<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - Q/A
[ x ] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
COMMISSION FILE NUMBER 0-25996
TRANSWITCH CORPORATION
(Exact name of Registrant as Specified in its Charter)
Delaware 06-1236189
(State of Incorporation) (I.R.S. Employer Identification Number)
3 ENTERPRISE DRIVE
SHELTON, CONNECTICUT 06484
(Address of Principal Executive Offices)
Telephone (203) 929-8810
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
COMMON STOCK, PAR VALUE $.001 PER SHARE, OUTSTANDING AT JULY 31, 2000:
81,706,974 SHARES.
Page 1 of 18
<PAGE>
TRANSWITCH CORPORATION
FORM 10-Q/A
June 30, 2000
TABLE OF CONTENTS
-----------------
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of June 30, 2000
and December 31, 1999 3
Consolidated Statements of Operations for the Three and
Six Months Ended June 30, 2000 and 1999 4
Consolidated Statements of Cash Flows for the Three and
Six Months Ended June 30, 2000 and 1999 5
Notes to Unaudited Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 2. Changes in securities and use of proceeds 14
Item 6. Exhibits and Reports on Form 8-K 16
Item 7a. Quantitative and Qualitative Disclosures about Market Risk 16
Signatures 18
Page 2 of 18
<PAGE>
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
TranSwitch Corporation
Consolidated Balance Sheets
(in thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---- ----
<S> <C> <C>
Assets
------
Current assets: (Unaudited)
Cash and cash equivalents $ 40,414 $ 55,685
Short term investments 36,786 20,117
Accounts receivable, net 17,584 13,208
Inventories 12,425 7,900
Prepaid expenses and other current assets 5,085 5,242
Total current assets 112,294 102,152
-------- --------
Long term investments 55,356 36,003
Property and equipment, net 10,414 7,563
Deferred taxes 15,937 11,624
Other assets 5,957 4,725
-------- --------
Total Assets $199,958 $162,067
============ ======== ========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current portion of long term leases $ 254 $ 192
Accounts payable - trade 5,646 4,297
Accrued expenses 1,426 664
Accrued compensation 1,377 1,628
Sales allowance reserve 1,839 1,494
Other current liabilities 1,695 1,438
-------- --------
Total current liabilities 12,237 9,713
Long term leases 179 216
Stockholders' equity:
Common stock, $.001 par value; authorized 300,000,000 shares
at June 30, 2000 and 100,000,000 shares at December 31, 1999;
issued and outstanding: 81,284,836 shares at June 30, 2000;
79,038,312 shares at December 31, 1999 81 79
Additional paid in capital 170,964 149,989
Retained earnings 16,497 2,070
-------- --------
Total stockholders' equity 187,542 152,138
-------- --------
Total Liabilities and Stockholders' Equity $199,958 $162,067
========================================== ======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
Page 3 of 18
<PAGE>
TranSwitch Corporation
Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $34,072 $16,459 $61,432 $31,391
Cost of Revenues 10,412 5,796 19,190 11,166
------- ------- ------- -------
Gross Profit 23,660 10,663 42,242 20,225
Operating Expenses:
Research and development 5,408 3,328 9,904 6,550
Marketing and sales 4,437 2,850 8,359 5,528
General and administrative 1,537 906 2,730 1,736
Merger expenses 1,163 -- 1,163 --
------- ------- ------- -------
Total Operating Expenses 12,545 7,084 22,156 13,814
------- ------- ------- -------
Operating Income 11,115 3,579 20,086 6,411
Interest Income, net 1,739 1,224 3,161 1,787
------- ------- ------- -------
Income before income taxes 12,854 4,803 23,247 8,198
Provision for income taxes 4,905 237 8,820 397
Net Income $ 7,949 $ 4,566 $14,427 $ 7,801
======= ======= ======= =======
Basic Earnings per Common Share $ 0.10 $ 0.06 $ 0.18 $ 0.10
Weighted Average Number of
Common Shares Outstanding 81,118 76,990 80,626 74,904
======= ======= ======= =======
Diluted Earnings per Common Share $ 0.09 $ 0.05 $ 0.17 $ 0.10
Weighted Average Number of
Common Shares and Equivalents Outstanding 87,460 83,268 86,954 81,294
======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
Page 4 of 18
<PAGE>
TranSwitch Corporation
Consolidated Statements of Cash Flows
( Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 14,427 $ 7,801
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,991 1,483
Bad debt expense 200 --
Deferred income taxes 1,060 --
Other non-cash items 165 --
Stock compensation expense -- 86
Changes in assets and liabilities:
(Increase) in accounts receivable (4,576) (1,380)
(Increase) decrease in inventories (4,525) 1,221
(Increase) in prepaids and other assets (1,247) (1,176)
Increase (decrease) in accounts payable 1,349 (337)
