Results in Line with Guidance, Positive Outlook for Q4
OTTAWA, Feb. 28 /CNW Telbec/ - Tundra Semiconductor Corporation (TSX:TUN) ("Tundra" or "Company"), a leader in System Interconnect, today reported financial results for the third quarter of fiscal 2008, which ended January 27, 2008. Revenue for the quarter fell within the financial guidance provided in November and management's outlook for the fourth quarter indicates 10-20% sequential growth.
Q3-2008 RESULTS:
- Q3 Revenue: $14.7 million
- Q3 Pro forma earnings: $0.3 million
- Q3 Pro forma diluted earnings per share: $0.02
- Q3 GAAP results: loss of $54.0 million or $2.72 per diluted share, as a
result of goodwill impairment charges
Revenue for the third quarter of fiscal year 2008 was $14.7 million,
comprised of $5.7 million in the Communications market segment, $7.1 million
in the Computing/Storage market segment, and $1.9 million in Design Services.
Quarterly revenue represents a $7.0 million decrease over the third quarter in
fiscal year 2007, and a $3.2 million decrease from the second quarter of
fiscal year 2008. Pro forma earnings of $0.3 million represent a $2.7 million
decrease compared to the third quarter of fiscal year 2007, and a $0.6 million
decrease over the second quarter of fiscal year 2008. On a GAAP basis the
Company had a loss for the quarter of $54.0 million or $2.72 per diluted
share, which primarily reflects goodwill impairment charges of $50.6 million,
stemming from the current market environment and its impact on share
valuation. GAAP losses for the quarter compare to a gain of $1.3 million or
$0.06 per diluted share in the third quarter of fiscal year 2007, and compare
to a loss of $0.7 million or $0.04 per diluted share in the second quarter of
fiscal year 2008.
"Our Q3 results were within the guidance we provided for the quarter. On a
pro forma basis, we remained profitable, primarily as a result of the
restructuring activity we executed in November to offset the downturn in the
Communications market and the negative impact of the strong Canadian dollar,"
said Daniel Hoste, President and Chief Executive Officer. "Our outlook for the
fourth quarter indicates a 10-20% sequential growth rate and we are pleased
with early indicators in the quarter that show an improving business
environment to end the fiscal year. Design win activity in our key product
lines (RapidIO, PCI Express and VME) and in particular from our Tier 1
customers, continues to confirm our projections for future growth," continued
Hoste.
Management offers the following outlook for the fourth quarter of fiscal
year 2008:
- Revenues are expected to be in the range of $16 million to $18 million
- Pro forma diluted earnings per share are expected to be in the range of
$0.04 per share to earnings of $0.07 per share
Q3-2008 Highlights:
Corporate Highlights:
- Richard Riker joined Tundra's Leadership team in January in the role of
Vice President Sales with responsibility for leading the Company's
global sales organization. Richard's successful 28 year career in the
semiconductor industry includes over 18 years of senior management
experience leading worldwide sales organizations and developing and
implementing winning business strategies. Richard's experience adds
strength to Tundra's Leadership Team, with his primary focus on growing
the Company's global business by penetrating new and existing markets
with the Company's leading System Interconnect portfolio and new smart
System Interconnect solutions. Prior to joining Tundra, Richard held a
variety of executive and management positions within Anadigm Inc.,
Vitesse Semiconductor, Intel, Digital Equipment Corporation, Inmos
Corporation, and Texas Instruments Corporation.
- Ed Vopni has been appointed Vice President Engineering. Ed joined
Tundra in September 2003 in the role of Director Engineering and was
appointed to Vice President Operations in March 2007. Ed brings with
him over 25 years experience in progressively senior management
positions from such companies as Gennum, Mitel, Nortel (both in Canada
and the UK) and IceFyre Semiconductor. Ed will continue to lead the
Operations team on an interim basis, in addition to his responsibility
for the company's Engineering teams.
