Tundra Semiconductor Releases Q3-Fiscal 2008 Financial Results



    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#. The replay will be available
through March 6, 2008.
    Web Cast: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=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
    -------------------------------------------------------------------------
    




For further information:

For further information: David Long, Chief Financial Officer, Tundra
Semiconductor Corporation, (613) 592-0859 x1704, david.long@tundra.com; Keri
Zeran, Director Marketing Communications, Tundra Semiconductor Corporation,
(613) 697-6788, keri.zeran@tundra.com

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