TranSwitch Corporation Announces Second Quarter 2009 Financial Results

SHELTON, Conn. — (BUSINESS WIRE) — July 30, 2009 TranSwitch Corporation (NASDAQ: TXCC), a leading provider of semiconductor solutions for the converging voice, data and video network, today announced financial results for the second quarter ended June 30, 2009.

Net revenues for the second quarter of 2009 were approximately $14.5 million, as compared to net revenues of $14.2 million in the first quarter of 2009 and $8.9 million for the second quarter of 2008. The GAAP net loss for the second quarter of 2009 was ($1.3) million, or ($0.01) per basic and diluted common share as compared to a net income of $4.0 million, or $0.03 per basic and diluted common share, during the first quarter of 2009 and a net loss of ($4.3) million, or ($0.03) per basic and diluted common share during the second quarter of 2008.

The non-GAAP gross margin for the second quarter was 59%. This is compared to the Company's non-GAAP gross margin of 60% for the first quarter of 2009, and 60% for the second quarter of 2008. Presented on a GAAP basis, the second quarter of 2009 GAAP gross margin was 59% on total revenues. This is compared to the company's GAAP gross margin of 58% for the first quarter of 2009, and 60% for the second quarter of 2008.

Total non-GAAP operating expenses for the second quarter of fiscal 2009 were $8.1 million, down sequentially from the first quarter of fiscal 2009 level of $10.0 million. Total GAAP operating expenses for the second quarter of fiscal 2009 were $8.9 million and included $0.5 million in amortization of purchase price intangibles and $0.3 million in stock-based compensation.

Non-GAAP operating income for the second quarter of fiscal 2009 was $0.5 million compared to a non-GAAP operating loss of ($1.4) million for the first quarter of fiscal 2009 and a non-GAAP operating loss of ($3.5) million for the second quarter of 2008. On a GAAP basis, the operating loss for the second quarter of fiscal 2009 was ($0.3) million, compared to an operating income of $3.8 million for the first quarter of fiscal 2009 and an operating loss of ($3.7) million for the second quarter of 2008.

Non-GAAP results were a net loss of ($0.5) million, or ($0.00) per share for the second quarter of 2009 compared with a non-GAAP net loss of ($1.2) million, or ($0.01) per share, for the first quarter of 2009 and a non-GAAP net loss of ($4.1) million, or ($0.03) per share, for the second quarter of 2008. The non-GAAP results for the second quarter 2009 excluded amortization of purchase price intangibles of $0.5 million and stock–based compensation of $0.3 million.

Further information about non-GAAP measures and a reconciliation to the GAAP results is provided after the financials attached to this release.

“We are happy to announce that we have successfully delivered on our promise to achieve operating profitability in the second quarter. As we entered 2009, our goal was to create a leaner, more efficient, growing, and profitable company which we call the ‘new TranSwitch.’ Now that we have achieved profitability from operations, before non-cash items, at a revenue level of $14.5 million in the most recent quarter, we expect to continue a trend of top line and bottom line improvement as we move forward,” stated Dr. Santanu Das, President and CEO.

“We also successfully delivered on our plan to contain our operating expenses. In fact, operating expenses for the second quarter were even lower than what we had guided to last May. We believe that we can hold our expenses roughly at current levels while maintaining our growth prospects for the foreseeable future. As a result, as our revenues grow, incremental profits should all fall to the bottom line,” added Dr. Das.

“Overall, we are encouraged by the positive business trends we are seeing in a number of our markets. Asia-Pacific particularly continues to be strong, and it represents a growing percentage of our business which positions the company well for future growth. Our backlog continues to be stronger, and we are confident that the company can continue its revenue growth in the second half of 2009,” continued Dr. Das.

“Based on our current backlog, we are forecasting TranSwitch revenues in the third quarter of 2009 to be around $15 million which was our revenue level in the fourth quarter of 2008. At this revenue level, we should again achieve a non-GAAP operating profit. We estimate our third quarter 2009 GAAP net loss to be roughly ($0.01) per basic and diluted common share,” concluded Dr. Das.

Additional details on TranSwitch’s second quarter 2009 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 719-325-2205 and reference confirmation code: 3825400. The call will be recorded and a replay will be available two hours after the conclusion of the live broadcast through August 10, 2009. To access the replay, dial 719-457-0820 and enter confirmation code: 3825400. 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.

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