Gennum Reports 2008 Fourth Quarter and Year-End Results



    BURLINGTON, ON, Jan. 29 /CNW/ - Gennum Corporation (TSX: GND) today
announced its unaudited financial results for the fourth quarter and fiscal
year ended November 30, 2008.
    For the 2008 fiscal year, consolidated revenue grew by 25% as we
experienced growth in all product groups. Gross margin as a percentage of
revenue remained strong through to the end of the year as productivity
programs and positive revenue mix offset price pressures in the marketplace.
Throughout 2008, we continued to invest aggressively in new product
development. To drive sales growth, Gennum now has six regional offices and
fifteen channel partners, all located close to major customers and fast-growth
markets. Our increased investment in research and development generated twenty
seven new products - five times more than we delivered in 2007.
    The slow-down in the global economy began to impact the Company's revenue
in the fourth quarter. As a result, consolidated revenues showed a sequential
decline of about 9% from the prior quarter but were still up 2% over the same
quarter in 2007. In addition, the global liquidity crisis has impacted
negatively on our investments in Toumaz and Cellpoint Connect. During the
quarter, we took an impairment charge against the value of our Toumaz common
shares and provided fully against our note, loan receivable and the share
repurchase agreement from Cellpoint which, in combination, reduced our
after-tax earnings by $2.4 million in the quarter and the year. The earnings
per share for the quarter before and after these provisions are included in
the table below.

    
    (in millions of U.S. dollars except per share amounts)

                                                    % of                % of
                                         2008    Revenue     2007    Revenue
                                         ----    -------     ----    -------
    Fourth quarter
    Revenue                              30.3                29.9
    Gross margin                         23.1        76%     22.3        75%

    Net earnings from continuing
     operations before provisions on
     loans and investments                5.1        17%      4.9        16%
    Net earnings from continuing
     operations                           2.7         9%      4.4        15%
    Net earnings per share - continuing
     operations before provisions on
     loans and investments               0.14                0.14
    Net earnings per share - continuing
     operations                          0.07                0.12

    Year
    Revenue                             126.9               101.8
    Gross margin                         96.4        76%     77.2        76%

    Net earnings from continuing
     operations before provisions on
     loans and investments               22.0        17%     20.9        20%
    Net earnings from continuing
     operations                          19.6        16%     20.3        20%
    Net earnings per share - continuing
     operations before provisions on
     loans and investments               0.62                0.58
    Net earnings per share - continuing
     operations                          0.55                0.57
    Cash and cash equivalents            48.7                34.1
    (all per share amounts are basic
     and diluted)
    

    Earnings from continuing operations before provisions on loans and
investments for the year was $22.0 million, or $0.62 per share, representing a
5.4% increase over 2007. Earnings from continuing operations before provisions
on loans and investments for the quarter was $5.1 million compared to $4.9
million for the same period last year.
    The cash and cash equivalents balance at November 30, 2008 was $48.7
million, an increase of $14.6 million from the end of the 2007 fiscal year.
This increase was primarily due to strong cash from operations, the sale of
VXP(R) in the first quarter of 2008 and the sale of the Company's corporate
office land and building in the third quarter of 2008.
    "Gennum had an exceptional 2008. I am pleased that our team accomplished
many critical milestones including delivering five times as many new products
versus the prior year, expanding our customer base and delivering solid
financial results," said Dr. Franz Fink, President and CEO of Gennum
Corporation. "As with many of our peers in the semiconductor industry, we are
currently seeing a weakening in customer demand as the global economy
continues to decline. As a result, we have taken proactive measures to reduce
our operating expenses. We are continuing to aggressively fund R&D critical to
our long-term success and to deliver a significant number of new products in
2009. Our solid financial position allows us to be flexible in our investments
to drive future growth. I am confident that we have the resources to continue
to invest in key projects that offer the greatest opportunity to deliver value
to our customers and shareholders."

    New product introductions and business developments

    In the fourth quarter of 2008 and early in 2009, Gennum launched several
new products to further expand its CDR and ActiveConnect(TM) portfolio. Gennum
participated in new technology demonstrations and announced it is partnering
with a leading consumer OEM to integrate ActiveConnect(TM) into
next-generation HDMI cable products.

    
    -  Gennum Partners with Monster Cable to Deliver World's Highest
       Performance Cabling Solutions - Monster is leveraging Gennum's
       ActiveConnect(TM) technology for its new Hyper-Speed product line.
       Monster unveiled six new products that leverage Gennum's
       ActiveConnect(TM) technology all of which will be available in April
       of 2009. Monster will use ActiveConnect(TM) technology in its future
       HDMI cabling and switching solutions in its high performance lines.
       Additionally, Monster and Gennum jointly demonstrated at the Consumer
       Electronics Show, 50 feet of cable that can distribute signals up to
       21 gigabits per second (Gbps). The new cabling technology is capable
       of running twice the rate of today's HDMI 1.3 specification and is the
       highest performance HDMI cabling technology ever publicly
       demonstrated.

