10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended March 31, 2008

or

o 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)

(203) 929-8810

(Registrant’s telephone number, including area code)

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    o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer oAccelerated Filer  x

Non-Accelerated Filer oSmaller Reporting Company o

(Do not check if a smaller reporting company)

Indicate by a check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   o    No    x

At April 30, 2008, there were 133,239,414 shares of Common Stock, par value $.001 per share, of the Registrant outstanding.

TRANSWITCH CORPORATION AND SUBSIDIARIES

FORM 10-Q

For the Quarterly Period Ended March 31, 2008

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheets as of March 31, 2008 and December 31, 2007	3
	Consolidated Statements of Operations for the three months ended March 31, 2008 and 2007	4
	Consolidated Statements of Cash Flows for the three months ended March 31, 2008 and 2007	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	17
Item 4.	Controls and Procedures	17
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 6.	Exhibits	19
	Signatures	20

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TRANSWITCH CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

	March 31, 2008			December 31, 2007
ASSETS
Current assets:
Cash and cash equivalents	$	26,748		$	34,098
Short-term investments in marketable securities		4,031			—
Accounts receivable, net		6,697			6,850
Inventories		2,934			3,069
Prepaid expenses and other current assets		1,280			1,510
Total current assets		41,690			45,527
Property and equipment, net		4,515			5,116
Goodwill		10,075			10,075
Contracts and other intangibles, net		1,377			1,483
Investments in non-publicly traded companies		2,898			2,898
Deferred financing costs, net		1,437			1,581
Other assets		917			907
Total assets	$	62,909		$	67,587
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,287		$	1,665
Accrued expenses and other current liabilities		4,256			3,164
Accrued compensation and benefits		2,340			2,207
Accrued stock rotation and sales allowances		12			159
Accrued interest		—			341
Restructuring liabilities		940			844
Obligation under deferred revenue		180			280
Derivative liability for foreign exchange contracts		24			—
Total current liabilities		9,039			8,660
Restructuring liabilities		20,115			20,246
5.45% Convertible Notes due 2010		25,013			25,013
Total liabilities		54,167			53,919
Stockholders’ equity:
Common stock, $.001 par value: 300,000,000 shares authorized; 133,208,364 and 133,098,432 shares issued at March 31, 2008 and December 31, 2007		133			133
Additional paid-in capital		355,245			354,813
Accumulated other comprehensive income – currency translation		1,112			858
Accumulated deficit		(347,630	)		(342,136	)
Common stock held in treasury (166,350 shares), at cost		(118	)		—
Total stockholders’ equity		8,742			13,668
Total liabilities and stockholders’ equity	$	62,909		$	67,587

See accompanying notes to unaudited consolidated financial statements.

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TRANSWITCH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended March 31,
	2008			2007
Net revenues:
Product revenues	$	6,894		$	8,938
Service revenues		626			348
Total net revenues		7,520			9,286
Cost of revenues:
Cost of product revenues		2,475			2,904
Cost of service revenues		460			261
Total cost of revenues		2,935			3,165
Gross profit		4,585			6,121
Operating expenses:
Research and development		5,549			6,119
Marketing and sales		2,127			2,802
General and administrative		1,563			1,445
Restructuring charges, net		248			700
Total operating expenses		9,487			11,066
Operating loss		(4,902	)		(4,945	)
Other income (expense):
Change in fair value of derivative liability		(24	)		109
Other expense		(214	)		—
Interest:
Interest income		295			693
Interest expense		(494	)		(995	)
Interest expense, net		(199	)		(302	)
Total other expense, net		(437	)		(193	)
Loss before income taxes		(5,339	)		(5,138	)
Income taxes		155			78
Net loss	$	(5,494	)	$	(5,216	)
Basic and diluted net loss per common share	$	(0.04	)	$	(0.04	)
Basic and diluted average common shares outstanding		133,194			131,605

See accompanying notes to unaudited consolidated financial statements.

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TRANSWITCH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except per share data)

(unaudited)

	Three Months Ended March 31,
	2008			2007
Operating activities:
Net loss	$	(5,494	)	$	(5,216	)
Adjustments to reconcile net loss to net cash used by operatingactivities, net of effects of acquisitions:
Depreciation and amortization		966			1,206
Amortization of debt discount and deferred financing fees		144			533
Provision for doubtful accounts		78			101
Stock-based compensation expense		396			411
Change in fair value of derivative liability		24			(109	)
Changes in operating assets and liabilities:
Accounts receivable		75			(1,351	)
Inventories		135			515
Prepaid expenses and other assets		186			(259	)
Accounts payable		(378	)		684
Accrued expenses and other current liabilities		737			(548	)
Obligation under deferred revenue		(100	)		81
Restructuring liabilities		(35	)		589
Net cash used by operating activities		(3,266	)		(3,363	)
Investing activities:
Capital expenditures		(237	)		(560	)
Investments in non-publicly traded companies		—			(16	)
Acquisition of business, net of cash acquired		—			(1,650	)
Purchases of short-term investments in marketable securities		(4,031	)		—
Net cash used by investing activities		(4,268	)		(2,226	)
Financing activities:
Issuance of common stock under employee stock plans		36			349
Purchase of 166,350 shares of common stock for treasury		(118	)		—
Net cash (used) provided by financing activities		(82	)		349
Effect of exchange rate changes on cash and cash equivalents		266			59
Change in cash and cash equivalents		(7,350	)		(5,181	)
Cash and cash equivalents at beginning of period		34,098			57,723
Cash and cash equivalents at end of period	$	26,748		$	52,542

