Stockholm, Sweden - 22 October 2014 July-September 2014 * Sales were SEK 193.0 (272.0) m, corresponding to a decrease of 29.0%, or 34.5% adjusted for exchange rate fluctuations. * Operating profit was SEK 1.6 (48.5) m, including restructuring expenses, corresponding to an operating margin of 0.9% (17.8). Excluding restructuring expenses of SEK 6.4 m, operating profit was SEK 8.0 m, and the operating margin was 4.2%. * Net profit was SEK 2.4 (40.1) m. * Basic and diluted earnings per share were SEK 0.09 (1.44). * Cash flow from operating activities was SEK 7.7 (45.1) m. January-September 2014 * Sales were SEK 674.3 (805.8) m, corresponding to a decrease of 16.3%, or 21.1% adjusted for exchange rate fluctuations. * Operating profit was SEK 45.0 (139.2) m, including restructuring expenses, corresponding to an operating margin of 6.7% (17.3). Excluding restructuring expenses of SEK 6.4 m, operating profit was SEK 51.4 m, and the operating margin was 7.6%. * Net profit was SEK 40.1 (112.4) m. * Basic and diluted earnings per share were SEK 1.45 (4.05). * Cash flow from operating activities was SEK 87.8 (103.0) m. CEO's Statement: A Weak Quarter-Focus on Remedial Actions Sales were down by 29.0% in the quarter to SEK 193.0 m. This decline affected our operating margin, which was 4.2%, excluding restructuring expenses of SEK 6.4 m. We have a strong gross margin of 52.0% and positive cash flow of SEK 7.7 m. The combination of a weak second quarter with persistent low sales on our largest EMEA customers in the third quarter resulted in low profits. After conducting a close dialogue with these customers, my view is that we haven't lost market share with them, but rather, the decline is due to lower investments in their metro networks. However, more recently, we have seen signs of a greater willingness to invest from them, although I don't expect any rapid change, but rather, a gradual recovery. Sales from other EMEA customers were stable in the quarter. Sales in the Americas increased in this quarter, and I take a continued positive view of progress in this region. To return to healthy profitability and growth, we've taken several measures. The cost and efficiency program we reported in the quarter is being executed, and will reduce our cost base by some SEK 40 m annually. Staff reductions concluded in early-October, while other savings are being executed, and this program will mainly generate its effect in 2015. In tandem with this program, we focused and intensified our sales efforts. We executed some 20 demos of our new 100G products in the quarter, gaining very positive feedback from existing and potential new customers. It's clear that the investments we made in a new generation of products for 100 and 10 Gbit/s have given us a competitive product portfolio, especially in terms of typical metro attributes like power consumption, density and pricing. I see great business potential for these products in 2015. To expand our customer base, we sustained our focus on our partner program, which is creating potential for new customers in the enterprise and alternative operator segment. We're seeing new business opportunities in the EMEA outside Northern Europe, so we've upscaled activities on some of these markets. In North America, we're increasing our focus on cable operators, where our successes in Europe with one of the world's largest cable operators Liberty Global make an excellent reference. That's why we conducted a major event at the Cable Tech Expo in Denver in the quarter. In conjunction with this our 100G solution was also highly rated in the BTR Diamond Awards. We're also continuing to invest with the aim of securing new large accounts, and are continuously advancing our positioning with them. I'm still positive about our market, driven by underlying high traffic growth in metro networks. In combination with the measures we've taken, an attractive product portfolio and continued investments in developing our products and markets, I'm confident about 2015. Karl Thedéen, CEO, Transmode The Interim Report is attached and available via the link at the end of this press release. The information in this announcement is required to be disclosed by Transmode AB under the Swedish Securities Markets Act (Sw. lagen om värdepappersmarknaden). This information was released for publication at 08:00 AM CEST on 22 October 2014. This is a translation of the Swedish original. In case of any inconsistency between the Swedish and English version, the Swedish version shall prevail. Invitation to press and analysts conference Transmode AB's Interim Report for January-September 2014 will be published at 08.00 AM CEST, October 22, 2014. The company therefore invites investors, analysts and media to a telephone conference (in English) at 09:00 AM CEST, October 22, 2014 where the Interim Report will be presented by Karl Thedéen, CEO, and Johan Wilsby, CFO. To access the telephone conference, please call UK +44 207 6602078 alternatively, call the Swedish number +46 8 50595261 a few minutes before the scheduled start. The conference and presentation can also be followed live online, see Transmode's homepage: http://www.transmode.com/en/investors/reports/interim-reports For more information please contact: Ola Elmeland Vice President Marketing & Communications Transmode Systems AB Telephone: +46 8 506 882 71 Email: ola.elmeland@transmode.com About Transmode Transmode is a global provider of packet-optical networking solutions that enable fixed line and mobile network operators to cost effectively address the capacity needs created by the rapid growth in video and data traffic. These solutions are important building blocks in next-generation high-speed optical networks that support services such as broadband backhaul, mobile data backhaul, video delivery services and cloud computing. Transmode's solutions are designed to increase the capacity, flexibility and functionality of metro and regional networks and are based on Wavelength Division Multiplexing (WDM) and transport technologies such as Ethernet. Transmode's Native Packet Optical 2.0 architecture gives customers key advantages such as cost efficient Ethernet services, ultra-low latency, low power consumption and future proof network design. Transmode is headquartered in Stockholm, Sweden and is listed on the NASDAQ OMX Stockholm Exchange (TRMO). Since 2000 the company has installed more than 45,000 systems for over 550 fixed and mobile network operators, service providers, large enterprises and public institutions in over 50 countries across the globe. For additional information about Transmode, please visit www.transmode.com. [HUG#1864654]