Published:
Tundra Semiconductor Reports Q2 FY09 Financial Results
Tundra Delivers Solid Quarter in Difficult Economic Environment
OTTAWA, Dec. 3 /PRNewswire-FirstCall/ - Tundra Semiconductor Corporation (Tundra, or "the Company") (TSX:TUN), a leader in System Interconnect, today reported financial results for the second quarter of fiscal 2009, which ended November 2, 2008.
Q2-2009 RESULTS:
- Q2 Revenue: $18.2 million
- Q2 Pro forma earnings: $2.4 million
- Q2 Pro forma diluted earnings per share: $0.12
- Q2 GAAP results: earnings of $1.7 million or $0.09 per diluted share
Revenue for the second quarter of fiscal year 2009 was $18.2 million,
comprised of $9.2 million in the Communications market segment, $6.8 million
in the Computing/Storage market segment, and $2.2 million in Design Services.
Quarterly revenue represents a 1% increase from the first quarter of fiscal
year 2009 and a 2% increase compared to the second quarter of fiscal year
2008. Pro forma earnings for the quarter were $2.4 million or $0.12 per share,
compared to earnings of $1.2 million or $0.06 per share in the first quarter
of fiscal year 2009 and compared to $0.9 million or $0.05 per share in the
second quarter of fiscal year 2008. GAAP earnings for the quarter were $1.7
million or $0.09 per diluted share, compared to earnings of $0.04 million or
$0.02 per diluted share in the first quarter of fiscal year 2009, and a loss
of $0.7 million or $0.04 per diluted share in the second quarter fiscal year
2008.
"Second quarter results were very good and operational performance was
strong, against a backdrop of difficult economic conditions. Overall revenue
grew by 1% and pro forma earnings doubled compared to the previous quarter.
Exchange rate fluctuations also contributed to the positive financial results.
Cash flow from operations of $5.1 million brought our total cash position to
more than $62 million at the close of the quarter," said Daniel Hoste,
President and Chief Executive Officer, Tundra Semiconductor. "We also
completed two important distribution agreements which will expand our global
reach and drive further penetration of our products in Japan, Europe
(including Russia), the Middle East, and Africa," continued Hoste.
"During the quarter, customer design activity remained steady giving us
confidence that future opportunities for Tundra's products remain positive and
that we continue to be well positioned for long-term success. Based on the
rapidly changing state of the global economy however, we, like many other
companies in our industry, have very limited short term visibility. Based on
our view today, we expect a decline in revenue for the coming quarter," said
David Long, Chief Financial Officer, Tundra Semiconductor.
Management offers the following outlook for the third quarter of fiscal
year 2009:
- Q3 Revenue is expected to be in the range of $13.5 million to
$16.5 million
- Q3 Pro forma diluted earnings per share is expected to be in the range
of a loss of $0.05 to a gain of $0.02
"Although we expect the business climate to be challenging in the short
term, we are focused on remaining profitable and delivering solid cash
performance," continued Long.
Q2-2009 Highlights
- Avnet Memec has joined Tundra's global sales channel as a Pan-European
distributor. Under the agreement announced in November, Avnet Memec
will market and sell Tundra's system interconnect product portfolio to
new and existing European customers, and will provide comprehensive
technical design-in support for Tundra products utilizing Avnet Memec's
network of 31 offices in 19 European countries.
- Tundra continued to demonstrate RapidIO(R) leadership with the addition
of a new cost and space sensitive switch, the Tundra Tsi577(TM). By
minimizing power consumption and package size, this Switch offers
customers the powerful functionality of RapidIO while reducing overall
system cost. Wireless and video infrastructure OEM's can now leverage a
smaller footprint and cost reduced RapidIO Switch using the Tsi577.
Tundra's industry-leading RapidIO Switches are the de facto standard
for all next generation wireless platforms, with 9 out of 10 of the
world's leading wireless OEM's now using Tundra's RapidIO solutions.
- The Company further expanded its Asia Pacific strategy by signing a
distribution agreement with Hakuto Co., Ltd., a leading-edge
electronics and semiconductor distributor in Japan. As part of Tundra's
on-going growth strategy, Hakuto will now promote and distribute
Tundra's full range of System Interconnect products in the Japanese
market. Hakuto is a well respected distributor and has been providing
customers in Japan cutting-edge technology and semiconductor solutions
for more than 50 years. Tundra's partnership with Hakuto's technical
professionals will ensure that the Japanese market has direct access to
Tundra's world-class System Interconnect solutions.