See accompanying notes to unaudited consolidated financial statements.

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TRANSWITCH CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Description of Business

TranSwitch Corporation and its subsidiaries (“TranSwitch” or the “Company”) design, develop and market innovative semiconductor solutions that provide core functionality for voice, data and video communications network equipment.  TranSwitch’s customers are original equipment manufacturers (“OEMs”) who supply wire-line and wireless network operators who in turn provide voice, data and video services to end users such as consumers, corporations, municipalities, etc. The Company has over 200 active customers, including the leading global equipment providers, and the Company’s products are deployed in the networks of the major service providers around the world.

TranSwitch is a Delaware corporation incorporated on April 26, 1988. The Company’s common stock trades on The NASDAQ Global Market under the symbol “TXCC.”

In addition to an extensive portfolio of standard integrated circuit products addressing voice, data, wireless and video markets, TranSwitch supplies intellectual property core products for Ethernet applications. In 2007, the Company expanded its offerings to include custom design services and intellectual property cores for high definition video (HDMI) applications. TranSwitch’s combination of standard products, intellectual property cores and custom design services enables it to serve its customers needs more fully.

Note 2. Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements of TranSwitch 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 accounting principles generally accepted in the United States of America for complete financial statements are not included herein. These financial statements are prepared on a consistent basis with, and should be read in conjunction with, the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2007, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, as filed with the Securities and Exchange Commission on March 13, 2008. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation. The results of operations for any interim period are not necessarily indicative of the results that may be achieved for the full year.

Note 3. Recent Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements”(“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring the fair value of assets and liabilities, and expands disclosure requirements regarding the fair value measurement. SFAS 157 does not expand the use of fair value measurements. This statement, as issued, is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. FASB Staff Position (FSP) FAS No. 157-2 was issued in February 2008 and deferred the effective date of SFAS 157 for nonfinancial assets and liabilities to fiscal years beginning after November 2008. As such, the Company adopted SFAS 157 as of January 1, 2008 for financial assets and liabilities only. There was no significant effect on the Company’s financial statements. As of March 31, 2008, the Company’s financial assets subject to SFAS 157 consisted of held to maturity investments in marketable securities and investments in non-publicly traded companies; financial liabilities consisted of derivatives for forward contracts. The Company determined fair value for the investments in marketable securities and the derivative liabilities based on quoted market prices in active markets (i.e. Level 1 as defined under SFAS 157); fair value for investments in non-publicly traded companies was based on third party valuation models (i.e. Level 2 as defined under SFAS 157). The Company does not believe that the adoption of SFAS 157 to non-financial assets and liabilities will significantly effect its financial statements.

In February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Liabilities—including an amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 expands the use of fair value accounting but does not affect existing standards which requires assets or liabilities to be carried at fair value. The objective of SFAS 159 is to improve financial reporting by providing companies with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. Under SFAS 159, a company may elect to use fair value to measure eligible items at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. Eligible items include, but are limited to, accounts receivable, accounts payable, and issued debt. If elected, SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company has not elected to measure any additional assets or liabilities at fair value that are not already measured at fair value under existing standards.

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In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”). SFAS 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired. SFAS 141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS 141(R) is effective for fiscal years beginning after December 15, 2008. The Company will apply the provisions of SFAS 141 (R) to any acquisition after January 1, 2009.

In December 2007, the FASB issued SFAS No. 160, “Accounting for Noncontrolling Interests.” SFAS 160 clarifies the classification of noncontrolling interests in consolidated balance sheets and reporting transactions between the reporting entity and holders of noncontrolling interests. Under this statement, noncontrolling interests are considered equity and reported as an element of consolidated equity. Further, net income encompasses all consolidated subsidiaries with disclosure of the attribution of net income between controlling and noncontrolling interests. SFAS No. 160 is effective prospectively for fiscal years beginning after December 15, 2008. Currently, there are no noncontrolling interests in any of the Company’s subsidiaries.

Note 4. Stock-Based Compensation

The amount of the stock-based compensation expense is based on the estimated fair value of the awards on their grant dates and is recognized over the required service periods. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model.