    -  Gennum Expands ActiveConnect(TM) Product Portfolio with New
       Connectivity Solution for DisplayPort Cable Products - DisplayPort is
       rapidly emerging in a variety of electronic devices including laptops,
       PCs, media servers, DVRs, home theater displays and commercial signage
       displays. Many of these applications require cables as long as 100
       feet and have therefore been unable to take advantage of the
       multimedia quality that DisplayPort offers. By leveraging
       ActiveConnect(TM) technology, Gennum can extend DisplayPort Cable
       Lengths by up to 15 times.

    -  Gennum Enables High Performance Computing Solution with World's First
       Quad 10 Gbps Clock and Data Recovery (CDR) Product - Gennum announced
       the industry's first quad 10 Gbps CDR solution, designed to restore
       and clean digital signals at extremely high data rates for
       applications such as next-generation high performance computing and
       networking interconnects. The end result is the highest level of
       performance and signal integrity for emerging Inifiniband QDR and 40
       gigabit Ethernet (GbE) and 100 GbE applications.

    -  Gennum and AMCC Announce Interoperability for High-speed, Power-
       Efficient Data Center Connectivity - AMCC and Gennum jointly
       demonstrated interoperability of a new technology which showcases the
       ability for Service Providers to leverage their existing fiber base to
       enable 10 Gbps Ethernet traffic over much farther distances, while
       significantly reducing their hardware investment. Gennum's innovative
       Receive Optical Sub-Assembly (ROSA) solution provides unparalleled
       performance in a low cost, plug-and-play single assembly that is
       enabling 10GbE adoption.
    

    OUTLOOK

    Analysts, such as Gartner Dataquest, Citigroup, and Inside Chips, have
published forecasts that show declines ranging from 16-28% for the
semiconductor industry in 2009. Recent outlooks from several semiconductor
companies are indicating the declines to be more significant in the early part
of 2009.
    Looking ahead, we also anticipate a significantly weaker first quarter
due to lower product demand and the impact of our customers and channel
partners working through excess inventory. However, as we move through 2009,
we expect overall decline in demand for our products to be in line with
general industry conditions.
    We reacted to this market weakness by identifying and implementing
productivity improvements which will enable Gennum to minimize the impact of
lower revenue on our bottom-line results in fiscal 2009. Specifically, we are
exploring strategic alternatives for our BST technology and related assets. We
are further reducing our operating expense by freezing 2009 salary increases,
minimizing capital expenditures and optimizing sales, marketing and
administrative programs and roles not tightly aligned with short and mid-term
customer revenue generation activities or new product development. All of
these actions are intended to preserve our Company's profitability and the
strong foundation that we have built.
    Our solid financial position allows us to be flexible in our investments
to drive future growth. We are confident that we have the resources to
continue to invest in key projects that offer the greatest opportunity to
deliver value to our customers and shareholders. Specifically in 2009, we will
continue to make strategic investments in research and development enabling us
to deliver a significant number of new products, capitalize on new customer
opportunities and grow our leadership in our target markets.
    We are having good initial traction with our expanded product portfolio
in new adjacent markets such as consumer connectivity. Additionally, our
refreshed core portfolio is enabling us to secure new customers in our
traditional broadcast, data communication and IP markets. Related revenue for
new products, however, is expected to start small and gradually grow as we
move into the second half of 2009 and into 2010.
    2008 has been a year in which Gennum delivered strong financial results,
expanded its global presence, introduced a record number of new products and
added to its portfolio of semiconductor IP. We believe our signal integrity
expertise puts us in a unique position to capitalize on critical inflection
points in high-growth markets where there is a growing need to deliver more
bandwidth intensive data at increasing speeds.
    Despite current industry challenges, we believe that Gennum is well
positioned for long-term growth beyond 2009. With our continued product
development plans, we expect to exit 2009 with an even stronger product
portfolio and market position. Combined with the strategic use of our strong
capital position, we believe that Gennum is on the right path to create
shareholder value.

    Dividend

    Gennum's Board of Directors has declared a regular cash dividend of 3.5
cents per share Canadian to be paid on February 25, 2009 to shareholders of
record on February 11, 2009. The dividend is considered an "eligible dividend"
for tax purposes.

    
    -------------------------------------------------------------------------
    Management will hold a conference call to discuss fourth quarter and
    year-end results on Thursday, January 29, 2009 at 5:30 p.m. (ET). To
    access the call, participants should dial 1-800-733-7560. The conference
    call will also be Webcast live at www.gennum.com or
    www.newswire.ca/en/webcast and subsequently archived on the Gennum site.
    A rebroadcast of the call will be available until midnight on February
    28, 2009. To access the rebroadcast, dial 416-640-1917 and enter the
    passcode 21292591 followed by the number sign.
    -------------------------------------------------------------------------

    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, Korea, Germany, United
States, Taiwan, India and the United Kingdom. www.gennum.com

    Caution Regarding Forward-Looking Information

    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; future trends in the semiconductor 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, sales, 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 investment; 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; 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; 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 most
recent annual report and "Risk Factors" in our most recent annual information
form.
    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;
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, 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
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.
    All financial results referenced are unaudited, in United States currency
and, unless otherwise indicated, are determined in accordance with Canadian
Generally Accepted Accounting Principles (GAAP).

