TranSwitch Corporation (NASDAQ: TXCC), a leading provider of
semiconductor solutions for multimedia connectivity and processing,
today announced financial results for the first quarter ended March 31,
2013.
Net revenues for the first quarter of 2013 were approximately $4.6
million, as compared to net revenues of $5.6 million for the fourth
quarter of 2012 and $3.7 million for the first quarter of 2012. Net loss
for the first quarter of 2013 was ($3.1) million, or ($0.08) per basic
and diluted common share, as compared to a net loss of ($3.1) million,
or ($0.09) per basic and diluted common share for the fourth quarter of
2012, and a net loss of ($6.1) million, or ($0.20) per basic and diluted
common share for the first quarter of 2012.
The GAAP gross margin for the first quarter was 81%. This is compared to
the Company's GAAP gross margin of 75% for the fourth quarter of 2012,
and 59% for the first quarter of 2012.
Total non-GAAP operating expenses for the first quarter of 2013 were
$5.9 million, as compared to $5.6 million in the fourth quarter of 2012
and $7.5 million in the first quarter of 2012. Non-GAAP operating
expenses for the first quarter of 2013 exclude $0.1 million in
amortization of purchase price intangibles, $0.6 million in stock-based
compensation and $0.2 million in restructuring charges, along with a
benefit of $0.2 million from the reversal of accrued royalties. Total
GAAP operating expenses for the first quarter of 2013 were $6.6 million,
as compared to $7.2 million in the fourth quarter of 2012 and $8.1
million in the first quarter of 2012.
Non-GAAP operating loss for the first quarter of 2013 was ($2.2)
million, compared to a non-GAAP operating loss of ($1.4) million for the
fourth quarter of 2012 and a non-GAAP operating loss of ($5.3) million
for the first quarter of 2012. On a GAAP basis, the operating loss for
the first quarter of 2013 was ($2.9) million, compared to an operating
loss of ($3.0) million for the fourth quarter of 2012 and an operating
loss of ($5.9) million for the first quarter of 2012.
Non-GAAP net loss for the first quarter of 2013 was ($2.4) million, or
($0.07) per share, compared with a non-GAAP net loss of ($1.5) million,
or ($0.04) per share, for the fourth quarter of 2012 and a non-GAAP net
loss of ($5.5) million, or ($0.18) per share, for the first quarter of
2012.
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.
“Since the beginning of this year, we have successfully raised about
$4.8 million to support the ramp of our video connectivity business,”
stated Dr. M. Ali Khatibzadeh, President and CEO of TranSwitch
Corporation. “Additionally, as we have previously announced, we have
signed a contract for the sale of ten of our legacy telecom patents. We
have so far completed sale of five patents in the amount of $0.8 million
and anticipate completing sale of the remaining five patents. On the
business front, we continued to make progress in expanding our active
customer list for HDplay™ products to nine customers so far. Our list of
new customer opportunities for HDplay™ products is over 75 potential
customers and we anticipate the list of active HDplay™ customers to
increase throughout 2013. We have also made substantial headway in the
launch of the new HDPlay™ products with MHL mobile connectivity feature
and have begun sampling the product in the market. TranSwitch’s new
HDplay™ products are the first products to support HDMI, DisplayPort and
MHL video connectivity modes making them very attractive for a number of
applications such as pico projectors and digital TVs.”
Additional details on TranSwitch’s first quarter 2013 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 719-457-2628 and reference confirmation code: 8221873. The call
will be recorded and a replay will be available two hours after the
conclusion of the live broadcast through May 24, 2013. To access the
replay, dial 719-457-0820 and enter confirmation code: 8221873.
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.
Forward-looking statements 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
provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that these forward-looking statements regarding
TranSwitch, its operations and its financial results, involve risks and
uncertainties that could cause actual results to differ materially from
those contained in the forward-looking statements, including without
limitation the risks associated with downturns in economic
conditions generally and in the telecommunications and data
communications 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 associated with foreign sales and high customer concentration;
risks associated with competition and competitive pricing pressures;
risks in technology development and commercialization; risks of
failing to attract and retain key managerial and technical personnel;
risks relating to TranSwitch’s available cash; risks associated with
acquiring new businesses; risks of dependence on third-party VLSI
fabrication facilities; risks related to intellectual property rights
and litigation; and other risks detailed in TranSwitch's filings with
the Securities and Exchange Commission.
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.