Stock-based compensation expense is as follows:

(in thousands)	Three Months Ended March 31,
	2008		2007
Cost of Sales	$	17	$	14
Research and Development		217		173
Marketing and Sales		48		87
General and Administration		114		137
Total Stock-Based Compensation	$	396	$	411

Note 5. Loss Per Common Share

Basic loss and diluted loss per common share amounts are based upon the weighted average common shares outstanding during the periods. All “in-the-money” stock options for the three months ended March 31, 2008 and 2007, respectively, and shares issuable upon the conversion of the5.45% Convertible Notes due 2010 were anti-dilutive.

Note 6. Acquisition of the ASIC Design Center Division of Data - JCE

On January 11, 2007, the Company acquired the ASIC Design Center Division of Data – JCE, an Israel-based publicly held electronics components distribution company. The ASIC Design Center develops and sells customer-specific semiconductor products.

The acquisition was financed with the issuance of 3,746,713 shares of the Company’s common stock with an approximate fair value of $5.5 million and $1.4 million of cash. The Company incurred transaction costs of approximately $0.3 million which resulted in a total purchase price of approximately $7.2 million.

Under the earn-out provisions of the ASIC Design Center acquisition agreement, the Company may have been required to pay up to an additional $14.5 million in the form of TranSwitch common stock or cash, at its option, if the ASIC Design Center achieved stipulated revenue and operating profit for the calendar year ending December 31, 2007. Such targets were not achieved.

The results of operations of the ASIC Design Center have been included in the Company's consolidated financial results beginning on January 11, 2007. All significant inter-company balances and transactions have been eliminated. The acquisition was accounted for by the purchase method of accounting.

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The Company has allocated the cost to acquire the ASIC Design Center to its identifiable tangible and intangible assets and liabilities, with the remaining amount classified as goodwill. None of the amount allocated to goodwill is expected to be deductible for tax reporting purposes. The total purchase price of the ASIC Design Center has been allocated in the Company's consolidated financial statements as follows (in thousands):

Inventory	$	400
Equipment		36
Contracts (1)		1,756
Obligation under deferred revenue (2)		(180	)
Goodwill		5,183
Total purchase price	$	7,195

(1) The valuation of existing contracts of the ASIC Design Center was determined based on their estimated fair value at the acquisition date. The income approach, which includes an analysis of the cash flows and risks associated with achieving such cash flows, was the primary technique used to value such contracts. The value assigned to the ASIC contracts is generally being amortized ratably over five years, which represents the estimated contract average remaining useful life. Amortization expenses of $0.1 million were recognized during each of the quarters ended March 31, 2008 and 2007.

(2) In connection with the purchase price allocation, the Company has estimated the fair value of the ASIC Design Center’s existing consulting and maintenance obligation related to deferred revenues. The estimated fair value of this obligation was determined utilizing a cost build-up approach. The cost build-up approach determines fair value by estimating the costs relating to fulfilling the obligations plus a normal profit margin. The sum of the costs and operating profit approximates the amount the Company would be required to pay a third party to assume the support obligations. As of March 31, 2008, the remaining obligation under deferred revenue was $0.2 million.

Note 7.    Inventories

The components of inventories follow:

(in thousands)	March 31, 2008		December 31, 2007
Raw material	$	340	$	401
Work-in-process		904		992
Finished goods		1,690		1,676
Total inventories	$	2,934	$	3,069

 Note 8.    Comprehensive Loss

The components of comprehensive loss were as follows:

(in thousands)	Three Months Ended March 31,
	2008			2007
Net loss	$	(5,494	)	$	(5,216	)
Foreign currency translation adjustment		254			71
Total comprehensive loss	$	(5,240	)	$	(5,145	)

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Note 9.    Restructuring and Asset Impairment Charges

During the three months ended March 31, 2008, the Company recorded restructuring charges of approximately $0.2 million. These charges include approximately $0.3 million related to workforce reductions in Europe partially offset by approximately $0.1 million related to adjustments to certain sub-lease agreements relating to the Company’s excess facilities in Shelton, Connecticut.

During the three months ended March 31, 2007, the Company recorded restructuring charges of approximately $0.7 million for a workforce reduction of approximately 16 primarily research and development employees in the Company’s Shelton, Connecticut and Bedford, Massachusetts facilities.