    
                             GENNUM CORPORATION

       Unaudited Consolidated Balance Sheets and Statement of Earnings

                    For the Year ended November 30, 2008


                   (Amounts in thousands of U.S. Dollars)



    The attached consolidated financial statements have been prepared by
      management of Gennum Corporation and have not been reviewed by an
                                  auditor.



    Gennum Corporation

    CONSOLIDATED BALANCE SHEETS (unaudited)
    As at November 30 (U.S. dollars, amounts in thousands)

                                                             2008       2007
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash and cash equivalents                              48,748     34,141
    Instruments held for trading                              268      1,000
    Accounts receivable, net                               22,726     20,951
    Inventories                                            14,361     12,131
    Prepaid expenses and other assets                       4,863      4,371
    Promissory notes receivable                               816      1,051
    Income taxes receivable                                   547      3,054
    Future income taxes                                    13,295     19,463
    Assets held for sale                                        -      6,576
    -------------------------------------------------------------------------
    Total current assets                                  105,624    102,738
    -------------------------------------------------------------------------
    Capital assets, net                                    22,195     26,037
    Long-term investments                                   1,300      3,079
    Intangible assets, net                                  8,652      7,467
    Deferred costs                                            403          -
    Loan receivable                                             -        658
    Promissory note receivable                                606      1,749
    Goodwill                                               18,029     19,393
    Future income taxes                                     2,915        893
    Assets held for sale                                        -        922
    -------------------------------------------------------------------------
                                                          159,724    162,936
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities               18,609     16,426
    Deferred revenue                                          308        733
    Current portion of long-term payable                    1,013      1,252
    Income taxes payable                                    1,138        214
    Future income taxes                                     1,515      1,220
    Liabilities related to assets held for sale               240      1,740
    -------------------------------------------------------------------------
    Total current liabilities                              22,823     21,585
    -------------------------------------------------------------------------
    Long-term payable                                       1,013      2,504
    Deferred revenue                                        3,430          -
    Future income taxes                                     2,478      2,491
    -------------------------------------------------------------------------

    Shareholders' equity
    Capital stock                                           8,576      8,680
    Deferred compensation                                  (2,092)    (3,404)
    Retained earnings                                     113,981     93,200
    Contributed surplus                                     2,493      1,078
    Accumulated other comprehensive income                  7,022     36,802
    -------------------------------------------------------------------------
    Total shareholders' equity                            129,980    136,356
    -------------------------------------------------------------------------
                                                          159,724    162,936
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Gennum Corporation

    CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
    Years ended November 30 (U.S. dollars, amounts in thousands except
     per share data)

                                                             2008       2007
    -------------------------------------------------------------------------

    Revenue                                               126,912    101,836
    Cost of goods sold                                     30,467     24,599
    -------------------------------------------------------------------------

    Gross margin                                           96,445     77,237
    -------------------------------------------------------------------------

    Sales, marketing and administration expense            35,777     26,220
    Research and development expense                       36,586     22,725
    Amortization of intangible assets                       1,816        426
      Less government assistance                           (5,921)    (3,711)
    -------------------------------------------------------------------------
                                                           68,258     45,660
    -------------------------------------------------------------------------

    Operating income                                       28,187     31,577
    Investment income                                       1,162      1,595
    Other income (expense)                                  4,701       (611)
    Provisions on loans and investments                    (2,840)      (652)
    -------------------------------------------------------------------------

    Earnings from continuing operations before
     income taxes                                          31,210     31,909
    Provision for income taxes                             11,585     11,581
    -------------------------------------------------------------------------

    Net earnings for the year, from continuing
     operations                                            19,625     20,328
    Net earnings (loss) on discontinued operations,
     net of tax                                             7,370    (24,699)
    -------------------------------------------------------------------------

    Net earnings (loss) for the year                       26,995     (4,371)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings (loss) per share
    Continuing operations - basic and diluted                0.55       0.57
    Discontinued operations - basic and diluted              0.21      (0.69)
    -------------------------------------------------------------------------
    Net earnings (loss) - basic and diluted                  0.76      (0.12)
    -------------------------------------------------------------------------
    




For further information:

For further information: Gennum Media Contact, Robin Vaitonis, Director
of Corporate Communications, Gennum Corporation, Tel: (905) 632-2999 ext.
2110, E-mail: Robin.Vaitonis@gennum.com; Gennum Investor Relations Contact,
Gordon Currie, Senior Vice-President, Finance & Administration and Chief
Financial Officer, Gennum Corporation, Tel: (905) 632-2999 ext. 3060, E-mail:
Gord.Currie@gennum.com

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