Tundra Semiconductor Reports Fourth Quarter Fiscal Year 2008 Financial Results



    Revenue Increases 22% over Third Quarter

    OTTAWA, June 5 /CNW Telbec/ - Tundra Semiconductor Corporation (Tundra,
or "the Company") (TSX:TUN), a leader in System Interconnect, today reported
financial results for the fourth quarter of fiscal 2008, which ended April 30,
2008.

    Q4-2008 RESULTS:

    - Q4 Revenue: $17.9 million
    - Q4 Pro forma earnings: $1.5 million
    - Q4 Pro forma diluted earnings per share: $0.07
    - Q4 GAAP Results: loss of $3.9 million or $0.20 per diluted share

    Revenue for the fourth quarter of fiscal year 2008 was $17.9 million,
comprised of $8.6 million in the Communications market segment, $6.4 million
in the Computing/Storage market segment, and $2.9 million in Design Services.
Quarterly revenue represents a 22% increase from the third quarter of fiscal
year 2008 and a 19% decrease over the fourth quarter in fiscal year 2007. Pro
forma earnings for the quarter were $1.5 million, compared to earnings of
$0.3 million in the third quarter of fiscal year 2008 and compared to
$3.4 million in the fourth quarter of fiscal year 2007. GAAP loss for the
quarter was $3.9 million or $0.20 per diluted share, compared to a loss of
$54.0 million or $2.73 loss per diluted share in the third quarter in fiscal
year 2008, and earnings of $1.7 million or $0.08 per diluted share in the
fourth quarter fiscal year 2007. The GAAP loss in the fourth quarter of fiscal
2008 was driven by a $4.7 million write down of an intangible asset and the
GAAP loss in the third quarter of fiscal 2008 was driven largely by a goodwill
impairment charge of $50.6 million.

    Fiscal Year 2008 RESULTS:

    - FY2008 Revenue: $70.6 million
    - FY2008 Pro forma earnings: $4.6 million
    - FY2008 Pro forma diluted earnings per share: $0.23
    - FY2008 GAAP Results: loss of $59.6 million or $3.00 per diluted share

    Revenue for fiscal year 2008 was $70.6 million, a 17% decrease over
fiscal year 2007. Pro forma earnings of $4.6 million represent a 57% decrease
compared to $10.8 million in fiscal year 2007. Pro forma diluted earnings per
share of $0.23 represent a 57% decrease compared to $0.54 in fiscal year 2007.
For the fiscal year, GAAP losses were $59.6 million or $3.00 per diluted
share, down from earnings of $2.0 million or $0.10 per diluted share in fiscal
year 2007.
    "We are pleased with the operational financial results in the fourth
quarter which were at the high end of the guidance we provided in March. We
see several indicators showing that the previously soft telecommunications
market is stabilizing and that the inventory correction at some of our key
accounts is now behind us and this is having a positive impact on our
revenues. Furthermore, our Design Services team, SLE, had a very strong
quarter with revenue exceeding our expectations," said Daniel Hoste, President
and Chief Executive Officer, Tundra.
    "Looking forward to fiscal year 2009, we are expecting much more
stability in the telecommunications market and in the currency. We expect that
our design wins and leadership products in RapidIO, PCI Express and VME will
drive future growth," continued Hoste.
    Management offers the following outlook for the first quarter of fiscal
year 2009:

    
    - Q1 Revenue is expected to be in the range of $16.5 million to
      $18.5 million
    - Q1 Pro forma diluted earnings per share is expected to be in the range
      of $0.02 to $0.06

    "Revenue for the first quarter of fiscal 2009 is expected to be relatively
flat, however our products business is expected to continue its growth trend
at a rate of 2% to 4% in the quarter," said David Long, Chief Financial
Officer, Tundra. "We expect our core products business to increase in revenue
while we expect design services revenue to return to a regular run rate."

    Q4-2008 Highlights

    Corporate Highlights:

    - On June 3, Tundra announced that it had terminated a product
      acquisition agreement and a license agreement with IBM. The acquired
      product was to be based on an IBM Power Architecture(TM) 90 nm
      processor core. IBM recently notified Tundra that the performance of
      the core is lower than previously stated. As a result of the decision
      to terminate the product acquisition agreement, and based on Tundra's
      review of the current IBM performance data for the 65nm core, Tundra
      has also made the decision to terminate the license agreement signed in
      November 2007. Tundra intends to actively pursue alternative means of
      executing against its smart System Interconnect (sSI) strategy to bring
      intelligent System Interconnect solutions to broader global markets.