A summary of the restructuring liabilities and activity follows:

(in thousands)	Activity for Three Months Ended March 31, 2008
	Restructuring Liabilities December 31, 2007		Restructuring Charges		Cash Payments, net of Receipts on Sublease Activity			Non-cash              Items		Adjustments and Changes in Estimates			Restructuring Liabilities March 31, 2008
Employee termination benefits	$	235	$	306	$	(263	)	$	—	$	—		$	278
Facility lease costs		20,731		—		(19	)		—		(58	)		20,654
Other		124		—		(1	)		—		—			123
Totals	$	21,090	$	306	$	(283	)	$	—	$	(58	)	$	21,055

Note 10.    Investments in Non-Publicly Traded Companies

The Company owns convertible preferred stock of Opulan Technologies Corp. (Opulan),. In addition, the Company has a 3% limited partnership interest in Neurone II, a venture capital fund organized as a limited partnership and 0.42% a limited partnership interest in Munich Venture Partners Fund. The Company accounts for these investments at cost. The financial condition of these companies is subject to significant changes resulting from their operating performance and their ability to obtain financing. The Company continually evaluates its investments in these companies for impairment.

For the three months ended March 31, 2008 and 2007, there was no impairment charges related to investments in non-publicly traded companies. 

Note 11.    Investments in Short-term Marketable Securities

Investments in short-term marketable securities as of March 31, 2008 consist of corporate bonds, mortgage backed securities and government securities. Such investments are stated at cost and accrued interest which approximates market.

Note 12. Supplemental Cash Flow Information

The following represents supplemental cash flow information:

(in thousands)	Three Months Ended March 31,
	2008		2007
Cash paid for interest	$	692	$	826
Cash paid for income taxes	$	68	$	263

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Note 13. Derivative Liability

As of March 31, 2008 the derivative liability consists exclusively of forward foreign exchange contracts which are shown at their estimated fair value. Changes in fair value are reflected in operations.

Note 14. Income Taxes

The provision for income taxes for the three months ended March 31, 2008 and 2007 relates to certain of TranSwitch’s subsidiaries located in foreign jurisdictions. The effective income tax rate differs from the U.S. federal statutory rate for the periods presented primarily due to foreign and state income taxes and increases in the valuation allowance for deferred income tax assets offset by non-deductible interest expense.

 Note 15. Stock Repurchase Program

On February 13, 2008 the Company announced that its Board of Directors authorized a stock repurchase program under which the Company may repurchase up to $10 million of its outstanding common stock. The share repurchase program authorizes the Company to repurchase shares through February 2010, from time to time, through transactions in the open market or in privately negotiated transactions. The number of shares to be purchased and the timing of the purchases will be based on market conditions and other factors. The stock repurchase program does not require the Company to repurchase any specific dollar value or number of shares, and the Company may terminate the repurchase program at any time.

During the three months ended March 31, 2008, the Company repurchased 166,350 shares at an average price of $0.68 per share for approximately $0.1 million, excluding approximately $5,000 of commissions. For the three months ended March 31, 2008, the Company's total cost for repurchasing shares was approximately $0.1 million.

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ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis in conjunction with our unaudited consolidated financial statements and the related notes thereto contained in Part 1, Item 1 of this Report. The information contained in this Quarterly Report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Report and in our other reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2007.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains, and any documents incorporated herein by reference may contain, forward-looking statements that involve risks and uncertainties. When used in this document, the words, “intend”, “anticipate”, “believe”, “estimate”, “plan”, “expect” and similar expressions as they relate to us are included to identify forward-looking statements. Our actual results could differ materially from the results discussed in the forward-looking statements as a result of risk factors including those set forth in this report and in our Annual Report on Form 10-K for the year ended December 31, 2007.

OVERVIEW

TranSwitch designs, develops and markets innovative semiconductor solutions that provide core functionality for voice, data and video communications network equipment.  Our customers are the original equipment manufacturers (“OEMs”) who supply wire-line and wireless network operators who provide voice, data and video services to end users such as consumers, corporations, municipalities, etc. We have over 200 active customers, including the leading global equipment providers, and our products are deployed in the networks of the major service providers around the world.

TranSwitch is a Delaware corporation incorporated on April 26, 1988. Our common stock trades on The NASDAQ Global Market under the symbol “TXCC.”

In addition to an extensive portfolio of standard integrated circuit products addressing voice, data, wireless and video markets, we supply intellectual property core products for Ethernet applications. In 2007, we expanded our offerings to include custom design services and intellectual property cores for high definition video (HDMI) applications. Our combination of standard products, intellectual property cores and custom design services enables us to serve our customers needs more fully.

Our products and services are compliant with relevant communications network standards. We offer several products that combine multi-protocol capabilities on a single chip, enabling our customers to develop network equipment for triple play (voice, data and video) applications. A key attribute of our products is their inherent flexibility. Many of our products incorporate embedded programmable micro-processors, enabling us to rapidly accommodate new customer requirements or evolving network standards by modifying the functionality of the device via software instructions.

We bring value to our customers through our communications systems expertise, very large scale integration (“VLSI”) design skills and commitment to excellence in customer support. Our emphasis on technical innovation results in defining and developing products that permit our customers to achieve faster time-to-market and to develop communications systems that offer a host of benefits such as greater functionality, improved performance, lower power dissipation, reduced system size and cost, and greater reliability for their customers.

