Results within Guidance, Continuing to Generate Cash
OTTAWA, March 4 /CNW Telbec/ - Tundra Semiconductor Corporation (Tundra, or "the Company") (TSX:TUN), a leader in System Interconnect, today reported financial results for the third quarter of fiscal 2009, which ended February 1, 2009.
Q3-2009 RESULTS:
- Q3 Revenue: $14.6 million
- Q3 Pro forma earnings: $0.1 million
- Q3 Pro forma diluted earnings per share: $0.00
- Q3 GAAP results: loss of $1.1 million or $0.06 per diluted share
Revenue for the third quarter of fiscal year 2009 was $14.6 million, comprised of $14.1 million in product revenue and $0.5 million in services revenue. The Communications market segment generated $8.0 million in the third quarter and the Computing/Storage market segment generated $6.1 million. Overall, the products business performed beyond our expectations in the quarter and was positively impacted by foreign exchange. Design Services revenue was significantly lower than expected as a result of the cancellation of a large project during the quarter. Overall quarterly revenue represents a 20% decrease from the second quarter of fiscal year 2009 and a 1% decrease compared to the third quarter of fiscal year 2008. Pro forma earnings for the quarter were $0.1 million or $0.00 per diluted share, compared to earnings of $2.4 million or $0.12 per diluted share in the second quarter of fiscal year 2009 and compared to $0.3 million or $0.02 per diluted share in the third quarter of fiscal year 2008. GAAP loss for the quarter was $1.1 million or $0.06 per diluted share, compared to earnings of $1.7 million or $0.09 per diluted share in the second quarter of fiscal year 2009, and a loss of $54.0 million or $2.73 per diluted share in the third quarter of fiscal year 2008.
"Third quarter results were within the guidance we provided at the close of the second quarter. Quarter over quarter, our cash position increased by more than $1 million and we generated more than $2 million in cash from operations during the quarter. Our cash position at the close of the quarter was more than $63 million and we remain debt free," said Daniel Hoste, President and Chief Executive Officer, Tundra Semiconductor. "Considering the current global economic environment we are satisfied with, but not complacent about, the results of the products business during the quarter," continued Hoste.
Management offers the following outlook for the fourth quarter of fiscal
year 2009:
- Q4 Revenue is expected to be in the range of $13.0 million to
$15.5 million
- Q4 Pro forma diluted earnings per share is expected to be in the range
of a loss of $0.04 to earnings of $0.01
"Although we expect revenue to be flat to slightly down quarter over
quarter, we expect to add to our cash balance during the quarter," said David
Long, Chief Financial Officer.
Q3-2009 Highlights
- In February, RMI Corporation and Tundra announced interoperability of
Tundra's Tsi578(TM) RapidIO(R) Switch with RMI's high performance XLS
multi-core multi-threaded processor. The combined switch-processor
solution enables high performance 3G and 4G wireless infrastructure
systems. By using Tundra's Serial RapidIO Development Platform, that
includes the Tsi578 RapidIO Switch, with RMI's XLS Processor(R)
evaluation platform, Tundra and RMI successfully completed testing for
interoperability between their two products. The comprehensive testing
validates that the Tsi578, with multi-cast capability, and RMI's multi-
core and multi-threaded XLS Processor are interoperable and can be
quickly deployed as a turnkey solution in wireless infrastructure
applications such as WiMAX, WCDMA, TD-SCDMA, and LTE.
- Tundra was recently presented with a supplier excellence award from
Huawei, in recognition of Tundra's outstanding support for delivering
technology excellence, world-class customer service and support, and
on-time delivery rates. Tundra's global teams: Sales, Research and
Development, Supply Chain Management and Field Applications Engineers,
adhere to Tundra's customer-first-commitment by constantly providing an
outstanding level of service to customers around the world. Tundra
has been a supplier to Huawei for many years, delivering System
Interconnect solutions that enable Huawei's next generation production
systems. Huawei's supplier excellence award is given only when a
supplier meets a strict set of guidelines by which Huawei measures
supplier performance throughout the year.
- Tundra recently announced that its PCI Express(R) (PCIe) products have
been selected by Axiomtek, EFI and Nortel for their latest designs,
based on the high quality and performance which the PCIe bridges offer.
AXIOMTEK selected Tundra's Tsi381(TM) Bridge because the product was
the best solution for their network appliance platform design.
"Tundra's PCIe bridges offer the best performance in the networking
vertical appliance and their expert technical team delivers a new,
higher standard of customer service and support to our engineers,"
said, Philip Wei, Product Management, AXIOMTEK.
