Centillium Communications (NASDAQ:CTLM)
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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.