We provide our products and services to customers in the following markets:

Optical Transport: This market segment includes equipment that transports information over optical networks based on the established SONET and SDH standards as well as the emerging networks that utilize the more recently introduced standards for Ethernet over SONET (“EoS”) and SDH. Our products are incorporated in Optical Transport equipment, and enable the fiber optic network to transport information with improved efficiency, thus increasing the overall network capacity. Our customers in this market segment include Fujitsu, Alcatel-Lucent, ZTE, Tejas Networks, Cisco Systems and Ericsson.

Broadband Access: This market segment includes equipment that provides “last mile” connectivity between the end customer and the network for broadband services. It includes systems for connectivity over copper wires based on DSL technology, fiber connectivity using Passive Optical Network (“PON”) technology or wireless connectivity using cellular, WiMAX or other technologies. Our products are incorporated into Broadband Access equipment, enabling telecommunications service providers to deliver next generation services such as voice, data and video over the broadband connection. Our customers in this market segment include Alcatel-Lucent and Nokia Siemens Networks.

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Carrier Ethernet: This is a new and rapidly growing market segment. Data and video services are the main drivers for future network infrastructure investments, and Carrier Ethernet is the industry’s accepted standard technology for next-generation networks. This market segment includes a variety of equipment including carrier grade Ethernet routers and switches. Our products, used in such equipment, enable carriers to provide robust and differentiated services using Ethernet technology in their wide-area networks. Our customers in this market segment include ZTE, Alcatel-Lucent and Tellabs.

Non-Telecommunications: Our design services unit leverages our integrated circuits (“IC”) design expertise, internal processes, tools and foundry relationships to develop and supply IC products to customers in a variety of industries besides telecommunications. Our customers in this market segment currently include various integrated circuit manufacturers and certain defense contractors.

We have sold our VLSI devices to more than 400 customers worldwide since shipping our first product in 1990. Our products are sold through a worldwide direct sales force and a worldwide network of independent distributors and sales representatives.

Available Information

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports will be made available free of charge through the Investor Relations section of our Internet website (http://www.transwitch.com) as soon as practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission. Material contained on our website is not incorporated by reference in this report. Our executive offices are located at Three Enterprise Drive, Shelton, CT 06484.

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CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

Our unaudited consolidated financial statements and related disclosures, which are prepared to conform with accounting principles generally accepted in the United States of America (U.S. GAAP), require us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the period reported. We are also required to disclose amounts of contingent assets and liabilities at the date of the consolidated financial statements. Our actual results in future periods could differ from those estimates and assumptions. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

During the quarter ended March 31, 2008, there were no significant changes to the critical accounting policies we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the year ended December 31, 2007. As of March 31, 2008 we had investments in debt securities classified as held to maturity which are stated at cost and accrued interest which approximates market. Further, we had forward exchange contract obligations stated at fair value. Neither item was present as of December 31, 2007.

RESULTS OF OPERATIONS

The results of operations that follow should be read in conjunction with our critical accounting policies and use of estimates summarized above as well as our accompanying unaudited condensed consolidated financial statements and notes thereto contained in Item 1 of this report. The following table sets forth certain unaudited interim consolidated statements of operations data as a percentage of net revenues for the periods indicated.

	Three Months Ended March 31,
	2008			2007
Net revenues:
Product revenues		92	%		96	%
Service revenues		8	%		4	%
Total net revenues		100	%		100	%
Cost of revenues:
Product cost of revenues		33	%		31	%
Service cost of revenues		6	%		3	%
Total cost of revenues		39	%		34	%
Gross profit		61	%		66	%
Operating expenses:
Research and development		74	%		66	%
Marketing and sales		28	%		30	%
General and administrative		21	%		16	%
Restructuring and asset impairment charges, net		3	%		7	%
Total operating expenses		126	%		119	%
Operating loss		( 65	%)		( 53	%)

Net Revenues

Net revenues, including product and service revenues were $7.5 million in the first quarter of 2008. This is a decrease of 19% from the first quarter of 2007. The following table summarizes our net revenue mix for the three months ended March 31, 2008 and 2007:

(Tabular dollars in thousands)	Three Months Ended March 31, 2008					Three Months Ended March 31, 2007
	Revenues		Percent of  Total  Revenues			Revenues		Percent of  Total  Revenues			Percentage Increase  (Decrease) in  Revenues
Optical Transport	$	4,234		56	%	$	5,345		57	%		(21	)%
Broadband Access		1,552		21	%		2,968		32	%		(48	)%
Carrier Ethernet		762		10	%		477		5	%		60	%
Non-Telecommunications		346		5	%		148		2	%		138	%
Sub-total product revenues		6,894		92	%		8,938		96	%		(23	)%
Service revenues		626		8	%		348		4	%		80	%
Total	$	7,520		100	%	$	9,286		100	%		(19	)%

13

Total product sales for the three months ended March 31, 2008 were $6.9 million as compared to $8.9 million for the three months ended March 31, 2007, a decrease of $2.0 million or 23%. This decrease in net product revenues for the first quarter of 2008 versus the comparable period of 2007 reflects decreased sales of our Optical Transport products of $1.1 million (mainly EtherPHAST 48 Plus) and decreased sales of our Broadband Access products of $1.4 million which is a result of lower sales for our ASPEN family of products. These decreases were partially offset by lesser increases in sales of our Carrier Ethernet and Non-Telecommunications products.