- During the quarter Tundra implemented an automatic securities purchase
plan ("Plan") in connection with its normal course issuer bid ("NCIB")
announced on April 7, 2008. The Plan was established to provide
standard pre-determined instructions regarding how Tundra's common
shares are to be purchased by Tundra's authorized broker, during self-
imposed blackout periods. Purchases under the Plan are subject to all
other restrictions applicable to the NCIB, including the daily and
yearly repurchase limits, as disclosed in Tundra's press release of
April 7, 2008. The Plan commenced October 17, 2008 and terminates
together with the NCIB on April 8, 2009. The Plan constitutes an
"automatic plan" for purposes of applicable Canadian securities
legislation.
- Dr. A. Kevin Francis, LLD, was elected to the Board of Directors, at
the last Annual General Meeting. Kevin's breadth of knowledge of the
information technology industry, as well as his 30 years of financial
and business management experience will make him a strong addition to
the Board. Currently, Kevin is the President and Chief Executive
Officer of CenterBeam, an IT service company. Previously he served as
President, Chief Executive Officer and Director of Accelio Corporation,
a leading global provider of web-enabled business process solutions.
Before joining Accelio, Kevin held a variety of positions with Xerox
including Chairman, President and Chief Executive Officer of Xerox
Canada.
Conference Call and Webcast
Tundra management will hold a conference call today December 3, 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: 1.416-644-3422
Replay: 1.416-640-1917, Passcode: 21287849#.
(Available until December 10, 2008)
Web Cast: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2482920
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, 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 Tsi577 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 Tsi577 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 quarters ended November 2, 2008 and October 28, 2007
(Canadian dollars, amounts in thousands except per share data)
(Unaudited)
Three months ended Six months ended
----------------------- ----------------------
November 2 October 28 November 2 October 28
2008 2007 2008 2007
Revenue
Product $ 16,024 $ 15,716 $ 31,720 $ 33,770
Service 2,225 2,176 4,540 4,180
-------------------------------------------------------------------------
18,249 17,892 36,260 37,950
Cost of revenue
Product 4,889 5,033 10,862 10,641
Service 1,698 1,367 3,292 2,541
-------------------------------------------------------------------------
6,587 6,400 14,154 13,182
-------------------------------------------------------------------------
Gross margin 11,662 11,492 22,106 24,768
Expenses
Sales and marketing 2,888 2,895 5,987 5,923
General and
administration 2,167 2,081 4,229 4,489
Research and development 5,353 5,905 9,791 11,867
-------------------------------------------------------------------------
10,408 10,881 20,007 22,279
Pro forma earnings
from operations 1,254 611 2,099 2,489
Interest and other income 1,081 346 1,524 1,032
-------------------------------------------------------------------------
Pro forma earnings before
income taxes 2,335 957 3,623 3,521
Income tax (recovery)
provision (62) 32 33 661
-------------------------------------------------------------------------
PRO FORMA EARNINGS $ 2,397 $ 925 $ 3,590 $ 2,860
-------------------------------------------------------------------------
Pro forma earnings
per share
Basic $ 0.12 $ 0.05 $ 0.18 $ 0.14
Diluted $ 0.12 $ 0.05 $ 0.18 $ 0.14
Weighted average number
of common shares
outstanding
Basic 19,564 19,894 19,656 19,974
Diluted 19,564 19,907 19,671 20,023
TUNDRA SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME
(LOSS)
For the quarters ended November 2, 2008 and October 28, 2007
(Canadian dollars, amounts in thousands except per share data)
(Unaudited)
Three months ended Six months ended
----------------------- ----------------------
November 2 October 28 November 2 October 28
2008 2007 2008 2007
Revenue
Product $ 16,024 $ 15,716 $ 31,720 $ 33,770
Service 2,225 2,176 4,540 4,180
-------------------------------------------------------------------------
18,249 17,892 36,260 37,950
Cost of revenue
Product 4,889 5,033 10,862 10,641
Service 1,698 1,367 3,292 2,541
-------------------------------------------------------------------------
6,587 6,400 14,154 13,182
-------------------------------------------------------------------------
Gross margin 11,662 11,492 22,106 24,768
Expenses
Sales and marketing 2,888 2,895 5,987 5,923
General and
administration 2,167 2,081 4,229 4,489
Research and development 5,353 5,905 9,791 11,867
Stock-based compensation 525 619 975 1,107
Amortization of
acquisition-related
intangible assets 137 1,017 443 2,099
