Gennum Reports Fourth Quarter and 2010 Year End Results

Achieves 51% Revenue Growth and Earnings Per Share of $0.54

BURLINGTON, ON, Feb. 8 /CNW/ - Gennum Corporation (TSX: GND) today reported unaudited financial results for the fourth quarter of fiscal 2010 and the audited financial results for the year ended November 30, 2010.

(in millions of U.S. dollars except per share amounts)
  2010 2009
Fourth quarter    
Revenue 33.3 25.1
Gross margin 25.0 18.3
     
Operating income 7.8 3.0
Adjusted EBITDA1 11.0 6.0
Net earnings 5.2 3.6
Net earnings per share 0.15 0.10
     
Fiscal Year    
Revenue 128.9 85.2
Gross margin 94.2 60.9
     
Restructuring charge --- 5.9
Operating income (loss) 27.4 (3.5)
Adjusted EBITDA1 39.7 12.3
Net earnings (loss) 18.6 (2.6)
Net earnings (loss) per share 0.54 (0.07)
     
Cash and cash equivalents 52.7 37.0

(all per share amounts are basic and diluted)

--------------------------------

1 "Adjusted EBITDA" is a non-GAAP financial measure that does not have any standardized meaning under GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers. A definition of this term, a description of why we believe it is a useful measure, and a quantitative reconciliation to the most directly comparable measure calculated in accordance with GAAP is set forth under the heading "Non-GAAP Reporting - EBITDA" in our management's discussion and analysis as filed on SEDAR at www.sedar.com.


"2010 was a strong year for Gennum. We grew revenues 51%, adjusted EBITDA increased to $40 million from $12 million in 2009 and our 21% operating income exceeded our business model.  We introduced a significant number of industry leading products and saw strong revenue growth around the world," said Dr. Franz Fink, President and Chief Executive Officer of Gennum. "We are entering 2011 with one of the strongest product portfolios in the company's history and I am confident in the future of Gennum." 

Fourth quarter revenue in 2010 was 33% higher than the same quarter in 2009 due to the economic recovery and growth from new products.  Gross margin percentage increased by two percentage points to 75% in the fourth quarter of 2010 from 73% in the fourth quarter of 2009.  The increase in revenue and strong gross margins resulted in net earnings of $5.2 million in the fourth quarter of 2010 or diluted earnings per share of $0.15, versus $3.6 million or $0.10 per share in the fourth quarter of 2009 which was favourably impacted by a tax refund in the quarter. 

The Company achieved its fifth consecutive quarter of growth in cash and cash equivalents. Cash and cash equivalents were $52.7 million, a 43% increase over fiscal 2009.

Outlook

Gennum achieved 51% growth compared to 2009 and 33% growth compared to the fourth quarter of last year. Sales of new products remain strong and now account for 36% of total product sales.

We are encouraged by continued market demand across all of our product segments as both design wins and open opportunities continued to grow. Existing and new customers around the world continue to contribute to the momentum in our business.

Looking ahead, our current order book for the first quarter is solid and is similar to the order book at the same time in the fourth quarter of 2010. New products ramping into significant volumes have led to some capacity issues in our supply chain, which we are quickly addressing. As our new products continue to ramp, we expect to deliver another quarter of solid business performance. For the full year, we continue to believe we will achieve better than industry revenue growth, deliver operating results that are in line with our business model and achieve another year of strong cash flow generation.

We remain confident in our strategy.  Our commitment to introducing innovative new products continues to be validated with the increasing design wins for these new products, expanding customer engagements and increasing penetration into our global markets. 

New Product Introductions

  • Gennum introduced the industry's fastest 2x2 crosspoint switch capable of supporting data rates in excess of 14 gigabits per second (Gbps) per port. The new GX4002 crosspoint is the first to integrate a CDR (clock and data recovery), providing a single-chip solution used in data center, enterprise and telecommunications networks.
  • Gennum extended its portfolio of 10G EPON (Ethernet Passive Optical Network) offerings aimed at equipment serving FTTx installations. Gennum's 10G EPON chipset provides optical network unit/optical network terminal (ONU/ONT) equipment manufacturers the first highly integrated and cost-efficient solution to ensure optimal 10 Gbps performance.
  • Gennum's Snowbush IP group is the first to support its high-speed PHY IP with simulation models based on the industry-standard IBIS-AMI (I/O Buffer Information Specification-Algorithmic Modeling Interface) specification.

The Company will be demonstrating its next generation products at the Optical Fiber Communications (OFC) conference in Los Angeles, March 8-10, 2011 and at the National Association of Broadcasters (NAB) show in Las Vegas April 11-14, 2011.

Dividend

Gennum's Board of Directors has declared a regular cash dividend of 3.5 cents per share Canadian to be paid on March 8, 2011 to shareholders of record on February 22, 2011. 

Our interim financial statements for the fourth quarter of 2010, and our audited consolidated financial statements for our year ended November 30, 2010 and the related management discussion and analysis have been filed and may be viewed on our website (www.gennum.com) and on SEDAR (www.sedar.com).

Download the complete financial results (PDF)
http://www.gennum.com/extranet/file/q4fy10-financials.pdf

Gennum will hold a conference call to discuss 2010 fourth quarter and year-end results on Tuesday, February 8, 2011 at 5:30 pm (ET). To access the call, participants should dial 1-877-974-0445. The conference call will also be webcast live at www.gennum.com or www.newswire.ca and subsequently archived on the Gennum site. A rebroadcast of the call will be available until March 8, 2011. To access the rebroadcast, dial 1-877-289-8525 and enter the passcode 4399529#. Download a slide presentation to accompany the discussion http://www.gennum.com/q4fy10-downloads.