Increase (decrease) in accrued expenses and other liabilities 8,859 (143)
--------- ---------
Total adjustments 3,276 (246)
--------- ---------
Net cash provided by operating activities 17,703 7,555
Cash flows from investing activities:
Capital expenditures (4,671) (2,449)
Purchase of investments (183,835) (73,345)
Proceeds from investments 147,698 12,376
--------- ---------
Net cash (used in) investing activities (40,808) (63,418)
Cash flows from financing activities:
Proceeds from the exercise of stock options 7,795 2,992
Proceeds from the issuance of common stock, net of issuance cost -- 68,181
Patments on long term leases 39 28
Payments on product license obligations -- (303)
--------- ---------
Net cash provided by financing activities 7,834 70,898
--------- ---------
(Decrease) increase in cash and cash equivalents (15,271) 15,035
Cash and cash equivalents at beginning of period 55,685 24,950
--------- ---------
Cash and cash equivalents at end of period $ 40,414 $ 39,985
========= =========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 41 $ 23
Tax benefit realized from exercise of stock options $ 13,180 $ --
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
Page 5 of 18
<PAGE>
TRANSWITCH CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended June 30, 2000
Note 1. Interim Financial Statements
This amended 10-Q is being filed to reflect the stock split that was
effective on August 10, 2000. The effective date of the stock split was August
10, 2000 for shareholders of record as of August 1, 2000. Stockholders' equity
has been restated to give retroactive recognition to the stock splits in prior
periods by reclassifying from additional paid-in capital to common stock the par
value of the additional shares arising from the splits. In addition, all
references in the financial statements to number of shares and per share amounts
have been restated to show effect of the splits.
The accompanying unaudited consolidated interim financial statements
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission for reporting on Form 10-Q. Accordingly, certain information
and footnotes required by generally accepted accounting principles for complete
financial statements are not included herein. The financial statements are
prepared on a consistent basis with and should be read in conjunction with the
statements and notes thereto contained in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1999 filed with the Securities and
Exchange Commission on March 30, 2000.
In the opinion of management, these statements include all adjustments,
consisting of normal recurring adjustments, which are necessary for a fair
presentation for such periods. The results of operations for any interim period
are not necessarily indicative of the results that may be achieved for the
entire fiscal year ending December 31, 2000.
Note 2. Inventories
Inventories are carried at the lower of cost (on a first in, first out
basis) or estimated net realizable value. Inventories are summarized as follows
(in thousands):
June 30, 2000 December 31, 1999
------------- -----------------
(unaudited)
Raw Materials $ 729 $ 1,017
Work in Process 2,121 1,121
Finished Goods 9,575 5,762
------- -------
Total Inventories $12,425 $ 7,900
======= =======
Note 3. Stock Splits
On each of April 14, 1999 and on December 15, 1999, the Board of Directors
announced a three for two stock split of the Company's common stock in the form
of a stock dividend. The effective dates
Page 6 of 18
<PAGE>
of the stock splits were June 8, 1999 and January 11, 2000 for shareholders of
record as of April 26, 1999 and December 31, 1999, respectively. On July 20,
2000 the Board of Directors announced a two for one stock split of the Company's
common stock in the form of a stock dividend. The effective date of the stock
split was August 10, 2000 for shareholders of record as of August 1, 2000.
Stockholders' equity has been restated to give retroactive recognition to the
stock splits in prior periods by reclassifying from additional paid-in capital
to common stock the par value of the additional shares arising from the splits.
In addition, all references in the financial statements to number of shares and
per share amounts have been restated to show effect of the splits.
Note 4. Consolidation of EASICS merger
On May 9, 2000 we merged with EASICS NV, an ASIC design service company. We
issued 252,691 shares of common stock to the owners of EASICS NV in connection
with this merger. The transaction was accounted for as a pooling of interests.
All items in both 2000 and 1999 periods include the results of the EASICS NV
merger as if the merger occurred on January 1, 1999.
Note 5. Consolidated Statement of Stockholders' Equity
(in thousands, except share data)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings Total
------ ------ ------- -------- -----
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1999 79,038,312 $79 $149,989 $ 2,070 $152,138
Shares of common stock issued upon exercise of stock options 2,246,524 2 7,795 7,797
Tax benefit on stock options - - 13,801 13,801
Net income - - - 14,427 14,427
---------- ------ -------- ------- --------
BALANCE AT JUNE 30, 2000 81,284,836 $81 $170,964 $16,497 $187,542
========== ====== ======== ======= ========
</TABLE>
Page 7 of 18
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
We commenced operations in April 1988. Since incorporation, we have
designed, sourced and marketed high-speed VLSI semiconductor devices for public
and private network applications worldwide. We shipped our first product in 1990
and have increased our volume of shipments over the last ten years. Our product
development efforts have been focused on devices that meet the needs of public
and private network telecommunications and data communications equipment
providers that serve the worldwide public network, Internet and corporate wide
area network markets. Our devices are compliant with established standards in
these markets, including SONET/SDH, asynchronous/PDH and ATM/IP.
We derive our revenues from product sales principally to domestic and
international telecommunications and data communications equipment OEMs and to
distributors. Revenues are recognized on product shipment. Agreements with
certain distributors provide price protection and return and allowance rights.
In certain cases, we work with network equipment OEMs during their system design
phase with the goal of having our products designed into the OEMs' products. Our
sales cycle often extends over more than one year because of the long lead times
between the OEM's design to the start of volume shipments. We incur product
research and development expenses well before the generation of substantial
revenues from product sales to OEMs. A significant portion of our total revenues
has been, and is anticipated to be, derived from foreign sales. All foreign
sales are currently denominated in U.S. dollars. Our cost of revenues consists
primarily of the purchase cost of finished VLSI devices produced by third party
semiconductor manufacturers and amortization of product licenses. We intend to
continue to outsource all of our VLSI device fabrication requirements.
As of June 30, 2000 we had retained earnings of $16.5 million. Our
operating results are subject to quarterly and annual fluctuations as a result
of several factors that could materially and adversely affect profitability.
THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
REVENUES
Total revenues for the quarter ended June 30, 2000 were $34.1 million,
representing a 107% increase over the $16.5 million recorded in the comparable
period of the prior year. Revenues included $33.6 million in product revenue and
$0.5 million in contract revenue from our newly acquired wholly own subsidiary,
EASICS NV. The increase in product revenue in the quarter is attributable to the
increase in the revenue across all three of our product lines, SONET/SDH,
asynchronous/PDH, and ATM/IP.
Page 8 of 18
<PAGE>
GROSS PROFIT
Gross profit was $23.7 million for the quarter ended June 30, 2000,
compared to $10.7 million in the corresponding period of the prior year. Gross
profit for the six months ended June 30, 2000 was $42.2 million, compared to
$20.2 million in the corresponding period of the prior year. Gross margin was
69.4% for the quarter ended June 30, 2000, compared to 64.8% for the quarter
ended June 30, 1999, gross margin for the six months ended June 30, 2000 was
68.8%, compared to 64.4% for the same period one year ago. The increase in gross
profit and margin is principally the result of lower costs resulting from
improved pricing from our vendors achieved as we purchased higher volumes of
products.
RESEARCH AND DEVELOPMENT
Research and development expenses were 15.9% of total revenues for the
quarter ended June 30, 2000, compared to 20.2% of total revenues for the quarter
ended June 30, 1999; total research and development spending increased 62.5%, to
$5.4 million, for the quarter ended June 30, 2000, compared to $3.3 million for
the quarter ended June 30, 1999. In the six month period ended June 30, 2000,
research and development expenses were 16.1% of revenues as compared to 20.9%
for the same period one year ago. The increase in period-over-period expense,
was the result of our continued investment in research and development
activities. The decrease as a percentage of total revenues in the quarter was
attributable to the growth in revenues from the comparable period in the prior
year.
