Revenue in Line with Revised Guidance
OTTAWA, Nov. 29 /CNW Telbec/ - Tundra Semiconductor Corporation (TSX:TUN), a leader in System Interconnect, today reported financial results for the second quarter of fiscal 2008, which ended October 28, 2007. On October 23, the Company provided updated revenue guidance for the quarter in the range of $17.0 million to $18.0 million.
Q2-2008 RESULTS:
- Q2 Revenue: $17.9 million
- Q2 Pro forma earnings: $0.9 million
- Q2 Pro forma diluted earnings per share: $0.05
- Q2 GAAP results: loss of $0.7 million or $0.04 per diluted share
Revenue for the second quarter of fiscal year 2008 was $17.9 million, a 19% decrease over the second quarter in fiscal year 2007, and an 11% decrease from the first quarter of fiscal year 2008. Pro forma earnings of $0.9 million represent a 61% decrease compared to the second quarter of fiscal year 2007, and a 52% decrease over the first quarter of fiscal year 2008. On a GAAP basis the Company had a loss for the quarter of $0.7 million or $0.04 per diluted share, compared to a loss of $0.2 million or $0.01 per diluted share in the second quarter of fiscal year 2007, up from a loss of $1.0 million or $0.05 per diluted share in the first quarter of fiscal year 2008.
"Although our business environment has been challenging this quarter, we were able to generate cash and remain profitable on a pro forma basis. Two factors, however, negatively impacted our revenues; the communications infrastructure market slowdown resulted in lower than expected sales of our communications products, and the continued appreciation of the Canadian dollar has decreased our top line revenue by close to 15% in the last several quarters," said Daniel Hoste, President and Chief Executive Officer. "Our short term revenue outlook continues to be challenging as the economic environment is uncertain. However, we are confident in our mid to long term growth strategy. Increased design win activity in the second quarter within our key product lines such as RapidIO, PCI Express, and VME, substantiates our expectations for future growth", continued Hoste.
Management offers the following outlook for the third quarter of fiscal year 2008:
- Revenues are expected to be in the range of $14.0 million to
$16.5 million
- Pro forma diluted earnings per share are expected to be in the range of
a loss of $0.01 per share to earnings of $0.03 per share
"We've made decisions to quickly align our costs with adjusted revenue
expectations based on the current business and economic environment. These
decisions were made with the expectation that we will continue to be
profitable on a pro forma basis and drive positive cashflow from operations,"
said David Long, Chief Financial Officer, Tundra Semiconductor.
Q2-2008 Highlights:
- Tundra and IBM recently announced the extension of a technology
collaboration and signing of a license agreement with IBM to bring new
Power Architecture(TM) solutions to market as part of Tundra's smart
System Interconnect strategy. In August, Tundra announced that it had
entered into a product acquisition agreement to bring to market the
first product in its smart System Interconnect strategy. This product,
defined by Tundra, will include a Power processor core in 90nm
technology. Tundra and IBM moved a step further in their partnership
and signed a license agreement for a 65nm Power processor core. The new
cores will be the processing engines of the future smart System
Interconnect Solutions designed by the Tundra research and development
team.
- GE Fanuc Intelligent Platforms recently announced that it has selected
Tundra's Tsi578(TM), the industry's highest performance serial
RapidIO(R) switch, to enable their DSP220, DSP230 and CRX800 system
blades designed for defence and aerospace applications. GE Fanuc
selected the Tundra Tsi578 for its industry-leading performance and
multi-port configurability to provide the level of connectivity
required to support a range of system architectures including VPX and
VXS. The wide-spread adoption of the Tundra RapidIO switch portfolio
across multiple vertical markets made GE Fanuc confident Tundra
switches would be the best choice for this range of innovative system
blades. In addition, Tundra's long-standing presence in the defence and
aerospace markets with de facto standard VME bridges gave GE Fanuc
assurance that Tundra was the optimum partner to enable their next-
generation system blades.
- Tundra introduced the Tsi620(TM) in October, an innovative multi-
standard serial RapidIO switch that lowers 3G baseband costs by
bridging RapidIO-based DSP clusters to low cost embedded processors and
FPGAs. This new RapidIO switch allows customers to both increase their
baseband performance and significantly reduce overall system cost.
Endorsed by both Texas Instruments and Altera, this solution has gained
significant interest from Tier 1 communications customers.
- In September, Tundra added to its PCI Express(R) (PCIe) portfolio with
the launch of the Tsi381(TM), a new single lane PCIe to PCI Bridge. Pin
compatible with competing PCIe bridge products, this new product offers
Tundra customers a superior solution with lower latency and better
throughput than competitive offerings. Tundra entered the PCIe market
in May, 2007 with the launch of the Tsi384(TM), a four-lane PCIe to
PCI-X Bridge, and continues to broaden this important portfolio. The
Tsi381 was designed by Tundra's Hyderabad, India design team to compete
with and beat PCIe bridges currently in the market, on performance and
quality.
