	$	4,011

As of March 30, 2014, our investment assets and liabilities, measured at fair value on a recurring basis, were as follows (in thousands):

	March 30, 2014
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	4,636	$	—	$	—	$	4,636
U.S. government and agency securities		9,378		13,134		—		22,512
State and local government securities		—		2,772		—		2,772
Corporate bonds and securities		5		71,248		—		71,253
Asset-backed securities		—		27,635		—		27,635
Mortgage-backed securities		—		28,248		—		28,248
Total investment assets	$	14,019	$	143,037	$	—	$	157,056
Liabilities:
Acquisition-related contingent consideration – Altior	$	—	$	—	$	2,973	$	2,973
Acquisition-related contingent consideration – Cadeka		—		—		1,370		1,370
Total liabilities	$	—	$	—	$	4,343	$	4,343

Our cash, cash equivalents and short-term marketable securities as of the dates indicated below were as follows (in thousands):

	June 29, 2014		March 30, 2014
Cash and cash equivalents
Cash at financial institutions	$	123,161	$	9,978
Restricted cash		26,000		—
Cash equivalents
Money market funds		—		4,636
Total cash and cash equivalents	$	149,161	$	14,614
Available-for-sale securities
U.S. government and agency securities	$	—	$	22,512
State and local government securities		—		2,772
Corporate bonds and securities		—		71,253
Asset-backed securities		—		27,635
Mortgage-backed securities		—		28,248
Total short-term marketable securities	$	—	$	152,420

Our marketable securities include U.S. government and agency securities, state and local government securities, corporate bonds and securities, asset-backed and mortgage-backed securities and certificate of deposit. We classify investments as available-for-sale at the time of purchase and re-evaluate such designation as of each balance sheet date. We amortize premiums and accrete discounts to interest income over the life of the investment. Our available-for-sale securities, which we intend to sell as necessary to meet our liquidity requirements, are classified as cash equivalents if the maturity date is 90 days or less from the date of purchase and as short-term marketable securities if the maturity date is greater than 90 days from the date of purchase. As of June 29, 2014, $26.0 million of short term certificate deposit was used as collateral against our CTBC bridge loan and classified as restricted cash. See Note 9-“Short-term Debt”.

All marketable securities are reported at fair value based on the estimated or quoted market prices as of each balance sheet date, with unrealized gains or losses, net of tax effect, recorded in the condensed consolidated statements of other comprehensive income except those unrealized losses that are deemed to be other than temporary which are reflected in the impairment charges on investments line item on the condensed consolidated statements of operations.

We received approximately 93,000 common shares of CounterPath Corporation (“CounterPath”) through the Skypoint dissolution, of which we estimated the fair value using the market value of common shares as determined by trading on the Nasdaq CM market. These securities have been classified to Level 2 as of June 29, 2014 and recorded in the other non-current assets line item on the condensed consolidated balance sheet. We believe the fair value inputs of CounterPath do not meet all of the criteria for Level 1 classification primarily due to the low trading volume of the stock. See Note 7–“Long-term Investments” for the discussion on Skypoint.

The fair value of contingent consideration was determined based on probability-based approach which includes projected revenues, percentage probability of occurrence and discount rate to present value payments. A significant increase (decrease) in the projected revenue, discount rate or probability of occurrence in isolation could result in a significantly higher (lower) fair value measurement. We calculate the fair value of the contingent consideration on a quarterly basis based on a collaborative effort of our operations and financial accounting groups based on additional information as it becomes available. Any change in the fair value adjustment is recorded in the earnings of that period.

Realized gains (losses) on the sale of marketable securities are determined by the specific identification method and are reflected in the interest income and other net, line item on the condensed consolidated statements of operations.

Our net realized gains (losses) on marketable securities for the periods indicated below were as follows (in thousands):

	Three Months Ended
	June 29, 2014			June 30, 2013
Gross realized gains	$	264		$	218
Gross realized losses		(238	)		(277	)
Net realized gain (losses)	$	26		$	(59	)

The following table summarizes our investments in marketable securities as March 30, 2014 (in thousands):

	March 30, 2014
	Amortized Cost		Unrealized Gross Gains (1)		Unrealized Gross Losses (1)			Fair Value
Money market funds	$	4,636	$	—	$	—		$	4,636
U.S. government and agency securities		22,550		1		(39	)		22,512
State and local government securities		2,762		10		—			2,772
Corporate bonds and securities		71,309		32		(88	)		71,253
Asset-backed securities		27,661		22		(48	)		27,635
Mortgage-backed securities		28,362		24		(138	)		28,248
Total investments	$	157,280	$	89	$	(313	)	$	157,056

(1) Gross of tax impact of $828

Our asset-backed securities are comprised primarily of premium tranches of vehicle loans and credit card receivables, while our mortgage-backed securities are primarily from Federal agencies. We do not own auction rate securities nor do we own securities that are classified as subprime.

Management determines the appropriate classification of cash equivalents or short-term marketable securities at the time of purchase and reevaluates such classification as of each balance sheet date. The investments are adjusted for amortization of premiums and accretion of discounts to maturity and such accretion/amortization, which is immaterial for the period presented, is included in the interest income and other, net line in the condensed statements of operations. Cash equivalents and short-term marketable securities are reported at fair value with the related unrealized gains and losses included in the accumulated other comprehensive losses line in the condensed consolidated balance sheets.

We periodically review our investments in unrealized loss positions for other-than-temporary impairments. This evaluation includes, but is not limited to, significant quantitative and qualitative assessments and estimates regarding credit ratings, collateralized support, the length of time and significance of a security’s loss position, our intent not to sell the security, and whether it is more likely than not that we will not have to sell the security before recovery of its cost basis. For the three months ended June 29, 2014, no investments were identified with other-than-temporary declines in value.