MARKETING AND SALES
Marketing and sales expenses were 13.0% of total revenues for the
quarter ended June 30, 2000, compared to 17.3% for the quarter ended June 30,
1999. Marketing and sales expenses increased 55.7%, to $4.4 million, for the
quarter ended June 30, 2000, compared to $2.9 million for the quarter ended June
30, 1999. In the six month period ended June 30, 2000, marketing and sales were
13.6% of total revenues, compared to 17.6% for the same period in 1999. Total
spending increased 51.2% to $8.4 million for the six month period ended June 30,
2000 as compared to $5.5 million in the comparable period in 1999. The increase
in spending was primarily the result of the increase in marketing and sales
personnel, expansion of our distribution network as part of our continued
investment in its marketing and sales infrastructure and increased commissions
paid to manufacturers representatives attributable to the higher sales volumes.
The decrease as a percentage of total revenues in the quarter was attributable
to the growth in revenues from the comparable period in the prior year.
GENERAL AND ADMINISTRATIVE
General and administrative expenses for the quarter ended June 30, 2000
increased to $1.5
Page 9 of 18
<PAGE>
million from $906,000 for the same quarter in the prior year and as a percentage
of total revenues decreased to 4.5% for the quarter ended June 30, 2000,
compared to 5.5% for the quarter ended June 30, 1999. The total spending for the
six month period ended June 30, 2000 increased 57% to $2.7 million from $1.7
million for the comparable period in 1999. In addition there were expenses of
$1.2 million in transaction costs related to the merger of EASICS NV completed
in May, 2000. The increase in period-over-period expense was the result of our
continued building of support in the general and administrative area. The
decrease as a percentage of total revenues in the quarter was attributable to
the growth in revenues from the comparable period in the prior year.
INTEREST INCOME, NET
Interest income, net of interest expense, was $1.7 million in the
quarter ended June 30, 2000, compared to $1.2 million in the corresponding
period in 1999; for the six months ended June 30, 2000 interest income, net of
interest expense, was $3.2 million as compared to $1.8 million for the same
period in 1999. The increase in interest income, net of interest expense, was
primarily the result of the increase in cash and investment balances between the
two periods, due to the cash generated from operations.
INCOME TAXES
Our effective tax rate for the first half of 2000 was 38.0%, compared
to an effective tax rate of 5.0% for the first half of 1999. The effective tax
rate for the second quarter of 2000 is consistent with the full year
expectation. The 1999 rate reflects the benefit derived from the use of the
Company's net operating loss carry forwards to offset taxable income for federal
and state purposes.
LIQUIDITY AND CAPITAL RESOURCES
We have financed our operations and met our capital requirements since
incorporation in 1988 primarily through private and public issuances of equity
securities, bank borrowings and cash generated from operations. Our principal
sources of liquidity as of June 30, 2000 consisted of $77.2 million in cash,
cash equivalents and short-term investments, $55.4 million in long term
investments and $10.0 million available under our working capital line of credit
and equipment line of credit provided by Silicon Valley Bank. As of June 30,
2000, we had no outstanding balance under these lines of credit. Pursuant to the
working capital and equipment financing agreements with Silicon Valley Bank, we
are restricted from further pledging our assets or granting additional security
interests in our assets.
In the first six months of 2000, we generated $4.2 million of cash from
operating activities, the result of net income of $14.4 million adjusted for
non-cash items of $301 million, offset by a net increase in working capital of
$x.x million. Capital expenditures during this period totaled $4.7 million,
including purchases of computer equipment and software. Net cash provided by
financing activities consists of proceeds from the exercise of stock options of
$7.6 million.
Page 10 of 18
<PAGE>
We believe that existing cash resources and cash generated from
operations will fund necessary purchases of capital equipment and provide
adequate working capital at least through the end of 2000. However, there can be
no assurance that events in the future will not require us to seek additional
capital in the future or, if so required, that capital will be available on
terms favorable or acceptable us, if at all.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
From time to time, information provided by us, statements made by our
employees, or information included in our filings with the Securities and
Exchange Commission (including this Form 10-Q) may contain statements which are
not historical facts, so-called "forward-looking statements," which involve
risks and uncertainties. Such forward-looking statements are made pursuant to
the safe harbor provisions of Section 21E of the Securities Exchange Act of
1934, as amended. Our actual future results may differ significantly from those
stated in any forward-looking statements. Factors that may cause such
differences include, but are not limited to, the factors discussed below. Each
of these factors, and others, are discussed from time to time in our filings
with the Securities and Exchange Commission.
