Tundra Reports Revenue of $22.2 Million, Earnings of $3.4 Million

Tundra Semiconductor Corporation (TSX:TUN), the leader in System Interconnect, reported financial results for the final quarter of fiscal 2007, which ended April 30, 2007.

Q4-2007 RESULTS:

  • Q4 Revenue: $22.2 million
  • Q4 Pro forma earnings: $3.4 million
  • Q4 Pro forma diluted earnings per share: $0.17
  • Q4 GAAP Results: earnings of $1.7 million or $0.08 per diluted share

Revenue for the fourth quarter of fiscal year 2007 was $22.2 million, a 17% increase over the fourth quarter in fiscal year 2006, and a 2% increase from the third quarter of fiscal year 2007. Pro forma earnings of $3.4 million represent a 30% increase compared to the fourth quarter of fiscal year 2006, and an 11% increase over the third quarter of fiscal year 2007. GAAP earnings for the quarter were $1.7 million or $0.08 per diluted share, down from earnings of $6.8 million or $0.35 in the fourth quarter fiscal year 2006, up from $1.3 million or $0.06 per diluted share in the third quarter in fiscal year 2007.

Fiscal Year 2007 RESULTS:

  • FY2007 Revenue: $85.3 million
  • FY2007 Pro forma earnings: $10.8 million
  • FY2007 Pro forma diluted earnings per share: $0.54
  • FY2007 GAAP Results: earnings of $2.0 million or $0.10 per diluted share

Revenue for fiscal year 2007 was $85.3 million, a 14% increase over fiscal year 2006. Pro forma earnings of $10.8 million represent a 21% increase compared to $8.9 million in fiscal year 2006. Pro forma diluted earnings per share of $0.54 represent a 20% increase compared to $0.45 in fiscal year 2006. GAAP earnings for the fiscal year were $2.0 million or $0.10 per diluted share, down from earnings of $10.8 million or $0.55 in fiscal year 2006.

“Tundra delivered solid performance in the fourth quarter and throughout fiscal year 2007,” said Daniel Hoste , President and Chief Executive Officer, Tundra Semiconductor. “Compared to fiscal year 2006, revenues in fiscal year 2007 increased by 14% accompanied by strong profitability and good cash generation. We will continue to build on our solid financial position and diversified portfolio of products and services while pursuing a renewed business strategy targeted to generate sustainable growth.”

Management offers the following outlook for the first quarter of fiscal year 2008:

  • Q1 Revenue is expected to be in the range of $19.5 million to $22.5 million
  • Q1 Pro forma diluted earnings per share is expected to be in the range of $0.09 to $0.13

“Guidance for the first quarter of fiscal 2008 reflects a continued lack of visibility in some end-markets, coupled with rapid appreciation of the Canadian dollar,” said David Long, Chief Financial Officer, Tundra Semiconductor.

Q4-2007 Highlights
Product Announcements:

Tundra recently announced through a partnership with their long time customer, Ericsson, that they will license Ericsson’s Switching Module of a MicroTCA(TM) Carrier Hub (MCH) card, designed with Tundra’s Tsi578(TM) Serial RapidIO(R) Switch. Tundra will sub-license the Tsi578 MicroTCA Switching Module (MSM) . In addition to being a preferred supplier, Ericsson selected Tundra as the sub-licenser due to the original selection of the Tsi578 for the MCH card design, and because Tundra is recognized as a key ecosystem enabler for RapidIO technology. RapidIO is a critical element in ATCA(R) and MicroTCA systems. With Tundra’s market presence, both Ericsson and Tundra anticipate the MSM offering, a ready-made MicroTCA option for networking OEM customers, to broaden the availability of Serial RapidIO -based MicroTCA Systems.

