Tundra Semiconductor Reports Third Quarter Fiscal Year 2007 Financial Results - Revenue Increases by 16% Year-Over-Year, Pro Forma Earnings up 34%



    OTTAWA, March 1 /CNW Telbec/ - Tundra Semiconductor Corporation
(TSX:TUN), the leader in System Interconnect, today reported financial results
for the third quarter of fiscal year 2007, which ended January 28, 2007.

    - Q3 Revenue: $21.7 million
    - Q3 Pro forma earnings: $3.0 million
    - Q3 Pro forma diluted earnings per share: $0.15
    - Q3 GAAP Results: earnings of $1.3 million or $0.06 per diluted share

    Revenue for the third quarter of fiscal year 2007 was $21.7 million, a
16% increase over the third quarter in fiscal year 2006, and a 1% decrease
from the second quarter of fiscal year 2007. Pro forma earnings of
$3.0 million represent a 34% increase compared to the third quarter of fiscal
year 2006, and a 26% increase over the second quarter of fiscal year 2007. Pro
forma diluted earnings per share of $0.15 were at the top of range of the
Company's per share earnings guidance for the quarter of $0.11 to $0.15. GAAP
earnings for the quarter were $1.3 million or $0.06 per diluted share, down
from earnings of $1.5 million or $0.08 in the third quarter fiscal year 2006,
up from a loss of $0.2 million or $0.01 per diluted share in the second
quarter in fiscal year 2007.
    "Tundra delivered exceptional profit growth in the third quarter and
revenue continued to gain on a year-over-year basis. Tundra overcame continued
volatility in communications infrastructure, one of the key markets that the
Company serves. Tundra's core business remains strong with multiple products
in the PCI and HyperTransport(TM) product lines moving into production in the
quarter and good momentum behind the roll out of new products," said Daniel
Hoste, President and Chief Executive Officer, Tundra Semiconductor. "Today we
announced another significant RapidIO(R) achievement and another industry
first. Tundra has entered into a partnership with Enea, a leading provider of
network software and services, to deliver the first RapidIO-based system level
software for the wireless communications infrastructure market. Tundra
continues to deliver innovative solutions in response to growing demands from
the RapidIO ecosystem."
    "Additionally, with engineering samples now ready to ship to lead
customers, we are on track for the upcoming launch of our first PCI Express
Bridge," added Daniel Hoste.
    Tundra's VME bridge business remained strong in the quarter. Tundra's VME
customers continue to adopt RapidIO switches to their new VME product designs,
as the high performance serial interconnect protocol in the core of their
systems. The steady penetration of RapidIO into the existing VME market is
increasing the addressable embedded computing market for Tundra's products.
    Management offers the following outlook for the fourth quarter of fiscal
year 2007:

    
    - Q4 Revenue is expected to be in the range of $20.0 million to
      $23.0 million
    - Q4 Pro forma diluted earnings per share is expected to be in the range
      of $0.11 to $0.15.

    Q3 FY2007 Highlights:

    Product Announcements:

    - Tundra recently announced a partnership with Enea, based in Sweden, to
      produce system level software which is RapidIO ready, signaling further
      demand and adoption for RapidIO and Tundra products in the wireless
      infrastructure market.
    - Silicon Logic Engineering, Inc. (SLE), Tundra's Design Services
      Division, announced the development of an Interlaken Interconnect
      Protocol Intellectual Property (IP) Core. Interlaken is a scalable,
      high speed chip-to-chip interconnect protocol developed jointly by
      Cisco Systems, Inc. and Cortina Systems. Designed and tested by SLE to
      be easily integrated into many ASIC and FPGA technologies, this IP Core
      is designed to work with off-the-shelf components from most leading
      technology vendors, and will be made commercially available by SLE
      later this quarter. The IP Core enables silicon suppliers to scale
      their components to 40Gbps and beyond, simplify designs, reduce
      development costs and reduce time-to-market.
    - In January, the Tundra Tsi110(TM) Host Bridge for PowerPC(R) began
      sampling. Further broadening Tundra's Host Bridge portfolio, this
      Bridge targets high volume applications such as, home gateways,
      video-over-IP, and video surveillance, where cost and power consumption
      are of primary concern.
    - In January, the Tundra Tsi148(TM) VME Bridge was reduced in price. The
      Tsi148 consumes half the power and 68% of the board footprint of the
      industry's leading VME Bridge, Tundra's Universe(TM) II.
    - In November, Tundra launched a new high quality PCI-to-PCI Bridge, the
      Tsi340(TM) which is expected to be in general sampling later this
      month. The Bridge targets a wide range of applications such as,
      communications and networking equipment, video capture cards, embedded
      video recorders, multi-function printers, and network interface cards.

