Quarterly revenue increases 13%, New executive team launches Smart
Interconnect Strategy
OTTAWA, ON, Nov. 30 /CNW Telbec/ - Tundra Semiconductor Corporation
(TSX:TUN), the leader in System Interconnect, today reported financial results
for the second quarter of fiscal year 2007, which ended October 29, 2006.
- Q2 Revenue: $22.0 million
- Q2 Pro forma earnings: $2.4 million
- Q2 Pro forma diluted earnings per share: $0.12
- Q2 GAAP Results: a loss of $0.2 million or $0.01 per diluted share
Revenue for the second quarter of fiscal year 2007 was $22.0 million, a
13% increase over the previous quarter, and an 18% increase over the same
quarter in fiscal year 2006. Pro forma earnings of $2.4 million represent a
21% increase, quarter-over-quarter and a 7% increase compared to the second
quarter of fiscal year 2006. Pro forma diluted earnings per share of $0.12
exceeded the Company's revised per share earnings guidance for the quarter of
$0.05 to $0.08. The stronger than expected earnings performance can be
attributed to: cost control, higher gross margins, and development expense
delays. GAAP results for the quarter was a loss of $0.2 million or $0.01 per
diluted share, down from a loss of $0.7 million or $0.03 per diluted share in
the previous quarter and down from earnings of $1.4 million or $0.07 compared
to second quarter fiscal year 2006.
"Despite volatility in the industry, I am pleased with the solid revenue
and earnings performance we achieved in the quarter. In addition to expanding
our PCI product portfolio, we also shipped the first production orders for our
RapidIO products," said Daniel Hoste, President and Chief Executive Officer,
Tundra Semiconductor. "We are increasingly seeing RapidIO being adopted and
realized in high bandwidth applications such as wireless and wireline
infrastructure. Our estimates indicate that the total available market in
calendar year 2009 is approximately $130 million USD for RapidIO. Our RapidIO
portfolio is a key element of our future growth strategy."
Management offers the following outlook for the third quarter of fiscal
year 2007:
<<
- Q3 Revenue is expected to be in the range of $20.0 million and
$23.0 million
- Q3 Pro forma diluted earnings per share is expected to be in the range
of $0.11 to $0.15
"In our third quarter guidance, we have broadened the expected range of
revenue and earnings per share performance to reflect the increased
uncertainty we are seeing in the communications end markets that some of our
products serve," said Hoste.
Under new executive management, Tundra has launched three initiatives to
strengthen its System Interconnect leadership position. First, the sales and
marketing organizations will be reinforced and refocused to maximize every
opportunity and to respond to the changing landscape of customers
requirements. Second, with a more focused market driven strategy, Tundra will
pursue a new portfolio of Smart Interconnect Solutions, while sustaining
investment in both RapidIO and PCI. Finally, structural organizational changes
will be implemented as required to align Tundra's global teams with the new
business strategy.
Q2 FY2007 Highlights:
- Tundra strengthened its management team:
- Daniel Hoste, formerly Vice President Products, appointed President
and Chief Executive Officer
- David Long, formerly with Cognos, appointed Chief Financial Officer
- Robert Fischer, formerly Director North American Sales, appointed
Vice President Worldwide Sales
- Tundra launched the Tsi350(TM) PCI-to-PCI Bridge, an industry standard,
low power 32-bit 66 MHz bridge. Competitively priced, the Tsi350 is
ideally suited for a wide range of communications and networking
applications and will begin sampling in January 2007.
- Tundra announced the availability of the Tundra Tsi578(TM) Serial
RapidIO Development Platform which gives designers the ability to
rapidly prototype and test interoperability of RapidIO-based systems.
The development platform uses the Tsi578 switch which has multicast
capability, essential for DSP aggregation that supports a wide range of
applications such as wireless base stations, media gateways, video
infrastructure and DSP-intensive image processing.
- Tundra announced a distribution agreement with Nu Horizons Electronics
Asia. Under the agreement, Nu Horizons Asia will promote, distribute
and support Tundra's full range of System Interconnect products
throughout the Asia Pacific region, with the exception of Japan. The
partnership is highly complementary as combines Tundra's broad System
Interconnect portfolio with Nu Horizons' leading distribution
capability for advanced technology active components, system solutions,
and multiple product lines.
- Tundra and e2V Semiconductors announced that e2v extended its processor
offering by launching the PC109(TM) Host Processor Bridge, the
extended-reliability version of the Tundra Tsi109 Host Bridge for
military and aerospace applications.
- Tundra announced Emerson Network Power implemented the Tundra
Tsi568(TM) Serial RapidIO Switch into the Fat Pipe switch module in its
new 12-slot MicroTCA(TM) development system.
- Tundra announced that GE Fanuc Embedded Systems incorporated the Tundra
Tsi109(TM) Host Bridge into its new Telum TSPE01 processor Advanced
Mezzanine Card (AdvancedMC(R)).
