Company Continues to Capitalize on Leadership Position in RapidIO(R) Market
Q2-2006 RESULTS: - Q2-2006 revenue of $18.6M (up 2% quarter-over-quarter; down 18% compared to Q2-2005) - Pro forma earnings of $2.2M (up from $1.8M in Q1-2006; down from $3.8M in Q2-2005) - Pro forma diluted earnings per share were $0.11 (up from $0.09 in Q1-2006; down from $0.19 in Q2-2005) - GAAP earnings for Q2-2006 were $1.4M or $0.07 per diluted share (up from $1.0M or $0.05 per diluted share in Q1-2006)
"Business was strong in the quarter and we're pleased with sequential revenue growth and solid earnings results as we maintain our investments in next-generation products," said Jim Roche, President and CEO of Tundra. "Our leadership position has been strengthened in our target markets with increasing momentum behind newly launched products and design support tools. We continue to broaden our product line, offering customers greater architectural scalability for a wide range of solutions that optimize performance, power efficiency, and cost - all key product attributes required for next-generation systems."
"We're pleased to report a second strong quarter of revenue at the high end of our guidance," said Norm Paquette, Chief Financial Officer of Tundra. "Our solid earnings are a reflection of a continued balanced approach to overall financial discipline and margin control, while delivering on our short term commitments and investing for future growth."
GUIDANCE FOR Q3-2006:
"We anticipate significant growth over the long term from our recently introduced host bridges for PowerPC(R) and serial RapidIO product lines," said Jim Roche, President and CEO of Tundra. "In the interim, we expect increased variability in our quarterly revenues."
- Revenue will be in the range of $17.0M to $19.0M - Pro forma diluted earnings per share will be in the range of $0.08 to $0.11 - Gross margins will be in the mid sixties LEADERSHIP IN RAPIDIO
Tundra continues to lead in the development of the RapidIO standard and is the first to bring parallel and serial RapidIO switches to market. RapidIO is the leading serial interconnect standard for embedded systems and is supported by industry leaders such as: Lucent, Freescale Semiconductor, Alcatel, AMCC, EMC Corp, and Ericsson. In October the Tsi564A(TM) serial RapidIO switch was made available for general sampling. Launched in May 2005, the Tsi564A joins the Tsi568A(TM) as the industry's only available serial RapidIO switches. The Tsi564A builds on the patent-pending technology of the Tsi568A, enabling reliable and high performance RapidIO interconnect in a smaller footprint for cost effective systems.
Tundra's leading role in bringing serial RapidIO to market and the increase in momentum of the number of serial RapidIO products available in the marketplace was demonstrated by the recent recognition of the Tsi564A by EETimes on its quarterly Ultimate Products Top Ten List issued October 3, 2005. Technical editors for the eeProductCenter nominate products named to the list and finalists are chosen through input solicited from up to 1,000 targeted product users. The Tsi564A received reader endorsement for being a key addition to the Tundra portfolio of RapidIO switches.
In September, Tundra announced it had signed an agreement with Technology Partnerships Canada, under which the Company would receive research and development funding of seven million dollars to accelerate the development of next-generation RapidIO System Interconnect products. This investment enables Tundra to build on the proven success of its RapidIO System Interconnect capability.
DRIVING THE GROWTH STRATEGY
Tundra recently announced the appointment of Mr. Daniel Hoste to the position of Vice President of Products. One of the semiconductor industry's leading executives, Mr. Hoste brings more than 30 years of experience to Tundra, including 16 years with Freescale Semiconductor, Inc. At Freescale, Mr. Hoste held management positions in all three business groups of the company, both in Europe and in the United States. More recently Mr. Hoste contributed to the company's success as Vice President and General Manager of the company's 8-16 bit Microcontroller division - a billion dollar global business - successfully growing revenues and profits. Bringing this highly successful track record and his global executive and management experience to Tundra, Mr. Hoste will become a key member of the executive team, contributing to the company's continued growth as the senior executive responsible for product management and operations.
