Tundra Semiconductor Reports Fourth Quarter Fiscal Year 2007 Financial Results



    Revenue Increases 17% in Fourth Quarter, Year-Over-Year

    OTTAWA, June 7 /CNW Telbec/ - Tundra Semiconductor Corporation (TSX:TUN),
the leader in System Interconnect, today reported financial results for the
final quarter of fiscal 2007, which ended April 30, 2007.

    Q4-2007 RESULTS:

    - Q4 Revenue: $22.2 million
    - Q4 Pro forma earnings: $3.4 million
    - Q4 Pro forma diluted earnings per share: $0.17
    - Q4 GAAP Results: earnings of $1.7 million or $0.08 per diluted share

    Revenue for the fourth quarter of fiscal year 2007 was $22.2 million, a
17% increase over the fourth quarter in fiscal year 2006, and a 2% increase
from the third quarter of fiscal year 2007. Pro forma earnings of $3.4 million
represent a 30% increase compared to the fourth quarter of fiscal year 2006,
and an 11% increase over the third quarter of fiscal year 2007. GAAP earnings
for the quarter were $1.7 million or $0.08 per diluted share, down from
earnings of $6.8 million or $0.35 in the fourth quarter fiscal year 2006, up
from $1.3 million or $0.06 per diluted share in the third quarter in fiscal
year 2007.

    
    Fiscal Year 2007 RESULTS:

    - FY2007 Revenue: $85.3 million
    - FY2007 Pro forma earnings: $10.8 million
    - FY2007 Pro forma diluted earnings per share: $0.54
    - FY2007 GAAP Results: earnings of $2.0 million or $0.10 per diluted
      share

    Revenue for fiscal year 2007 was $85.3 million, a 14% increase over fiscal
year 2006. Pro forma earnings of $10.8 million represent a 21% increase
compared to $8.9 million in fiscal year 2006. Pro forma diluted earnings per
share of $0.54 represent a 20% increase compared to $0.45 in fiscal year 2006.
GAAP earnings for the fiscal year were $2.0 million or $0.10 per diluted
share, down from earnings of $10.8 million or $0.55 in fiscal year 2006.
    "Tundra delivered solid performance in the fourth quarter and throughout
fiscal year 2007," said Daniel Hoste, President and Chief Executive Officer,
Tundra Semiconductor. "Compared to fiscal year 2006, revenues in fiscal year
2007 increased by 14% accompanied by strong profitability and good cash
generation. We will continue to build on our solid financial position and
diversified portfolio of products and services while pursuing a renewed
business strategy targeted to generate sustainable growth."
    Management offers the following outlook for the first quarter of fiscal
year 2008:

    - Q1 Revenue is expected to be in the range of $19.5 million to
      $22.5 million
    - Q1 Pro forma diluted earnings per share is expected to be in the range
      of $0.09 to $0.13

    "Guidance for the first quarter of fiscal 2008 reflects a continued lack
of visibility in some end-markets, coupled with rapid appreciation of the
Canadian dollar," said David Long, Chief Financial Officer, Tundra
Semiconductor.

    Q4-2007 Highlights

    Product Announcements:

    - Tundra recently announced through a partnership with their long time
      customer, Ericsson, that they will license Ericsson's Switching Module
      of a MicroTCA(TM) Carrier Hub (MCH) card, designed with Tundra's
      Tsi578(TM) Serial RapidIO(R) Switch. Tundra will sub-license the
      Tsi578 MicroTCA Switching Module (MSM). In addition to being a
      preferred supplier, Ericsson selected Tundra as the sub-licenser due to
      the original selection of the Tsi578 for the MCH card design, and
      because Tundra is recognized as a key ecosystem enabler for RapidIO
      technology. RapidIO is a critical element in ATCA(R) and MicroTCA
      systems. With Tundra's market presence, both Ericsson and Tundra
      anticipate the MSM offering, a ready-made MicroTCA option for
      networking OEM customers, to broaden the availability of Serial
      RapidIO-based MicroTCA Systems.

    - Tundra also recently launched the Tundra Tsi384(TM) four-lane PCI
      Express(R) (PCIe) to PCI-X Bridge. Pin compatible with a competing PCIe
      bridge product, this Bridge offers superior performance, lower latency,
      better throughput and lower power consumption than the competitive
      offering. Customers already sampling Tundra's PCIe Bridge confirm that
      the product delivers outstanding performance. Customer response to the
      addition of PCIe interconnect to Tundra's already broad PCI offering
      has been positive and Tundra anticipates good traction in new and
      existing designs against the competition.