Conference Call and Webcast
Management will hold a conference call and webcast on Thursday,
November 30, 2006 at 5:00 pm EST. Participants wishing to access the
conference call should dial 1.416.644.3415. The conference call will also be
webcast live at www.tundra.com, and www.newswire.ca, and subsequently archived
on Tundra's website. Replay of the conference call will be available until
midnight December 7, 2006. To access the replay, please dial 1.416.640.1917
and enter passcode 21210539(pound key).
The difference between pro forma and GAAP earnings is due to stock-based
compensation expense, goodwill impairment charges and amortization of
intangibles and other assets associated with Tundra's acquisitions. Tundra
uses pro forma measures internally to evaluate and manage operating
performance as well as to forecast and plan.
Tundra Semiconductor Corporation is a public company with common shares
listed for trading on the Toronto Stock Exchange (TSX:TUN) in Canada. All
figures, unless otherwise noted, are stated in Canadian dollars in accordance
with accounting principles generally accepted in Canada.
About Tundra
Tundra Semiconductor Corporation (TSX:TUN) is the global leader in System
Interconnect providing world-class customer and technical support,
leading-edge semiconductor solutions and design services to the world's
foremost communications, networking, storage system, and information
technology vendors. Consistently delivering on system level performance
promises that reduce time to market, Tundra System Interconnect products
ensure market advantage in wireless infrastructure, storage networking,
network access, military, industrial automation, and information technology
applications. Silicon Logic Engineering, Inc. (SLE), Tundra's semiconductor
design services division, offers industry-leading ASIC and FPGA design
services, semiconductor intellectual property and product development
consulting. For more information, please visit www.tundra.com.
Forward Looking Information
The Company cautions that the forward-looking information in this release
is based on certain assumptions made by the Company that may prove to be
inaccurate. Assumptions made include customer demand for the Company's
products and services, the Company's ability to maintain and enhance existing
customer relationships, as well as the Company's ability to bring to market
the products currently under development.
Furthermore, the Company cautions that the forward-looking statements in
this release are based on current expectations that are subject to risks and
uncertainties. Actual results may differ due to factors such as customer
demand, customer relationships, new product development, new services
offerings, product shipping schedules, product mix, competitive products and
services, pricing pressure, and changes in the embedded systems market
specifically. The Company assumes no obligation to update or revise any
forward-looking statements. Additional information identifying risks and
uncertainties is contained in the Company's filings with the various
provincial securities commissions which are available online at www.sedar.com.
TUNDRA is a registered trademark of Tundra Semiconductor Corporation
(Canada, U.S. and U.K.). TUNDRA and the Tundra logo are registered marks of
Tundra Semiconductor Corporation in Canada, European Union and People's
Republic of China (registration is pending in the United States). Tsi350,
Tsi568, Tsi578, Tsi109 and Design.Connect.Go are trademarks of Tundra
Semiconductor Corporation. RapidIO is a trademark of the RapidIO Trade
Association, Inc. Other registered and unregistered trademarks are the
property of their respective owners.
Development of the Tsi578(TM) was made possible in part with the
assistance of the Technology Partnerships Canada Program.
(C) Copyright 2006 Tundra Semiconductor Corporation. All rights reserved.
Information subject to change without notice.
TUNDRA SEMICONDUCTOR CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
(Canadian dollars, amounts in thousands except per share data)
(Unaudited)
Three months ended Six months ended
----------------------- -----------------------
October 29 October 30 October 29 October 30
2006 2005 2006 2005
Revenue:
Product $ 19,074 $ 18,625 $ 37,017 $ 36,821
Service 2,891 - 4,409 -
-------------------------------------------------------------------------
21,965 18,625 41,426 36,821
Cost of revenue:
Product 5,842 6,183 11,720 12,549
Service 1,359 - 2,440 -
-------------------------------------------------------------------------
7,201 6,183 14,160 12,549
-------------------------------------------------------------------------
Gross margin 14,764 12,442 27,266 24,272
Expenses:
Sales and marketing 3,371 2,883 6,915 5,649
General and administration 3,469 1,358 5,250 2,780
Research and development 5,992 5,089 11,928 10,128
-------------------------------------------------------------------------
12,832 9,330 24,093 18,557
Pro forma earnings from
operations 1,932 3,112 3,173 5,715
Interest and other income 529 304 1,292 529
-------------------------------------------------------------------------
Pro forma earnings before
income taxes 2,461 3,416 4,465 6,244
Income tax provision (67) (1,181) (92) (2,192)
-------------------------------------------------------------------------
PRO FORMA EARNINGS $ 2,394 $ 2,235 $ 4,373 $ 4,052
-------------------------------------------------------------------------
Pro forma earnings per share
Basic $0.12 $0.11 $0.22 $0.21
Diluted $0.12 $0.11 $0.22 $0.21
Weighted average number of
common shares outstanding
Basic 19,964 19,508 19,881 19,505