Reconciliation of Non-GAAP Financial Measures to Comparable U.S. GAAP
Measures (Unaudited)
Pursuant to the requirements of Regulation G, the Company has provided a
reconciliation of each non-GAAP financial measure used in this earnings
release and related conference call or webcast to the most directly
comparable financial measure prepared in accordance with accounting
principles generally accepted in the United States (“GAAP”). The
reconciliation for historic non-GAAP measures is provided herein on a
quantitative basis and for non-GAAP measures that are forward-looking is
provided herein on a qualitative basis.
The non-GAAP measures used in this earnings release and related
conference call differ from GAAP in that they exclude expenses related
to stock-based compensation, amortization of intangible assets, the
effects of special charges such as asset impairments, restructuring
charges and benefits from the reversal of accrued royalties. The
Company’s basis for these adjustments is described below. Management
uses these non-GAAP measures for internal reporting and forecasting
purposes. The Company has provided these non-GAAP financial measures in
addition to GAAP financial results because it believes that these
non-GAAP financial measures provide useful information to certain
investors and financial analysts for comparison across accounting
periods not influenced by certain non-cash items that are not used by
management when evaluating the Company’s historical and prospective
financial performance.
Management uses these non-GAAP financial measures when evaluating the
Company’s operating performance and believes that such measures are
useful to investors and financial analysts in assessing the Company’s
operating performance as the Company believes that the presentation of
non-GAAP measures that adjust for the impact of stock-based compensation
expenses, amortization of intangible assets, the effects of special
charges such as asset impairments and restructuring charges and benefits
from the reversal of accrued royalties provides investors and financial
analysts with a consistent basis for comparison across accounting
periods and, therefore, are useful to investors and financial analysts
in helping them to better understand the Company’s operating results and
underlying operational trends.
We do not provide forward-looking GAAP measures or a reconciliation of
the forward-looking non-GAAP measures to GAAP measures because of our
inability to project special charges, asset impairments, employee
separation costs and stock-based compensation related expenses.
The non-GAAP financial measures we provide have certain limitations
because they do not reflect all of the costs associated with the
operation of our business as determined in accordance with GAAP. The
non-GAAP measures are in addition to, and not a substitute for, or
superior to, measures of financial performance prepared in accordance
with GAAP and may be different from non-GAAP measures used by other
companies. We endeavor to compensate for the limitations of these
non-GAAP measures by providing GAAP financial statements, descriptions
of the reconciling items and a reconciliation of the non-GAAP measures
to the most directly comparable GAAP measures so that investors can
appropriately incorporate the non-GAAP measures and their limitations
into their analyses. Please see our financial statements and
"Management's Discussion and Analysis of Results of Operations and
Financial Condition" that will be included in the periodic report we
expect to file with the SEC with respect to the financial periods
discussed herein.
|
|
|
|
|
TranSwitch Corporation CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited) (in
thousands, except for per share amounts)
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
Mar 31, 2013
|
|
|
Dec 31, 2012
|
|
|
Mar 31, 2012