CONFERENCE CALL DETAILS
Tundra will host a conference call and audio web cast on November 30, 2005 at 5:00 pm (EST) to discuss this earnings update. To listen by phone, call 416-644-3416. To listen to the web cast, please access http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal sign)1314940. An archive of the web cast will be available 15 minutes after the call. To listen to the conference call replay, call 416-640-1917 and enter pass code number: 21163830(pound key). Replay of the call will be available two hours following the call and up until December 9, 2005.
ABOUT TUNDRA
Tundra Semiconductor Corporation ( www.tundra.com) is the global leader in System Interconnect providing world-class support and leading edge semiconductor solutions to the world's foremost communications, networking, storage system, and information technology vendors. Consistently delivering on system level performance promises that reduce time to market, Tundra System Interconnect ensures market advantage in wireless infrastructure, storage networking, network access, military, industrial automation, and information technology applications.
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.
Comment respecting any Forward Looking Statement in this release
Tundra Semiconductor Corporation is a public company with common shares listed for trading on The Toronto Stock Exchange 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 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, product shipping schedules, product mix, competitive products, pricing pressure, 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 (Canada - registration in the United States, European Union, and People's Republic of China pending). Tsi564A and Tsi568A are trademarks of Tundra Semiconductor Corporation. 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.
(C) Copyright 2005 Tundra Semiconductor Corporation. All rights reserved. Information subject to change without notice. << TUNDRA SEMICONDUCTOR CORPORATION PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS (Canadian dollars, amounts in thousands except per share data) For the For the two fiscal quarter ended fiscal quarters ended ----------------------- ------------------------- October 30 October 31 October 30 October 31 2005 2004 2005 2004 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue $ 18,625 $ 22,655 $ 36,821 $ 45,296 Cost of revenue 6,183 7,927 12,549 16,033 ------------------------------------------------------------------------- Gross margin 12,442 14,728 24,272 29,263 ------------------------------------------------------------------------- Expenses Sales and marketing 2,883 2,355 5,649 4,902 General and administration 1,358 1,325 2,780 2,961 Research and development 5,089 4,778 10,128 9,540 ------------------------------------------------------------------------- 9,330 8,458 18,557 17,403 Pro forma earnings from operations 3,112 6,270 5,715 11,860 Interest and other income (expense) 304 (417) 529 (94) ------------------------------------------------------------------------- Pro forma earnings before income taxes 3,416 5,853 6,244 11,766 Income tax provision (1,181) (2,051) (2,192) (4,213) ------------------------------------------------------------------------- PRO FORMA EARNINGS $ 2,235 $ 3,802 $ 4,052 $ 7,553 ------------------------------------------------------------------------- Pro forma earnings per share Basic $ 0.11 $ 0.20 $ 0.21 $ 0.39 Diluted $ 0.11 $ 0.19 $ 0.21 $ 0.38 Weighted average number of common shares outstanding Basic 19,508 19,482 19,505 19,461 Diluted 19,711 19,721 19,684 19,808 ------------------------------------------------------------------------- TUNDRA SEMICONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS AND DEFICIT (Canadian dollars, amounts in thousands except per share data) For the For the two fiscal quarter ended fiscal quarters ended ----------------------- ------------------------- October 30 October 31 October 30 October 31 2005 2004 2005 2004 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue $ 18,625 $ 22,655 $ 36,821 $ 45,296 Cost of revenue 6,183 7,927 12,549 16,033 ------------------------------------------------------------------------- Gross margin 12,442 14,728 24,272 29,263 ------------------------------------------------------------------------- Expenses Sales and marketing 2,883 2,355 5,649 4,902 General and administration 1,358 1,325 2,780 2,961 Research and development 5,089 4,778 10,128 9,540 Stock based compensation expense 493 349 951 676 Amortization of purchased intangibles