TranSwitch Corporation Announces Fourth Quarter Results.SHELTON Shelton, city (1990 pop. 35,418), Fairfield co., SW Conn., on the Housatonic River opposite Derby; settled 1697, set off from Stratford 1789, inc. as a city 1915. Metal products, furniture, and electronic equipment are among the city's manufactures. , Conn. -- TranSwitch Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : TXCC TXCC Transwitch Corporation (stock symbol) ) announced today that it posted fourth quarter, 2004 net revenues of $8.4 million and a net loss of ($13.9) million, or ($0.14) per basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. common share. For the year ended December December: see month. 31, 2004, the Company posted net revenues of $33.7 million and a net loss of ($44.6) million, or ($0.47) per basic and diluted common share. During the quarter ended December 31, 2004, the Company reported a gross margin of $5.7 million. This margin was impacted by a cost of sales benefit totaling $0.6 million from the sale of previously reserved inventory. The net loss for the fourth quarter, 2004 includes the following non-cash items: --a loss of $1.7 million reflecting the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of the unamortized debt discount associated with the exchange of $11.5 million face value of the Company's Plus Cash NotesSM that were exchanged for approximately 8.9 million shares of common stock; --interest expense of approximately $1.3 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" amortization of the debt discount related to the Company's 5.45% Convertible Plus Cash NotesSM due September September: see month. 30, 2007; --restructuring charges totaling approximately $0.8 million resulting from the Company's disengagement disengagement /dis·en·gage·ment/ (dis?en-gaj´ment) emergence of the fetus from the vaginal canal. dis·en·gage·ment n. from Easics N.V., a wholly owned research and development subsidiary in Belgium Belgium (bĕl`jəm), Du. België, Fr. La Belgique, officially Kingdom of Belgium, constitutional kingdom (2005 est. pop. 10,364,000), 11,781 sq mi (30,513 sq km), NW Europe. , the deconsolidation of OptiX Networks, Inc. and asset impairments; and --other expense of approximately $0.7 million to reflect the change in the fair value of the derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. liability relating to the Company's 5.45% Convertible Plus Cash NotesSM due September 30, 2007. For comparison purposes, the net revenues, the gross margin and the net loss for the fourth quarter, 2003 were: --the net revenues were $7.4 million; --the gross margin was $5.7 million; and --the net loss was ($11.2) million, or ($0.12) per basic and diluted common share. Results for the fourth quarter of 2003 included a non-cash gain of $2.6 million to reflect the change in the fair value of the derivative liability relating to the 5.45% Convertible Plus Cash Notes issued on September 30, 2003. "As we enter 2005, we have a positive expectation for the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. prospects of the Company. This is based on the fact that today we have design-wins in the key platforms of most of the Tier-1 customers, we have a product portfolio in our sector that is second to none, and we have been successful in reducing our expenses systematically without compromising our competitive advantage in the wire-line market segment that we are targeting," stated Dr. Santanu Das, Chairman of the Board, Chief Executive Officer, and President of TranSwitch Corporation. "In Q4, we secured 62 design-wins worldwide at 29 customers. Although we continue to remain cautious about the revenue forecast for these new designs, we are encouraged by the fact that 20 of the design-wins this quarter came from several tier-one accounts in the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. industry. Our EtherMap-3 product gained 14 design wins this quarter with 5 new customers, bringing the total to 131 design-wins with 75 customers. We gained 3 additional wins with our ET-12 and ET-48 products. In addition, during the fourth quarter, we continued to make progress with our Envoy envoy: see diplomatic service. Envoy - Motorola's integrated personal wireless communicator. Envoy is a personal digital assistant which incorporates two-way wireless and wireline communication. family of products (a single chip solution for backplane An interconnecting device that has sockets for printed circuit boards to plug into. Passive and Active Although resistors may be used, a "passive" backplane adds no processing in the circuit. switching and physical layer applications such as Ethernet Ethernet Telecommunications networking protocol introduced by Xerox Corp. in 1979. It was developed as an inexpensive way of sending information quickly between office machines connected together in a single room or building, but it rapidly became a standard computer uplinks, Ethernet Over VDSL See DSL. VDSL - Very high bit-rate Digital Subscriber Line , and Ethernet Over SONET) with 5 designs. Our PHAST PHAST Participatory Hygiene and Sanitation Transformation PHAST Prototype Hard and Soft Tooling (rapid prototyping) PHAST Practical