Reported net revenues of $11.0 million for the second quarter of 2001 represent a decrease of 72% from the $38.7 million in the prior quarter and a 68% decrease from the $34.1 million for the same period last year. In addition, the Company reported a pro forma operating loss of $15.7 million for the second quarter of 2001, versus the pro forma operating income of $6.5 million reported in the first quarter of 2001 and the pro forma operating income of $12.3 million for the same period last year.
The pro forma net loss of $9.5 million for the second quarter of 2001 excludes: (1) a $24.7 million charge for excess inventories, (2) $12.1 million of the extraordinary gain, net of income taxes, related to the repurchase of $82.2 million of our 4.5% convertible notes, (3) $0.6 million charge for amortization of goodwill and other purchased intangible assets related to prior acquisitions, and (4) the income tax effect related to inventory and amortization as stated above. The pro forma net income for the prior quarter was $6.1 million and $9.1 million for the same period last year. The net loss for the second quarter of 2001 was $13.8 million, or $0.16 per basic and diluted share compared to net income of $7.9 million, or $0.10 and $0.09 per basic and diluted share for the same period last year.
As a result of current business conditions and in order to reduce our operating expense run-rate, TranSwitch Corporation reduced its workforce earlier this week which will result in an estimated $1.5 to $2.0 million one-time charge to earnings in the third quarter. In addition, we wrote down $24.7 million of excess inventory in the second quarter. Although this has been a very tough time for the Company, we remain highly confident of our long-term outlook and are moving forward to achieve our aggressive product development milestones, stated Dr. Santanu Das, Chairman of the Board, President, and CEO of TranSwitch Corporation.
While the continued weakness in the telecommunications systems market in North America, Europe and some parts of Asia has had a significant impact on our second quarter revenues, we are continuing to stay on course with our R&D plan. During this past quarter, we added TEMx28, AsTriX, Sertopia, and CUBIT®-622 to our product portfolio. Our partnership programs with Onex Communications Corporation, OptiX Networks Inc., Systems On Silicon (SOSi), Inc., and Intellectual Capital for Integrated Circuits (IC4IC), are on track and we expect to field some of the higher speed products from these partnerships starting in the first quarter, 2002. These products and additional new products in the pipeline from TranSwitch will be the foundation for the new landscape that we expect to emerge in 2002, concluded Dr. Das.
SOURCE: COMPANY PRESS RELEASE