Noam Rabin, Senior Engineering Manager at EFI said, "EFI selected the
Tundra Tsi384(TM) for our print solutions, because of its proven,
industry-leading performance. The Tsi384 offered us the high quality,
reliable performance required to help deliver cutting-edge digital
printing solutions to our customers."
Nortel's Senior Design Engineer, Karl Reinke said, "customers continue
to rely on Nortel's longstanding commitment to quality and reliability.
The new Nortel Passport switch/routers take advantage of the proven
reliability of the Tundra Tsi381(TM), which offers the highest
performance connection between PCI and PCI Express."
- MUSILAND, China's well known computer sound card manufacturer, recently
announced that it selected Tundra's PCIe bridge to be used in its
X-SWORDS II High Definition Audio System. Musiland selected the Tsi382
for its high performance and support of a single lane configuration
providing 2.5 Gbps throughput capacity. The PCI port of the device
works at frequencies as high as 66 MHz and supports three types of
addressing modes; transparent, opaque and non-transparent providing the
designer with excellent flexibility. The Tsi382 has a highly efficient
buffering mechanism and provides low latency and high throughput
capacity.
- Tundra recently signed a representative agreement with StarBridge Inc.,
a leading provider of design services and integration of switch fabric
technology for embedded system OEMs in Japan. This agreement will bring
new opportunities for customers to take advantage of Tundra's Serial
RapidIO and PCI Express products in the Japanese market.
StarBridge's existing partnerships with OEMs in the embedded industry,
and their long standing expertise and experience in system integration
and design services of switch fabric technology, will offer Tundra's
customers another level of world-class support and service. "This
partnership is important for StarBridge's new and existing customers,
as we can now offer the proven results of Tundra's industry-leading
RapidIO and PCI Express products through our extensive network in
Japan," said Akira Sato, President and Chief Executive Officer,
StarBridge.
Conference Call and Webcast
Tundra management will hold a conference call today March 4, 2009 at 5:30
pm EST to discuss additional details regarding this earnings update. You can
access the conference call via any of the following:
Teleconference: 1.416.644.3422
Replay: 1.416.640.1917, Passcode: 21287849(number sign). (Available until
March 11, 2009)
Web Cast: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal sign)2482920
About Tundra
Tundra Semiconductor Corporation (TSX:TUN) supplies the world's leading communications, computing and storage companies with System Interconnect products, intellectual property (IP) 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(TM), 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 technology connects 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, restructuring charges, goodwill and intangible assets, impairment charges and amortization of acquisition-related intangibles. Tundra uses pro forma measures internally to evaluate and manage operating performance as well as to forecast and plan. A reconciliation of the differences between pro forma and GAAP measures is provided in the tables attached.
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.
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 assumptions about: stability of the telecommunications market, appropriate customer inventory levels, currency fluctuations, the movement of products from design wins to production within customer products, the Company's ability to bring to market the products currently under development, as well as stability of customer need for design services.
Furthermore, the Company cautions that the forward-looking statements in this release are based on current expectations that are subject to risks and uncertainties. The Company assumes no obligation to update or revise any forward-looking statements, except as required by law. Actual results may differ due to variable factors such as customer demand and customer inventory management, customer relationships, product development, new services offerings, product shipping schedules, product mix, competitive products and services, pricing pressure, changes and volatility in the Company's target markets, including but not limited to the telecommunications market, and currency fluctuations. 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 and the Tundra logo are registered marks of Tundra Semiconductor Corporation in Canada, the United States, the European Union and the People's Republic of China. Design.Connect.Go. and Tsi578, Tsi382, Tsi384, Tsi381 are trademarks of Tundra Semiconductor Corporation. RapidIO is a trademark of the RapidIO Trade Association, Inc. The PowerPC name, Power Architecture name, and the PowerPC logotype are trademarks of International Business Machines Corporation, used under license therefrom. Other registered and unregistered trademarks are the property of their respective owners.
Development of the Tundra Tsi578 was made possible in part with the assistance of the Technology Partnerships Canada Program.
(C) Copyright 2009 Tundra Semiconductor Corporation. All rights reserved.
Information subject to change without notice.
