TranSwitch Corporation Issues Corporate Update in Anticipation of its Pending Merger with Centillium Communications, Inc.
October 06 2008 - 8:30AM
Business Wire
TranSwitch Corporation (NASDAQ: TXCC) a leading provider of
semiconductor solutions for the converging voice, data and video
network, today announced the following in anticipation of its
pending merger with Centillium Communications, Inc. (NASDAQ: CTLM),
a leading provider of highly innovative communications processing
technology. TranSwitch now expects revenues to be in the range of
$10.3 million to $10.5 million for the third quarter ended
September 30, 2008. The Company�s previous outlook for third
quarter revenues, as announced on its July 29, 2008 conference
call, was to be around $10.2 million. The Company is also revising
its expectations for potential expense savings, assuming the
completion of the merger, from at least $10.5 million annually to
around $14 million, compared to the two companies� current
expenses. In addition to $10.5 million of previously identified
expense savings at Centillium, TranSwitch has identified an
additional $3.5 million of potential annual savings for 2009
through restructuring of its current operations along with other
expense reduction steps already initiated. Pending approval of
Centillium�s Shareholders, TranSwitch anticipates closing this
transaction on or about October 24, 2008. As a result of the
restructuring, TranSwitch expects to record a one-time
restructuring charge of approximately $400,000 in the fourth
quarter of 2008, in addition to other anticipated one-time
restructuring charges related to the merger. The new TranSwitch,
resulting from the combination of the two companies, will have a
broad portfolio of best-in-class communications products for
next-generation broadband access, transport, carrier Ethernet and
VoIP applications with important design wins in the next-generation
projects of major carriers in the UK, Japan, China, Korea and
India. �We are well-positioned with strong footprints in the UK�s
upgrade to an all-IP network, Japan�s Fiber-to-the-Home initiative,
and China�s 3G network deployment, along with other initiatives,�
said Dr. Santanu Das, CEO of TranSwitch. �These projects are just
beginning to ramp and we expect them to contribute a growing stream
of high-margin revenue for many years to come.� �TranSwitch has
invested heavily over the past years in anticipation of the
architectural change that is occurring now as carriers transition
from legacy to Ethernet and IP technologies. While we will continue
to invest systematically in the communications space, it will be
measured and consistent with the long cycle nature of the
business,� stated Das. �Going forward, TranSwitch has a unique
opportunity to become a leader in the large and rapidly growing
field of digital video transport, which complements the Company�s
traditional communications business. The Company has just begun to
license its HDMI� and DisplayPort intellectual property, which
offers industry leading performance and functionality. We believe
that the video transport business presents an opportunity for
faster return on investment. Our plan is to increase investment in
this area to take advantage of our technology leadership with the
goal of developing a rapidly growing revenue stream,� added Dr.
Das. �We will continuously re-evaluate our investment decisions
with the objective of maximizing shareholder value,� concluded Dr.
Santanu Das. Additional details on TranSwitch�s third quarter
results will be discussed during a conference call that will be
scheduled in October. A formal announcement for the date of the
conference call will be made by TranSwitch. About TranSwitch
Corporation TranSwitch Corporation (Nasdaq: TXCC) designs, develops
and markets innovative semiconductors that provide core
functionality and complete solutions for voice, data and video
communications network equipment. As a leading supplier to telecom,
datacom, cable television and wireless markets, TranSwitch
customers include the major OEMs that serve the worldwide public
network, the Internet, and corporate Wide Area Networks (WANs).
TranSwitch devices are inherently flexible, many incorporating
embedded programmable microcontrollers to rapidly meet customers�
new requirements or evolving network standards by modifying a
function via software instruction. TranSwitch implements global
communications standards in its VLSI solutions and is committed to
providing high-quality products and services. TranSwitch, Shelton,
CT, is an ISO 9001:2000 registered company. Additional information
is available at www.transwitch.com. About Centillium Communications
Inc. Centillium Communications, Inc. (Nasdaq: CTLM) delivers highly
innovative communications processing technology for global systems
vendors targeting service provider, enterprise and consumer
markets. Centillium's high performance Systems-on-Chip (SoC)
products power leading edge optical, Voice- over-Internet Protocol
(VoIP), security and data systems requiring top quality, highly
integrated, very low power processing solutions that help minimize
the energy footprint of communications networks. With a long
heritage of technology leadership and first-to-market product
development, Centillium provides semiconductor solutions that keep
customers and end users at the forefront of the communications
evolution. Centillium is a global company with headquarters in
Fremont, CA. Additional information is available at
http://www.centillium.com. Information set forth in this
communication contains forward-looking statements, which involve a
number of risks and uncertainties. Such forward-looking statements
include, but are not limited to, statements about the timing of the
completion of the transaction, the anticipated benefits of the
transaction, including future financial and operating results and
estimated cost savings and synergies, and other statements that are
not historical facts. TranSwitch and Centillium caution readers
that any forward-looking information is not a guarantee of future
performance and that actual results could differ materially from
those contained in the forward-looking information due to various
risks and uncertainties. These include risks and uncertainties
relating to: the parties� potential inability to complete the
transaction because conditions to the closing of the transaction
may not be satisfied; the risk that the businesses will not be
integrated successfully and without delay; the risk that the
transaction may involve unexpected costs or unexpected liabilities;
uncertainties concerning the effect of the transaction on
relationships with customers, employees and suppliers of either or
both companies; 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 both companies products and products developed by the
companies� customers; risks relating to TranSwitch's indebtedness;
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
facilities; risks related to intellectual property rights and
litigation; risks in technology development and commercialization.
The risks included above are not exhaustive. The annual reports on
Form 10-K, the quarterly reports on Form 10-Q, current reports on
Form 8-K, any amendments thereto, and other documents TranSwitch
and Centillium have filed and will file with the SEC contain
additional factors that could impact the company�s businesses and
financial performance. TranSwitch and Centillium expressly disclaim
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. Important Information for
Investors and Stockholders TranSwitch and Centillium filed a
Definitive Proxy Statement/Prospectus with the SEC on September 25,
2008. Centillium has mailed to its stockholders the Definitive
Proxy Statement/Prospectus concerning the proposed merger of
Centillium with a subsidiary of TranSwitch. TRANSWITCH AND
CENTILLIUM URGE INVESTORS AND STOCKHOLDERS TO READ THE PROXY
STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED BY
EITHER PARTY WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Investors and stockholders will be able to obtain the
proxy statement/prospectus and other documents filed with the SEC
free of charge at the website maintained by the SEC at www.sec.gov.
In addition, documents filed with the SEC by TranSwitch will be
available free of charge on the investor relations portion of the
TranSwitch website at www.transwitch.com. Documents filed with the
SEC by Centillium will be available free of charge on the investor
relations portion of the Centillium website at www.centillium.com.
Participants in the Solicitation This communication is not a
solicitation of a proxy from any security holder of Centillium.
However, Centillium, and certain of its directors and executive
officers, may be deemed participants in the solicitation of proxies
from the stockholders of Centillium in connection with the merger.
The names of Centillium�s directors and executive officers and a
description of their interests in Centillium (including their
ownership of Centillium stock) are set forth in the proxy statement
for Centillium�s 2008 annual meeting of stockholders, which was
filed with the SEC on April 29, 2008. Investors and stockholders
can obtain more detailed information regarding the direct and
indirect interests of Centillium�s directors and executive officers
in the merger by reading the definitive proxy statement/prospectus
when it becomes available. TranSwitch Corporation and TranSwitch
Corporation products and terms referenced herein are either
trademarks or registered trademarks of TranSwitch Corporation HDMI
is a registered trademark of HDMI Licensing LLC.
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