Tundra Semiconductor Reports Q1 FY09 Financial Results



    Tundra Reports Revenue and Earnings at High End of Guidance

    OTTAWA, Aug. 28 /CNW Telbec/ - Tundra Semiconductor Corporation (Tundra,
or "the Company") (TSX:TUN), a leader in System Interconnect, today reported
financial results for the first quarter of fiscal 2009, which ended August 3,
2008.

    Q1-2009 RESULTS:

    - Q1 Revenue: $18.0 million
    - Q1 Pro forma earnings: $1.2 million
    - Q1 Pro forma diluted earnings per share: $0.06
    - Q1 GAAP Results: earnings of $0.4 million or $0.02 per diluted share
    - Q1 Product Revenue: up 4% over previous quarter

    Revenue for the first quarter of fiscal year 2009 was $18.0 million,
comprised of $8.9 million in the Communications market segment, $6.8 million
in the Computing/Storage market segment, and $2.3 million in Design Services.
Quarterly revenue represents a 1% increase from the fourth quarter of fiscal
year 2008 and a 10% decrease compared to the first quarter in fiscal year
2008. Pro forma earnings for the quarter were $1.2 million or $0.06 per share,
compared to earnings of $1.5 million or $0.07 per share in the fourth quarter
of fiscal year 2008 and compared to $1.9 million or $0.10 per share in the
first quarter of fiscal year 2008. GAAP earnings for the quarter were
$0.4 million or $0.02 per diluted share, compared to a loss of $3.9 million or
$0.20 per diluted share in the fourth quarter of fiscal year 2008, and a loss
of $1.0 million or $0.05 per diluted share in the first quarter fiscal year
2008.
    "We are pleased with the financial results of the first quarter of fiscal
2009. Revenue and pro forma earnings were at the high end of the guidance we
provided at the close of the fourth quarter, and we also achieved more than 4%
growth in product revenue as projected. Our cash position remains strong at
more than $58 million and our cash generated from operations was once again
positive," said Daniel Hoste, President and Chief Executive Officer, Tundra
Semiconductor. "In the first quarter we adapted our growth strategy to focus
on maintaining our leadership position in RapidIO and on addressing new,
broader, larger markets by expanding our PCI Express portfolio. We are excited
about this strategy, setting up Tundra for steady growth from both product
lines, while we continue to carefully manage our financial performance,"
continued Hoste.
    Management offers the following outlook for the second quarter of fiscal
year 2009:

    
    - Q2 Revenue is expected to be in the range of $16.5 million to
      $18.5 million
    - Q2 Pro forma diluted earnings per share is expected to be in the range
      of $0.03 to $0.07

    "Our outlook for the second quarter is expected to be consistent with
first quarter guidance, with a continued focus on delivering solid cash
performance," said David Long, Chief Financial Officer, Tundra Semiconductor.

    Q1-2009 Highlights

    - Tundra announced that it has been selected by ZTE Corporation, a
      leading global provider of telecommunications equipment and network
      solutions, to supply Tundra's high performance PCI Express(R) (PCIe)
      product for ZTE's Next Generation Platform System Graphics Card. ZTE
      selected Tundra's high performance semiconductor to improve overall
      performance on its new Graphics Card. Tundra's PCIe interconnect
      solution has typical power consumption of 1.3W, and incorporates power
      management to minimize power consumption during operation. In addition,
      Tundra's PCIe product offers the flexibility, high performance, small
      footprint, low power consumption and drop-in compatibility that ZTE
      required for its new design.

