TranSwitch Corporation Announces Second Quarter 2009 Financial Results

TranSwitch expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in expectations or any change in events, conditions or circumstances on which any such statement is based.

TranSwitch is a registered trademark of TranSwitch Corporation.

TranSwitch Corporation
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except for per share amounts)

 
 

Three Months Ended

June 30,

  Six Months Ended

June 30,

2009   2008 2009   2008
Net revenues:
Product revenues $ 13,758 $ 8,640 $ 26,585 $ 15,534
Service revenues   777     251     2,197     877  
 
Total net revenues 14,535 8,891 28,782 16,411
Cost of revenues:
Cost of product revenues 5,566 3,422 10,746 5,874
Provision for excess and obsolete inventories 87 248 23
Cost of service revenues   330     127     926     587  
Total cost of revenues   5,983     3,549     11,920     6,484  
Gross profit 8,552 5,342 16,862 9,927
Operating expenses:
Research and development 4,292 5,829 9,935 11,378
Marketing and sales 2,723 2,003 5,541 4,130
General and administrative 1,885 1,409 4,050 2,972
Restructuring (benefit) charge and asset impairments   (35 )   (176 )   (6,192 )   72  
Total operating expenses   8,865     9,065     13,334     18,552  
Operating (loss) income (Note 1) (313 ) (3,723 ) 3,528 (8,625 )
Other income (expense):
Change in fair value of derivative liability (231 ) (255 )
Impairment of investments in non-publicly traded companies (31 )
Other (expense) income (739 ) 72 (205 ) (142 )
Interest income (expense):
Interest income 42 164 76 459
Interest expense   (202 )   (489 )   (401 )   (983 )
Interest expense, net   (160 )   (325 )   (325 )   (524 )
Total other expense, net   (899 )   (484 )   (561 )   (921 )
(Loss) income before income taxes (1,212 ) (4,207 ) 2,967 (9,546 )
Income tax expense   108     113     271     268  
Net (loss) income $ (1,320 ) $ (4,320 ) $ 2,696   $ (9,814 )
 
Basic net (loss) income per common share: $ (0.01 ) $ (0.03 ) $ 0.02   $ (0.07 )
Basic average common shares outstanding 159,224 132,422 159,106 133,235
 
Diluted net (loss) income per common share: $ (0.01 ) $ (0.03 ) $ 0.02   $ (0.07 )
 
Diluted average common shares outstanding 159,224 132,422 160,971 133,235
 
Note 1: Stock-based compensation expense included in cost of revenues and operating expenses is as follows:
Cost of revenues $ 11 $ 17 $ 24 $ 34
Research and development 190 222 365 439
Marketing and sales 38 29 81 77
General and administrative   84     63     154     177  
 
Total $ 323 $ 331 $ 624 $ 727
 

TranSwitch Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)

   

June 30,
2009

December 31,
2008

ASSETS
Current assets:
Cash, cash equivalents, restricted cash and short-term investments $ 8,619 $

15,284

 

Accounts receivable, net 13,999 12,865
Inventories 4,104 4,504
Prepaid expenses and other current assets   2,599     2,526  
 
Total current assets 29,321 35,179
 
Property and equipment, net 1,662 2,029
Goodwill 24,651 25,079
Other assets   15,105     16,140  
 
Total assets $ 70,739   $ 78,427  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, accrued expenses and other current liabilities $ 19,821 $ 20,746
Restructuring liabilities, current portion   3,456     5,725  
Total current liabilities 23,277 26,471
 
Restructuring liabilities 11,668 19,664
5.45% Convertible Notes due 2010   10,013     10,013  
 
Total liabilities   44,958     56,148  
 
Total stockholders’ equity   25,781     22,279  
 
Total liabilities and stockholders’ equity $ 70,739   $ 78,427  
 
TRANSWITCH CORPORATION
Supplemental Reconciliation of GAAP Results to Non-GAAP
(Unaudited)
(In thousands, except per share data)
 
Three Months Ended   Six Months Ended
June 30,   March 31,   June 30, June 30,   June 30,
2009 2009     2008 2009     2008
GAAP gross profit $ 8,552 $ 8,310 $ 5,342 $ 16,862 $ 9,927
Add:
Inventory Write-Up Acquired 42 227 - 269 -
Stock-based compensation 11   13   17   24   34  
Non-GAAP gross profit $ 8,605   $ 8,550   $ 5,359   $ 17,155   $ 9,961  
 
GAAP gross margin 58.8 % 58.3 % 60.1 % 58.6 % 60.5 %
Inventory Write-Up Acquired 0.3 % 1.6 % 0.0 % 0.9 % 0.0 %
Stock-based compensation 0.1 % 0.1 % 0.2 % 0.1 % 0.2 %
Non-GAAP gross margin 59.2 % 60.0 % 60.3 % 59.6 % 60.7 %
 
GAAP research and development expenses $ 4,292 $ 5,643 $ 5,829 $ 9,935 $ 11,378
Less:
Amortization of purchase accounting intangibles 113 119 18 232 36
Stock-based compensation 190   175   222   365   439  
Non-GAAP research and development expenses $ 3,989   $ 5,349   $ 5,589   $ 9,338   $ 10,903  
 
GAAP selling, general, and administrative expenses $ 4,608 $ 4,983 $ 3,412 $ 9,591 $ 7,102
Less:
Amortization of purchase accounting intangibles 340 250 88 590 176
Stock-based compensation 122   113   92   235   254  
Non-GAAP selling, general, and administrative expenses $ 4,146   $ 4,620   $ 3,232   $ 8,766   $ 6,672  
 
GAAP operating expenses $ 8,865 $ 4,469 $ 9,065 $ 13,334 $ 18,552
Less:
Amortization of purchase accounting intangibles 453 369 106 822 212
Stock-based compensation 312 288 314 600 693
Restructuring charges (35 ) (6,157 ) (176 ) (6,192 ) 72  
Non-GAAP operating expenses $ 8,135   $ 9,969   $ 8,821   $ 18,104   $ 17,575  
Non-GAAP operating income (loss) $ 470   $ (1,419 ) $ (3,462 ) $ (949 ) $ (7,614 )
 
GAAP net income (loss) $ (1,320 ) $ 4,016 $ (4,320 ) $ 2,696 $ (9,814 )
Less:
Amortization of purchase accounting intangibles 453 369 106 822 212
Stock-based compensation 323 301 331 624 727
Inventory Write-Up Acquired 42 227 - 269 -
Restructuring charges (35 ) (6,157 ) (176 ) (6,192 ) 72  
Non-GAAP net income (loss) $ (537 ) $ (1,244 ) $ (4,059 ) $ (1,781 ) $ (8,803 )
 
GAAP basic and diluted net income (loss) per share $ (0.01 ) $ 0.03 $ (0.03 ) $ 0.02 $ (0.07 )
Amortization of purchase accounting intangibles 0.01 - - 0.01 -
Stock-based compensation - - - - -
Inventory Write-Up Acquired - - - - -
Restructuring charges -   (0.04 ) -   (0.04 ) -  
Non-GAAP net income (loss) $ -   $ (0.01 ) $ (0.03 ) $ (0.01 ) $ (0.07 )

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