TUNDRA SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME
(LOSS)
For the quarters ended February 1, 2009 and January 27, 2008
(Canadian dollars, amounts in thousands except per share data)
(Unaudited)
Three months ended Nine months ended
----------------------- -----------------------
February 1 January 27 February 1 January 27
2009 2008 2009 2008
Revenue
Product $ 14,109 $ 12,832 $ 45,829 $ 46,602
Service 523 1,892 5,063 6,072
-------------------------------------------------------------------------
14,632 14,724 50,892 52,674
Cost of revenue
Product 4,150 4,202 15,012 14,843
Service 1,537 1,185 4,829 3,726
-------------------------------------------------------------------------
5,687 5,387 19,841 18,569
-------------------------------------------------------------------------
Gross margin 8,945 9,337 31,051 34,105
Expenses
Sales and marketing 2,834 2,803 8,821 8,726
General and
administration 1,942 1,775 6,171 6,264
Research and development 5,201 5,206 14,992 17,073
Stock-based compensation 566 575 1,541 1,682
Amortization of
acquisition-related
intangible assets 137 888 580 2,987
Restructuring charges
(recovery) (30) 2,304 (30) 3,963
-------------------------------------------------------------------------
10,650 13,551 32,075 40,695
Loss from operations (1,705) (4,214) (1,024) (6,590)
Interest and other income 995 926 2,519 1,958
Impairment of intangible
assets (515) - (515) -
Impairment of goodwill - (50,571) - (50,571)
-------------------------------------------------------------------------
Earnings (loss) before
income taxes (1,225) (53,859) 980 (55,203)
Income tax (recovery)
provision (112) 166 (79) 506
-------------------------------------------------------------------------
NET EARNINGS (LOSS) AND
COMPREHENSIVE INCOME
(LOSS) $ (1,113) $ (54,025) $ 1,059 $ (55,709)
-------------------------------------------------------------------------
Earnings (loss) per share
Basic $ (0.06) $ (2.73) $ 0.05 $ (2.80)
Diluted $ (0.06) $ (2.73) $ 0.05 $ (2.80)
Weighted average number
of common shares
outstanding
Basic 19,479 19,825 19,556 19,901
Diluted 19,479 19,825 19,557 19,901
TUNDRA SEMICONDUCTOR CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
For the quarters ended February 1, 2009 and January 27, 2008
(Canadian dollars, amounts in thousands except per share data)
(Unaudited)
Three months ended Nine months ended
----------------------- -----------------------
February 1 January 27 February 1 January 27
2009 2008 2009 2008
Revenue
Product $ 14,109 $ 12,832 $ 45,829 $ 46,602
Service 523 1,892 5,063 6,072
-------------------------------------------------------------------------
14,632 14,724 50,892 52,674
Cost of revenue
Product 4,150 4,202 15,012 14,843
Service 1,537 1,185 4,829 3,726
-------------------------------------------------------------------------
5,687 5,387 19,841 18,569
-------------------------------------------------------------------------
Gross margin 8,945 9,337 31,051 34,105
Expenses
Sales and marketing 2,834 2,803 8,821 8,726
General and
administration 1,942 1,775 6,171 6,264
Research and development 5,201 5,206 14,992 17,073
-------------------------------------------------------------------------
9,977 9,784 29,984 32,063
Pro forma earnings (loss)
from operations (1,032) (447) 1,067 2,042
Interest and other income 995 926 2,519 1,958
-------------------------------------------------------------------------
Pro forma earnings (loss)
before income taxes (37) 479 3,586 4,000
Income tax (recovery)
provision (112) 166 (79) 827
-------------------------------------------------------------------------
PRO FORMA EARNINGS $ 75 $ 313 $ 3,665 $ 3,173
-------------------------------------------------------------------------
Pro forma earnings per
share
Basic $ 0.00 $ 0.02 $ 0.19 $ 0.16
Diluted $ 0.00 $ 0.02 $ 0.19 $ 0.16
Weighted average number
of common shares
outstanding
Basic 19,479 19,825 19,556 19,901
Diluted 19,479 19,837 19,557 19,958
TUNDRA SEMICONDUCTOR CORPORATION
RECONCILIATION BETWEEN PRO FORMA AND GAAP MEASURES
For the quarters ended February 1, 2009 and January 27, 2008
(Canadian dollars, amounts in thousands)
(Unaudited)
The reconciliation below provides a more detailed description of the
amounts excluded from the pro forma results.