Tundra also recently launched the Tundra Tsi384(TM) four-lane PCI Express(R) (PCIe) to PCI-X Bridge. Pin compatible with a competing PCIe bridge product, this Bridge offers superior performance, lower latency, better throughput and lower power consumption than the competitive offering. Customers already sampling Tundra’s PCIe Bridge confirm that the product delivers outstanding performance. Customer response to the addition of PCIe interconnect to Tundra’s already broad PCI offering has been positive and Tundra anticipates good traction in new and existing designs against the competition.

In addition to a strong portfolio of industry-leading switches and first-to-market development platforms, Tundra has expanded its RapidIO offering to include Endpoint Intellectual Property (IP) for license. Currently in development, the Tundra Endpoint IP will be made commercially available through Silicon Logic Engineering (SLE), Tundra’s design services division, to system developers, semiconductor manufacturers, FPGA and ASIC vendors and their customers. The Endpoint IP is proven to interoperate with multiple vendor DSPs, FPGAs, and ASICs and will be used to create custom and standard product functions that will further enlarge the RapidIO product ecosystem.

Tundra announced the interoperability of its Tsi578 Serial RapidIO Switch with Texas Instruments TMS320TCI6487 and TMS320TCI6488 wireless infrastructure optimized DSPs. Using the Tundra Tsi578 Serial RapidIO development platform, Tundra and Texas Instruments completed interoperability testing. Successful tests prove that Tundra’s third generation switch, with multi-cast capability, and Texas Instrument’s 3-core, 3GHz DSPs can be deployed to develop DSP clusters, aggregated with Serial RapidIO switching. This industry-leading switch-DSP combination is ideal for high data intensive applications such as WiMAX, 3G, LTE, TD-SCDMA and WiBRO.

Tundra announced that its low power, asynchronous PCI-to-PCI Bridge, the Tundra Tsi350(TM) is in production. Communications and network equipment customers gain a competitive advantage with this high quality bridge solution with low power consumption. The Tsi350 targets both new and existing designs requiring 32-bit PCI-to-PCI bridges.

Jointly with RIOLAB(TM), now a division of Fabric Embedded Tools Corporation and the world’s only independent RapidIO interoperability testing facility, Tundra announced that its Tsi578(TM) Serial RapidIO Switch has now been qualified as Device Interoperability Level 3 (DIL-3) having successfully passed DIL-1, DIL-2 and DIL-3 testing against all other vendor devices in the RIOLAB hardware library.

Corporate Announcements:

On May 30 the Company announced a restructuring to align the organization more closely with the new long-term growth strategy. Rebalancing the Company’s resources and expenses was required in order to ensure Tundra’s operational efficiency, both in the short and long term. 20 positions were eliminated in the workforce reduction accompanied by a $1.6 million restructuring charge impacting the first quarter of fiscal 2008. Cost savings expected in fiscal 2008 as a result of this initiative are expected to be approximately $2 million.

On March 27, 2007 Tundra announced that the Toronto Stock Exchange (TSX) had accepted the Company’s notice of intention to make a normal course issuer bid. The Tundra Board of Directors approved a purchase of up to 1,722,000 common shares (representing approximately 10% of Tundra’s public float). The normal course issuer bid commenced on March 29, 2007 and will terminate on March 28, 2008. During the brief trading window prior to the Company’s Q4 black-out period, Tundra repurchased a total of 106,000 shares for cancellation under the bid.

Also in the quarter, Tundra appointed Dr. Benny Chang to the position of Chief Technology Officer (CTO), and promoted Mr. Ed Vopni to Vice President of Operations. Dr. Chang and Mr. Vopni bring technology innovation, market-driven focus, and momentum to Tundra’s smart interconnect solutions strategy.

Conference Call and Webcast
Tundra management will hold a conference call today June 7, 2007 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: 21233404#. (Available until June 14, 2007)

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

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.

TUNDRA and the Tundra logo are registered marks of Tundra Semiconductor Corporation in Canada, the European Union and the People’s Republic of China (registration is pending in the United States). Design.Connect.Go., Tsi350, Tsi384, Tsi578, and Tsi578 MSM, 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.