The amortized cost and estimated fair value of cash equivalents and marketable securities classified as available-for-sale by expected maturity as of March 30, 2014 (in thousands):

	March 30, 2014
	Amortized Cost		Fair Value
Less than 1 year	$	49,539	$	49,504
Due in 1 to 5 years		107,741		107,552
Total	$	157,280	$	157,056

The following table summarizes the gross unrealized losses and fair values of our investments in an unrealized loss position as of March 30, 2014, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	March 30, 2014
	Less than 12 months					12 months or greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government and agency securities	$	18,245	$	(39	)	$	—	$	—		$	18,245	$	(39	)
Corporate bonds and securities		48,379		(87	)		596		(1	)		48,975		(88	)
Asset-backed securities		7,118		(12	)		5,478		(36	)		12,596		(48	)
Mortgage-backed securities		19,682		(120	)		983		(18	)		20,665		(138	)
Total	$	93,424	$	(258	)	$	7,057	$	(55	)	$	100,481	$	(313	)

The fair value of contingent consideration was determined based on a probability-based approach which includes projected revenues, percentage probability of occurrence and discount rate to present value payments. A significant increase (decrease) in the projected revenue, discount rate or probability of occurrence in isolation could result in a significantly higher (lower) fair value measurement. 

The following table presents quantitative information about the inputs and valuation methodologies used for our fair value measurements classified in Level 3 of the fair value hierarchy as of June 29, 2014.

As of June 29, 2014	Fair Value (in thousands)		Valuation Technique	Significant Unobservable Input	Range
Acquisition-related contingent consideration – Altior	$	3,022	Combination of income and market approach	Revenue (in ‘000’s)	$6,725	-	$20,175
				Probability of Achievement	1%	-	66%
Acquisition-related contingent consideration – Cadeka	$	890	Combination of income and market approach	Revenue (in ‘000’s)	$8,400	-	$18,000
				Probability of Achievement	2%	-	30%

We calculate the fair value of the contingent consideration on a quarterly basis based on additional information as it becomes available. Any change in the fair value adjustment is recorded in the earnings of that period.

The change in the fair value of our Altior purchase consideration liability is as follows (in thousands):

	Amount
As of March 30, 2014	$	2,973
Adjustment to purchase consideration		49
As of June 29, 2014	$	3,022

The change in the fair value of our Cadeka purchase consideration liability is as follows (in thousands):

	Amount
As of March 30, 2014	$	1,370
Adjustment to purchase consideration		(480	)
As of June 29, 2014	$	890

In the first quarter of fiscal 2015, the fair value of the contingent consideration for Altior acquisition increased by $49,000 due to the impact of change in present value of the amount payable due to passage of time. Contingent consideration for Cadeka acquisition decreased by $480,000 due to change in timing of achieving revenue targets and passage of time.

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Note 17 - Income Taxes

3 Months Ended

Jun. 29, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 17. INCOME TAXES

During the three months ended June 29, 2014, we recorded an income tax expense of approximately $0.7million. The income tax expense was primarily related to the allocation of tax expense between continuing operations and other comprehensive income when applying the exception to the ASC 740 intraperiod allocation rule upon liquidation of our available for sale security portfolio. During the three months ended June 30, 2013, we recorded an income tax benefit of approximately $9,000. The income tax benefit was primarily due to income tax benefits in certain non-US operations.

During the three months ended June 29, 2014, the unrecognized tax benefits increased by $2.7million to $16.9million primarily related to the acquisition of iML. If recognized, $14.2million of these unrecognized tax benefits (net of federal benefit) would be recorded as a reduction of future income tax provision before consideration of changes in valuation allowance.

Estimated interest and penalties related to the income taxes are classified as a component of the provision for income taxes in the condensed consolidated statement of operations. Accrued interest and penalties consisted of the following as of the dates indicated (in thousands):

	June 29, 2014		March 30, 2014
Accrued interest and penalties	$	1,189	$	83

Our major tax jurisdictions are the United States federal and various states, Canada, China, Hong Kong, Taiwan, the Cayman Islands and certain other foreign jurisdictions. The fiscal years 2003 through 2013 remain open and subject to examinations by the appropriate governmental agencies in the United States and over varying periods in certain of our foreign jurisdictions.

ASU No. 2013-11 – U.S. GAAP previously did not include explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. On a jurisdictional basis, Accounting Standard Update (“ASU”) No. 2013-11 generally requires an unrecognized tax benefit to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Exar has properly applied this guidance to its required disclosures. The adoption of this guidance did not have any material impact on our financial position, results of operations or cash flows.

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Note 13 - Net Income (Loss) Per Share

3 Months Ended

Jun. 29, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

NOTE 13. NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share excludes dilution and is computed by dividing net income (loss) attributable to Exar by the weighted average number of common shares outstanding for the applicable period. Diluted earnings per share reflects the potential dilution that would occur if outstanding stock options or warrants to purchase common stock were exercised for common stock, using the treasury stock method, and the common stock underlying outstanding RSUs was issued.

The following table summarizes our loss per share for the periods indicated below (in thousands, except per share amounts):

	Three Months Ended
	June 29, 2014			June 30, 2013
Net income (loss) attributable to Exar Corporation	$	(12,105	)	$	806
Shares used in computation of net income (loss) per share:
Basic		47,236			46,805
Effect of options and awards		─			1,280
Diluted		47,236			48,085
Net income (loss) per share:
Basic	$	(0.26	)	$	0.02
Diluted	$	(0.26	)	$	0.02

All outstanding stock options and RSUs are potentially dilutive securities. As of June 29, 2014, all outstanding stock options and RSUs were excluded from the computation of diluted net income per share because they were determined to be anti-dilutive. As of June 30, 2013, stock options and RSUs of 1.0 million were excluded from the computation of diluted net income per share because they were determined to be anti-dilutive.