    - On April 7, the Toronto Stock Exchange (TSX) accepted the Company's
      notice of intention to make a normal course issuer bid. The Tundra
      Board of Directors approved Tundra's purchase of up to 983,530 common
      shares (representing approximately 5% of the 19,670,613 outstanding
      Tundra common shares as of March 31, 2008). The normal course issuer
      bid commenced on April 9, 2008 and will terminate on April 8, 2009 or
      at such time as Tundra has purchased the maximum number of shares
      permitted under the bid. Management and the Board of Directors of
      Tundra believe that the market price of Tundra's common shares, from
      time to time, may not reflect the inherent value of the Corporation.

    - Tundra recently launched a new website, and "MyTundra" customer portal.
      The enhanced features and functionality of this new online site and
      portal further expand Tundra's world-class customer support offering to
      its global customer base. The site enhancements were created with
      Tundra's customers in mind, making more options available than ever
      before to assist communications and computing/storage customers with
      their market-leading designs. New features include a MyTundra portal -
      a unique service environment that provides visibility and secure access
      to Tundra's comprehensive portfolio of product documentation and
      support tools and resources; enhanced search capabilities to obtain
      information and obtain technical support quickly; and improved
      navigation throughout the website enabling easy access to all areas of
      the site.

    - Also in the quarter, Tundra appointed Mr. Bob Solberg to the position
      of Vice President of Design Services. Mr. Solberg is a co-founder of
      Silicon Logic Engineering and has more than 25 years of experience in
      leading design services teams and will be a significant asset to the
      Tundra Leadership Team. Prior to co-founding SLE, Mr. Solberg worked at
      Cray Research where he held multiple engineering management positions,
      including management roles for several of Cray's J90 series and T3E
      supercomputer projects.

    Product Highlights:

    - Tundra's Tsi381(TM) PCI Express(R) Bridge was selected by I-View
      Communication for its high performance PCI Express DVR video capture
      cards for next generation surveillance systems. The I-View PCIe video
      capture card combines the high performance ACP-915 PCI One Chip Decoder
      from Alogics, and the reliable x1 PCIe bridging capability of Tundra's
      Tsi381 PCIe Bridge. I-View evaluated a number of PCIe to PCI bridges
      for their design and selected the Tundra Tsi381 for its superior
      performance, quality and reliability. I-View was able to easily
      integrate the Tsi381 with Alogics ACP-915, enabling it to achieve
      significantly better performance than any other solution. This
      performance advantage allowed I-View to quickly bring to market a
      product that provides its customers the best video quality and frame
      rate. The combined ACP-915/Tsi381 solution offered I-View maximum video
      throughput performance over the PCIe interface, enabling I-View's video
      capture card to produce the highest video quality for its customers.

    - Texas Instruments has selected the Tsi574(TM) RapidIO(R) Switch to
      cluster its wireless infrastructure optimized DSPs on its new 6484 AMC
      evaluation platform. The 1 GHz single core DSP and evaluation module
      targets Beyond3G applications including HSPA/HSPA+, LTE and WiMAX
      Wave 2. The evaluation module includes the Tsi574 RapidIO Switch to
      interconnect TI's processors on the board, leveraging Tundra's high
      performance interconnect capability and Tundra's interoperability track
      record with TI's suite of wireless DSPs. High bandwidth applications,
      such as wireless infrastructure designs, require multiple high
      performance DSPs for data processing. Tundra's RapidIO Switch
      technology allows multiple DSPs on a single board to pass high
      bandwidth data at maximum transfer rates.

