Centillium Communications Announces Second Quarter 2004

Financial Results 
Business Editors
FREMONT, Calif.--(BUSINESS WIRE)--July 28, 2004
Centillium Communications, Inc. (Nasdaq:CTLM), a
leading provider of broadband access solutions, today announced
financial results for the second quarter ended June 30, 2004. 
Revenues for the second quarter were $18.5 million, a 17 percent
increase from revenues of $15.8 million in the first quarter of 2004. 
Under generally accepted accounting principles (GAAP), net loss
for the second quarter of 2004 was $11.0 million, or a net loss of
$0.29 per share, compared with a net loss of $12.7 million, or a net
loss of $0.33 per share, in the first quarter of 2004. 
"We were pleased with the progress we made in continuing our
broadband access diversification strategy during the second quarter,"
said Faraj Aalaei, co-founder and CEO of Centillium. 
"During the quarter, we announced a full line of passive optical
network (PON) access solutions for the burgeoning FTTP market,
leveraging our expertise in mixed-signal and System-on-a-Chip
solutions for high-speed broadband access. 
"Also, we announced an ongoing collaboration with OF Networks Co.,
Ltd., a joint venture between Oki Electric Industry Co., Ltd. and
Fujikura Ltd., for the development of Gigabit Ethernet Passive Optical
Networks (known as EPON in North America and GE-PON in Japan).
Initially targeting Japan, OF Networks will design and deliver gigabit
PON equipment powered by Centillium's EPON System-on-a-Chip solutions,
allowing potential carriers and end users to benefit from the
high-speed access the technology will provide," said Aalaei. 
"We also introduced Atlanta(TM) 100, the first member of our new
family of carrier-grade solutions for the rapidly growing VoIP
Customer Premises Equipment (CPE) market. Atlanta 100 addresses the
needs of service providers, enabling them to increase their revenue
opportunities by offering consumers superior voice quality and
next-generation telephony features. We are excited about this product
as more broadband subscribers worldwide are migrating to VoIP in
significant volumes. 
"In addition, we announced Palladia(TM) 400, the world's first
integrated Asynchronous Digital Subscriber Line (ADSL2+/2++) and VoIP
gateway-on-a-chip for next-generation CPE. Palladia 400's unparalleled
level of performance and features will enable service providers to
deliver VoIP using the existing broadband infrastructure. With both
the Atlanta 100 and Palladia 400 products, our customers will be able
to differentiate their product offerings with feature-rich solutions
for the CPE segment of the worldwide DSL market," Aalaei said. 
"We are also pleased to have added J. Scott Kamsler as our vice
president and chief financial officer. His management experience in
the communications, semiconductor and instrumentation industries will
be invaluable to us as we continue to execute on our diversification
strategy," said Aalaei. 
A conference call discussing the second quarter of 2004 financial
results will follow this release at 2:00 p.m. Pacific time/5:00 p.m.
Eastern time. To listen to the call, please dial (773) 756-4623, pass
code: Centillium. A replay will be made available approximately one
hour after the conclusion of the call and will remain available for
approximately two weeks. To access the replay, dial (402) 280-1658.
The conference call will also be webcast over the Internet; visit the
Investor Relations section of the Centillium Communications website at
www.centillium.com to access the call from the website. This webcast
will be recorded and available for replay on the Centillium website
approximately two hours after the conclusion of the conference call
for approximately two weeks. 
About Centillium Communications 
Centillium Communications, Inc. is a leading provider of broadband
access solutions with innovative systems-level products for the
consumer, enterprise and service provider markets. The Company's
high-performance and cost-effective infrastructure and service enabler
products gives its customers the winning edge in broadband access.
Centillium Communications' products include digital and mixed-signal
integrated circuits and related hardware and software applications for
Digital Subscriber Line (DSL) and Optical Networking equipment
deployed in central offices and customer premises and
Voice-over-Internet Protocol (VoIP) products for carrier- and
enterprise-class gateways and consumer telephony. The Centillium
Communications headquarters are located at 215 Fourier Avenue,
Fremont, CA 94539. Additional information is available at
www.centillium.com. 
Forward Looking Statements 
Except for statements of historical fact, this press release
includes statements that are forward-looking statements within the
meaning of U.S. Federal securities laws. Actual results may differ
materially from those indicated by such forward-looking statements
based on a variety of risks and uncertainties, including without
limitation the risks and uncertainties relating to the rate and
breadth of deployment of broadband access in general and Centillium's
technology solutions in particular; the successful development and
market acceptance of Centillium's new products and technology;
Centillium's ability to continue and expand on its relationships with
communications equipment manufacturers; and Centillium's reliance on
third party suppliers. Centillium undertakes no obligation to update
forward-looking statements for any reason. Information about potential
factors that could affect Centillium's financial results is included
in Centillium's Annual Report on Form 10-K and in other documents on
file with the Securities and Exchange Commission. 
Note to Editors: Centillium Communications, the Centillium Logo,
Atlanta and Palladia are trademarks of Centillium Communications, Inc.
in the United States and certain other countries. 