Diluted 20,057 19,711 20,071 19,684
-------------------------------------------------------------------------
TUNDRA SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS AND DEFICIT
(Canadian dollars, amounts in thousands except per share data)
(Unaudited)
Three months ended Six months ended
----------------------- -----------------------
October 29 October 30 October 29 October 30
2006 2005 2006 2005
Revenue:
Product $ 19,074 $ 18,625 $ 37,017 $ 36,821
Service 2,891 - 4,409 -
-------------------------------------------------------------------------
21,965 18,625 41,426 36,821
Cost of revenue:
Product 5,842 6,183 11,720 12,549
Service 1,359 - 2,440 -
-------------------------------------------------------------------------
7,201 6,183 14,160 12,549
-------------------------------------------------------------------------
Gross margin 14,764 12,442 27,266 24,272
Expenses:
Sales and marketing 3,371 2,883 6,915 5,649
General and administration 3,469 1,358 5,250 2,780
Research and development 5,992 5,089 11,928 10,128
Stock-based compensation 1,363 493 1,995 951
Amortization of purchased
intangibles and other
assets 1,242 558 2,617 1,104
-------------------------------------------------------------------------
15,437 10,381 28,705 20,612
Earnings (loss) from
operations (673) 2,061 (1,439) 3,660
Interest and other income 529 304 1,292 529
-------------------------------------------------------------------------
Earnings (loss) before
income taxes (144) 2,365 (147) 4,189
Income tax provision (67) (980) (727) (1,795)
-------------------------------------------------------------------------
NET EARNINGS (LOSS) (211) 1,385 (874) 2,394
Deficit, beginning of
period (27,509) (36,599) (26,846) (37,608)
-------------------------------------------------------------------------
DEFICIT, END OF PERIOD $ (27,720) $ (35,214) $ (27,720) $ (35,214)
-------------------------------------------------------------------------
Earnings (loss) per share
Basic ($0.01) $0.07 $(0.04) $0.12
Diluted ($0.01) $0.07 $(0.04) $0.12
Weighted average number of
common shares outstanding
Basic 19,964 19,508 19,881 19,505
Diluted 20,057 19,711 20,071 19,684
-------------------------------------------------------------------------
TUNDRA SEMICONDUCTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
(Canadian dollars, amounts in thousands)
October 29 April 30
2006 2006
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $ 58,449 $ 64,914
Short term investments - 11,393
Accounts receivable 7,853 7,759
Inventories 9,829 5,502
Prepaid expenses and other current assets 2,843 3,445
Future income tax asset 2,282 1,433
-------------------------------------------------------------------------
81,256 94,446
Long-term prepaids 1,942 2,155
Capital assets 23,605 20,541
Purchased intangibles and other assets 7,540 1,534
Goodwill 50,355 37,325
Future income tax asset 10,892 10,038
-------------------------------------------------------------------------
$ 175,590 $ 166,039
-------------------------------------------------------------------------
CURRENT LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 12,369 $ 10,140
Income tax payable 1,209 927
-------------------------------------------------------------------------
13,578 11,067
Shareholders' equity
Share capital 183,801 177,882
Contributed surplus 5,931 3,936
Deficit (27,720) (26,846)
-------------------------------------------------------------------------
162,012 154,972
-------------------------------------------------------------------------
$ 175,590 $ 166,039
-------------------------------------------------------------------------
TUNDRA SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Canadian dollars, amounts in thousands)
(Unaudited)
Three months ended Six months ended
----------------------- -----------------------
October 29 October 30 October 29 October 30
2006 2005 2006 2005
Operating activities
Net earnings (loss) $ (211) $ 1,385 $ (874) $ 2,394
Items not affecting cash:
Amortization of capital
assets and asset
impairments 2,332 2,086 4,694 3,016
Amortization of
purchased intangibles
and other assets 1,242 558 2,617 1,104
Stock-based compensation 1,363 493 1,995 951
Future income taxes (1,020) (85) (1,918) (595)
-------------------------------------------------------------------------
3,706 4,437 6,514 6,870
Cash effect of changes in:
Accounts receivable 402 (1,738) 1,653 (476)
Inventories (1,900) 76 (3,674) 394
Prepaid expenses and
other current assets 780 526 1,077 1,539
Accounts payable and
accrued liabilities 1,190 (393) 981 (2,982)
Income taxes payable 352 (115) 282 (1,266)
-------------------------------------------------------------------------
4,530 2,793 6,833 4,079
Investing Activities:
Acquisition of capital
assets (1,992) (1,790) (6,977) (4,570)
Acquisition of short
term investments - (19,187) - (59,638)
Proceeds on disposal of
short term investments 11,393 - 11,393 -
Acquisition of business - (1,370) (18,528) (1,370)
-------------------------------------------------------------------------
9,401 (22,347) (14,112) (65,578)
Financing activities:
Net proceeds on the issue
of common shares 196 46 1,464 92
Repayment of debt - - (650) -
-------------------------------------------------------------------------
196 46 814 92
Increase (decrease) in
cash and cash equivalents 14,127 (19,508) (6,465) (61,407)
Cash and cash equivalents,
beginning of period 44,322 26,291 64,914 68,190
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 58,449 $ 6,783 $ 58,449 $ 6,783
-------------------------------------------------------------------------
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