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Note 12 - Stock-Based Compensation (Details) - Weighted Average Assumptions (USD $)	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Weighted Average Assumptions [Abstract]
Expected term of options (years)	4 years 6 months	4 years 146 days
Risk-free interest rate	1.30%	0.60%
Expected volatility	32.00%	35.00%
Weighted average estimated fair value (in Dollars per share)	$ 3.12	$ 3.20

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Note 9 - Short-Term Debt

3 Months Ended

Jun. 29, 2014

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE 9. SHORT-TERM DEBT

As part of the acquisition of iML, we entered into short-term financing agreements with Stifel Financial Corporation (“Stifel”) and CTBC Bank Corporation (USA) (“CTBC”) to provide bridge financing for the acquisition.

As of the date indicated below, our short-term debts principal balances, which is included in the Other current liabilities line item on the condensed consolidated balance sheets, consisted of the following (in thousands):

	June 29, 2014
Stifel	$	65,000
Repayment		(26,000	)
CTBC		26,000
Total short-term debt	$	65,000

Stifel

On May 27, 2014 (the “Initial Funding Date”), Exar entered into a bridge credit agreement (the “Credit Agreement”) certain lenders party and Stifel Financial Corp., as Administrative Agent. The Credit Agreement provided Exar with a bridge term loan credit facility in an aggregate principal amount of up to $90.0 million (the “Bridge Facility”).

Interest on loans made under the Bridge Facility accrues, at Exar’s option, at a rate per annum equal to (1) the Base Rate (as defined below) plus (a) during the first 90 days following the Initial Funding Date, 7.5% and (b) thereafter, 8.5% or (2) 1-month LIBOR plus (a) during the first 90 days following the Initial Funding Date, 8.5% and (b) thereafter, 9.5%. The “Base Rate” is equal to, for any day, a rate per annum equal to the highest of (a) the prime rate in effect on such day, (b) the federal funds effective rate in effect on such day plus 0.50%, and (c) 1 month LIBOR plus 1.00%. The Base Rate is subject to a floor of 2.5%, and LIBOR is subject to a floor of 1.5%. The interest rate for June, 2014 was 8.65%.

Exar had drawn $50.0 million and $15.0 million on May 27, 2014 and May 29, 2014, respectively to fund the acquisition of approximately 92% of iML’s outstanding shares. We repaid $26.0 million of the debt in June 2014 through a loan from CTBC with lower interest rate. As of July, 2014, the Stifel loan has been completely paid off through an intercompany loan from iML. See Note 19 – Subsequent Event”.

CTBC

On June 9, 2014 we entered into a Business Loan Agreement with CTBC to provide a loan for $26.0 million to partially pay off the Stifel loan. This loan bears an interest rate of 3.25% and matures on December 9, 2014. Interest payments are due monthly with the entire principal due not later than December 9, 2014.

All obligations of Exar under the Business Loan Agreement are unconditionally guaranteed by iML through a $26.0 million short-term certificate deposit with the same institution.

Interest

As of the date indicated below, interest on our short-term debt, which is included in the “Interest expense” line item on the condensed consolidated statement of operations, consisted of the following (in thousands):

	June 29, 2014
Stifel	$	402
CTBC		45
Total interest expense	$	447

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Note 6 - Goodwill and Intangible Assets (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended												0 Months Ended	3 Months Ended	0 Months Ended	12 Months Ended	0 Months Ended	12 Months Ended
	Jun. 29, 2014	Mar. 30, 2014	Jun. 29, 2014 Existing Technology [Member] Minimum [Member]	Jun. 29, 2014 Existing Technology [Member] Maximum [Member]	Jun. 29, 2014 Customer Relationships [Member] Minimum [Member]	Jun. 29, 2014 Customer Relationships [Member] Maximum [Member]	Jun. 29, 2014 Distribution Rights [Member] Minimum [Member]	Jun. 29, 2014 Distribution Rights [Member] Maximum [Member]	Jun. 29, 2014 Patented Technology [Member] Minimum [Member]	Jun. 29, 2014 Patented Technology [Member] Maximum [Member]	Jun. 29, 2014 Trade Names [Member] Minimum [Member]	Jun. 29, 2014 Trade Names [Member] Maximum [Member]	Jun. 03, 2014 Integrated Memory Logic Limited [Member]	Jun. 29, 2014 Integrated Memory Logic Limited [Member]	Jul. 05, 2013 Cadeka [Member]	Mar. 30, 2014 Cadeka [Member]	Jan. 14, 2014 Stretch [Member]	Mar. 30, 2014 Stretch [Member]
Note 6 - Goodwill and Intangible Assets (Details) [Line Items]
Number of Operating Segments	1
Goodwill, Acquired During Period (in Dollars)													$ 14.6	$ 14.6	$ 19.4	$ 19.4	$ 0.7	$ 0.7
Finite-Lived Intangible Asset, Useful Life			2 years	9 years	5 years	7 years	6 years	7 years	5 years	6 years	3 years	6 years
Impairment of Intangible Assets (Excluding Goodwill) (in Dollars)		$ 1.6

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Note 7 - Long-Term Investment

3 Months Ended

Jun. 29, 2014

Investments Schedule [Abstract]

Investment [Text Block]

NOTE 7. LONG-TERM INVESTMENT

In July 2001, Exar became a Limited Partner in the Skypoint Telecom Fund II (US), LP. (“Skypoint Fund”), a venture capital fund focused on investments in communications infrastructure companies. We accounted for this non-marketable equity investment under the cost method in the other non-current assets in the consolidated balance sheet. The partnership was dissolved and the fund distributed stock of investee companies to Exar during first quarter of fiscal 2015.

We regularly review and determine whether the investment is other-than-temporarily impaired, in which case the investment is written down to its impaired value.