Three months ended Nine months ended
----------------------- -----------------------
February 1 January 27 February 1 January 27
2009 2008 2009 2008
GAAP net earnings (loss) $ (1,113) $ (54,025) $ 1,059 $ (55,709)
Stock-based compensation 566 575 1,541 1,682
Amortization of
acquisition-related
intangible assets 137 888 580 2,987
Restructuring charges
(recovery) (30) 2,304 (30) 3,963
Impairment of intangible
assets 515 - 515 -
Impairment of goodwill - 50,571 - 50,571
Income tax effect - - - (321)
-------------------------------------------------------------------------
Pro forma net earnings $ 75 $ 313 $ 3,665 $ 3,173
-------------------------------------------------------------------------
GAAP net earnings (loss)
per share $ (0.06) $ (2.73) $ 0.05 $ (2.80)
Stock-based compensation 0.03 0.03 0.08 0.08
Amortization of
acquisition-related
intangible assets 0.01 0.05 0.03 0.15
Restructuring charges
(recovery) - 0.12 - 0.20
Impairment of intangible
assets 0.02 - 0.03 -
Impairment of goodwill - 2.55 - 2.54
Income tax effect - - - (0.01)
-------------------------------------------------------------------------
Pro forma net earnings per
diluted share $ 0.00 $ 0.02 $ 0.19 $ 0.16
-------------------------------------------------------------------------
TUNDRA SEMICONDUCTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
(Canadian dollars, amounts in thousands)
February 1 April 30
2009 2008
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $ 44,471 $ 23,861
Short-term investments 18,882 35,373
Accounts receivable 7,356 7,470
Inventories 7,007 6,226
Prepaid expenses and other current assets 1,698 3,288
Future income tax asset 1,830 2,970
-------------------------------------------------------------------------
81,244 79,188
Other assets 1,739 1,919
Investment tax credits recoverable 8,973 8,976
Property, plant and equipment 15,922 16,272
Intangible assets 4,613 5,720
Future income tax asset 6,172 4,638
-------------------------------------------------------------------------
$ 118,663 $ 116,713
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 10,384 $ 9,913
Income tax payable 240 131
-------------------------------------------------------------------------
10,624 10,044
Shareholders' equity
Share capital 178,585 181,006
Contributed surplus 12,819 10,087
Deficit (83,365) (84,424)
-------------------------------------------------------------------------
108,039 106,669
-------------------------------------------------------------------------
$ 118,663 $ 116,713
-------------------------------------------------------------------------
TUNDRA SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the quarters ended February 1, 2009 and January 27, 2008
(Canadian dollars, amounts in thousands)
(Unaudited)
Three months ended Nine months ended
----------------------- -----------------------
February 1 January 27 February 1 January 27
2009 2008 2009 2008
Operating activities
Earnings (loss) $ (1,113) $ (54,025) $ 1,059 $ (55,709)
Items not affecting
cash
Amortization of
property, plant and
equipment and asset
impairments 1,904 2,234 5,894 6,280
Amortization of
intangible assets 189 888 719 2,987
Stock-based
compensation 566 575 1,541 1,682
Investment tax
credits recoverable (182) (210) 3 (1,931)
Future income taxes (136) 48 (394) (103)
Impairment of
intangible assets 515 - 515 -
Impairment of goodwill - 50,571 - 50,571
-------------------------------------------------------------------------
1,743 81 9,337 3,777
Cash effect of changes
in
Accounts receivable 1,211 (492) 114 892
Inventories (887) (99) (781) 1,999
Prepaid expenses and
other assets 475 292 1,770 1,503
Accounts payable and
accrued liabilities (566) 1,573 173 (393)
Income taxes payable 90 - 109 (115)
-------------------------------------------------------------------------
2,066 1,355 10,722 7,663
-------------------------------------------------------------------------
Investing activities
Acquisition of property,
plant and equipment (307) (955) (5,478) (6,386)
Purchased intangibles - (3,802) (193) (4,749)
Acquisition of
short-term investments (18,882) (35,373) (43,678) (35,373)
Proceeds on disposal of
short-term investments 24,796 - 60,169 42,379
-------------------------------------------------------------------------
5,607 (40,130) 10,820 (4,129)
-------------------------------------------------------------------------
Financing activities
Net proceeds on the
issue of common shares - - - 426
Share repurchase (461) (1,018) (932) (1,401)
-------------------------------------------------------------------------
(461) (1,018) (932) (975)
-------------------------------------------------------------------------
Increase (decrease) in
cash and cash equivalents 7,212 (39,793) 20,610 2,559
Cash and cash equivalents,
beginning of period 37,259 60,692 23,861 18,340
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period 44,471 20,899 44,471 20,899
Short-term investments,
end of period 18,882 35,373 18,882 35,373
-------------------------------------------------------------------------
Cash, cash equivalents and
short-term investments,
end of period $ 63,353 $ 56,272 $ 63,353 $ 56,272
-------------------------------------------------------------------------