    - In addition to a strong portfolio of industry-leading switches and
      first-to-market development platforms, Tundra has expanded its RapidIO
      offering to include Endpoint Intellectual Property (IP) for license.
      Currently in development, the Tundra Endpoint IP will be made
      commercially available through Silicon Logic Engineering (SLE),
      Tundra's design services division, to system developers, semiconductor
      manufacturers, FPGA and ASIC vendors and their customers. The Endpoint
      IP is proven to interoperate with multiple vendor DSPs, FPGAs, and
      ASICs and will be used to create custom and standard product functions
      that will further enlarge the RapidIO product ecosystem.

    - Tundra announced the interoperability of its Tsi578 Serial RapidIO
      Switch with Texas Instruments TMS320TCI6487 and TMS320TCI6488 wireless
      infrastructure optimized DSPs. Using the Tundra Tsi578 Serial RapidIO
      development platform, Tundra and Texas Instruments completed
      interoperability testing. Successful tests prove that Tundra's third
      generation switch, with multi-cast capability, and Texas Instrument's
      3-core, 3GHz DSPs can be deployed to develop DSP clusters, aggregated
      with Serial RapidIO switching. This industry-leading switch-DSP
      combination is ideal for high data intensive applications such as
      WiMAX, 3G, LTE, TD-SCDMA and WiBRO.

    - Tundra announced that its low power, asynchronous PCI-to-PCI Bridge,
      the Tundra Tsi350(TM) is in production. Communications and network
      equipment customers gain a competitive advantage with this high quality
      bridge solution with low power consumption. The Tsi350 targets both new
      and existing designs requiring 32-bit PCI-to-PCI bridges.

    - Jointly with RIOLAB(TM), now a division of Fabric Embedded Tools
      Corporation and the world's only independent RapidIO interoperability
      testing facility, Tundra announced that its Tsi578 Serial RapidIO
      Switch has now been qualified as Device Interoperability Level 3
      (DIL-3) having successfully passed DIL-1, DIL-2 and DIL-3 testing
      against all other vendor devices in the RIOLAB hardware library.

    Corporate Announcements:

    - On May 30 the Company announced a restructuring to align the
      organization more closely with the new long-term growth strategy.
      Rebalancing the Company's resources and expenses was required in order
      to ensure Tundra's operational efficiency, both in the short and long
      term. 20 positions were eliminated in the workforce reduction
      accompanied by a $1.6 million restructuring charge impacting the first
      quarter of fiscal 2008. Cost savings expected in fiscal 2008 as a
      result of this initiative are expected to be approximately $2 million.

    - On March 27, 2007 Tundra announced that the Toronto Stock Exchange
      (TSX) had accepted the Company's notice of intention to make a normal
      course issuer bid. The Tundra Board of Directors approved a purchase of
      up to 1,722,000 common shares (representing approximately 10% of
      Tundra's public float). The normal course issuer bid commenced on
      March 29, 2007 and will terminate on March 28, 2008. During the brief
      trading window prior to the Company's Q4 black-out period,
      Tundra repurchased a total of 106,000 shares for cancellation under
      the bid.

    - Also in the quarter, Tundra appointed Dr. Benny Chang to the position
      of Chief Technology Officer (CTO), and promoted Mr. Ed Vopni to Vice
      President of Operations. Dr. Chang and Mr. Vopni bring technology
      innovation, market-driven focus, and momentum to Tundra's smart
      interconnect solutions strategy.

    Conference Call and Webcast

    Tundra management will hold a conference call today June 7, 2007 at 5:00pm
EST to discuss additional details regarding this earnings update. You can
access the conference call via any of the following:

    Teleconference: 1.416-644-3416
    Replay: 1.416-640-1917, Passcode: 21233404#.
    (Available until June 14, 2007)
    Web Cast:
    http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1882320 or
www.tundra.com

    About Tundra

    Tundra Semiconductor Corporation (TSX:TUN) supplies the world's leading
communications, computing and storage companies with smart 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), PowerPC(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 smart 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, goodwill impairment charges and amortization of
intangibles and other assets associated with Tundra's acquisitions. 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.