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues
|
|
|
$
|
|
2,098
|
|
|
$
|
|
3,148
|
|
|
$
|
|
3,162
|
|
Intellectual property and service revenues
|
|
|
|
|
2,545
|
|
|
|
|
2,472
|
|
|
|
|
519
|
|
Total net revenues
|
|
|
|
|
4,643
|
|
|
|
|
5,620
|
|
|
|
|
3,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product revenues
|
|
|
|
|
686
|
|
|
|
|
1,045
|
|
|
|
|
1,119
|
|
Provision for excess and obsolete inventories
|
|
|
|
|
82
|
|
|
|
|
264
|
|
|
|
|
231
|
|
Cost of service revenues
|
|
|
|
|
119
|
|
|
|
|
94
|
|
|
|
|
161
|
|
Total cost of revenues
|
|
|
|
|
887
|
|
|
|
|
1,403
|
|
|
|
|
1,511
|
|
Gross profit
|
|
|
|
|
3,756
|
|
|
|
|
4,217
|
|
|
|
|
2,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
|
3,781
|
|
|
|
|
3,553
|
|
|
|
|
4,336
|
|
Marketing and sales
|
|
|
|
|
975
|
|
|
|
|
928
|
|
|
|
|
1,642
|
|
General and administrative
|
|
|
|
|
1,784
|
|
|
|
|
1,838
|
|
|
|
|
2,132
|
|
Restructuring charges
|
|
|
|
|
254
|
|
|
|
|
426
|
|
|
|
|
-
|
|
Impairment of goodwill and other intangibles
|
|
|
|
|
-
|
|
|
|
|
648
|
|
|
|
|
-
|
|
Reversal of accrued royalties
|
|
|
|
|
(179
|
)
|
|
|
|
(171
|
)
|
|
|
|
(58
|
)
|
Total operating expenses
|
|
|
|
|
6,615
|
|
|
|
|
7,222
|
|
|
|
|
8,052
|
|
Operating loss (Note 1)
|
|
|
|
|
(2,859
|
)
|
|
|
|
(3,005
|
)
|
|
|
|
(5,882
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
(20
|
)
|
|
|
|
(30
|
)
|
|
|
|
(101
|
)
|
Interest income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
|
|
3
|
|
|
|
|
(14
|
)
|
|
|
|
23
|
|
Interest expense
|
|
|
|
|
(58
|
)
|
|
|
|
(46
|
)
|
|
|
|
(9
|
)
|
Interest (expense) income, net
|
|
|
|
|
(55
|
)
|
|
|
|
(60
|
)
|
|
|
|
14
|
|
Total other income (expense), net
|
|
|
|
|
(75
|
)
|
|
|
|
(90
|
)
|
|
|
|
(87
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
|
|
(2,934
|
)
|
|
|
|
(3,095
|
)
|
|
|
|
(5,969
|
)
|
Income tax expense
|
|
|
|
|
173
|
|
|
|
|
47
|
|
|
|
|
114
|
|
Net loss
|
|
|
$
|
|
(3,107
|
)
|
|
$
|
|
(3,142
|
)
|
|
$
|
|
(6,083
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share – basic and diluted
|
|
|
$
|
|
(0.08
|
)
|
|
$
|
|
(0.09
|
)
|
|
$
|
|
(0.20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding – basic and diluted
|
|
|
|
|
36,873
|
|
|
|
|
35,907
|
|
|
|
|
30,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 1: Stock-based compensation expense included in cost of
revenues and operating expenses is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
$
|
|
7
|
|
|
$
|
|
7
|
|
|
$
|
|
6
|
|
Research and development
|
|
|
|
|
153
|
|
|
|
|
198
|
|
|
|
|
120
|
|
Marketing and sales
|
|
|
|
|
127
|
|
|
|
|
131
|
|
|
|
|
111
|
|
General and administrative
|
|
|
|
|
287
|
|
|
|
|
376
|
|
|
|
|
295
|
|
Total
|
|
|
$
|
|
574
|
|
|
$
|
|
712
|
|
|
$
|
|
532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TranSwitch Corporation CONDENSED CONSOLIDATED
BALANCE SHEETS (unaudited) (in thousands)
|
|
|
|
|
|
|
|
|
|
|
March 31, 2013
|
|
|
December 31, 2012
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash, cash equivalents, restricted cash and short-term investments
|
|
|
$
|
602
|
|
|
$
|
2,244
|
Accounts receivable, net
|
|
|
|
4,821
|
|
|
|
4,238
|
Inventories
|
|
|
|
833
|
|
|
|
748
|
Prepaid expenses and other current assets
|
|
|
|
1,525
|
|
|
|
1,409
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
7,781
|
|
|
|
8,639
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
1,060
|
|
|
|
1,111
|
Goodwill
|
|
|
|
5,271
|
|
|
|
5,271
|
Other intangible assets, net
|
|
|
|
515
|
|
|
|
548
|
Other assets
|
|
|
|
2,007
|
|
|
|
2,028
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
$
|
16,634
|
|
|
$
|
17,597
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Bank debt
|
|
|
$
|
1,288
|
|
|
$
|
2,432
|
Accounts payable, accrued expenses and other current liabilities
|
|
|
|
12,470
|
|
|
|
10,457
|
Current portion of restructuring liabilities
|
|
|
|
1,649
|
|
|
|
2,016