                    Centillium Communications, Inc.
       Condensed Consolidated Statement of Operations-Unaudited
                 (In thousands, except per share data)



                            Three Months Ended       Six Months Ended
                      ----------------------------- ------------------
                         June     March     June      June      June
                          30,      31,       30,       30,       30,
                         2004     2004      2003      2004      2003
                      --------- ---------  -------- --------- --------
Net revenues          $ 18,532  $ 15,839   $33,928  $ 34,371  $61,757
Cost of revenues        10,114     8,784    17,870    18,898   32,146
                      --------- ---------  -------- --------- --------
Gross profit             8,418     7,055    16,058    15,473   29,611
                      --------- ---------  -------- --------- --------
 Gross profit margin     45.4%     44.5%     47.3%     45.0%    47.9%

Operating expenses:
 Research and
  development           13,561    14,261    11,294    27,822   22,879
 Sales and marketing     3,217     3,371     3,192     6,588    5,981
 General and
  administrative         2,899     2,363     2,264     5,262    4,644
 Amortization of
  other acquisition - 
  related intangibles       --        --        41        --       83
                      --------- ---------  -------- --------- --------
 Total operating
  expenses              19,677    19,995    16,791    39,672   33,587
                      --------- ---------  -------- --------- --------
Operating loss         (11,259)  (12,940)     (733)  (24,199)  (3,976)
Interest and other,
 net                       295       277       247       572      571
                      --------- ---------  -------- --------- --------
Loss before provision
 for income taxes      (10,964)  (12,663)     (486)  (23,627)  (3,405)
Provision for income
 taxes                     (46)      (26)      (25)      (72)     (66)
                      --------- ---------  -------- --------- --------
Net loss              $(11,010) $(12,689)  $  (511) $(23,699) $(3,471)
                      ========= =========  ======== ========= ========

Basic and diluted net
 loss per share       $  (0.29) $  (0.33)  $ (0.01) $  (0.62) $ (0.10)
                      ========= =========  ======== ========= ========

Common shares
 outstanding            38,066    37,891    35,819    37,979   35,527
                      ========= =========  ======== ========= ========


(a) The three months ended June 30, 2004, March 31, 2004, and June
30, 2003 includes expenses of $44,000, $150,000 and $376,000,
respectively, for stock based compensation expense.

(b) The six months ended June 30, 2003 includes expenses of (i)
$677,000 for stock based compensation expense and (ii) $245,000 for
restructuring charges.

(c) The six months ended June 30, 2004 includes expenses of
$194,000 for stock based compensation expense.



                    Centillium Communications, Inc.
             Consolidated Summary Financial Data-Unaudited
                            (In thousands)



                                              June 30,    December 31,
                                                2004          2003
                                            -----------   ------------

Balance Sheet Data:
Cash and cash equivalents and short-term
 investments                                  $ 75,531     $  89,626
Accounts receivable, net                        12,000        12,476
Inventories                                      6,184        11,908
Other assets                                    11,574        11,614
                                            -----------   ------------
Total assets                                  $105,289     $ 125,624
                                            ===========   ============

Accounts payable                              $ 11,273     $   7,434
Accruals and other current liabilities          20,188        22,010
Long-term liabilities                              210           143
                                            -----------   ------------
Total liabilities                               31,671        29,587
Total stockholders' equity                      73,618        96,037
                                            -----------   ------------
Total liabilities and stockholders' equity    $105,289     $ 125,624
                                            ===========   ============


CONTACT:
Centillium Communications, Inc.
J. Scott Kamsler, 510-771-3917  
skamsler@centillium.com 
or
Stapleton Communications
Deborah Stapleton, 650-470-0200
deb@stapleton.com
Christina Carrabino, 650-470-0200    
christina@stapleton.com
-0- Jul/28/2004 20:05 GMT
 
 
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