As of the dates indicated below, our long-term investment balance, which is included in the “Other non-current assets” line item on the condensed consolidated balance sheets, consisted of the following (in thousands):

	June 29, 2014		March 30, 2014
Beginning balance	$	946	$	1,288
Net distributions		—		(19	)
Impairment charges		—		(323	)
Ending balance	$	946	$	946

The carrying amount of approximately $0.9 million as of June 29, 2014 reflects the net of the capital contributions, capital distributions and cumulative impairment charges. During the term of the fund we have made $4.8 million in capital contributions to Skypoint Fund since we became a limited partner in July 2001. As of June 29, 2014, we do not have any further capital commitments.

Impairment

We evaluate our long-term investment for impairment on an annual basis or whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. We conduct our annual impairment analysis in the fourth quarter of each fiscal year by comparing the carrying amount to the fair value of the underlying investments. If the carrying amount exceeds its fair value, long term-investment is considered impaired and a second step is performed to measure the amount of impairment loss. We analyzed the fair value of the remaining underlying investments of Skypoint Fund and as a result, no impairment was recorded during the first quarter of fiscal 2015 and 2014. We recorded approximately $0.3 million impairment charges in the fourth quarter of fiscal 2014.

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Note 8 - Related Party Transaction

3 Months Ended

Jun. 29, 2014

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 8.      RELATED PARTY TRANSACTION

Alonim Investments Inc. (“Alonim”) owns approximately 7.6 million shares, or approximately 16%, of our outstanding common stock as of June 29, 2014. As such, Alonim is our largest stockholder.

Related party contributions as a percentage of our total net sales for the periods indicated below were as follows:

	Three Months Ended
	June 29, 2014			June 30, 2013
Alonim		29	%		27	%

Related party receivables as a percentage of our net accounts receivable were as follows as of the dates indicated below:

	June 29, 2014			March 30, 2014
Alonim		9	%		18	%

Related party expenses for marketing promotional materials reimbursed were not significant for either the three months ended June 29, 2014 or June 30, 2013, respectively.

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Note 10 - Common Stock Repurchases

3 Months Ended

Jun. 29, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 10. COMMON STOCK REPURCHASES

From time to time, we acquire outstanding common stock in the open market to partially offset dilution from our equity award programs, to increase our return on our invested capital and to bring our cash to a more appropriate level for Exar.

On August 28, 2007, we announced the approval of a share repurchase plan (“2007 SRP”) and authorized the repurchase of up to $100.0 million of our common stock.

On July 9, 2013, we announced the approval of a share repurchase program under which we were authorized to repurchase an additional $50.0 million of our common stock. The repurchase program does not have a termination date, and may be modified, extended or terminated at any time. We intend to retire all shares repurchased under the stock repurchase plan. The purchase price for the repurchased shares of Exar is reflected as a reduction of common stock and additional paid-in capital. We may continue to repurchase our common stock under the repurchase plan, which would reduce our cash, cash equivalents and/or short-term marketable securities available to fund future operations and to meet other liquidity requirements.

Stock repurchase activities during first quarter of fiscal 2015 and fiscal 2014 were indicated below (in thousands, except per share amounts):

	Total number of Shares Purchased		Average Price Paid Per Share (or Unit)		Amount Paid for Purchase
Balances, March 31, 2013		9,564	$	9.22	$	88,189
Repurchases – August 25 to September 29, 2013		153		13.07		1,999
Repurchases – September 30 to October 27, 2013		73		13.63		1,001
Repurchases – November 24 to December 29, 2013		83		12.09		1,000
Repurchases – December 30, 2013 to January 26, 2014		122		11.61		1,417
Repurchases – January 27 to February 23, 2014		324		11.05		3,583
Balances, March 30, 2014		10,319	$	9.22	$	97,189
Repurchases – March 31 to April 27, 2014		273		10.98		3,000
Balances, June 29, 2014		10,592	$	9.46	$	100,189

Note: The average price paid per share is based on the total price paid by Exar, which includes applicable broker fees.

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Note 6 - Goodwill and Intangible Assets (Details) - Estimated Future Amortization Expenses for Purchased Intangible Assets (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Mar. 30, 2014
Amortization Expense (by fiscal year)
2015 (9 months remaining)	$ 11,901
2016	15,339
2017	14,406
2018	14,193
2019	12,993
2020 and thereafter	29,889
Total future amortization	$ 98,721	$ 29,110

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Note 13 - Net Income (Loss) Per Share (Details) (Stock Options, Warrants and RSUs [Member]) In Millions, unless otherwise specified	3 Months Ended
	Jun. 30, 2013
Stock Options, Warrants and RSUs [Member]
Note 13 - Net Income (Loss) Per Share (Details) [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1.0

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Note 7 - Long-Term Investment (Details) - Long-term Investment (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Jun. 29, 2014	Mar. 30, 2014
Long-term Investment [Abstract]
Beginning balance	$ 946	$ 1,288
Net distributions	0	(19)
Impairment charges	0	(323)
Ending balance	$ 946	$ 946

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Note 19 - Subsequent Events (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	0 Months Ended		1 Months Ended	0 Months Ended
	Jun. 29, 2014	May 29, 2014 Term Loan Credit Facility [Member] Bridge Facility [Member]	May 27, 2014 Term Loan Credit Facility [Member] Bridge Facility [Member]	Jun. 30, 2014 Term Loan Credit Facility [Member] Bridge Facility [Member]	Jun. 30, 2014 CTBC [Member]	Jun. 09, 2014 CTBC [Member]	Jun. 29, 2014 iML [Member]
Note 19 - Subsequent Events (Details) [Line Items]
Proceeds from Issuance of Debt	$ 91,000	$ 15,000	$ 50,000			$ 26,000
Business Acquisition, Percentage of Voting Interests Acquired							92.00%
Repayments of Debt	$ 26,000			$ 26,000	$ 26,000

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Note 6 - Goodwill and Intangible Assets (Details) - Aggregate Amortization Expenses for Purchased Intangible Assets (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Aggregate Amortization Expenses for Purchased Intangible Assets [Abstract]
Amortization expense	$ 2,277	$ 1,544

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Note 14 - Lease Financing Obligations (Details) - Operating Lease (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014
Operating Lease [Abstract]
2015 (9 months remaining)	$ 1,178
2016	1,105
2017	508
2018	159
Total minimum lease payments	$ 2,950

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Note 11 - Restructuring Charges and Exit Costs (Tables)

3 Months Ended

Jun. 29, 2014

Restructuring and Related Activities [Abstract]

Restructuring and Related Costs [Table Text Block]

	March 30, 2014		Additions/ adjustments		Non-cash charges			Payments			June 29, 2014
Lease termination costs and others	$	1,615	$	60	$	(77	)	$	(92	)	$	1,506
Severance		754		336		—			(516	)		574
Total	$	2,369	$	396	$	(77	)	$	(608	)	$	2,080

	April 1, 2013		Additions/ adjustments		Non-cash charges			Payments			March 30, 2014
Lease termination costs and others	$	2,860	$	570	$	(57	)	$	(1,758	)	$	1,615
Severance		426		2,444		—			(2,116	)		754
Total	$	3,286	$	3,014	$	(57	)	$	(3,874	)	$	2,369

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Note 5 - Fair Value (Details) - Investment Assets Measured at Fair Value (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Mar. 30, 2014
Liabilities:
Investment liabilities	$ 4,011	$ 4,343
CounterPath [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Common shares of CounterPath	99
CounterPath [Member]
Assets:
Common shares of CounterPath	99
Fair Value, Inputs, Level 2 [Member]
Liabilities:
Investment liabilities	99
Fair Value, Inputs, Level 3 [Member] | Altior [Member]
Liabilities:
Investment liabilities	3,022	2,973
Fair Value, Inputs, Level 3 [Member] | Cadeka [Member]
Liabilities:
Investment liabilities	890	1,370
Fair Value, Inputs, Level 3 [Member]
Liabilities:
Investment liabilities	3,912	4,343
Altior [Member]
Liabilities:
Investment liabilities	3,022	2,973
Cadeka [Member]
Liabilities:
Investment liabilities	$ 890	$ 1,370

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Note 15 - Commitments and Contingencies

3 Months Ended

Jun. 29, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

NOTE 15.      COMMITMENTS AND CONTINGENCIES

In 1986, Micro Power Systems Inc. (“MPSI”), a subsidiary that we acquired in June 1994, identified low-level groundwater contamination at its principal manufacturing site. The area and extent of the contamination appear to have been defined. MPSI previously reached an agreement with a prior tenant to share in the cost of ongoing site investigations and the operation of remedial systems to remove subsurface chemicals and well closure activities. In April 2012, the San Francisco Bay Regional Water Quality Control Board (“RWQCB”) approved our application for low-threat closure and rescinded the previous cleanup order. All monitoring well closure activities on the site and adjacent/neighboring sites have been completed. We have finalized and executed access, environmental indemnity and tolling agreements, and deed restriction covenants with the property owner. The required deed restriction has been recorded. We are awaiting final determination from RWQCB.

Outstanding liabilities for remediation activities were immaterial for all periods presented.

In early 2012, we received correspondences from the California Department of Toxic Substance Control (“DTSC”) regarding its ongoing investigation of hazardous wastes and hazardous waste constituents at a former regulated treatment facility in San Jose, California. In 1985, MPSI made two separate permitted hazmat deliveries to a licensed and regulated site for treatment. DTSC has requested that former/current property owners and companies, currently in excess of 50, that had hazardous waste treated at the site participate in further site assessment and limited remediation activities. We have entered into various agreements with other named generators, former property owners and DTSC limited to the investigation of the sites’ condition and evaluation, and selection of appropriate remedial measures. The designated environmental consulting firm is moving forward with the agreed preliminary site assessment and periodic status reporting. Given that this matter is in the early stages of investigation and discussions are ongoing, we are unable to ascertain our exposure, if any.

In a letter dated March 27, 2012, Exar was notified by the Alameda County Water District (“ACWD”) of the recent detection of volatile organic compounds at a site adjacent to a facility that was previously owned and occupied by Sipex. The letter was also addressed to prior and current property owners and tenants (collectively “Property Owners”). ACWD requested that the Property Owners carry out further site investigation activities to determine if the detected compounds are emanating from the site or simply flowing under it. In June 2012, the Property Owners filed with ACWD a report of its investigation/characterization activities and analytical data obtained. Accumulated data suggests that compounds of concern in groundwater appear to be from an offsite source. ACWD is investigating alternative upgradient sites. Given that this investigation is ongoing, we are unable to ascertain our exposure, if any.

We warrant all custom products and application specific products, including cards and boards, against defects in materials and workmanship for a period of 12 months, and occasionally we may provide an extended warranty from the delivery date. We warrant all of our standard products against defects in materials and workmanship for a period of 90 days from the date of delivery. Reserve requirements are recorded in the period of sale and are based on an assessment of the products sold with warranty, historical warranty costs incurred and customer/product specific circumstances. Our liability is generally limited, at our option, to replacing, repairing, or issuing a credit (if it has been paid for). Our warranty does not cover damage which results from accident, misuse, abuse, improper line voltage, fire, flood, lightning or other damage resulting from modifications, repairs or alterations performed other than by us, or resulting from failure to comply with our written operating and maintenance instructions.

Warranty expense has historically been immaterial for our products. The warranty liability related to our product sales as of September 29, 2013 of $1.4 million was established for the return of certain older generation data compression products shipped in prior years.