    - In the quarter Tundra introduced an evaluation platform centered on its
      Tsi620(TM) multi-standard RapidIO(R) Switch. In addition to the Tundra
      Tsi620, the multi-platform evaluation platform works in conjunction
      with Texas Instruments (TI) TMS320TCI6487 high performance multi-core
      DSP and an Altera(R) Stratix(R) III FPGA to enable prototyping and,
      ultimately, cost reduction in applications such as high performance
      wireless and video processing, medical imaging and military signal-
      processing solutions. The platform will allow customers to use the
      RapidIO protocol for DSP or processor aggregation, while leveraging the
      Tsi620's hardware bridging to low cost PCI-enabled processors. The
      platform offers communication with a variety of cost competitive
      PCI-enabled microprocessors through a PMC connector, providing
      additional cost saving opportunities. TI's 3GHz embedded DSP delivers
      exceptional performance in computationally challenging applications. On
      the evaluation platform, the Tsi620 interfaces with Altera's Stratix
      III FPGA to leverage RapidIO over XGMII. This results in low latency
      while leveraging the RapidIO protocol and allows customers to access
      RapidIO processor clusters from an FPGA without SerDes. The complete
      solution allows customers to reduce their time-to-market, and the
      bill-of-materials (BOM) in end applications by over $100 compared to
      other solutions.

    Finally, it is with deep regret that we announced in July that Mike Unger,
a long-standing member of the Tundra Board of Directors, passed away after a
short illness. Mike served on Tundra's Board of Directors since 2001, after a
long and successful career at Nortel Networks, his last role there being
President of the Optical Networks Division. As a Director of Tundra's
business, and as Chair of the Board's Human Resources, Corporate Governance
and Nominating Committee, Mike demonstrated grace, balance, wisdom and good
judgment in all that he did, and always had the best interests of Tundra's
Shareholders and Employees in mind. Mike's positive attitude and good nature
will be sorely missed.

    Conference Call and Webcast

    Tundra management will hold a conference call today August 28, 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: 1.416-644-3414
    Replay: 1.416-640-1917, Passcode: 21280986#.
    (Available until Sept 4, 2008)
    Web Cast:
    http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2389420

    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, restructuring charges, 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. and Tsi620 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 Tsi620 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 three months ended August 3, 2008 and July 29, 2007
    (Canadian dollars, amounts in thousands except per share data)
    (Unaudited)

                                                          Three months ended
                                                    -------------------------
                                                      August 3       July 29
                                                          2008          2007

    Revenue
      Product                                        $  15,696     $  18,054
      Service                                            2,315         2,004
    -------------------------------------------------------------------------
                                                        18,011        20,058

    Cost of revenue
      Product                                            5,973         5,608
      Service                                            1,594         1,174
    -------------------------------------------------------------------------
                                                         7,567         6,782

    -------------------------------------------------------------------------
    Gross margin                                        10,444        13,276

    Expenses
      Sales and marketing                                3,099         3,028
      General and administration                         2,062         2,408
      Research and development                           4,438         5,962
    -------------------------------------------------------------------------
                                                         9,599        11,398

    Pro forma earnings from operations                     845         1,878

    Interest and other income                              443           686

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

    Pro forma earnings before income taxes               1,288         2,564

    Income tax provision                                    95           629

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

    PRO FORMA EARNINGS                               $   1,193     $   1,935

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

    Pro froma earnings per share
      Basic                                          $    0.06     $    0.10
      Diluted                                        $    0.06     $    0.10
    Weighted average number of common
     shares outstanding
      Basic                                             19,625        19,932
      Diluted                                           19,625        19,970


    TUNDRA SEMICONDUCTOR CORPORATION
    CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME
    (LOSS)
    For the three months ended August 3, 2008 and July 29, 2007
    (Canadian dollars, amounts in thousands except per share data)
    (Unaudited)

                                                          Three months ended
                                                    -------------------------
                                                      August 3       July 29
                                                          2008          2007
    Revenue
      Product                                        $  15,696     $  18,054
      Service                                            2,315         2,004
    -------------------------------------------------------------------------
                                                        18,011        20,058

    Cost of revenue
      Product                                            5,973         5,608
      Service                                            1,594         1,174
    -------------------------------------------------------------------------
                                                         7,567         6,782

    -------------------------------------------------------------------------
    Gross margin                                        10,444        13,276

    Expenses
      Sales and marketing                                3,099         3,028
      General and administration                         2,062         2,408
      Research and development                           4,438         5,962
      Stock-based compensation                             450           488
      Amortization of acquisition-related
       intangible assets                                   306         1,082
      Restructuring charges                                  -         1,659
    -------------------------------------------------------------------------
                                                        10,355        14,627

    Earnings (loss) from operations                         89        (1,351)

    Interest and other income                              443           686

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

    Earnings (loss) before income taxes                    532          (665)

    Income tax provision                                    95           308

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

    NET EARNINGS (LOSS) AND COMPREHENSIVE
     INCOME (LOSS)                                   $     437     $    (973)

    -------------------------------------------------------------------------
    Earnings (loss) per share
      Basic                                          $    0.02     $   (0.05)
      Diluted                                        $    0.02     $   (0.05)
    Weighted average number of common
     shares outstanding
      Basic                                             19,625        19,932
      Diluted                                           19,625        19,932


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

                                                      August 3      April 30
                                                          2008          2008
                                                    (Unaudited)     (Audited)
    ASSETS

    Current assets
      Cash and cash equivalents                      $  58,537     $  23,861
      Short-term investments                                 -        35,373
      Accounts receivable                                8,766         7,470
      Inventories                                        5,998         6,226
      Prepaid expenses and other current assets          2,258         3,288
      Future income tax asset                            2,705         2,970
    -------------------------------------------------------------------------

                                                        78,264        79,188

    Other assets                                         1,912         1,919
    Investment tax credits recoverable                   9,116         8,976
    Property, plant and equipment                       18,399        16,272
    Intangible assets                                    5,399         5,720
    Future income tax asset                              5,017         4,638

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

                                                     $ 118,107     $ 116,713

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

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
      Accounts payable and accrued liabilities       $  10,769     $   9,913
      Income tax payable                                   189           131
    -------------------------------------------------------------------------
                                                        10,958        10,044
    Shareholders' equity
      Share capital                                    180,159       181,006
      Contributed surplus                               10,977        10,087
      Deficit                                          (83,987)      (84,424)
    -------------------------------------------------------------------------

                                                       107,149       106,669

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

                                                     $ 118,107     $ 116,713

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


    TUNDRA SEMICONDUCTOR CORPORATION
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the three months ended August 3, 2008 and July 29, 2007
    (Canadian dollars, amounts in thousands)
    (Unaudited)

                                                          Three months ended
                                                    -------------------------
                                                      August 3       July 29
                                                          2008          2007

    Operating activities
      Earnings (loss)                                $     437     $    (973)
      Items not affecting cash
        Amortization of property, plant and
         equipment and asset impairments                 1,810         1,997
        Amortization of acquisition-related
         intangible assets                                 306         1,082
        Stock-based compensation                           450           488
        Investment tax credits recoverable                (140)         (128)
        Future income taxes                               (114)       (1,058)
    -------------------------------------------------------------------------
                                                         2,749         1,408
      Cash effect of changes in
        Accounts receivable                             (1,296)       (1,060)
        Inventories                                        228         1,462
        Prepaid expenses and other assets                1,037           168
        Accounts payable and accrued liabilities           814        (1,263)
        Income taxes payable                                58          (115)
    -------------------------------------------------------------------------
                                                         3,590           600
    -------------------------------------------------------------------------

    Investing activities
      Acquisition of property, plant and equipment      (3,922)       (4,148)
      Proceeds on disposal of short-term investments    35,373        42,379
    -------------------------------------------------------------------------
                                                        31,451        38,231
    -------------------------------------------------------------------------

    Financing activities
      Net proceeds on the issue of common shares             -           250
      Share repurchase                                    (365)            -
    -------------------------------------------------------------------------
                                                          (365)          250
    -------------------------------------------------------------------------

    Increase in cash and cash equivalents               34,676        39,081

    Cash and cash equivalents, beginning of period      23,861        18,340
    -------------------------------------------------------------------------

    Cash and cash equivalents, end of period            58,537        57,421
    Short-term investments, end of period                    -             -
    -------------------------------------------------------------------------
    Cash, cash equivalents and short-term
     investments, end of period                      $  58,537     $  57,421
    -------------------------------------------------------------------------
    




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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