    TUNDRA SEMICONDUCTOR CORPORATION
    CONSOLIDATED STATEMENTS OF PRO FORMA EARNINGS
    (Canadian dollars, amounts in thousands, except per share data)

                                             For the                 For the
                                       quarter ended              year ended
                              ----------------------- -----------------------
                                April 30    April 30    April 30    April 30
                                    2007        2006        2007        2006
                              (Unaudited) (Unaudited) (Unaudited) (Unaudited)

    Revenue
      Product                  $  19,144   $  18,975   $  75,208   $  74,523
      Service                      3,016           -      10,052           -
    -------------------------------------------------------------------------

                                  22,160      18,975      85,260      74,523

    Cost of revenue
      Product                      5,192       5,524      22,258      23,965
      Service                      1,583           -       5,495           -
    -------------------------------------------------------------------------

                                   6,775       5,524      27,753      23,965
    -------------------------------------------------------------------------

    Gross margin                  15,385      13,451      57,507      50,558

    Expenses
      Sales and marketing          3,869       3,227      14,220      11,590
      General and
       administration              2,457       1,542       9,810       5,666
      Research and
       development                 6,608       5,212      25,742      21,090
    -------------------------------------------------------------------------

                                  12,934       9,981      49,772      38,346

    Pro forma earnings
     from operations               2,451       3,470       7,735      12,212

    Interest and other income         39         416       2,256       1,356

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

    Pro forma earnings
     before income taxes           2,490       3,886       9,991      13,568

    Income tax provision
     (recovery)                     (878)      1,292        (776)      4,667

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

    PRO FORMA EARNINGS         $   3,368   $   2,594   $  10,767   $   8,901

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

    Pro forma earnings
     per share
      Basic                    $    0.17   $    0.13   $    0.54   $    0.46
      Diluted                  $    0.17   $    0.13   $    0.54   $    0.45

    Weighted average number
     of common shares
     outstanding
      Basic                       19,955      19,533      19,926      19,515
      Diluted                     19,995      19,805      20,041      19,726

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


    TUNDRA SEMICONDUCTOR CORPORATION
    CONSOLIDATED STATEMENTS OF EARNINGS AND DEFICIT
    (Canadian dollars, amounts in thousands, except per share data)

                                             For the                 For the
                                       quarter ended              year ended
                              ----------------------- -----------------------
                                April 30    April 30    April 30    April 30
                                    2007        2006        2007        2006
                              (Unaudited) (Unaudited)   (Audited)   (Audited)
    Revenue
      Product                  $  19,144   $  18,975   $  75,208   $  74,523
      Service                      3,016           -      10,052           -
    -------------------------------------------------------------------------

                                  22,160      18,975      85,260      74,523

    Cost of revenue
      Product                      5,192       5,524      22,258      23,965
      Service                      1,583           -       5,495           -
    -------------------------------------------------------------------------

                                   6,775       5,524      27,753      23,965
    -------------------------------------------------------------------------

    Gross margin                  15,385      13,451      57,507      50,558

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

    Expenses
      Sales and marketing          3,869       3,227      14,220      11,590
      General and
       administration              2,457       1,542       9,810       5,666
      Research and
       development                 6,608       5,212      25,742      21,090
      Stock based
       compensation expense          549         509       3,105       1,982
      Amortization of
       purchased intangibles       1,166         311       4,982       1,726
    -------------------------------------------------------------------------

                                  14,649      10,801      57,859      42,054

    Earnings (loss) from
     operations                      736       2,650        (352)      8,504

    Interest and other
     income                           39         416       2,256       1,356

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

    Earnings before income
     taxes and extraordinary
     item                            775       3,066       1,904       9,860

    Income tax provision
     (recovery)                     (878)      1,180        (141)      4,046

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

    Earnings before
     extraordinary item            1,653       1,886       2,045       5,814

    Extraordinary gain                 -       4,948           -       4,948

    -------------------------------------------------------------------------
    NET EARNINGS                   1,653       6,834       2,045      10,762

    Deficit, beginning
     of period                   (26,454)    (33,680)    (26,846)    (37,608)
    -------------------------------------------------------------------------

    DEFICIT, END OF PERIOD     $ (24,801)  $ (26,846)  $ (24,801)  $ (26,846)

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

    Earnings per share before
     extraordinary item
      Basic                    $    0.08   $    0.10   $    0.10   $    0.30
      Diluted                  $    0.08   $    0.10   $    0.10   $    0.29
    Earnings per share
      Basic                    $    0.08   $    0.35   $    0.10   $    0.55
      Diluted                  $    0.08   $    0.35   $    0.10   $    0.55
    Weighted average number
     of common shares
     outstanding
      Basic                       19,955      19,533      19,926      19,515
      Diluted                     19,995      19,805      20,041      19,726


    TUNDRA SEMICONDUCTOR CORPORATION
    CONSOLIDATED BALANCE SHEETS
    (Canadian dollars, amounts in thousands)