Restructuring charges - - - 1,659
-------------------------------------------------------------------------
11,070 12,517 21,425 27,144
Earnings (loss) from
operations 592 (1,025) 681 (2,376)
Interest and other income 1,081 346 1,524 1,032
-------------------------------------------------------------------------
Earnings (loss) before
income taxes 1,673 (679) 2,205 (1,344)
Income tax (recovery)
provision (62) 32 33 340
-------------------------------------------------------------------------
NET EARNINGS (LOSS) AND
COMPREHENSIVE INCOME
(LOSS) $ 1,735 $ (711) $ 2,172 $ (1,684)
-------------------------------------------------------------------------
Earnings (loss) per share
Basic $ 0.09 $ (0.04) $ 0.11 $ (0.08)
Diluted $ 0.09 $ (0.04) $ 0.11 $ (0.08)
Weighted average number
of common shares
outstanding
Basic 19,564 19,894 19,656 19,974
Diluted 19,564 19,894 19,671 19,974
TUNDRA SEMICONDUCTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
(Canadian dollars, amounts in thousands)
November 2 April 30
2008 2008
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $ 37,259 $ 23,861
Short-term investments 24,796 35,373
Accounts receivable 8,567 7,470
Inventories 6,120 6,226
Prepaid expenses and other current assets 2,168 3,288
Future income tax asset 1,850 2,970
-------------------------------------------------------------------------
80,760 79,188
Other assets 1,744 1,919
Investment tax credits recoverable 8,791 8,976
Property, plant and equipment 17,468 16,272
Intangible assets 5,368 5,720
Future income tax asset 6,016 4,638
-------------------------------------------------------------------------
$120,147 $116,713
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 10,800 $ 9,913
Income tax payable 150 131
-------------------------------------------------------------------------
10,950 10,044
Shareholders' equity
Share capital 179,893 181,006
Contributed surplus 11,556 10,087
Deficit (82,252) (84,424)
-------------------------------------------------------------------------
109,197 106,669
-------------------------------------------------------------------------
$120,147 $116,713
-------------------------------------------------------------------------
TUNDRA SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the quarters November 2, 2008 and October 28, 2007
(Canadian dollars, amounts in thousands)
(Unaudited)
Three months ended Six months ended
----------------------- ----------------------
November 2 October 28 November 2 October 28
2008 2007 2008 2007
Operating activities
Earnings (loss) $ 1,735 $ (711) $ 2,172 $ (1,684)
Items not affecting cash
Amortization of property,
plant and equipment and
asset impairments 2,180 2,049 3,975 4,046
Amortization of
intangible assets 224 1,017 545 2,099
Stock-based compensation 525 619 975 1,107
Investment tax credits
recoverable 325 (1,592) 185 (1,720)
Future income taxes (144) 906 (258) (152)
-------------------------------------------------------------------------
4,845 2,288 7,594 3,696
Cash effect of changes in
Accounts receivable 199 2,444 (1,097) 1,384
Inventories (122) 636 106 2,098
Prepaid expenses and
other assets 258 1,043 1,295 1,211
Accounts payable and
accrued liabilities (75) (703) 739 (1,966)
Income taxes payable (39) - 19 (115)
-------------------------------------------------------------------------
5,066 5,708 8,656 6,308
-------------------------------------------------------------------------
Investing activities
Acquisition of property,
plant and equipment (1,249) (1,283) (5,171) (5,431)
Purchased intangibles (193) (947) (193) (947)
Acquisition of short-term
investments (24,796) - (24,796) -
Proceeds on disposal of
short-term investments - - 35,373 42,379
-------------------------------------------------------------------------
(26,238) (2,230) 5,213 36,001
-------------------------------------------------------------------------
Financing activities
Net proceeds on the issue
of common shares - 176 - 426
Share repurchase (106) (383) (471) (383)
-------------------------------------------------------------------------
(106) (207) (471) 43
-------------------------------------------------------------------------
Increase (Decrease) in cash
and cash equivalents (21,278) 3,271 13,398 42,352
Cash and cash
equivalents, beginning
of period 58,537 57,421 23,861 18,340
-------------------------------------------------------------------------
Cash and cash
equivalents, end of
period 37,259 60,692 37,259 60,692
Short-term investments,
end of period 24,796 - 24,796 -
-------------------------------------------------------------------------
Cash, cash equivalents
and short-term
investments, end of
period $ 62,055 $ 60,692 $ 62,055 $ 60,692
-------------------------------------------------------------------------
SOURCE TUNDRA SEMICONDUCTOR CORPORATION
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