    - Tundra recently introduced the Tsi572(TM) Serial RapidIO Switch, a
      scalable, low power switch, which adds another processor aggregation
      solution to Tundra's industry-leading portfolio of RapidIO products.
      The Tsi572 is ideal for cost sensitive applications, allowing designers
      to take advantage of the powerful functionality of Tundra's RapidIO
      Switches, including; scalability, performance, hardware multicast, and
      low latency. The new Tsi572 Switch is the lowest power RapidIO Switch
      available on the market today, compliant with the RapidIO 1.3
      specification. Tundra's new Tsi572 Switch offers designers the
      performance and reliability of RapidIO with lower port count and lower
      power consumption, at a cost that suits their high volume applications.
      Designers can rely on the proven interoperability of the Tsi57x product
      line and socket compatibility of the Tsi572 with the Tsi576(TM). The
      Tsi572 is ideally suited for a broad spectrum of wireless, wireline,
      and imaging/video applications.

    - Tundra also announced that VMETRO, a leader in embedded computing
      solutions, has selected the Tsi578(TM) Serial RapidIO Switch to enable
      high performance processing, for its new Quad-Core Processing Engine
      and Single Board Computer. VMETRO recently launched two new 6U VPX-REDI
      offerings, which use the Tsi578 for large-scale DSP aggregation and
      Tundra's Tsi148(TM) VME Bridge, the highest bandwidth VMEbus bridge
      available on the market today. By using Tundra's Tsi578 RapidIO switch,
      VMETRO's VPX multi-processor boards provide a system fabric with the
      features their customers demand - low latency, low overhead, high
      throughput, peer-to-peer communication, reliability, and scalability.
      No other fabric offers this complete set of features. Customer's
      deploying VMETRO's new MPE730 and SBC731 with RapidIO across the VPX
      backplane will get the performance and reliability they need for their
      multi-processing applications.

    Conference Call and Webcast

    Tundra management will hold a conference call today June 5, 2008 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: 21271801#.
            (Available until June 14, 2008)

    Web Cast: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2285140
or www.tundra.com

    About Tundra

    Tundra Semiconductor Corporation (TSX:TUN) supplies the world's leading
communications, computing and storage companies with System Interconnect
products, intellectual property (IP) and design services backed by world-class
customer service and technical support. Tundra's track record of product
leadership includes over a decade of bridges and switches enabling key
industry standards: RapidIO(R), PCI, PCI-X, PCI Express(R), Power
Architecture(TM), VME, HyperTransport(TM), Interlaken, and SPI4.2. Tundra's
products deliver high functional quality and simplified board design and
layout, with specific focus on system level signal integrity. Tundra's design
services division, Silicon Logic Engineering, Inc., offers industry-leading
ASIC and FPGA design services, semiconductor intellectual property and product
development consulting. Tundra's technology connects critical components in
high performance embedded systems around the world. For more information,
please visit www.tundra.com.
    The difference between pro forma and GAAP earnings is due to stock-based
compensation expense, 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.

    Forward Looking Information

    The Company cautions that the forward-looking information in this release
is based on certain assumptions made by the Company that may prove to be
inaccurate. Assumptions made include assumptions about: stability of the
telecommunications market, appropriate customer inventory levels, minimal
currency fluctuation, the movement of products from design wins to production
within customer products, the Company's ability to bring to market the
products currently under development, as well as stability of customer need
for design services.
    Furthermore, the Company cautions that the forward-looking statements in
this release are based on current expectations that are subject to risks and
uncertainties. Actual results may differ due to variable factors such as
customer demand and customer inventory management, customer relationships,
product development, new services offerings, product shipping schedules,
product mix, competitive products and services, pricing pressure, changes in
the Company's target markets, including but not limited to the
telecommunications market, and currency fluctuation . 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 United States, the European Union and the People's
Republic of China. Design.Connect.Go. Tsi148, Tsi381, Tsi572, Tsi576, Tsi574
Tsi578, 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 Tsi57x product line was made possible in part
with the assistance of the Technology Partnerships Canada Program.