    Corporate Announcements:

    - Tundra transferred the business and operations of RIOLAB(TM), the
      world's first RapidIO interoperability testing facility, to an
      independent third party, Fabric Embedded Tools, Inc., in February.
      RIOLAB was established by Tundra a year ago as a facility designed to
      give commercial semiconductor vendors, FPGA and ASIC developers, and
      OEMs, the ability to validate interoperability of their products and
      test for specification compliance. With both the establishment and
      transfer of RIOLAB, Tundra continues to demonstrate leadership within
      the RapidIO ecosystem.
    - In January, Daniel Hoste presented the key note address at the VME
      industry's annual event, Bus and Boards and said, "RapidIO technology
      provides the optimal performance and reliability for next generation
      critical embedded systems such as, medical imaging, military and
      aerospace applications. It is therefore, the serial interconnect of
      choice to complement VME-based designs."
    - Terry Nickerson, former Chief Financial Officer of ATI, joined the
      Tundra board of directors in November 2006 bringing notable financial
      and business background and skills to the group.

    Conference Call and Webcast

    Management will hold a conference call and webcast on Thursday, March 1,
2007 at 5:00 pm EST. Participants wishing to access the conference call should
dial 1.416.644.3425. The conference call will also be webcast live at
www.tundra.com, and www.newswire.ca, and subsequently archived on Tundra's
website. Replay of the conference call will be available until midnight March
8, 2007. To access the replay, please dial 1.416.640.1917 and enter pass code
21220389#.

    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.

    About Tundra

    Tundra Semiconductor Corporation (TSX:TUN) supplies the world's leading
communications, computing and storage companies with smart 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 PC(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.

    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, European Union and People's Republic of China
(registration is pending in the United States). TUNDRA is a registered
trademark of Tundra Semiconductor Corporation (Canada, U.S. and U.K.).
Universe II, Tsi340, Tsi110, Tsi148 and Design.Connect.Go. are trademarks of
Tundra Semiconductor Corporation. RapidIO is a trademark of the RapidIO Trade
Association, Inc. Power PC is a trademark of International Business Machines
Corporation, used under license there from. Other registered and unregistered
trademarks are the property of their respective owners.

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


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

                                      For the fiscal           For the three
                                       quarter ended   fiscal quarters ended
                              ----------------------- -----------------------
                              January 28  January 29  January 28  January 29
                                    2007        2006        2007        2006

    Revenue:
      Product                  $  19,047   $  18,727   $  56,064   $  55,548
      Service                      2,627           -       7,036           -
    -------------------------------------------------------------------------
                                  21,674      18,727      63,100      55,548

    Cost of revenue:
      Product                      5,346       5,892      17,066      18,441
      Service                      1,472           -       3,912           -
    -------------------------------------------------------------------------
                                   6,818       5,892      20,978      18,441

    -------------------------------------------------------------------------
    Gross margin                  14,856      12,835      42,122      37,107

    Expenses
      Sales and marketing          3,436       2,714      10,351       8,363
      General and
       administration              2,103       1,344       7,353       4,124
      Research and
       development                 7,206       5,750      19,134      15,878
    -------------------------------------------------------------------------
                                  12,745       9,808      36,838      28,365

    Pro forma earnings
     from operations               2,111       3,027       5,284       8,742

    Interest and other income        925         411       2,217         940

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

    Pro forma earnings
     before income taxes           3,036       3,438       7,501       9,682

    Income tax provision              10       1,183         102       3,376

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

    PRO FORMA EARNINGS         $   3,026   $   2,255   $   7,399   $   6,306

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

    Pro forma earnings
     per share
      Basic                    $    0.15   $    0.12   $    0.37   $    0.32
      Diluted                  $    0.15   $    0.11   $    0.37   $    0.32
    Weighted average number
     of common shares
     outstanding
      Basic                       19,994      19,517      19,912      19,509
      Diluted                     20,047      19,737      20,148      19,700


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

                                      For the fiscal           For the three
                                       quarter ended   fiscal quarters ended
                              ----------------------- -----------------------
                              January 28  January 29  January 28  January 29
                                    2007        2006        2007        2006

    Revenue:
      Product                  $  19,047   $  18,727   $  56,064   $  55,548
      Service                      2,627           -       7,036           -
    -------------------------------------------------------------------------
                                  21,674      18,727      63,100      55,548

    Cost of revenue:
      Product                      5,346       5,892      17,066      18,441
      Service                      1,472           -       3,912           -
    -------------------------------------------------------------------------
                                   6,818       5,892      20,978      18,441

    -------------------------------------------------------------------------
    Gross margin                  14,856      12,835      42,122      37,107

    Expenses
      Sales and marketing          3,436       2,714      10,351       8,363
      General and
       administration              2,103       1,344       7,353       4,124
      Research and
       development                 7,206       5,750      19,134      15,878
      Stock-based
       compensation                  561         522       2,556       1,473
      Amortization of
       purchased intangibles
       and other assets            1,199         311       3,816       1,415
    -------------------------------------------------------------------------
                                  14,505      10,641      43,210      31,253

    Earnings (loss) from
     operations                      351       2,194      (1,088)      5,854

    Interest and other income        925         411       2,217         940

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

    Earnings before
     income taxes                  1,276       2,605       1,129       6,794