Potential Fluctuations in Operating Results. Our quarterly and annual operating
revenues, expenses and operating results may fluctuate due to a number of
factors including:
-the timing and cancellation of customer orders;
-market acceptance our products and our customers' products;
-competitive pressures on selling prices; and
-general economic conditions.
Management of Growth and Dependence on Key Personnel. We must attract and retain
highly qualified and well-trained personnel, including senior managers.
Competition for such employees is intense, and it may become increasingly
difficult for us to hire and retain such personnel.
We Depend on a Few Outside Fabrication Facilities. We do not own or operate a
VLSI circuit fabrication facility and depends upon seven foundries for most of
its semiconductor device requirements. We cannot be certain that we will be able
to renew or maintain contracts with these foundries on terms as favorable as
current contract terms. There are other significant risks associated with
reliance on a few outside foundries, including:
-the lack of assured semiconductor wafer supply and control over
delivery schedules;
Page 11 of 18
<PAGE>
-the unavailability of, or delays in obtaining access to, key process
technologies; and
-limited control over quality assurance, manufacturing yields and
production costs.
Dependence on Telecommunications, Internet and Data Communications Equipment
Markets. We derive virtually all of our product revenues from sales of products
for the telecommunications, Internet and data communications equipment markets,
which are characterized by intense competition, rapid technological change and
short product life cycles. Although the telecommunications, Internet and data
communications equipment markets have grown rapidly in the last few years, they
may not continue to grow, or a significant slowdown in these markets may occur.
Dependence on New Products and Process Technologies; Risk of Product Development
Delays. Our future success depends on our ability to develop new products that
use new process technologies, to introduce new process technologies into the
marketplace ahead of competition and to have our new process technologies
selected to be designed into products of leading manufacturers. Semiconductor
design, process methodologies and technologies are subject to rapid
technological change and requires large expenditures for research and
development and from time to time, we have experienced delays in completing the
development of new products.
Customer Concentration. Historically, a relatively small number of customers
have accounted for a significant portion of our total revenues in any particular
period and probably will continue to do so.
Our Success Depends on Intellectual Property. Our success depends in part on our
ability to obtain patents and licenses and to preserve other intellectual
property rights covering our products and development and testing tools. We
cannot ensure that:
-patents be will issued from currently pending or future applications;
-existing patents or any new patents will be sufficient in scope or
strength to provide meaningful protection or any commercial advantage;
-foreign intellectual property laws will protect our intellectual
property rights; or
-others will not independently develop similar products, duplicate our
products or design around any patents issued to us.
In addition, we may be unknowingly infringing on the proprietary rights
of others and may be liable for that infringement, which could result in
significant liability.
Competition. The semiconductor industry is intensely competitive and is
characterized by factors likely to result in pricing pressures on our products.
Page 12 of 18
<PAGE>
Foreign Sales. We expect foreign sales to continue to account for a significant
percentage of revenues. A significant portion of total revenues, therefore, will
be subject to risks associated with foreign sales.
The Semiconductor Industry. We provide semiconductor devices to
telecommunications and data communications OEMs. The semiconductor industry is
highly cyclical and has been subject to significant economic downturns at
various times.
Our business could be harmed if we fail to adequately integrate the operations
of acquired businesses. Our management must devote substantial time and
resources to the integration of the operations of businesses we have acquired.
If we fail to accomplish this integration efficiently, we may not realize the
anticipated benefits of the transactions. In addition, we may engage in future
acquisitions that could harm our operating results, dilute our stockholders and
cause us to incur debt or assume contingent liabilities.
Page 13 of 18
<PAGE>
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
On May 9, 2000 we issued under Regulation S of the Securities Act of 1933, as
amended, 252,691 shares of common stock to the former stockholders of EASICS NV
in exchange for all of Easics' outstanding shares. The exchange was made in an
offshore transaction, and the former Easics stockholders certified to us that
they were not "U.S. Persons" within the meaning of Regulation S. Offering
restrictions were implemented in connection with the transaction and the former
Easics stockholders received shares of TranSwitch common stock bearing a
restrictive legend. The shares issued to the former Easics stockholders were
registered on a on a registration statement on Form S-3 (File No. 333-38318)
that was declared effective on July 24, 2000.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held its Annual Meeting of Stockholders on May 18, 2000 and June 16,
2000 at such meeting the stockholders of the Company voted on the following
matters:
1. The election of a Board of Directors for the ensuing year. The number of
votes cast for the reelection of each of the directors listed below was as
follows:
Nominee Number of Shares
------- ----------------
For Withhold Authority
--- ------------------
Santanu Das 36,072,551 223,431
Alfred R. Boschulte 36,038,782 257,200
Ljubomir Micic 36,066,515 229,467
James M. Pagos 36,072,109 223,873
Albert E. Paladino 36,073,363 222,619
Erik H. Van Der Kaay 36,074,272 221,710
2. To amend the Amended and Restated Certificate of Incorporation to increase
the number of authorized shares of the Corporations's Common Stock by an
additional 200,000,000 shares.