As of the dates indicated below, our warranty reserve balance, which is included in the “Other current liabilities” line item on the condensed consolidated balance sheets, consisted of the following (in thousands):

	June 29, 2014		March 30, 2014
Beginning balance	$	1,074	$	50
Provisions for warranties issued		17		1,480
Settlements/adjustments		—		(456	)
Ending balance	$	1,091	$	1,074

In the ordinary course of business, we may provide for indemnification of varying scope and terms to customers, vendors, lessors, business partners, purchasers of assets or subsidiaries, and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of agreements or representations and warranties made by us, services to be provided by us, intellectual property infringement claims made by third parties or, matters related to our conduct of the business. In addition, we have entered into indemnification agreements with our directors and certain of our executive officers that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or executive officers. We maintain director and officer liability insurance, which may cover certain liabilities arising from our obligation to indemnify our directors and officers, and former directors and officers of acquired companies, in certain circumstances.

It is not possible to determine the aggregate maximum potential loss under these indemnification agreements due to the unique facts and circumstances involved in each particular agreement and claims. Such indemnification agreements might not be subject to maximum loss clauses. Historically, we have not incurred material costs as a result of obligations under these agreements and we have not accrued any liabilities related to such indemnification obligations in our condensed consolidated financial statements.

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Note 3 - Business Combinations (Tables)

3 Months Ended

Jun. 29, 2014

Business Combinations [Abstract]

Schedule Of Consideration Paid [Table Text Block]

Acquisition of approximately 68.3 million shares of iML at NT$91.00 per share in cash	$	206,411
Fair value of non-controlling interest shares		17,872
Fair value of iML employee options to be assumed		3,327
Total purchase price	$	227,610

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

	Amount
Identifiable tangible assets (liabilities)
Cash	$	133,752
Accounts receivable		10,096
Inventories		3,950
Other current assets		608
Property, plant and equipment		480
Other assets		308
Accrued expenses		(8,137	)
Accounts payable		(4,219	)
Long-term liabilities		(3,595	)
Total identifiable tangible assets (liabilities), net		133,243
Identifiable intangible assets		79,760
Total identifiable assets, net		213,003
Goodwill		14,607
Fair value of total consideration transferred	$	227,610

	Fair Value
Developed technologies	$	55,570
In-process research and development		8,040
Distributor relationships		5,980
Customer relationships		9,050
Trade names		1,120
Total identifiable intangible assets	$	79,760

	Amount
Tangible assets	$	2,937
Intangible assets		7,010
Goodwill		667
Liabilities assumed		(10,604	)
Fair value of total consideration transferred	$	10

	Amount
Tangible assets	$	3,286
Intangible assets		20,380
Goodwill		19,387
Liabilities assumed		(8,216	)
Fair value of total consideration transferred	$	34,837

Business Acquisition, Pro Forma Information [Table Text Block]

	Three months ended June 29, 2014			Three months ended June 30, 2013
Net sales		41,286			49,177
Net loss	$	(7,675	)	$	(722	)
Less: Net loss attributable to non-controlling interests		(105	)		(122	)
Net loss attributable to Exar Corporation	$	(7,570	)	$	(600	)
Earnings per share
Basic	$	(0.16	)	$	(0.01	)
Diluted	$	(0.16	)	$	(0.01	)

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Note 17 - Income Taxes (Details) (USD $)	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Note 17 - Income Taxes (Details) [Line Items]
Income Tax Expense (Benefit)	$ 692,000	$ (9,000)
Unrecognized Tax Benefits, Period Increase (Decrease)	2,700,000
Unrecognized Tax Benefits	16,900,000
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	$ 14,200,000
Earliest Tax Year [Member]
Note 17 - Income Taxes (Details) [Line Items]
Open Tax Year	2003
Latest Tax Year [Member]
Note 17 - Income Taxes (Details) [Line Items]
Open Tax Year	2013

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Note 4 - Balance Sheet Details (Details) - Other Noncurrent Obligations (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Mar. 30, 2014
Other Noncurrent Obligations [Abstract]
Long-term taxes payable	$ 4,427	$ 794
Fair value of earn out liability – long-term	3,912	3,853
Accrued retention bonus	1,575	1,181
Deferred tax liability	608	614
Accrued restructuring charges and exit costs	109	155
Other	20	29
Total other non-current obligations	$ 10,651	$ 6,626

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Note 3 - Business Combinations (Details) (USD $)	3 Months Ended			3 Months Ended		0 Months Ended		3 Months Ended	0 Months Ended	12 Months Ended	0 Months Ended	12 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 03, 2014 Scenario, Forecast [Member] Integrated Memory Logic Limited [Member]	Jun. 29, 2014 Pro Forma [Member] Integrated Memory Logic Limited [Member]	Jun. 30, 2013 Pro Forma [Member] Integrated Memory Logic Limited [Member]	Jul. 03, 2014 Integrated Memory Logic Limited [Member]	Jun. 03, 2014 Integrated Memory Logic Limited [Member]	Jun. 29, 2014 Integrated Memory Logic Limited [Member]	Jan. 14, 2014 Stretch [Member]	Mar. 30, 2014 Stretch [Member]	Jul. 05, 2013 Cadeka [Member]	Mar. 30, 2014 Cadeka [Member]
Note 3 - Business Combinations (Details) [Line Items]
Business Acquisition, Percentage of Voting Interests Acquired			8.00%				92.00%
Payments to Acquire Businesses, Gross							$ 206,411,000
Business Combination, Contingent Consideration, Liability			17,900,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities							3,300,000		10,604,000		8,216,000
Acquired Intangible Assets Discount Rate							16.90%
Goodwill, Acquired During Period							14,600,000	14,600,000	700,000	700,000	19,400,000	19,400,000
Business Combination, Consideration Transferred						227,610,000	227,610,000		10,000		34,837,000
Business Combination, Acquisition Related Costs	4,050,000	465,000		8,200,000			4,200,000
Amortization of Intangible Assets	3,545,000	1,350,000		2,400,000	2,400,000
Inventory Write-down				1,500,000	2,500,000
Allocated Share-based Compensation Expense	3,127,000	1,087,000		200,000	100,000
Increase (Decrease) in Intangible Assets, Current				(92,000)	(92,000)
Stock or Unit Option Plan Expense				200,000	500,000
Recognition of Deferred Revenue				1,800,000	2,000,000
Cost of Goods Sold	12,353,000	11,812,000		900,000	900,000
Income Tax Expense (Benefit)	$ 692,000	$ (9,000)		$ 200,000	$ 900,000
Business Acquisition Purchase Price Allocation Goodwill Expected Tax Deductible Period (in years)									15 years

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Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Net income (loss)	$ (12,105)	$ 806
Changes in unrealized losses	199	(584)
Reclassification adjustment for net realized gains (losses)	26	(59)
Release of tax provision for unrealized gains	828
Net change in market value of investments	1,053	(643)
Comprehensive income (loss)	(11,052)	163
Less: comprehensive income attributable to non-controlling interests	135
Comprehensive income (loss) attributable to Exar Corporation	$ (10,917)	$ 163

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Note 14 - Lease Financing Obligations (Details) - Amortization Expense Related to the Design Tools (Design Tools [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Design Tools [Member]
Note 14 - Lease Financing Obligations (Details) - Amortization Expense Related to the Design Tools [Line Items]
Amortization expense	$ 800	$ 866

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Note 4 - Balance Sheet Details

3 Months Ended

Jun. 29, 2014

Disclosure Text Block Supplement [Abstract]

Supplemental Balance Sheet Disclosures [Text Block]

NOTE 4. BALANCE SHEET DETAILS

Our inventories consisted of the following as of the dates indicated (in thousands):

	June 29, 2014		March 30, 2014
Work-in-process and raw materials	$	20,597	$	13,555
Finished goods		11,391		15,427
Total inventories	$	31,988	$	28,982

Our property, plant and equipment consisted of the following as of the dates indicated below (in thousands):

	June 29, 2014			March 30, 2014
Land	$	6,660		$	6,660
Building		17,287			16,787
Machinery and equipment		43,108			40,675
Software and licenses		17,815			17,549
Property, plant and equipment, total		84,870			81,671
Accumulated depreciation and amortization		(64,226	)		(60,391	)
Total property, plant and equipment, net	$	20,644		$	21,280

Our other current liabilities consisted of the following as of the dates indicated (in thousands):

	June 29, 2014		March 30, 2014
Accrued acquisition costs	$	3,514	$	—
Short-term lease financing obligations		2,348		2,671
Accrued manufacturing expenses, royalties and licenses		2,094		1,639
Accrued restructuring charges and exit costs		1,971		2,214
Accrued legal and professional services		1,576		1,453
Accrued income tax		1,420		74
Purchase consideration holdback		1,006		1,256
Accrued sales and marketing expenses		564		666
Fair value of earn out liability – short-term		—		490
Other		1,764		907
Total other current liabilities	$	16,257	$	11,370

Our other non-current obligations consisted of the following (in thousands) as of the dates indicated:

	June 29, 2014		March 30, 2014
Long-term taxes payable	$	4,427	$	794
Fair value of earn out liability – long-term		3,912		3,853
Accrued retention bonus		1,575		1,181
Deferred tax liability		608		614
Accrued restructuring charges and exit costs		109		155
Other		20		29
Total other non-current obligations	$	10,651	$	6,626

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Note 5 - Fair Value (Details) - Fair Value Inputs, Assets, Quantitative Information (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014
Combination of Income and Marketable Approach [Member] | Altior [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Acquisition-related contingent consideration	$ 3,022
Combination of Income and Marketable Approach [Member] | Altior [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	6,725
Combination of Income and Marketable Approach [Member] | Altior [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	20,175
Combination of Income and Marketable Approach [Member] | Cadeka [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Acquisition-related contingent consideration	890
Combination of Income and Marketable Approach [Member] | Cadeka [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	8,400
Combination of Income and Marketable Approach [Member] | Cadeka [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	$ 18,000
Altior [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	1.00%
Altior [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	66.00%
Cadeka [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	2.00%
Cadeka [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	30.00%

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Note 12 - Stock-Based Compensation (Details) - Stock-Based Compensation Expense Related to Stock Options and RSUs (USD $)	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-Based Compensation Expense	$ 3,127,000	$ 1,087,000
Cost of Sales [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-Based Compensation Expense	260,000	142,000
Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-Based Compensation Expense	812,000	140,000
Selling, General and Administrative Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-Based Compensation Expense	$ 2,055,000	$ 805,000

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Note 8 - Related Party Transaction (Details) - Related Party Receivables As a Percentage of Net Accounts Receivable (Alonim Investments Inc. [Member], Accounts Receivable [Member], Customer Concentration Risk [Member])	3 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Alonim Investments Inc. [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Related Party Transaction [Line Items]
Alonim	9.00%	18.00%

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Note 4 - Balance Sheet Details (Tables)

3 Months Ended

Jun. 29, 2014

Disclosure Text Block Supplement [Abstract]

Schedule of Inventory, Current [Table Text Block]

	June 29, 2014		March 30, 2014
Work-in-process and raw materials	$	20,597	$	13,555
Finished goods		11,391		15,427
Total inventories	$	31,988	$	28,982

Property, Plant and Equipment [Table Text Block]

	June 29, 2014			March 30, 2014
Land	$	6,660		$	6,660
Building		17,287			16,787
Machinery and equipment		43,108			40,675
Software and licenses		17,815			17,549
Property, plant and equipment, total		84,870			81,671
Accumulated depreciation and amortization		(64,226	)		(60,391	)
Total property, plant and equipment, net	$	20,644		$	21,280

Other Current Liabilities [Table Text Block]

