TranSwitch Corporation Announces Third Quarter 2012 Financial Results

SHELTON, Conn. — (BUSINESS WIRE) — November 8, 2012 — TranSwitch Corporation (NASDAQ: TXCC), a leading provider of semiconductor solutions for multimedia connectivity and processing today announced financial results for the third quarter ended September 30, 2012.

Net revenues for the third quarter of 2012 were approximately $4.8 million, as compared to net revenues of $3.8 million for the second quarter of 2012 and $6.7 million for the third quarter of 2011. Net loss for the third quarter of 2012 was ($3.0) million, or ($0.09) per basic and diluted common share, as compared to a net loss of ($6.0) million, or ($0.19) per basic and diluted common share for the second quarter of 2012, and a net loss of ($4.8) million, or ($0.16) per basic and diluted common share for the third quarter of 2011.

The GAAP gross margin for the third quarter was 64%. This is compared to the Company's GAAP gross margin of 67% for the second quarter of 2012, and 65% for the third quarter of 2011.

Total non-GAAP operating expenses for the third quarter of 2012 were $5.7 million, as compared to $7.4 million in the second quarter of 2012 and $7.4 million in the third quarter of 2011. Non-GAAP operating expenses for the third quarter of 2012 exclude $0.1 million in amortization of purchase price intangibles and $0.5 million in stock-based compensation along with a benefit of $0.3 million from the reversal of accrued royalties. Total GAAP operating expenses for the third quarter of 2012 were $6.0 million, as compared to $8.5 million in the second quarter of 2012 and $8.8 million in the third quarter of 2011.

Non-GAAP operating loss for the third quarter of 2012 was ($2.7) million, compared to a non-GAAP operating loss of ($4.9) million for the second quarter of 2012 and a non-GAAP operating loss of ($3.1) million for the third quarter of 2011. On a GAAP basis, the operating loss for the third quarter of 2012 was ($2.9) million, compared to an operating loss of ($5.9) million for the second quarter of 2012 and an operating loss of ($4.5) million for the third quarter of 2011.

Non-GAAP net loss for the third quarter of 2012 was ($2.7) million, or ($0.08) per share, compared with a non-GAAP net loss of ($5.0) million, or ($0.16) per share, for the second quarter of 2012 and a non-GAAP net loss of ($3.3) million, or ($0.11) per share, for the third quarter of 2011.

Further information about non-GAAP measures is provided below and a reconciliation of the non-GAAP measures to the comparable GAAP results is provided after the financial statements attached to this release.

“We made meaningful progress in the third quarter toward our business objectives,” stated Dr. M. Ali Khatibzadeh, President and CEO of TranSwitch Corporation. “In addition to 24% quarterly sequential revenue growth driven by IP licensing opportunities and increased royalty revenue, we achieved significant on-going reductions in expenses due to the restructuring plan we initiated earlier in the quarter. On the new video connectivity business front, we passed an important milestone of initial production shipments of HDplay™ product for our first customer who also plans to incorporate HDplay™ in new products. In addition, we are making progress securing new customers from an expanding list of opportunities and anticipate additional customers reaching production ramp in the fourth quarter and as we move into 2013. Overall, through the combination of an increased backlog of telecom products, IP licensing opportunities, royalty revenue and ramp of HDplay™ product, we are targeting further sequential growth in the fourth quarter. With regard to improving our balance sheet, as we have previously announced, our primary plan is the sale of telecom patents. We are making tangible progress towards the sale of our patents and anticipate completing a transaction by the end of the year.”

Additional details on TranSwitch’s third quarter 2012 financial results will be discussed during a conference call regarding this announcement today at 5:30 pm Eastern time. To listen to the live call, investors can dial 719-325-2484 and reference confirmation code: 2054387. The call will be recorded and a replay will be available two hours after the conclusion of the live broadcast through November 18, 2012. To access the replay, dial 719-457-0820 and enter confirmation code: 2054387. Investors can also access an audio webcast which will be broadcast through Vcall’s Investor Calendar at www.investorcalendar.com or the Company’s website at www.transwitch.com. This audio webcast will also be available on a replay basis for 10 business days.

About TranSwitch Corporation

TranSwitch Corporation (Nasdaq: TXCC) provides innovative integrated circuit (IC) and intellectual property (IP) solutions that deliver core functionality for video, voice, and data communications equipment for the customer premises and network infrastructure markets. For the customer-premises market, we offer multi-standard, high-speed interconnect solutions enabling the distribution and presentation of high-definition (HD) video and data content for consumer electronics applications. We also provide a family of best-in-class communications processors. For the network infrastructure market we provide integrated multi-core network processor System-on-a-Chip (SoC) solutions for Fixed, 3G and 4G Mobile, VoIP and Multimedia applications. TranSwitch’s customers are leading consumer electronics and telecom equipment companies around the globe. For more information, please visit www.transwitch.com or follow us at Facebook or Twitter .

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