    Income tax provision              10       1,071         737       2,866

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

    NET EARNINGS                   1,266       1,534         392       3,928

    Deficit, beginning
     of period                   (27,720)    (35,214)    (26,846)    (37,608)

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

    DEFICIT, END OF PERIOD     $ (26,454)  $ (33,680)  $ (26,454)  $ (33,680)

    -------------------------------------------------------------------------
    Earnings per share
      Basic                    $    0.06   $    0.08   $    0.02   $    0.20
      Diluted                  $    0.06   $    0.08   $    0.02   $    0.20
    Weighted average number
     of common shares
     outstanding
      Basic                       19,994      19,517      19,912      19,509
      Diluted                     20,047      19,737      20,148      19,700


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

                                                      January 28    April 30
                                                            2007        2006
                                                      (Unaudited)   (Audited)

    ASSETS
    Current assets
      Cash and cash equivalents                        $  19,164   $  64,914
      Short term investments                              42,379      11,393
      Accounts receivable                                  8,972       7,759
      Inventories                                         10,693       5,502
      Prepaid expenses and other current assets            3,397       3,445
      Future income tax asset                              2,934       1,433
    -------------------------------------------------------------------------
                                                          87,539      94,446

    Long-term prepaids                                     1,957       2,155
    Capital assets                                        22,844      20,541
    Purchased intangibles and other assets                 6,340       1,534
    Goodwill                                              50,355      37,325
    Future income tax asset                               11,343      10,038
    -------------------------------------------------------------------------
                                                       $ 180,378   $ 166,039
    -------------------------------------------------------------------------

    CURRENT LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
      Accounts payable and accrued liabilities         $  15,118   $  10,140
      Income tax payable                                   1,209         927
    -------------------------------------------------------------------------
                                                          16,327      11,067

    Shareholders' equity
      Share capital                                      184,013     177,882
      Contributed surplus                                  6,492       3,936
      Deficit                                            (26,454)    (26,846)
    -------------------------------------------------------------------------
                                                         164,051     154,972
    -------------------------------------------------------------------------
                                                       $ 180,378   $ 166,039
    -------------------------------------------------------------------------


    TUNDRA SEMICONDUCTOR CORPORATION
    CONSOLIDATED STATEMENT OF CASH FLOW
    (Canadian dollars, amounts in thousands)
    (Unaudited)

                                      For the fiscal           For the three
                                       quarter ended   fiscal quarters ended
                              ----------------------- -----------------------
                              January 28  January 29  January 28  January 29
                                    2007        2006        2007        2006

    Operating activities
      Net earnings             $   1,266   $   1,534   $     392   $   3,928
      Items not affecting
       cash:
        Amortization of
         capital assets and
         asset impairments         2,905       1,682       7,599       4,698
        Amortization of
         purchased intangibles
         and other assets          1,199         311       3,816       1,415
        Stock-based
         compensation                561         522       2,556       1,473
        Future income taxes       (1,102)       (160)     (3,020)       (755)
    -------------------------------------------------------------------------
                                   4,829       3,889      11,343      10,759

      Cash effect of
       changes in:
        Accounts receivable       (1,119)     (1,178)        534      (1,654)
        Inventories                 (864)       (282)     (4,538)        112
        Prepaid expenses and
         other current assets       (569)       (207)        508       1,332
        Accounts payable and
         accrued liabilities       2,391        (408)      3,372      (3,390)
        Income taxes payable           -         638         282        (628)
    -------------------------------------------------------------------------
                                   4,668       2,452      11,501       6,531

      Investing Activities
        Acquisition of capital
         assets                   (1,786)       (740)     (8,763)     (5,310)
        Acquisition of short
         term investments        (42,379)          -     (42,379)    (59,638)
        Proceeds on disposal
         of short term
         investments                   -      40,326      11,393      40,326
        Acquisition of
         business                      -           -     (18,528)     (1,370)
    -------------------------------------------------------------------------
                                 (44,165)     39,586     (58,277)    (25,992)

      Financing activities
        Net proceeds on the
         issue of common
         shares                      212          89       1,676         181
        Repayment of debt              -           -        (650)          -
    -------------------------------------------------------------------------
                                     212          89       1,026         181

      Increase (decrease)
       in cash and cash
       equivalents               (39,285)     42,127     (45,750)    (19,280)

      Cash and cash
       equivalents,
       beginning of period        58,449       6,783      64,914      68,190
    -------------------------------------------------------------------------

      Cash and cash
       equivalents, end of
       period                  $  19,164   $  48,910   $  19,164   $  48,910
    -------------------------------------------------------------------------
    




For further information:

For further information: Veronica Farmer, Corporate Communications,
Tundra Semiconductor, (613) 862-3346, veronica.farmer@tundra.com; David Long,
Chief Financial Officer, Tundra Semiconductor, (613) 592-0859 x1704,
david.long@tundra.com

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TUNDRA SEMICONDUCTOR CORPORATION

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