- Tundra recently began executing on expansion plans in its Hyderabad,
India design centre. Tundra plans to expand its engineering capacity in
Hyderabad with specific focus in; ASIC Design/Verification, Physical
Implementation, Chip Integration, and Embedded Software Design. The
Hyderabad design team will work on developing new and innovative
products, using cutting edge process technologies, for Tundra's next
generation System Interconnect solutions. The growing high tech
hub in Hyderabad is receiving world-wide recognition for its pool of
talented design engineers. Tundra's experienced team in Hyderabad has
added significantly to the successful delivery of new PCI Express
products.
- In the quarter, Tundra announced a distribution agreement with Uniquest
Corporation, an award winning distributor in Korea. Uniquest will now
promote and distribute Tundra's full range of System Interconnect
products in the rapidly growing Korean market. Uniquest is a well
respected, technical distributor that often receives industry awards
from global Tier 1 partners and customers for its outstanding
performance.
Product Highlights:
- At the Texas Instruments Developers Conference this week, Tundra
announced the availability of the market's first end-to-end
RapidIO(R)-enabled MicroTCA(TM) platform for wireless baseband. The
"baseband-in-a-box" platform offers 10 Gigabit RapidIO Interconnect for
chip-to-chip and board-to-board links across the backplane. The
platform will allow wireless telecommunication system vendors to
expedite their go-to-market schedule with this "baseband-in-a-box"
solution. Production-ready components, available now, will speed
wireless infrastructure design cycles and free up designer resources to
focus on application firmware and software development. Leveraging the
industry's leading semiconductor components from; Tundra, Texas
Instruments, Mercury Computer Systems, CommAgility, and Fabric Embedded
Tools, wireless base station vendors can now go to market in full
volume production, ahead of their competition.
- Tundra's design services division, SLE, recently announced the
availability of a new 150Gb/s High Speed Interlaken protocol IP core
for use in ASIC designs. The new Interlaken IP Core is now available
with more than twice the performance of the standard 60Gb/s version.
The Interlaken core delivers the performance and bandwidth that new
designs require, now with higher data transfer rates. With full
scalability, the core is ideally suited for multiple generations of
future network switches, routers and storage equipment.
- Tundra recently launched the Tsi382(TM), a small form-factor, high
performance bridge that connects a single lane PCI Express (x1 PCIe)
interface to the PCI bus standard. The device's 32 bit PCI Interface
can operate up to 66 MHz in PCI mode. This interface offers designers
extensive flexibility by supporting three types of addressing modes:
transparent, opaque, and non-transparent. The Tsi382 is suited for
applications that need to bridge from PCIe to conventional 32-bit PCI
devices. The Tsi382 responds to specific customer demand for a small
footprint PCIe bridge, and is ideally suited for applications where
board space is limited.
CONFERENCE CALL AND WEBCAST
Tundra management will be holding a conference call today, February 28,
2008 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: +1.416.644.3424
Replay: +1.416.640.1917 Passcode: 21262751(number sign). The replay will be available
through March 6, 2008.
Web Cast: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal sign)2167440
About Tundra Semiconductor
Tundra Semiconductor Corporation (TSX:TUN) supplies the world's leading
communications, computing and storage companies with 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), Power Architecture(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 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, amortization of intangibles associated with Tundra's
acquisitions, restructuring, and goodwill impairment charges. 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.
Caution Regarding 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, but are not limited to; various aspects
of the Company's future financial performance including anticipated costs,
margins and revenues, the competitive environment and product offerings by
competitors, improvement in the business environment within which the Company
operates, customer adoption of technology giving rise to demand for Company
products, 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 assumptions and expectations that are
subject to risks and uncertainties. Actual results may differ due to changes
in the factors underlying the Company's assumptions and expectations such as
lower than anticipated customer demand, changes in the timeframe within which
customers require new products, deterioration in customer and partner
relationships, delays in new product development and new services offerings,
product shipping schedules, product mix, competitive products and services
offered on better terms or with more desirable features and performance,
pricing pressure, exchange rate fluctuations, and changes in the market
specifically. Additional information identifying risks and uncertainties is
contained in the Company's filings with the various provincial securities
commissions available at www.sedar.com.