Service revenues (approximately $0.6 million in the first quarter of 2008 and $0.3 million in the first quarter of 2007) consist of design services performed for third parties on a short-term contract basis and technology licenses.

International net revenues represented approximately 85% and 89% of net revenues for the three months ended March 31, 2008 and 2007, respectively.

Gross Profit

The following table presents the impact on gross profit of excess and obsolete inventory charges and benefits:

(in thousands)	Three Months Ended March 31, 2008						Three Months Ended March 31, 2007
	Gross Profit $			Gross Profit %			Gross Profit $			Gross Profit %
Gross Profit—as reported	$	4,585			61	%	$	6,121			66	%
Excess and obsolete inventory benefit		(236	)		(3	)%		(278	)		(3	)%
Gross profit—as adjusted	$	4,349			58	%	$	5,843			63	%

Total gross profit for the three months ended March 31, 2008, decreased by approximately $1.5 million, or 25% from the comparable period of the prior year. The decrease in gross profit reflects lower overall revenues coupled with an increase in sales of our lower margin ASIC products.

Excluding the benefit from sales of previously written down inventory, gross profit as a percentage of net revenues declined from 63% in the first quarter of 2007 to 58% in the first quarter of 2008. We anticipate that gross profit will continue to be impacted by fluctuations in the volume and mix of our product shipments as well as material costs, yield and the fixed cost absorption of our product operations.

Research and Development

Research and development expenses consist primarily of salaries and related costs of employees engaged in research, design and development activities, costs related to electronic design automation tools, subcontracting and fabrication costs, depreciation and amortization, and facilities expenses. During the quarter ended March 31, 2008, research and development expenses decreased $0.6 million, or 9% over the comparable period of 2007.

We believe that continued investment in the design and development of future products is vital to maintain a competitive edge. We continue to seek opportunities to focus our research and development activities and will continue to closely monitor both our costs and our revenue expectations in future periods. We will continue to concentrate our spending in this area to meet our customer requirements and respond to market conditions.

Marketing and Sales

Marketing and sales expenses consist primarily of personnel-related expenses, trade show expenses, travel expenses and facilities expenses. Marketing and sales expenses for the three months ended March 31, 2008 decreased by $.7 million or 24%, as compared to the same period in the prior year.

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General and Administrative

General and administrative expenses consist primarily of personnel-related expenses, professional and legal fees, and facilities expenses. General and administrative expenses for the three months ended March 31, 2008 increased by $0.1 million as compared to the same period in the prior year.

Restructuring and Asset Impairment Charges, net

During the three months ended March 31, 2008, we recorded restructuring charges of approximately $0.2 million. These charges include approximately $0.3 million related to workforce reductions partially offset by approximately $0.1 million related to adjustments to certain sub-lease agreements relating to our excess facilities.

In the first quarter of 2007, we recorded charges of approximately $0.7 million for costs associated with a workforce reduction of approximately 16 primarily research and development employees in our Shelton, Connecticut and Bedford, Massachusetts facilities.

Change in Fair Value of Derivative Liability

During the first quarter of 2008 we entered into a number of foreign exchange contracts to purchase Indian Rupees which we use in our India operations. The fair value of these derivative financial instruments at March 31, 2008 was a liability of $24,000.

For the first quarter of 2007, we recorded other income of approximately $0.1 million to reflect the change in the fair value of the derivative liability resulting from the 5.45% Convertible Plus Cash Notes due 2007 (“Plus Cash Notes”).

Interest Expense, net

Interest expense, net decreased from $0.3 million in the first quarter of 2007 to $0.2 million in 2008, reflecting lower interest income and lower interest expense.

Interest expense decreased from $1.0 million in the first quarter of 2007 to $0.5 million in 2008 due to lower debt balances resulting from the exchanges of our Plus Cash Notes in 2007.

Interest income decreased from $0.7 million in the first quarter of 2007 to $0.3 million in 2008. This decrease is the result of lower market yields due to decreased interest rates and lower cash and investment balances. At March 31, 2008 and 2007, the effective interest rate on our interest-bearing securities was approximately 3.1% and 5.2%, respectively.

Income Tax Expense

For the three months ended March 31, 2008 and 2007, income tax expense was $.2 million and $.1 million respectively. The amounts that were recorded reflect income taxes on the earnings of certain of our foreign subsidiaries.

During the three months ended March 31, 2008 and 2007, we evaluated our deferred income tax assets as to whether it is “more likely than not” that the deferred income tax assets will be realized. In our evaluation of the realizability of deferred income tax assets, we consider projections of future taxable income, the reversal of temporary differences and tax planning strategies. We have evaluated and determined that it is not “more likely than not” that all of the deferred income tax assets will be realized. Accordingly, a valuation allowance was recorded for all of our domestic net deferred income tax assets. In future periods, we will not recognize a deferred tax benefit and will maintain a deferred tax valuation allowance until we achieve sustained U.S. taxable income. Additionally, in the future, we expect our current income tax expense to be related to taxable income generated by our foreign subsidiaries.

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LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2008 and December 31, 2007, we had total cash, cash equivalents and investments in marketable securities of approximately $30.8 million and $34.1 million, respectively. This is our primary source of liquidity, as we are not currently generating positive cash flow from our operations. A summary of our cash, cash equivalents and investments in marketable securities and future commitments are detailed as follows:

Cash, Cash Equivalents and Short-term investments in marketable securities

We have financed our operations and have met our capital requirements since incorporation in 1988 primarily through private and public issuances of equity securities, convertible notes, bank borrowings and, for certain years, cash generated from operations. Our principal sources of liquidity as of March 31, 2008, consisted of $30.8 million in cash and cash equivalents and marketable securities. Cash equivalents are instruments with original maturities of less than 90 days and short-term investments have original maturities of greater than 90 days but remaining maturities of less than one year. Our cash equivalents and investments as of March 31, 2008 consist of money market instruments, corporate bonds, mortgage backed securities and government securities.

We believe that our existing cash and cash equivalents as of March 31, 2008 will be sufficient to fund operating losses, capital expenditures and provide adequate working capital for at least the next twelve months. However, there can be no assurance that events in the future will not require us to seek additional capital and, if so required, that capital will be available on terms favorable or acceptable to us, if at all.

(in thousands)	March 31,  2008		December 31,  2007		Change			March 31,  2007		December 31,  2006		Change
Cash and Cash equivalents	$	26,748	$	34,098	$	(7,350	)	$	52,542	$	57,723	$	(5,181	)
Short term investments		4,031		-		4,031			-		-		-
Total Cash and investments	$	30,779	$	34,098	$	(3,319	)	$	52,542	$	57,723	$	(5,181	)

Effect of Exchange Rates and Inflation: Exchange rates and inflation have not had a significant impact on our operations or cash flows.

Commitments and Significant Contractual Obligations

There have been no material changes to our contractual obligations reported in our Annual Report on Form 10-K for the year ended December 31, 2007 as filed with the Securities and Exchange Commission on March 13, 2008. Additional comments related to our contractual obligations are presented below.

We have existing commitments to make future interest payments on our 5.45% Convertible Notes due September 30, 2010 (the “2010 Notes”) and to redeem these notes in September 2010. Over the remaining life of the 2010 Notes, we expect to accrue and pay approximately $3.4 million in interest to the holders thereof.

We have outstanding operating lease commitments of approximately $35.1 million, payable over the next nine years. Some of these commitments are for space that is not being utilized and, for which, we recorded restructuring charges in prior periods. We are in the process of trying to sublease additional excess space but it is unlikely that any sublease income generated will offset the entire future commitment. As of March 31, 2008, we have sublease agreements totaling approximately $3.2 million to rent portions of our excess facilities over the next two years. We currently believe that we can fund these lease commitments in the future; however, there can be no assurances that we will not be required to seek additional capital or provide additional guarantees or collateral on these obligations.

We have also pledged approximately $0.2 million in available cash and cash equivalents as collateral for stand-by letters of credit that guarantee certain long-term property lease obligations.

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ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes from the information provided in our Annual Report on Form 10-K for the year ended December 31, 2007.

ITEM 4.     CONTROLS AND PROCEDURES

As of the end of the period covered by this report, our management, including our President and Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)). These officers have concluded that our disclosure controls and procedures are effective. As such, we believe that all material information relating to us and our consolidated subsidiaries required to be disclosed in our periodic filings with the SEC (i) is recorded, processed, summarized and reported within the required time period, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

During the three months ended March 31, 2008, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

Limitations Inherent in all Controls.

Our management, including the President and Chief Executive Officer, and Chief Financial Officer, recognize that our disclosure controls and our internal controls (discussed above) cannot prevent all errors or all attempts at fraud. Any controls system, no matter how well crafted and operated, can only provide reasonable, and not absolute, assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in any control system, no evaluation or implementation of a control system can provide complete assurance that all control issues and all possible instances of fraud have been or will be detected.

PART II.    OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

We are not party to any material litigation proceedings.

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not currently aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.

ITEM 1A.    RISK FACTORS

There have been no material changes to the factors disclosed in Item 1A – Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2007 other than as provided below.

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If foreign exchange rates fluctuate significantly, our profitability may decline.

We are exposed to foreign currency rate fluctuations because we incur a significant portion of our operating expenses in currencies other than U.S. dollars (mainly Indian rupees, Israeli shekels and Euros). The U.S. dollar has devalued significantly and this trend may continue. To protect against reductions in value and the volatility of future cash flows caused by changes in foreign exchange rates, we enter into foreign currency forward contracts. The contracts reduce, but do not eliminate, the impact of foreign currency exchange rate movements. Also, this foreign currency risk management policy may not be effective in addressing long-term fluctuations.

Our ability to sublease excess office space may adversely affect our future cash outflows.

We have outstanding operating lease commitments of approximately $35.1 million, payable over the next nine years. Some of these commitments are for space that is not being utilized and, for which, we recorded restructuring charges in prior periods. We are in the process of trying to sublease additional excess space but it is unlikely that any sublease income generated will offset the entire future commitment. As of March 31, 2008, we have sublease agreements totaling approximately $3.2 million to rent portions of our excess facilities over the next two years. We currently believe that we can fund these lease commitments in the future; however, there can be no assurances that we will not be required to seek additional capital or provide additional guarantees or collateral on these obligations.

Of the office space being leased in our Shelton, Connecticut location, approximately 116,000 square feet is considered excess for which we have taken restructuring charges in prior years. Substantially all of this space is currently being sublet, but not for the full term that we are committed to under our lease agreements. A large portion of our sublet space is only under contract through June 2009. If we are unable to re-lease this space, at similar rates, our future cash outflows would be adversely affected.

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 13, 2008 we announced that our Board of Directors authorized a stock repurchase program under which we may repurchase up to $10 million of our outstanding common stock. The share repurchase program authorizes the repurchase of shares through February 2010, from time to time, through transactions in the open market or in privately negotiated transactions. The number of shares to be purchased and the timing of the purchases will be based on market conditions and other factors. The stock repurchase program does not require us to repurchase any specific dollar value or number of shares, and we may terminate the repurchase program at any time.

During the three months ended March 31, 2008, we repurchased 166,350 shares at an average price of $0.68 per share for approximately $0.1 million, excluding approximately $5,000 of commissions. For the three months ended March 31, 2008, our total cost for repurchasing shares was approximately $0.1 million.

Issuer Purchases of Equity Securities (table in thousands, except per share amounts)

	(a)		(b)		(c)		(d)
Period	Total Number of Shares Purchased		Average Price Paid per share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
February 1-29, 2008		120	$	0.67		120	$	9,919
March 1-31, 2008		46	$	0.69		46	$	9,887
Total		166	$	0.68		166

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ITEM 6.     EXHIBITS

Exhibit 3.1	Amended and Restated Certificate of Incorporation, as amended to date (previously filed as Exhibit 3.1 to TranSwitch’s quarterly report on Form 10-Q for the quarter ended March 31, 2005 and incorporated herein by reference).
Exhibit 3.2	Second Amended and Restated By-Laws, (previously filed as Exhibit 3.1 to TranSwitch’s current report on Form 8-K as filed with the Securities and Exchange Commission on October 17, 2007 and incorporated herein by reference).
Exhibit 31.1	CEO Certification pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
Exhibit 31.2	CFO Certification pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
Exhibit 32.1	CEO and CFO Certification pursuant to 18 U.S.C. 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith)

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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
May 9, 2008	/s/ Dr. Santanu Das
Date	Dr. Santanu Das Chief Executive Officer and President (Chief Executive Officer)

May 9, 2008	/s/ Robert A. Bosi
Date	Robert A. Bosi Vice President and Chief Financial Officer (Chief Financial Officer)

20

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Dr. Santanu Das, certify that:

1.  I have reviewed this Quarterly Report on Form 10-Q of TranSwitch Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Dr. Santanu Das
	Dr. Santanu Das Chief Executive Officer and President

Dated: May 9, 2008

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Robert A. Bosi, certify that:

1.  I have reviewed this Quarterly Report on Form 10-Q of TranSwitch Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Robert A. Bosi
	Robert A. Bosi Vice President and Chief Financial Officer

Dated:  May 9, 2008

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of TranSwitch Corporation (the Company) for the period ended March 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the Report), Dr. Santanu Das, Chief Executive Officer and President of the Company and Robert A. Bosi, Vice President & Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge, based upon review of the report, subject to the qualifications noted below:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By:	/s/ Dr. Santanu Das
Dr. Santanu Das
Chief Executive Officer and President
May 9, 2008
By:	/s/ Robert A. Bosi
Robert A. Bosi
Vice President and Chief Financial Officer
May 9, 2008