Home Automation Systems Technology (AMX) family of products were designed into 16 applications." "In the fourth quarter, 2004 and the first quarter, 2005, we took several steps to meaningfully reduce our operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . These steps included the very difficult decision of reducing our staff by approximately 18%. This is the fifth time we have restructured our staff since the downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. started in 2001," continued Dr. Das. "We believe that we are still in the middle of an inventory re-balancing as systems vendors reduce excess inventories. This adjustment continues to take some time and makes short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. visibility cloudy cloudy (clou´de) 1. murky; turbid; not transparent. 2. marked by indistinct streaks. , even though we believe the end market is sound. Therefore, we are estimating that our first quarter, 2005 product revenues will be approximately $7.5 - $8.0 million, of which approximately $5.7 million was in opening backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. . Our first quarter, 2005 net loss is estimated to be in the range of ($0.10) to ($0.12) per basic and diluted common share. This net loss estimate for the first quarter, 2005 excludes any adjustment to the fair value of the derivative liability associated with our 5.45% Convertible Plus Cash NotesSM. The non-cash adjustment to fair value is based on several estimates, including our common stock price during the quarter ending March 31, 2005," concluded Dr. Das. Additional details on TranSwitch's fourth quarter results will be discussed during a conference call regarding this announcement on Monday, January 24, 2005 at 5:30 pm eastern time. To listen to the live call, investors can dial (719) 457-2734 and reference confirmation code: 4246352. The call will be recorded and a replay will be available two hours after the conclusion of the live broadcast through February 7, 2005. To access the replay, dial (719) 457-0820 and enter confirmation code: 4246352. Investors can also access an audio webcast via www.vcall.com by clicking on the TranSwitch Corporation conference call link. This audio webcast will also be available on a replay basis for 10 business days. About TranSwitch Corporation: TranSwitch Corporation, headquartered in Shelton, CT, is a leading developer and global supplier of innovative high-speed VLSI VLSI: see integrated circuit. (1) (Very Large Scale Integration) Between 100,000 and one million transistors on a chip. See SSI, MSI, LSI and ULSI. (2) (VLSI Technology, Inc., Tempe, AZ, www.semiconductors. semiconductor solutions - Connectivity Engines(TM) - to original equipment manufacturers who serve three end-markets: the Worldwide Public Network Infrastructure, the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the Infrastructure, and corporate Wide Area Networks (WANs). Combining its in-depth understanding of applicable global communication standards and its world-class expertise in semiconductor design, TranSwitch Corporation implements communications standards in VLSI solutions which deliver high levels of performance. Committed to providing high-quality products and service, TranSwitch Corporation, Shelton, CT is an ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. 9001:2000 registered company. Detailed information on TranSwitch products, news announcements, seminars, service and support is available on TranSwitch's home page at the World Wide Website - http://www.transwitch.com. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. in this release, including statements regarding management's expectations for future financial results and the markets for TranSwitch's products, are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Investors are cautioned that these forward-looking statements regarding TranSwitch, its operations and its financial results involve risks and uncertainties, including without limitation risks of downturns in economic conditions generally and in the telecommunications and data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. markets and the semiconductor industry specifically; risks in product development and market acceptance of and demand for TranSwitch's products and products developed by TranSwitch's customers; risks relating to TranSwitch's indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. ; risks of failing to attract and retain key managerial and technical personnel; risks associated with foreign sales and high customer concentration; risks associated with competition and competitive pricing pressures; risks associated with investing in new businesses; risks of dependence on third-party VLSI fabrication fabrication (fab´rikā´sh  n),n the construction or making of a restoration. facilities; risks related to intellectual property rights and litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; risks in technology development and commercialization; and other risks detailed in TranSwitch's filings with the Securities and Exchange Commission. Actual results could differ materially from those currently expected or anticipated.