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
15,407
|
|
|
|
14,905
|
|
|
|
|
|
|
|
|
|
Restructuring liabilities
|
|
|
|
1,497
|
|
|
|
1,463
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
16,904
|
|
|
|
16,368
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity (deficit)
|
|
|
|
(270
|
)
|
|
|
1,229
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity (deficit)
|
|
|
$
|
16,634
|
|
|
$
|
17,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRANSWITCH CORPORATION
|
Supplemental Reconciliation of GAAP Results to Non-GAAP
|
(Unaudited)
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Mar 31,
|
|
|
|
Dec 31,
|
|
|
|
Mar 31,
|
|
|
|
|
|
2013
|
|
|
|
|
2012
|
|
|
|
|
2012
|
|
GAAP gross profit
|
|
|
$
|
|
3,756
|
|
|
$
|
|
4,217
|
|
|
$
|
|
2,170
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
|
|
7
|
|
|
|
|
7
|
|
|
|
|
6
|
|
Non-GAAP gross profit
|
|
|
$
|
|
3,763
|
|
|
$
|
|
4,224
|
|
|
$
|
|
2,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin
|
|
|
|
|
80.9
|
%
|
|
|
|
75.0
|
%
|
|
|
|
59.0
|
%
|
Stock-based compensation
|
|
|
|
|
0.2
|
%
|
|
|
|
0.1
|
%
|
|
|
|
0.2
|
%
|
Non-GAAP gross margin
|
|
|
|
|
81.0
|
%
|
|
|
|
75.2
|
%
|
|
|
|
59.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP research and development expenses
|
|
|
$
|
|
3,781
|
|
|
$
|
|
3,553
|
|
|
$
|
|
4,336
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of purchase accounting intangibles
|
|
|
|
|
7
|
|
|
|
|
7
|
|
|
|
|
35
|
|
Stock-based compensation
|
|
|
|
|
153
|
|
|
|
|
198
|
|
|
|
|
120
|
|
Non-GAAP research and development expenses
|
|
|
$
|
|
3,621
|
|
|
$
|
|
3,348
|
|
|
$
|
|
4,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP selling, general, and administrative expenses
|
|
|
$
|
|
2,759
|
|
|
$
|
|
2,766
|
|
|
$
|
|
3,774
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of purchase accounting intangibles
|
|
|
|
|
25
|
|
|
|
|
25
|
|
|
|
|
43
|
|
Stock-based compensation
|
|
|
|
|
414
|
|
|
|
|
507
|
|
|
|
|
406
|
|
Non-GAAP selling, general, and administrative expenses
|
|
|
$
|
|
2,320
|
|
|
$
|
|
2,234
|
|
|
$
|
|
3,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating expenses
|
|
|
$
|
|
6,615
|
|
|
$
|
|
7,222
|
|
|
$
|
|
8,052
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of purchase accounting intangibles
|
|
|
|
|
32
|
|
|
|
|
32
|
|
|
|
|
78
|
|
Stock-based compensation
|
|
|
|
|
567
|
|
|
|
|
705
|
|
|
|
|
526
|
|
Reversal of accrued royalties and other
|
|
|
|
|
(179
|
)
|
|
|
|
(171
|
)
|
|
|
|
(58
|
)
|
Impairment of goodwill and intangibles
|
|
|
|
|
-
|
|
|
|
|
648
|
|
|
|
|
-
|
|
Restructuring charges
|
|
|
|
|
254
|
|
|
|
|
426
|
|
|
|
|
-
|
|
Non-GAAP operating expenses
|
|
|
$
|
|
5,941
|
|
|
$
|
|
5,582
|
|
|
$
|
|
7,506
|
|
Non-GAAP operating loss
|
|
|
$
|
|
(2,178
|
)
|
|
$
|
|
(1,358
|
)
|
|
$
|
|
(5,330
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss
|
|
|
$
|
|
(3,107
|
)
|
|
$
|
|
(3,142
|
)
|
|
$
|
|
(6,083
|
)
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of purchase accounting intangibles
|
|
|
|
|
32
|
|
|
|
|
32
|
|
|
|
|
78
|
|
Stock-based compensation
|
|
|
|
|
574
|
|
|
|
|
712
|
|
|
|
|
532
|
|
Reversal of accrued royalties and other
|
|
|
|
|
(179
|
)
|
|
|
|
(171
|
)
|
|
|
|
(58
|
)
|
Impairment of goodwill and intangibles
|
|
|
|
|
-
|
|
|
|
|
648
|
|
|
|
|
-
|
|
Restructuring charges
|
|
|
|
|
254
|
|
|
|
|
426
|
|
|
|
|
-
|
|
Non-GAAP net loss
|
|
|
$
|
|
(2,426
|
)
|
|
$
|
|
(1,495
|
)
|
|
$
|
|
(5,531
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP basic net loss per share
|
|
|
$
|
|
(0.07
|
)
|
|
$
|
|
(0.04
|
)
|
|
$
|
|
(0.18
|
)
|
Basic shares used to calculate non-GAAP net loss per share
|
|
|
|
|
36,873
|
|
|
|
|
35,907
|
|
|
|
|
30,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
![](http://cts.businesswire.com/ct/CT?id=bwnews&sty=20130514006910r1&sid=ntxv4&distro=nx)
<div class="copyright">
Copyright Business Wire 2013
</div>