Corporate Announcements:
- GE Fanuc has awarded Tundra a "Preferred Supplier Award", recognizing
Tundra's strategic business partner relationship and competitive
technological edge. GE Fanuc continues to rely on Tundra's dedication
to service, quality, and product knowledge and this award reflects the
intimate relationship between Tundra and GE Fanuc.
- In November, Tundra announced a restructuring plan to address a
decrease in quarterly revenue caused by a slowdown in the
communications market and strong Canadian dollar. The restructuring
initiative will reduce Tundra's headcount by approximately 30 positions
and result in approximately $1.5 million in cost savings on a quarterly
basis, the full impact of savings will be in effect in Q1 FY09
financial results. The restructuring charge of $4.0 million, associated
with this initiative, will impact third quarter GAAP results. Third
quarter pro forma guidance, given today, reflects some operating
expense savings resulting from the restructuring.
CONFERENCE CALL AND WEBCAST
Tundra management will be holding a conference call today, November 29,
2007 at 5:00 p.m. EST to discuss additional details regarding this earnings
update. You may access the conference call via any of the following:
Teleconference: +1.416.644.3415
Replay: +1.416.640.1917 Passcode: 21253090(number sign). The replay will be available
through December 6, 2007.
Web Cast: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal sign)2090220
About Tundra Semiconductor
Tundra Semiconductor Corporation (TSX:TUN) supplies the world's leading
communications, computing and storage companies with smart System Interconnect
products and design services backed by world-class customer service and
technical support. Tundra's track record of product leadership includes over a
decade of bridges and switches enabling key industry standards: RapidIO(R),
PCI, PCI-X, PCI Express(R), PowerPC(R), VME, HyperTransport(TM), Interlaken,
and SPI4.2. Tundra's products deliver high functional quality and simplified
board design and layout, with specific focus on system level signal integrity.
Tundra's design services division, Silicon Logic Engineering, Inc., offers
industry-leading ASIC and FPGA design services, semiconductor intellectual
property and product development consulting. Tundra's smart System
Interconnect products connect critical components in high performance embedded
systems around the world. For more information, please visit www.tundra.com.
The difference between pro forma and GAAP earnings is due to stock-based
compensation expense, goodwill impairment charges and amortization of
intangibles and backlog 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.
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, but are not limited to; customer demand
for the Company's products and services, the Company's ability to maintain and
enhance existing customer relationships, and leverage existing partnerships,
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 and partner relationships, new product development, new
services offerings, product shipping schedules, product mix, competitive
products and services, pricing pressure, exchange rate fluctuations, and
changes in the embedded systems market specifically. Additional information
identifying risks and uncertainties is contained in the Company's filings with
the various provincial securities commissions.
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, People's Republic
of China and the United States. Tsi578, Tsi620, Tsi381, Tsi384, and
Design.Connect.Go. are trademarks of Tundra Semiconductor Corporation. RapidIO
is a trademark of the RapidIO Trade Association, Inc. The Power Architecture
and Power.org word marks and the Power and Power.org logos and related marks
are trademarks and service marks licensed by Power.org. Other registered and
unregistered trademarks are the property of their respective owners.
Development of the Tundra Tsi578, Tsi574(TM) and Tsi576(TM) was made
possible in part with the assistance of the Technology Partnerships
Canada Program.
(C) Copyright 2007 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 28 October 29 October 28 October 29
2007 2006 2007 2006
Revenue:
Product $ 15,716 $ 19,074 $ 33,669 $ 37,017
Service 2,176 2,891 4,281 4,409
-------------------------------------------------------------------------
17,892 21,965 37,950 41,426
Cost of revenue:
Product 5,033 5,842 10,641 11,720
Service 1,367 1,359 2,541 2,440
-------------------------------------------------------------------------
6,400 7,201 13,182 14,160
-------------------------------------------------------------------------
Gross margin 11,492 14,764 24,768 27,266
Expenses:
Sales and marketing 2,895 3,371 5,923 6,915
General and
administration 2,081 3,469 4,489 5,250
Research and
development 5,905 5,992 11,867 11,928
-------------------------------------------------------------------------
10,881 12,832 22,279 24,093
Pro forma earnings
from operations 611 1,932 2,489 3,173
Interest and other income 346 529 1,032 1,292
-------------------------------------------------------------------------
Pro forma earnings before
income taxes 957 2,461 3,521 4,465
Income tax provision
32 67 661 92
-------------------------------------------------------------------------
PRO FORMA EARNINGS $ 925 $ 2,394 $ 2,860 $ 4,373
-------------------------------------------------------------------------
Pro forma earnings
per share
Basic $ 0.05 $ 0.12 $ 0.14 $ 0.22
Diluted $ 0.05 $ 0.12 $ 0.14 $ 0.22
Weighted average number
of common shares
outstanding