About Gennum Corporation
Gennum Corporation (TSX: GND) designs innovative semiconductor solutions and intellectual property (IP) cores for the world's most advanced consumer connectivity, enterprise, video broadcast and data communications products. Leveraging the company's proven optical, analog and mixed-signal products and IP, Gennum enables multimedia and data communications products to send and receive information without compromising the signal integrity. Recognized as an award winner for advances in high definition (HD) broadcasting, Gennum is headquartered in Burlington, Canada, and has global design, research and development and sales offices in Canada, Mexico, Japan, Germany, United States, Taiwan, India and the United Kingdom. www.gennum.com

Caution Regarding Forward-Looking statements
This document contains statements which constitute forward-looking statements. These forward-looking statements are not descriptive of historical matters and may refer to management's expectations or plans. These statements include but are not limited to statements concerning: Gennum's business objectives and plans including Gennum's corporate strategy and strategic priorities; Gennum's future financial performance and prospects including revenues, gross margins and earnings, and ability to achieve operating earnings, cash flow and other business model targets; future trends in the semiconductor products and intellectual property licensing industries and, in particular, market trends for analog and mixed-signal products, optical products and intellectual property products and licensing; Gennum's expectations for sales and licensing of its products in these markets including anticipated costs and fees, sales, product prices, size, duration, growth or decline of market opportunities and competitive and pricing pressures in these markets; Gennum's product roadmap and the speed at which Gennum is able to introduce new products; the adoption of new standards in the markets in which Gennum competes and the ability of Gennum to anticipate these changes and successfully address new opportunities; sales and capital spending plans and estimates, shipment levels and operating expenses; exchange rate fluctuations in, and the relative values of, the Canadian dollar, the U.S. dollar and the Japanese yen; Gennum's ability to finance its growth plans and make necessary investments; and litigation in which Gennum is involved.

Inherent in forward-looking statements are risks and uncertainties beyond Gennum's ability to predict or control including, but not limited to, risks associated with: competitive and pricing pressures in the increasingly competitive environment in which Gennum operates; changes in the mix of products sold which, due to associated margins, can impact Gennum's financial results; economic cycles in the semiconductor industry including downturns which can result from adverse general economic conditions; our ability to anticipate needs for future products and successfully execute our product roadmap, including the possibility of the emergence of disruptive technologies which negatively impact our positioning in the marketplace; the risk that unforeseen factors may arise that result in us not being able to achieve our operating income, cash flow and other business model targets; possible impairments of assets which could be required in the future; fluctuations in foreign exchange rates and their potential adverse impact upon our financial results; our reliance on external foundries and suppliers and the potential adverse effects of disruptions in any of these arrangements; the successful integration of acquisitions; our ability to attract and retain key personnel necessary for our business; our ability to successfully protect our intellectual property rights; and the initiation and outcome of legal proceedings.  Readers should also refer to the sections entitled "Risks and Uncertainties" in our 2010 management's discussion and analysis and "Risk Factors" in our most recent annual information form, each as filed on SEDAR at www.sedar.com.

Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this document.  Such statements are based on a number of assumptions which may prove to be incorrect including, but not limited to, the following assumptions: there is no material deterioration in the business and economic conditions in the marketplace for Gennum's products; Gennum's expectations regarding market trends for analog and mixed-signal products, optical products and intellectual property products and licensing are not materially incorrect; Gennum is able to execute its product roadmap without delays or disruptions having a material impact on Gennum; Gennum's expectations relating to the needs and direction of the marketplace for its products are within reasonable bounds of accuracy and Gennum is able to introduce products and capitalize on new opportunities generally as expected; Gennum's expectations relating to its future operating expenses, as well as the capital required to conduct its business in the future, are not materially incorrect; significant impairments of assets will not arise; material disruptions in the manufacture and supply of products and services to Gennum by foundries and suppliers will not materialize; Gennum's expectations relating to competitive pressures, including pricing pressures, as well as Gennum's expectations relating to the mix of products to be sold by it, are not materially incorrect; significant fluctuations in foreign exchange rates which materially adversely affect Gennum's financial results do not arise; customer demand for Gennum's products remains generally as anticipated; Gennum is able to successfully integrate acquisitions; and Gennum is able to continue to retain and attract technical and other key employees.

Readers are cautioned that the foregoing list of important factors and assumptions is not exhaustive. Forward-looking statements are not guarantees of future performance. Events or circumstances could cause Gennum's actual results to differ materially from those estimated or projected and expressed in, or implied by, these forward-looking statements. Consequently, readers should not place any undue reliance on these forward-looking statements. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. In addition, these forward-looking statements relate to the date on which they are made. We disclaim any intention or obligation to update or revise any forward-looking statements or the foregoing list of factors, whether as a result of new information, future events or otherwise, except to the extent required by law.

SOURCE Gennum Corporation

For further information:

Gennum Media Contact    Gennum Investor Relations Contact 
Robin Vaitonis      Gregory Miller
Tel: 480-381-6302     Senior Vice-President, Finance & Administration and
E-mail: robin.vaitonis@gennum.com   Chief Financial Officer
  Gennum Corporation
  Tel:  905-632-2999 ext. 3060
  E-mail: greg.miller@gennum.com

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