                                                        April 30    April 30
                                                            2007        2006
                                                        (Audited)   (Audited)
    ASSETS
    Current assets
      Cash and cash equivalents                        $  18,340   $  64,914
      Short term investments                              42,379      11,393
      Accounts receivable                                  7,745       7,759
      Inventories                                          9,282       5,502
      Prepaid expenses and other current assets            4,497       3,445
      Future income tax asset                              2,997       1,433
    -------------------------------------------------------------------------
                                                          85,240      94,446

    Long term prepaids                                     1,895       2,155
    Capital assets                                        22,343      20,541
    Purchased intangibles                                  5,174       1,534
    Goodwill                                              50,571      37,325
    Future income tax asset                               11,407      10,038
    -------------------------------------------------------------------------
                                                       $ 176,630   $ 166,039
    -------------------------------------------------------------------------

    CURRENT LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
      Accounts payable and accrued liabilities         $  11,125   $  10,140
      Income tax payable                                     105         927
    -------------------------------------------------------------------------
                                                          11,230      11,067
    Shareholders' equity
      Share capital                                      183,204     177,882
      Contributed surplus                                  6,997       3,936
      Deficit                                            (24,801)    (26,846)
    -------------------------------------------------------------------------
                                                         165,400     154,972
    -------------------------------------------------------------------------
                                                       $ 176,630   $ 166,039
    -------------------------------------------------------------------------


    TUNDRA SEMICONDUCTOR CORPORATION
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Canadian dollars, amounts in thousands)

                                             For the                 For the
                                       quarter ended              year ended
                              ----------------------- -----------------------
                                April 30    April 30    April 30    April 30
                                    2007        2006        2007        2006
                              (Unaudited) (Unaudited)   (Audited)   (Audited)

    Operating activities
      Net earnings             $   1,653   $   6,834   $   2,045   $  10,762

      Items not affecting
       cash:
        Extraordinary gain             -      (4,948)          -      (4,948)
        Amortization of
         capital assets and
         asset impairments         2,187       1,942       9,786       6,640
        Amortization of
         purchased
         intangibles               1,166         311       4,982       1,726
        Stock based
         compensation
         expense                     549         509       3,105       1,982
        Future income taxes         (128)        (54)     (3,148)       (809)

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

                                   5,427       4,594      16,770      15,353

      Cash effect of
       changes in:
        Accounts receivable        1,227         (29)      1,761      (1,683)
        Inventories                1,411        (970)     (3,127)       (858)
        Prepaid expenses and
         other current assets     (1,038)     (2,158)       (530)       (826)
        Accounts payable and
         accrued liabilities      (3,999)      2,134        (627)     (1,256)
        Income taxes payable      (1,104)        103        (822)       (525)
    -------------------------------------------------------------------------

                                   1,924       3,674      13,425      10,205

      Investing activities
        Acquisition of
         capital assets           (1,678)     (1,625)    (10,441)     (6,935)
        Acquisition of short
         term investments              -           -     (42,379)    (59,638)
        Proceeds on disposal
         of short term
         investments                   -      15,086      11,393      55,412
        Acquisition of
         business                   (216)     (1,420)    (18,744)     (2,790)

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

                                  (1,894)     12,041     (60,171)    (13,951)

      Financing activities
        Net proceeds on the
         issue of common shares      166         289       1,842         470
        Repurchase of
         common shares            (1,020)          -      (1,020)          -
        Repayment of note
         payable                       -           -        (650)          -

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

                                    (854)        289         172         470

      Increase (decrease) in
       cash and cash
       equivalents                  (824)     16,004     (46,574)     (3,276)

      Cash and cash
       equivalents, beginning
       of period                  19,164      48,910      64,914      68,190

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

      Cash and cash
       equivalents, end of
       period                  $  18,340   $  64,914   $  18,340   $  64,914

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

    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 customer demand for the Company's
products and services, the Company's ability to maintain and enhance existing
customer relationships, 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 expectations that are subject to risks and
uncertainties. Actual results may differ due to factors such as customer
demand, customer relationships, new product development, new services
offerings, product shipping schedules, product mix, competitive products and
services, pricing pressure, and changes in the embedded systems market
specifically. The Company assumes no obligation to update or revise any
forward-looking statements. 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 European Union and the People's Republic of China
(registration is pending in the United States). Design.Connect.Go., Tsi350,
Tsi384, Tsi578, and Tsi578 MSM, 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(TM) was made possible in part with the
assistance of the Technology Partnerships Canada Program.

    (C) Copyright 2007 Tundra Semiconductor Corporation. All rights reserved.
    Information subject to change without notice.




For further information:

For further information: David Long, Chief Financial Officer, Tundra
Semiconductor, (613) 592-0714, david.long@tundra.com

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TUNDRA SEMICONDUCTOR CORPORATION

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