TUNDRA(R) is a registered trademark of Tundra Semiconductor Corporation
(Canada, U.S. and U.K.). TUNDRA and the Tundra logo, Tsi382, and
Design.Connect.Go. are registered marks of Tundra Semiconductor Corporation in
Canada, European Union, People's Republic of China and the United States.
RapidIO is a trademark of the RapidIO Trade Association, Inc. The Power
Architecture(TM) and Power.org(TM) 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.
(C) Copyright 2008 Tundra Semiconductor Corporation. All rights reserved.
Information subject to change without notice.
TUNDRA SEMICONDUCTOR CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
For the fiscal quarters ended January 27, 2008 and January 28, 2007
(Canadian dollars, amounts in thousands except per share data)
(Unaudited)
Three months ended Nine months ended
---------------------- ----------------------
January 27 January 28 January 27 January 28
2008 2007 2008 2007
Revenue:
Product $ 12,832 $ 19,047 $ 46,501 $ 56,064
Service 1,892 2,627 6,173 7,036
-------------------------------------------------------------------------
14,724 21,674 52,674 63,100
Cost of revenue:
Product 4,202 5,346 14,843 17,066
Service 1,185 1,472 3,726 3,912
-------------------------------------------------------------------------
5,387 6,818 18,569 20,978
-------------------------------------------------------------------------
Gross margin 9,337 14,856 34,105 42,122
Expenses:
Sales and marketing 2,803 3,436 8,726 10,351
General and administration 1,775 2,103 6,264 7,353
Research and development 5,206 7,206 17,073 19,134
-------------------------------------------------------------------------
9,784 12,745 32,063 36,838
Pro forma earnings (loss)
from operations (447) 2,111 2,042 5,284
Interest and other income 926 925 1,958 2,217
-------------------------------------------------------------------------
Pro forma earnings
before income taxes 479 3,036 4,000 7,501
Income tax provision 166 10 827 102
-------------------------------------------------------------------------
PRO FORMA EARNINGS $ 313 $ 3,026 $ 3,173 $ 7,399
-------------------------------------------------------------------------
Pro froma earnings per share
Basic $ 0.02 $ 0.15 $ 0.16 $ 0.37
Diluted $ 0.02 $ 0.15 $ 0.16 $ 0.37
Weighted average number of
common shares outstanding
Basic 19,825 19,984 19,901 19,912
Diluted 19,837 20,047 19,958 20,148
TUNDRA SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND DEFICIT
For the fiscal quarters ended January 27, 2008 and January 28, 2007
(Canadian dollars, amounts in thousands except per share data)
(Unaudited)
Three months ended Nine months ended
---------------------- ----------------------
January 27 January 28 January 27 January 28
2008 2007 2008 2007
Revenue:
Product $ 12,832 $ 19,047 $ 46,501 $ 56,064
Service 1,892 2,627 6,173 7,036
-------------------------------------------------------------------------
14,724 21,674 52,674 63,100
Cost of revenue:
Product 4,202 5,346 14,843 17,066
Service 1,185 1,472 3,726 3,912
-------------------------------------------------------------------------
5,387 6,818 18,569 20,978
-------------------------------------------------------------------------
Gross margin 9,337 14,856 34,105 42,122
Expenses:
Sales and marketing 2,803 3,436 8,726 10,351
General and
administration 1,775 2,103 6,264 7,353
Research and development 5,206 7,206 17,073 19,134
Stock-based compensation 575 561 1,682 2,556
Amortization of
purchased intangibles
and other assets 888 1,199 2,987 3,816
Restructuring charges 2,304 - 3,963 -
-------------------------------------------------------------------------
13,551 14,505 40,695 43,210
Earnings (loss) from
operations (4,214) 351 (6,590) (1,088)
Interest and other income 926 925 1,958 2,217
Impairment of goodwill (50,571) - (50,571) -
-------------------------------------------------------------------------
Earnings (loss) before
income taxes (53,859) 1,276 (55,203) 1,129
Income tax provision 166 10 506 737
-------------------------------------------------------------------------
NET EARNINGS (LOSS) (54,025) 1,266 (55,709) 392
Deficit, beginning of
period (26,485) (27,720) (24,801) (26,846)