TranSwitch Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share amounts)
(unaudited)
Three Months Ended Year Ended
December 31, December 31,
2004 2003 2004 2003
Net revenues:
Product revenues $ 8,441 $ 7,259 $ 33,481 $ 22,970
Service revenues 6 171 206 850
---------- -------- --------- ----------
Total net revenues 8,447 7,430 33,687 23,820
Cost of revenues:
Cost of product revenues 2,719 1,588 9,609 6,086
Provision for excess and
obsolete inventories -- -- 571 1,498
Cost of service revenues -- 107 160 333
---------- -------- --------- ----------
Total cost of revenues 2,719 1,695 10,340 7,917
---------- -------- --------- ----------
Gross profit 5,728 5,735 23,347 15,903
Operating expenses:
Research and development 9,159 10,680 46,030 42,510
Marketing and sales 3,211 2,788 12,543 10,964
General and administrative 1,528 1,535 6,697 5,630
Restructuring charge
(benefit) and asset
impairments 846 (526) 1,126 2,538
---------- -------- --------- ----------
Total operating expenses 14,744 14,477 66,396 61,642
---------- -------- --------- ----------
Operating loss (9,016) (8,742) (43,049) (45,739)
Other (expense) income:
Equity in net losses of
affiliates -- (565) -- (1,933)
Change in fair value of
derivative liability (728) 2,619 12,124 2,619
Gain on exchange of 4.50%
convertible notes -- -- -- 14,463
Loss on extinguishment of
debt (1,746) -- (2,987) --
Other income, net -- -- 378 --
Impairment of investments
in non-publicly traded
companies -- (1,495) (123) (1,545)
Interest income (expense):
Interest income 686 495 2,394 2,805
Interest expense (3,103) (3,522) (12,895) (8,116)
---------- -------- --------- ----------
Interest expense, net (2,417) (3,027) (10,501) (5,311)
---------- -------- --------- ----------
Total other (expense)
income, net (4,891) (2,468) (1,109) 8,293
---------- -------- --------- ----------
Loss before income taxes,
extraordinary loss and
cumulative
Effect of adoption of
and changes in
accounting principles (13,907) (11,210) (44,158) (37,446)
Income tax expense (benefit) 26 (11) 189 246
---------- -------- --------- ----------
Loss before extraordinary
loss and cumulative effect
of adoption of and changes
in accounting principles (13,933) (11,199) (44,347) (37,692)
Extraordinary loss upon
consolidation of TeraOp
(USA), Inc. -- -- -- (83)
Cumulative effect on
prior years of adoption
of and retroactive
application of FIN 46R
and new depreciation
method -- -- (277) (805)
---------- -------- --------- ----------
Net loss $(13,933) $(11,199) $(44,624) $(38,580)
---------- -------- --------- ----------
Basic and diluted loss per
common share:
Loss before extraordinary
loss and cumulative effect
of adoption of and changes
in accounting principles (0.14) (0.12) $ (0.47) $ (0.42)
Extraordinary loss
upon consolidation of
TeraOp (USA), Inc. -- -- -- --
Cumulative effect on
prior years of
adoption of and
retroactive
application of FIN
46R and new
depreciation method -- -- -- (0.01)
---------- -------- --------- ----------
Net loss $ (0.14) $ (0.12) $ (0.47) $ (0.43)
---------- -------- --------- ----------
Basic and diluted average
common shares outstanding 100,438 90,842 94,638 90,406
TranSwitch Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2004 2003
(unaudited)
ASSETS
Current assets:
Cash and short-term investments $102,504 $152,051
Accounts receivable, net 4,795 3,684
Inventories 2,933 2,838
Prepaid expenses and other current assets 2,243 2,912
---------- ---------
Total current assets 112,475 161,485
Long-term marketable securities 32,178 27,300
Property and equipment, net 3,590 10,262
Other assets 6,465 7,259
---------- ---------
Total assets $154,708 $206,306
---------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses and other
current liabilities $ 10,579 $ 12,186
Restructuring liabilities 1,093 1,454
4.50% Convertible Notes due 2005 24,442 --
---------- ---------
Total current liabilities 36,114 13,640
Restructuring liabilities - long-term 21,532 22,689
5.45% Convertible Plus Cash NotesSM due 2007,
net of debt discount of $13,149
and $21,742, respectively 67,370 75,866
4.50% Convertible Notes due 2005 -- 24,442
Derivative liability 8,461 20,659
---------- ---------
Total liabilities 133,477 157,296
---------- ---------
Commitments and contingencies
Total stockholders' equity 21,231 49,010
---------- ---------
Total liabilities and stockholders' equity $154,708 $206,306
---------- ---------
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion