Tundra Semiconductor Releases Q1-Fiscal 2008 Financial Results



    Revenue Increases 3% Year-Over-Year

    OTTAWA, Aug. 27 /CNW Telbec/ - Tundra Semiconductor Corporation
(TSX:TUN), the leader in System Interconnect, today reported financial results
for the first quarter of fiscal 2008, which ended July 29, 2007.

    Q1-2008 RESULTS:

    - Q1 Revenue: $20.1 million
    - Q1 Pro forma earnings: $1.9 million
    - Q1 Pro forma diluted earnings per share: $0.10
    - Q1 GAAP results: loss of $1.0 million or $0.05 per diluted share

    Revenue for the first quarter of fiscal year 2008 was $20.1 million, a 3%
increase over the first quarter in fiscal year 2007, and a 9% decrease from
the fourth quarter of fiscal year 2007. Pro forma earnings of $1.9 million
represent a 2% decrease compared to the first quarter of fiscal year 2007, and
a 42% decrease over the fourth quarter of fiscal year 2007. On a GAAP basis
the company had a loss for the quarter of $1.0 million or $0.05 per diluted
share, compared to a loss of $0.7 million or $0.03 per diluted share in the
first quarter of fiscal year 2007, down from a gain of $1.7 million or $0.08
per diluted share in the fourth quarter of fiscal year 2007. The loss on a
GAAP basis reflects the one time restructuring charge of $1.7 million which
was announced in May, in conjunction with an organizational realignment.
    "The first quarter of 2008 concluded with 3% year-over-year revenue
growth and included key customer announcements from Huawei and RadiSys, two
examples of the continued adoption of our industry-leading Serial RapidIO
solutions," said Daniel Hoste, President and Chief Executive Officer, Tundra
Semiconductor. "Our products business remains solid and our outlook for
Q2-2008 is steady. The Design Services business however, fell short of our
expectations as the transition of resources from a large project in the fourth
quarter to a number of smaller projects in the first quarter proved to be
challenging," continued Hoste.
    "Performance of our products business in the first quarter, in
US dollars, was slightly ahead of our expectations. However, the strength of
the Canadian dollar had a negative impact on our results, both top and bottom
line," said David Long, Chief Financial Officer, Tundra Semiconductor.
    Management offers the following outlook for the second quarter of fiscal
year 2008:

    
    - Revenue is expected to be in the range of $19.0 million and
      $22.0 million
    - Pro forma diluted earnings per share are expected to be in the range of
      $0.05 to $0.09

    Q1-2008 Highlights:

    - Tundra was selected by Huawei Technologies Co. Ltd. (Huawei), a leader
      in next generation telecommunications networks, to provide Serial
      RapidIO(R) Switches to enable Huawei's next generation production
      systems. Huawei selected Tundra's first-to-market Serial RapidIO Switch
      because the solution solved their design requirement to cluster many
      Digital Signal Processor's (DSPs) while keeping processor overhead at
      an industry-low. Tundra's Tsi568A(TM) Switch offers high
      inter-processor bandwidth, with up to 10 Gbps per link. Tundra's
      Tsi568A is the ideal solution for Huawei's design as it offers; low
      power at 120-200mW per port, a large port count with 16x1 solution in a
      small 27x27mm form factor, as well as ports individually configurable
      by width and speed to optimize intra component connectivity.

    - Tundra recently announced the release of a Serial RapidIO development
      platform that combines the industry's highest performing programmable
      digital signal processors (DSPs) and the lowest power Serial RapidIO
      Switch available. The platform leverages Serial RapidIO interconnect
      technology, using Tundra's Tsi578(TM) switch to cluster four Freescale
      MSC8144 multi-core DSPs in an AMC single-width form factor. Tundra and
      Freescale created the solution to address interconnect bandwidth
      requirements of up to 10 Gbps between on-board components in key
      applications such as wireless base stations, radio network controllers,
      media gateways, video conferencing and radar signal processing. These
      processing-intensive applications require high performance DSPs and the
      high throughput, low latency characteristics of a RapidIO solution.

    - Tundra now offers customers a complete portfolio of proven, high
      performance, low-cost PCI and PCI-X bridges. In Q1-FY2008, Tundra
      launched the new Tsi352(TM) PCI-to-PCI Bridge which offers designers
      the opportunity to extend a system's load capability limit beyond that
      of a single PCI bus by allowing motherboard designers to add more PCI
      devices or more PCI option card slots than a single PCI bus can
      support. The Tsi352 joins the Tsi340(TM) and Tsi350(TM) to complete
      Tundra's PCI-to-PCI bridge portfolio. Similar in features and
      functionality, the three PCI Bridge solutions offered by Tundra provide
      compatible footprints for most standard 32-bit PCI bridges on the
      market today.

    - RadiSys Corporation, a leading global provider of advanced embedded
      solutions, has selected the Tundra Tsi578 Serial RapidIO Switch for its
      Promentum(TM) ATCA-9100 Media Resource Module. RadiSys recently
      launched the Advanced Telecommunications Computing Architecture (ATCA)
      Digital Signal Processing (DSP) blade, which uses the Tsi578 as its
      Serial RapidIO interconnection for large-scale DSP aggregation. The
      Promentum ATCA-9100 responds to increasing customer demand for high
      performance solutions that address the growing number of applications
      requiring media processing. RadiSys selected Tundra's Tsi578 with
      multicast because the Switch offered large-scale DSP aggregation
      capabilities with proven interoperability, lower power and minimal
      latency - all critical requirements for the highly intensive network
      applications that the ATCA-9100 targets.

    Corporate Announcements:

    - In August, Tundra signed a strategic agreement to acquire a new product
      from a leading global solutions and engineering services provider. The
      agreement is a significant first step in executing Tundra's previously
      announced smart interconnect solutions strategy. This product
      represents a new product line and new market opportunity for Tundra.
      Based on strong I/O management experience, Tundra intends to use its
      existing design teams to develop future products in this new product
      line and in the broader smart interconnect solutions product portfolio.

    - Mr. Tracy Richardson joined the Tundra Leadership Team in the first
      quarter of fiscal 2008, in the role of Vice President Marketing. Tracy
      is responsible for development and deployment of Tundra's global market
      driven strategy and is responsible for the strategic and product
      marketing, architecture and applications engineering teams. With over
      20 years of executive management in semiconductors and computing
      systems notably at Digital Equipment, Intel and as Chief Executive
      Officer of Stargen, and with experience in business development, sales
      and marketing, engineering and strategy development, Tracy will play a
      central role in augmenting the Company's leadership position in System
      Interconnect.

    - Mr. Cesar Cesaratto has been appointed to the Tundra Semiconductor
      Board of Directors, effective July 2007. Cesar's career has included
      more than 30 years with Nortel Networks, spanning product development,
      business development, operations, and sales and marketing in both North
      America and Europe. The experience and depth of background that Cesar
      gained during his executive tenure at Nortel will be a significant
      asset to Tundra's governing Board.


    CONFERENCE CALL AND WEBCAST

    Tundra management will be holding a conference call today, August 27, 2007
at 5:00 p.m. EST to discuss additional details regarding this earnings update.
You may access the conference call via any of the following:

    Teleconference: +1.416.644.3414
    Replay: +1.416.640.1917 Pass code: 21243186#. The replay will
    be available through September 3, 2007.
    Web Cast: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1970540

    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), 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 backlog 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.

    The Company cautions that the forward-looking information in this release
is based on certain assumptions made by the Company that may prove to be
inaccurate. Assumptions made include, but are not limited to; customer demand
for the Company's products and services, the Company's ability to maintain and
enhance existing customer relationships, and leverage existing partnerships,
as well as the Company's ability to bring to market the products currently
under development.
    Furthermore, the Company cautions that the forward-looking statements in
this release are based on current expectations that are subject to risks and
uncertainties. Actual results may differ due to factors such as customer
demand, customer and partner relationships, new product development, new
services offerings, product shipping schedules, product mix, competitive
products and services, pricing pressure, exchange rate fluctuations, and
changes in the embedded systems market specifically. Additional information
identifying risks and uncertainties is contained in the Company's filings with
the various provincial securities commissions.

    TUNDRA is a registered trademark of Tundra Semiconductor Corporation
(Canada, U.S. and U.K.). TUNDRA and the Tundra logo are registered marks of
Tundra Semiconductor Corporation in Canada, European Union, People's Republic
of China and the United States. Tsi568A, Tsi578, Tsi574, Tsi576, Tsi340,
Tsi350, Tsi352 and Design.Connect.Go. are trademarks of Tundra Semiconductor
Corporation. RapidIO is a trademark of the RapidIO Trade Association, Inc. The
PowerPC name is a trademark 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, Tsi574 and Tsi576 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.


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

                                                                     For the
                                                        fiscal quarter ended
                                                    -------------------------

                                                       July 29       July 30
                                                          2007          2006
                                                    (Unaudited)   (Unaudited)
    Revenue:
     Product                                         $  17,953     $  17,943
     Service                                             2,105         1,518
    -------------------------------------------------------------------------
                                                        20,058        19,461

    Cost of revenue:
      Product                                            5,608         5,878
      Service                                            1,174         1,081
    -------------------------------------------------------------------------
                                                         6,782         6,959

    Gross margin                                        13,276        12,502
    -------------------------------------------------------------------------

    Expenses
      Sales and marketing                                3,028         3,544
      General and administration                         2,408         1,781
      Research and development                           5,962         5,936
    -------------------------------------------------------------------------

                                                        11,398        11,261

    Pro forma earnings from operations                   1,878         1,241

    Interest and other income                              686           763

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

    Pro forma earnings before income taxes               2,564         2,004

    Income tax provision                                   629            25

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

    PRO FORMA EARNINGS                               $   1,935     $   1,979

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

    Pro forma earnings per share
      Basic                                          $    0.10     $    0.10
      Diluted                                        $    0.10     $    0.10

    Weighted average number of common shares
     outstanding
      Basic                                             19,932        19,619
      Diluted                                           19,970        19,883

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


    TUNDRA SEMICONDUCTOR CORPORATION
    CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
    (Canadian dollars, amount s in thousands except per share data)

                                                                     For the
                                                        fiscal quarter ended
                                                    -------------------------

                                                       July 29       July 30
                                                          2007          2006
                                                    (Unaudited)   (Unaudited)
    Revenue:
      Product                                        $  17,953     $  17,943
      Service                                            2,105         1,518
    -------------------------------------------------------------------------
                                                        20,058        19,461

    Cost of revenue:
      Product                                            5,608         5,878
      Service                                            1,174         1,081
    -------------------------------------------------------------------------
                                                         6,782         6,959

    Gross margin                                        13,276        12,502
    -------------------------------------------------------------------------
    Expenses
      Sales and marketing                                3,028         3,544
      General and administration                         2,408         1,781
      Research and development                           5,962         5,936
      Stock-based compensation                             488           632
      Amortization of purchased intangibles
       and backlog                                       1,082         1,375
      Restructuring charges                              1,659             -
    -------------------------------------------------------------------------

                                                        14,627        13,268

    Loss from operations                                (1,351)         (766)

    Interest and other income                              686           763

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

    Loss before income taxes                              (665)           (3)

    Income tax provision                                   308           660

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

    NET LOSS                                              (973)         (663)

    -------------------------------------------------------------------------
    Deficit, beginning of period                       (24,801)      (26,846)

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

    DEFICIT, END OF PERIOD                           $ (25,774)    $ (27,509)

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

    Loss per share
      Basic                                          $   (0.05)    $   (0.03)
      Diluted                                        $   (0.05)    $   (0.03)

    Weighted average number of common
     shares outstanding
      Basic                                             19,932        19,619
      Diluted                                           19,932        19,619

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


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

                                                       July 29      April 30
                                                          2007          2007
                                                    (Unaudited)     (Audited)
    ASSETS

    Current assets
      Cash and cash equivalents                      $  57,421     $  18,340
      Short term investments                                 -        42,379
      Accounts receivable                                8,805         7,745
      Inventories                                        7,820         9,282
      Prepaid expenses and other current assets          4,279         4,497
      Future income tax asset                            2,844         2,997

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

                                                        81,169        85,240

    Long-term prepaids                                   1,945         1,895
    Capital assets                                      24,494        22,343
    Purchased intangibles and other assets               4,092         5,174
    Goodwill                                            50,571        50,571
    Future income tax asset                             12,745        11,407

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

                                                     $ 175,016     $ 176,630

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

    CURRENT LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
      Accounts payable and accrued liabilities       $   9,852     $  11,125
      Income tax payable                                     -           105
    -------------------------------------------------------------------------
                                                         9,852        11,230

    Shareholders' equity
      Share capital                                    183,580       183,204
      Contributed surplus                                7,358         6,997
      Deficit                                          (25,774)      (24,801)

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

                                                       165,164       165,400

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

                                                     $ 175,016     $ 176,630

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


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

                                                                     For the
                                                        fiscal quarter ended
                                                    -------------------------

                                                       July 29       July 30
                                                          2007          2006
                                                    (Unaudited)   (Unaudited)

    Operating activities

      Net loss                                       $    (973)    $    (663)

      Items not affecting cash:
        Amortization of capital assets and
         asset impairments                               1,997         2,362
        Amortization of purchased intangibles
         and backlog                                     1,082         1,375
        Stock-based compensation                           488           632
        Future income taxes                             (1,186)         (898)
    -------------------------------------------------------------------------

                                                         1,408         2,808

      Cash effect of changes in:
        Accounts receivable                             (1,060)        1,251
        Income tax payable                                (115)          (70)
        Inventories                                      1,462        (1,774)
        Prepaid expenses and other current assets          168           297
        Accounts payable and accrued liabilities        (1,263)         (209)
    -------------------------------------------------------------------------

                                                           600         2,303

    Investing activities
      Acquisition of capital assets                     (4,148)       (4,985)
      Disposal of short term investments                42,379             -
      Acquisition of business                                -       (18,528)
    -------------------------------------------------------------------------

                                                        38,231       (23,513)

    Financing activities
      Net proceeds on the issue of common shares           250         1,268
      Repayment of debt                                      -          (650)
    -------------------------------------------------------------------------

                                                           250           618

    Increase (decrease) in cash and cash equivalents    39,081       (20,592)

    Cash and cash equivalents, beginning of period      18,340        64,914

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

    Cash and cash equivalents, end of period         $  57,421     $  44,322

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




For further information:

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

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