and backlog 558 563 1,104 1,187 ------------------------------------------------------------------------- 10,381 9,370 20,612 19,266 Earnings from operations 2,061 5,358 3,660 9,997 Interest and other income (expense) 304 (417) 529 (94) ------------------------------------------------------------------------- Earnings before income taxes 2,365 4,941 4,189 9,903 Income tax provision (980) (1,854) (1,795) (3,788) ------------------------------------------------------------------------- NET EARNINGS 1,385 3,087 2,394 6,115 Deficit, beginning of period (36,599) (42,072) (37,608) (44,530) Adjustment for change in accounting policy related to stock based compensation 0 0 0 (570) Deficit, beginning of period as restated (36,599) (42,072) (37,608) (45,100) ------------------------------------------------------------------------- DEFICIT, END OF PERIOD $ (35,214) $ (38,985) $ (35,214) $ (38,985) ------------------------------------------------------------------------- Earnings per share Basic $ 0.07 $ 0.16 $ 0.12 $ 0.31 Diluted $ 0.07 $ 0.16 $ 0.12 $ 0.31 Weighted average number of common shares outstanding Basic 19,508 19,482 19,505 19,461 Diluted 19,711 19,721 19,684 19,808 ------------------------------------------------------------------------- TUNDRA SEMICONDUCTOR CORPORATION CONSOLIDATED BALANCE SHEETS (Canadian dollars, amounts in thousands) October 30 April 30 2005 2005 (Unaudited) (Audited) ASSETS Current assets Cash and cash equivalents $ 6,783 $ 68,190 Short term investments 66,805 7,167 Accounts receivable 6,552 6,076 Inventories 4,235 4,629 Prepaid expenses and other current assets 3,235 4,774 Future income tax asset 1,179 901 ------------------------------------------------------------------------- 88,789 91,737 Capital assets 21,701 20,132 Purchased intangibles 2,157 3,249 Goodwill 37,325 37,325 Future income tax asset 3,604 3,287 ------------------------------------------------------------------------- $ 153,576 $ 155,730 ------------------------------------------------------------------------- CURRENT LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and accrued liabilities $ 8,195 $ 11,116 Income tax payable 186 1,452 Note payable 0 1,404 ------------------------------------------------------------------------- 8,381 13,972 Shareholders' equity Share capital 177,504 177,412 Contributed surplus 2,905 1,954 Deficit (35,214) (37,608) ------------------------------------------------------------------------- 145,195 141,758 ------------------------------------------------------------------------- $ 153,576 $ 155,730 ------------------------------------------------------------------------- TUNDRA SEMICONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Canadian dollars, amounts in thousands) For the For the two fiscal quarter ended fiscal quarters ended ----------------------- ------------------------- October 30 October 31 October 30 October 31 2005 2004 2005 2004 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Operating activities Net earnings $ 1,385 $ 3,087 $ 2,394 $ 6,115 Items not affecting cash: Amortization of capital assets and asset impairments 2,086 3,147 3,016 4,567 Amortization of purchased intangibles and backlog 558 563 1,104 1,187 Stock based compensation expense 493 349 951 676 Future income taxes (85) 308 (595) 1,862 ------------------------------------------------------------------------- 4,437 7,454 6,870 14,407 Cash effect of changes in: Accounts receivable (1,738) (1,003) (476) (276) Inventories 76 (664) 394 (783) Prepaid expenses and other current assets 526 (433) 1,539 (3,268) Accounts payable and accrued liabilities (393) (1,046) (2,982) (6,829) Income taxes payable (115) 671 (1,266) 1,552 ------------------------------------------------------------------------- 2,793 4,979 4,079 4,803 Investing Activities Acquisition of capital assets (1,790) (1,224) (4,570) (2,103) Proceeds on disposal of capital assets 0 0 0 201 Acquisition of short term investments (19,187) 0 (59,638) (55,983) Acquisition of business (1,370) (1,715) (1,370) (5,104) ------------------------------------------------------------------------- (22,347) (2,939) (65,578) (62,989) Financing activities Net proceeds on the issue of common shares 46 28 92 1,287 ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (19,508) 2,068 (61,407) (56,899) Cash and cash equivalents, beginning of period 26,291 11,663 68,190 70,630 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 6,783 $ 13,731 $ 6,783 $ 13,731 ------------------------------------------------------------------------- >>