    (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 April 30, 2008 and April 30, 2007
    (Canadian dollars, amounts in thousands except per share data)


                               Three months ended            Year ended
                           ------------------------  ------------------------
                             April 30     April 30     April 30     April 30
                                 2008         2007         2008         2007
                           (Unaudited)  (Unaudited)    (Audited)    (Audited)
    Revenue:
      Product               $  15,024    $  19,144    $  61,525    $  75,208
      Service                   2,888        3,016        9,061       10,052
    -------------------------------------------------------------------------
                               17,912       22,160       70,586       85,260

    Cost of revenue:
      Product                   5,184        5,192       20,027       22,258
      Service                   1,930        1,583        5,656        5,495
    -------------------------------------------------------------------------
                                7,114        6,775       25,683       27,753

    -------------------------------------------------------------------------
    Gross margin               10,798       15,385       44,903       57,507

    Expenses:
      Sales and marketing       2,822        3,869       11,548       14,220
      General and
       administration           1,745        2,457        8,009        9,810
      Research and development  4,891        6,608       21,964       25,742
    -------------------------------------------------------------------------
                                9,458       12,934       41,521       49,772


    Pro forma earnings from
     operations                 1,340        2,451        3,382        7,735

    Interest and other income     416           39        2,374        2,256

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


    Pro forma earnings before
     income taxes               1,756        2,490        5,756        9,991


    Income tax provision
     (recovery)                   280         (878)       1,107         (776)

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

    PRO FORMA EARNINGS      $   1,476    $   3,368    $   4,649    $  10,767

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

    Pro forma earnings per
     share
      Basic                 $    0.07    $    0.17    $    0.23    $    0.54
      Diluted               $    0.07    $    0.17    $    0.23    $    0.54

    Weighted average number
     of common shares
     outstanding
      Basic                    19,694       19,955       19,848       19,926
      Diluted                  19,694       19,995       19,916       20,041


    TUNDRA SEMICONDUCTOR CORPORATION
    CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME(LOSS)
    For the fiscal quarters ended April 30, 2008 and April 30, 2007
    (Canadian dollars, amounts in thousands except per share data)

                               Three months ended            Year ended
                           ------------------------  ------------------------
                             April 30     April 30     April 30     April 30
                                 2008         2007         2008         2007
                           (Unaudited)  (Unaudited)    (Audited)    (Audited)

    Revenue:
      Product               $  15,024    $  19,144    $  61,525    $  75,208
      Service                   2,888        3,016        9,061       10,052
    -------------------------------------------------------------------------
                               17,912       22,160       70,586       85,260

    Cost of revenue:
      Product                   5,184        5,192       20,027       22,258
      Service                   1,930        1,583        5,656        5,495
    -------------------------------------------------------------------------
                                7,114        6,775       25,683       27,753

    -------------------------------------------------------------------------
    Gross margin               10,798       15,385       44,903       57,507

    Expenses:
      Sales and marketing       2,822        3,869       11,548       14,220
      General and
       administration           1,745        2,457        8,009        9,810
      Research and
       development              4,891        6,608       21,964       25,742
      Stock-based
       compensation               592          549        2,274        3,105
      Amortization of
       acquisition-related
       intangible assets          889        1,166        3,876        4,982
      Restructuring charges      (250)           -        3,713            -
    -------------------------------------------------------------------------
                               10,689       14,649       51,384       57,859

    Earnings (loss) from
     operations                   109          736       (6,481)        (352)

    Interest and other income     416           39        2,374        2,256
    Impairment of intangible
     assets                    (4,749)           -       (4,749)           -
    Impairment of goodwill        590            -      (49,981)           -

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

    Earnings (loss) before
     income taxes              (3,634)         775      (58,837)       1,904

    Income tax provision
     (recovery)                   280         (878)         786         (141)

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

    NET EARNINGS (LOSS)
     AND COMPREHENSIVE
     INCOME (LOSS)          $   (3,914)  $   1,653    $ (59,623)   $   2,045

    -------------------------------------------------------------------------
    Earnings (loss) per
     share
      Basic                 $   (0.20)   $    0.08    $   (3.00)   $    0.10
      Diluted               $   (0.20)   $    0.08    $   (3.00)   $    0.10

    Weighted average number
     of common shares
     outstanding
      Basic                    19,694       19,955       19,848       19,926
      Diluted                  19,694       19,995       19,848       20,041



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

                                                          April        April
                                                           2008         2007

    ASSETS

    Current assets
      Cash and cash equivalents                       $  23,861    $  18,340
      Short-term investments                             35,373       42,379
      Accounts receivable                                 7,470        7,745
      Inventories                                         6,226        9,282
      Prepaid expenses and other current assets           3,288        4,497
      Future income tax asset                             2,970        2,997
    -------------------------------------------------------------------------