	June 29, 2014		March 30, 2014
Accrued acquisition costs	$	3,514	$	—
Short-term lease financing obligations		2,348		2,671
Accrued manufacturing expenses, royalties and licenses		2,094		1,639
Accrued restructuring charges and exit costs		1,971		2,214
Accrued legal and professional services		1,576		1,453
Accrued income tax		1,420		74
Purchase consideration holdback		1,006		1,256
Accrued sales and marketing expenses		564		666
Fair value of earn out liability – short-term		—		490
Other		1,764		907
Total other current liabilities	$	16,257	$	11,370

Other Noncurrent Liabilities [Table Text Block]

	June 29, 2014		March 30, 2014
Long-term taxes payable	$	4,427	$	794
Fair value of earn out liability – long-term		3,912		3,853
Accrued retention bonus		1,575		1,181
Deferred tax liability		608		614
Accrued restructuring charges and exit costs		109		155
Other		20		29
Total other non-current obligations	$	10,651	$	6,626

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Note 10 - Common Stock Repurchases (Details) - Stock Repurchase Activities (USD $) In Thousands, except Per Share data, unless otherwise specified	1 Months Ended						3 Months Ended
	Apr. 27, 2014	Feb. 23, 2014	Jan. 26, 2014	Dec. 29, 2013	Oct. 27, 2013	Sep. 29, 2013	Jun. 29, 2014	Mar. 30, 2014	Mar. 31, 2013
Stock Repurchase Activities [Abstract]
Balances, Total number of Shares Purchased							10,592	10,319	9,564
Balances, Average Price Paid Per Share (or Unit)							$ 9.46	$ 9.22	$ 9.22
Balances, Amount Paid for Purchase							$ 100,189	$ 97,189	$ 88,189
Repurchases, Total number of Shares Purchased	273	324	122	83	73	153
Repurchases, Average Price Paid Per Share (or Unit)	$ 10.98	$ 11.05	$ 11.61	$ 12.09	$ 13.63	$ 13.07
Repurchases, Amount Paid for Purchase	$ 3,000	$ 3,583	$ 1,417	$ 1,000	$ 1,001	$ 1,999	$ 3,000

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Note 15 - Commitments and Contingencies (Tables)

3 Months Ended

Jun. 29, 2014

Commitments and Contingencies Disclosure [Abstract]

Schedule of Product Warranty Liability [Table Text Block]

	June 29, 2014		March 30, 2014
Beginning balance	$	1,074	$	50
Provisions for warranties issued		17		1,480
Settlements/adjustments		—		(456	)
Ending balance	$	1,091	$	1,074

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Note 14 - Lease Financing Obligations

3 Months Ended

Jun. 29, 2014

Disclosure Text Block Supplement [Abstract]

Debt and Capital Leases Disclosures [Text Block]

NOTE 14. LEASE FINANCING OBLIGATIONS

We have acquired engineering design tools (“Design Tools”) under capital leases. We acquired Design Tools of $0.9 million in July 2012 under a three-year license, $4.5 million in December 2011 under a three-year license, $5.8 million in October 2011 under a three-year license, and $1.0 million in June 2010 under a three-year license, all of which were accounted for as capital leases and recorded in the property, plant and equipment, net line item in the condensed consolidated balance sheets. The obligations related to the Design Tools were included in other current liabilities and long-term lease financing obligations in our condensed consolidated balance sheets as of June 29, 2014 and March 30, 2014, respectively. The effective interest rates for the Design Tools range from 2.0% to 7.25%.

Amortization expense related to the Design Tools, which was recorded using the straight-line method over the remaining useful life for the periods indicated below was as follows (in thousands):

	Three Months Ended
	June 29, 2014		June 30, 2013
Amortization expense	$	800	$	866

Future minimum lease and sublease income payments for the lease financing obligations as of June 29, 2014 are as follows (in thousands):

Fiscal Years	Design Tools
2015 (9 months remaining)	$	2,369
2016		59
2017		10
2018		6
Total minimum lease payments		2,444
Less: amount representing interest		56
Present value of minimum lease payments		2,388
Less: short-term lease financing obligations		2,348
Long-term lease financing obligations	$	40

Interest expense for the lease financing obligation for the periods indicated below was as follows (in thousands):

	Three Months Ended
	June 29, 2014		June 30, 2013
Interest expense	$	39	$	37

In the course of our business, we enter into arrangements accounted for as operating leases related to rental of office space. Rent expenses for all operating leases for the periods indicated below were as follows (in thousands):

	Three Months Ended
	June 29, 2014		June 30, 2013
Rent expense	$	332	$	196

Our future minimum lease payments for the lease operating obligations as of June 29, 2014 are as follows (in thousands):

Fiscal Years	Facilities
2015 (9 months remaining)	$	1,178
2016		1,105
2017		508
2018		159
Total minimum lease payments	$	2,950

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Note 18 - Segment and Geographic Information (Details) - Major Distributors of Net Account Receivables (Accounts Receivable [Member], Customer Concentration Risk [Member])	3 Months Ended		12 Months Ended
	Jun. 29, 2014		Mar. 30, 2014
Distributor E [Member]
Note 18 - Segment and Geographic Information (Details) - Major Distributors of Net Account Receivables [Line Items]
Net Accounts Receivable	11.00%			[1]
Distributor B [Member]
Note 18 - Segment and Geographic Information (Details) - Major Distributors of Net Account Receivables [Line Items]
Net Accounts Receivable	10.00%		17.00%
Distributor D [Member]
Note 18 - Segment and Geographic Information (Details) - Major Distributors of Net Account Receivables [Line Items]
Net Accounts Receivable	10.00%		14.00%
Distributor A [Member]
Note 18 - Segment and Geographic Information (Details) - Major Distributors of Net Account Receivables [Line Items]
Net Accounts Receivable		[1]	16.00%
Distributor C [Member]
Note 18 - Segment and Geographic Information (Details) - Major Distributors of Net Account Receivables [Line Items]
Net Accounts Receivable		[1]	12.00%

[1] Accounts receivable for this distributor for this period were less than 10% of total account balance.