Number of Shares
----------------
For 28,300,837
Against 7,960,436
Abstain 34,709
Broker Non-Votes 0
3. To amend the Corporation's Third Amended and Restated 1995 Stock Plan, to
increase the number of shares available for issuance thereunder by an additional
4,000,000 shares of Common Stock. The number of votes cast was as follows:
Page 14 of 18
<PAGE>
Number of Shares
----------------
For 15,854,405
Against 14,450,031
Abstain 77,505
Broker Non-Votes 5,914,041
4. The selection of KPMG LLP as auditors for the fiscal year ending December 31,
2000 was ratified by the following vote:
Number of Shares
----------------
For 36,146,189
Against 16,771
Abstain 133,022
Broker Non-Votes 1,716,803
Item 5. Other Information.
The Company's By-Laws establish an advance notice procedure with regard
to certain matters, including nominations of persons for election to
the Board of Directors and the proposal of business to be considered by
the stockholders entitled to vote at the next annual meeting of
stockholders. In general for the annual meeting to be held in 2001,
notice must be received, in writing, at the Company's principal
executive offices not later than December 21, 2000 and not before
November 21, 2000. Notice should be sent to the attention of the
Secretary of the Company and must contain specified information
concerning the matters to be brought before such meeting and concerning
the stockholder proposing such matters. In order to curtail any
controversy as to the date on which notice was received by the Company,
it is suggested that proponents submit their notice by Certified Mail,
Return Receipt Requested.
Page 15 of 18
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 2.1, Share for Share exchange Agreement. Dated May 9,
2000 by and among TranSwitch and the Easics Stockholders
(filed as Exhibit 2.1 to the TranSwitch registration statement
on Form S-3 (File No. 333-38318) and incorporated herein by
reference).
Exhibit 2.2, Escrow Agreement, dated May 9, 2000, by and among
TranSwitch, the Easics Stockholders and the other parties
thereto (filed as Exhibit 2.2 to the TranSwitch registration
statement on Form S-3 (File No. 333-38318) and incorporated
herein by reference).
Exhibit 3.1 Amended and Restated Certificate of Incorporation
of TranSwitch Corporation, as amended (filed as Exhibit 3.1 to
the TranSwitch report on Form 10-Q for the quarter ended June
30, 2000 and incorporated herein by reference).
Exhibit 4.1 Registration Rights Agreement, dated May 9, 2000,
by and among TranSwitch and the Easics Stockholders (filed as
Exhibit 4.1 to the TranSwitch registration statement on Form
S-3 (File No. 333-38318) and incorporated herein by
reference).
Exhibit 11, Statement re: computation of per share earnings.
Exhibit 27, Financial Data Schedule
(b) Reports on Form 8-K
On May 23, 2000, we filed a current report on Form 8-K
reporting the acquisition of Easics NV.
Item 7a. Quantitative and Qualitative Disclosures about Market Risk
Market risk represents the risk of changes in value of a financial
instrument, derivative or non-derivative, caused by fluctuations in
interest rates, foreign exchange rates and equity prices. We have no
financial instruments that give us exposure to changes in foreign
exchange rates or equity prices. We have investments in money market
accounts, government securities and commercial paper that earn interest
income that is a function of
Page 16 of 18
<PAGE>
the market rates. As a result we do have exposure to changes in
interest rates. For example if interest rates were to decrease by one
percentage point from the current levels, our potential interest income
for the remainder of calendar 2000 would decrease by approximately
$600,000.
Page 17 of 18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TranSwitch Corporation
(Registrant)
Date: August 28, 2000
/s/ Dr. Santanu Das
---------------------------
Dr. Santanu Das
Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Michael F. Stauff
---------------------------
Michael F. Stauff
Senior Vice President and Chief
Financial Officer and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
Page 18 of 18