                                                         79,188       85,240

    Other assets                                          1,919        1,895
    Investment tax credits recoverable                    8,976        8,370
    Property, plant and equipment                        16,272       17,747
    Intangible assets                                     5,720        9,770
    Goodwill                                                  -       50,571
    Future income tax asset                               4,638        3,037
    -------------------------------------------------------------------------

                                                      $ 116,713    $ 176,630

    -------------------------------------------------------------------------
    LIABILITIES AND SHAREHOLDERS' EQUITY


    Current liabilities
      Accounts payable and accrued liabilities        $   9,913    $  11,125
      Income tax payable                                    131          105
    -------------------------------------------------------------------------
                                                         10,044       11,230

    Shareholders' equity
      Share capital                                     181,006      183,204
      Contributed surplus                                10,087        6,997
      Deficit                                           (84,424)     (24,801)
    -------------------------------------------------------------------------

                                                        106,669      165,400

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

                                                      $ 116,713    $ 176,630

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


    TUNDRA SEMICONDUCTOR CORPORATION
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the fiscal quarters ended April 30, 2008 and April 30, 2007
    (Canadian dollars, amounts in thousands)

                               Three months ended            For the year
                           ------------------------  ------------------------
                             April 30     April 30     April 30     April 30
                                 2008         2007         2008         2007
                           (Unaudited)  (Unaudited)    (Audited)    (Audited)

    Operating activities:
      Earnings (loss)       $  (3,914)   $   1,653    $ (59,623)   $   2,045
      Items not affecting
       cash:
        Amortization of
         property, plant
         and equipment and
         asset impairments      2,077        2,187        8,357        9,786
        Amortization of
         acquisition-related
         intangible assets        889        1,166        3,876        4,982
        Stock-based
         compensation             592          549        2,274        3,105
        Investment tax
         credit
         recoverable            1,325         (250)        (606)      (2,636)
        Future income taxes    (1,471)         122       (1,574)        (512)
        Impairment of
         intangible assets      4,749            -        4,749            -
        Impairment of
         goodwill                (590)           -       49,981            -
    -------------------------------------------------------------------------
                                3,657        5,427        7,434       16,770

      Cash effect of
       changes in:
        Accounts receivable      (617)       1,227          275        1,761
        Inventories             1,057        1,411        3,056       (3,127)
        Prepaid expenses
         and other assets        (341)      (1,038)       1,162         (530)
        Accounts payable
         and accrued
         liabilities             (500)      (3,999)        (829)        (627)
        Income taxes payable      205       (1,104)          26         (822)
    -------------------------------------------------------------------------
                                3,461        1,924       11,124       13,425
    -------------------------------------------------------------------------

    Investing activities:
      Acquisition of capital
       assets                    (299)      (1,678)      (6,685)     (10,441)
      Acquisition of business       -         (216)           -      (18,744)
      Purchased intangibles         -            -       (4,749)           -
      Acquisition of
       short-term investments       -            -      (35,373)     (42,379)
      Proceeds on disposal of
       short-term investments       -            -       42,379       11,393
    -------------------------------------------------------------------------
                                 (299)      (1,894)      (4,428)     (60,171)
    -------------------------------------------------------------------------

    Financing activities:
      Net proceeds on the
       issue of common shares       -          166          426        1,842
      Repurchase of shares       (200)      (1,020)      (1,601)      (1,020)
      Repayment of debt             -            -            -         (650)
    -------------------------------------------------------------------------
                                 (200)        (854)      (1,175)         172
    -------------------------------------------------------------------------

    Increase (decrease) in
     cash and cash
     equivalents                2,962         (824)       5,521      (46,574)

    Cash and cash
     equivalents, beginning
     of period                 20,899       19,164       18,340       64,914
    -------------------------------------------------------------------------

    Cash and cash
     equivalents, end of
     period                    23,861       18,340       23,861       18,340
    Short-term investments,
     end of period             35,373       42,379       35,373       42,379
    -------------------------------------------------------------------------

    Cash, cash
     equivalents and
     short-term investments,
     end of period          $  59,234    $  60,719    $  59,234    $  60,719
    -------------------------------------------------------------------------
    




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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