-------------------------------------------------------------------------
DEFICIT, END OF PERIOD $ (80,510) $ (26,454) $ (80,510) $ (26,454)
-------------------------------------------------------------------------
Earnings (loss) per share
Basic $ (2.73) $ 0.06 $ (2.80) $ 0.02
Diluted $ (2.72) $ 0.06 $ (2.79) $ 0.02
Weighted average number
of common shares outstanding
Basic 19,825 19,984 19,901 19,912
Diluted 19,837 20,047 19,958 20,148
TUNDRA SEMICONDUCTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
(Canadian dollars, amounts in thousands)
January 27 April 30
2008 2007
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $ 20,899 $ 18,340
Short-term investments 35,373 42,379
Accounts receivable 6,853 7,745
Inventories 7,283 9,282
Prepaid expenses and other current assets 2,970 4,497
Future income tax asset 3,012 2,997
-------------------------------------------------------------------------
76,390 85,240
Long-term prepaids 1,897 1,895
Capital assets 22,471 22,343
Purchased intangibles and other assets 6,936 5,174
Goodwill - 50,571
Future income tax asset 13,426 11,407
-------------------------------------------------------------------------
$ 121,120 $ 176,630
-------------------------------------------------------------------------
CURRENT LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities $ 10,873 $ 11,125
Income tax payable - 105
-------------------------------------------------------------------------
10,873 11,230
Shareholders' equity
Share capital 181,445 183,204
Contributed surplus 9,312 6,997
Deficit (80,510) (24,801)
-------------------------------------------------------------------------
110,247 165,400
-------------------------------------------------------------------------
$ 121,120 $ 176,630
-------------------------------------------------------------------------
TUNDRA SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the fiscal quarters ended January 27, 2008 and January 28, 2007
(Canadian dollars, amounts in thousands)
(Unaudited)
Three months ended Nine months ended
---------------------- ----------------------
January 27 January 28 January 27 January 28
2008 2007 2008 2007
Operating activities:
Earnings (loss) $ (54,025) $ 1,266 $ (55,709) $ 392
Items not affecting cash:
Amortization of capital
assets and asset
impairments 2,234 2,905 6,280 7,599
Amortization of
purchased intangibles
and other assets 888 1,199 2,987 3,816
Stock-based compensation 526 561 1,532 2,556
Future income taxes (162) (1,102) (2,034) (3,020)
Impairment of goodwill 50,571 - 50,571 -
-------------------------------------------------------------------------
32 4,829 3,627 11,343
Cash effect of changes in:
Accounts receivable (492) (1,119) 892 534
Inventories (99) (864) 1,999 (4,538)
Prepaid expenses and
other current assets 292 (569) 1,503 508
Accounts payable and
accrued liabilities 1,622 2,391 (243) 3,372
Income taxes payable - - (115) 282
-------------------------------------------------------------------------
1,355 4,668 7,663 11,501
-------------------------------------------------------------------------
Investing activities:
Acquisition of capital
assets (955) (1,786) (6,386) (8,763)
Acquisition of short-term
investments (35,373) (42,379) - (42,379)
Purchased intangibles (3,802) - (4,749) -
Proceeds on disposal of
short-term investments - - 7,006 11,393
Acquisition of business - - - (18,528)
-------------------------------------------------------------------------
(40,130) (44,165) (4,129) (58,277)
-------------------------------------------------------------------------
Financing activities:
Net proceeds on the issue
of common shares - 212 426 1,676
Share repurchase (1,018) - (1,401) -
Repayment of debt - - - (650)
-------------------------------------------------------------------------
(1,018) 212 (975) 1,026
-------------------------------------------------------------------------
Increase (decrease) in
cash and cash equivalents (39,793) (39,285) 2,559 (45,750)
Cash and cash equivalents,
beginning of period 60,692 58,449 18,340 64,914
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 20,899 $ 19,164 $ 20,899 $ 19,164
-------------------------------------------------------------------------