Basic 19,894 19,964 19,974 19,881
Diluted 19,907 20,057 20,023 20,071
-------------------------------------------------------------------------
TUNDRA SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
(Canadian dollars, amounts in thousands except per share data)
(Unaudited)
Three months ended Six months ended
---------------------- ----------------------
October 28 October 29 October 28 October 29
2007 2006 2007 2006
Revenue:
Product $ 15,716 $ 19,074 $ 33,669 $ 37,017
Service 2,176 2,891 4,281 4,409
-------------------------------------------------------------------------
17,892 21,965 37,950 41,426
Cost of revenue:
Product 5,033 5,842 10,641 11,720
Service 1,367 1,359 2,541 2,440
-------------------------------------------------------------------------
6,400 7,201 13,182 14,160
-------------------------------------------------------------------------
Gross margin 11,492 14,764 24,768 27,266
Expenses:
Sales and marketing 2,895 3,371 5,923 6,915
General and
administration 2,081 3,469 4,489 5,250
Research and development 5,905 5,992 11,867 11,928
Stock-based compensation 619 1,363 1,107 1,995
Amortization of
purchased intangibles
and other assets 1,017 1,242 2,099 2,617
Restructuring charges - - 1,659 -
-------------------------------------------------------------------------
12,517 15,437 27,144 28,705
Loss from operations (1,025) (673) (2,376) (1,439)
Interest and other income 346 529 1,032 1,292
-------------------------------------------------------------------------
Loss before income taxes (679) (144) (1,344) (147)
Income tax provision 32 67 340 727
-------------------------------------------------------------------------
NET LOSS (711) (211) (1,684) (874)
Deficit, beginning of
period (25,774) (27,509) (24,801) (26,846)
-------------------------------------------------------------------------
DEFICIT, END OF PERIOD $ (26,485) $ (27,720) $ (26,485) $ (27,720)
-------------------------------------------------------------------------
Loss per share
Basic $ (0.04) $ (0.01) $ (0.08) $ (0.04)
Diluted $ (0.04) $ (0.01) $ (0.08) $ (0.04)
Weighted average number
of common shares
outstanding
Basic 19,894 19,964 19,974 19,881
Diluted 19,907 20,057 20,023 20,071
-------------------------------------------------------------------------
TUNDRA SEMICONDUCTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
(Canadian dollars, amounts in thousands)
October 28 April 30
2007 2007
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $ 60,692 $ 18,340
Short-term investments - 42,379
Accounts receivable 6,361 7,745
Inventories 7,184 9,282
Prepaid expenses and other current assets 3,262 4,497
Future income tax asset 2,886 2,997
-------------------------------------------------------------------------
80,385 85,240
Long-term prepaids 1,919 1,895
Capital assets 23,728 22,343
Purchased intangibles and other assets 4,021 5,174
Goodwill 50,571 50,571
Future income tax asset 13,389 11,407
-------------------------------------------------------------------------
$ 174,013 $ 176,630
-------------------------------------------------------------------------
CURRENT LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 9,249 $ 11,125
Income tax payable - 105
-------------------------------------------------------------------------
9,249 11,230
Shareholders' equity
Share capital 183,416 183,204
Contributed surplus 7,833 6,997
Deficit (26,485) (24,801)
-------------------------------------------------------------------------
164,764 165,400
-------------------------------------------------------------------------
$ 174,013 $ 176,630
-------------------------------------------------------------------------
TUNDRA SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Canadian dollars, amounts in thousands)
(Unaudited)
Three months ended Six months ended
---------------------- ----------------------
October 28 October 29 October 28 October 29
2007 2006 2007 2006
Operating activities:
Loss $ (711) $ (211) $ (1,684) $ (874)
Items not affecting
cash:
Amortization of
capital assets and
asset impairments 2,049 2,332 4,046 4,694
Amortization of
purchased intangibles
and other assets 1,017 1,242 2,099 2,617
Stock-based compensation 518 1,363 1,006 1,995
Future income taxes (686) (1,020) (1,872) (1,918)
-------------------------------------------------------------------------
2,187 3,706 3,595 6,514
Cash effect of changes in:
Accounts receivable 2,444 402 1,384 1,653
Inventories 636 (1,900) 2,098 (3,674)
Prepaid expenses and
other current assets 1,043 780 1,211 1,077
Accounts payable and
accrued liabilities (602) 1,190 (1,865) 981
Income taxes payable - 352 (115) 282
-------------------------------------------------------------------------
5,708 4,530 6,308 6,833
Investing activities:
Acquisition of capital
assets (1,283) (1,992) (5,431) (6,977)
Purchased intangibles (947) - (947) -
Proceeds on disposal
of short-term investments - 11,393 42,379 11,393
Acquisition of business - - - (18,528)
-------------------------------------------------------------------------
(2,230) 9,401 36,001 (14,112)
Financing activities:
Net proceeds on the issue
of common shares 176 196 426 1,464
Share repurchase (383) - (383) -
Repayment of debt - - - (650)
-------------------------------------------------------------------------
(207) 196 43 814
Increase (decrease) in cash
and cash equivalents 3,271 14,127 42,352 (6,465)
Cash and cash equivalents,
beginning of period 57,421 44,322 18,340 64,914
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 60,692 $ 58,449 $ 60,692 $ 58,449
-------------------------------------------------------------------------