CENTILLIUM COMMUNICATIONS ANNOUNCES FILING OF ANNUAL REPORT ON FORM 10-K

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1 Press Contact: Investor Contact: Laurie Falconer Darrel Slack Director of Corporate Communications Chief Financial Officer (510) (510) CENTILLIUM COMMUNICATIONS ANNOUNCES FILING OF ANNUAL REPORT ON FORM 10-K High Demand for DSL Services in Japan Driving Orders for Centillium Inventory Previously Believed Excess or Obsolete; Favorable Adjustment of $5.4 Million Required to Inventory Carrying Value FREMONT, Calif., March 27, 2002 (Nasdaq: CTLM), innovator of broadband communications technology, today announced the filing of its Annual Report on Form 10-K with the Securities and Exchange Commission. The financial statements contained in the Company s Form 10-K, prepared in accordance with generally accepted accounting principles (GAAP), reflect a favorable adjustment of $5.4 million to increase inventory carrying value as compared to the financial statements released with the quarterly earnings release on January 30, The acceleration of DSL subscriber growth in Japan has recently increased demand for our DSL products, said Faraj Aalaei, chief executive officer and co-founder of Centillium Communications, Inc. During the period from May to August 2001, net new DSL subscribers in Japan averaged 100,000 subscribers per month. Since October 1, 2001, net new monthly DSL subscribers in Japan averaged 285,000. As of February 28, 2002 there were 2.1 million DSL subscribers in Japan, compared with 510,000 at the end of August This rapid increase of subscriber additions has recently allowed both our customers in Japan and the DSL service providers equipped by these customers to quickly deplete most of their previously existing inventory of DSL equipment and semiconductors, continued Mr. Aalaei. GAAP and SEC rules require that companies consider possible effects on financial statements of subsequent events through the issuance date of a full set of financial statements, which occurs upon the filing of an Annual Report on Form 10-K with the SEC. The financial statements contained in Centillium s January 30, 2002 earnings release included inventory write-downs related to G.lite and first generation multi-mode DSL chipset inventory, which the Company believed to be excess or obsolete. Due to the rapid acceleration of growth in the DSL subscriber market in Japan, Centillium received orders subsequent to year-end for most of the inventory it had previously written down in the fourth quarter and has therefore made the appropriate favorable adjustments to the December

2 31, 2001 financial statements. The pro forma financial statements in the January 2002 earnings release remain unchanged because those pro forma results excluded the effect of the original inventory write-down. The Company will host a conference call today to discuss the current business environment as well as the financial effect of the favorable adjustment to inventory carrying value. The conference call will take place at 2:00 P.M. Pacific time (5:00 P.M. Eastern time) and will be web cast over the Internet. To listen to the call, visit the Investor Relations section of the Centillium web site at The web cast will be recorded and available for replay on the Company's web site approximately three hours after the conclusion of the conference call. About Centillium Communications combines technical innovation and customer commitment to make broadband communications in business and at home a practical reality. The Company designs and markets communications chipsets for Digital Subscriber Line (DSL) central office and customer premises equipment and for carrier- and enterprise-class Voice over Packet (VoP) gateways and switches. The Centillium Communications headquarters are located at Lakeview Blvd., Fremont, CA Additional information is available at Forward Looking Statements This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those indicated by such forward-looking statements based on a variety of risks and uncertainties, including the risks and uncertainties relating to rate and breadth of deployment of broadband access in general and Centillium s DSL technology solutions in particular; the effects of the introduction of additional DSL standards in Japan, including whether the version of DSL employed by the Company will remain dominant; Centillium s ability to continue and expand on its relationships with communications equipment manufacturers; and the successful development and market acceptance of Centillium s new products. The Company assumes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof. Information about potential factors that could affect Centillium s financial results is included in Centillium s most recent Annual Report on Form 10-K, on file with the Securities and Exchange Commission. ### Centillium Communications and the Centillium Logo are trademarks of All rights reserved.

3 Page 3 Pro Forma Condensed Consolidated Statements of Operations Unaudited (In Thousands, Except Per Share Data) For the Three Months Ended For the Twelve Months Ended 12/31/01 9/30/01 12/31/00 12/31/01 12/31/00 Net revenues $ 34,477 $ 46,804 $ 24,341 $ 159,507 $ 56,474 Cost of revenues 15,873 23,421 12,353 78,265 30,792 Gross profit 18,604 23,383 11,988 81,242 25,682 Gross profit % 54% 50% 49% 51% 45% Operating expenses: Research and development 13,411 14,269 9,338 50,884 28,942 Sales and marketing 3,666 4,273 3,015 15,472 10,404 General and administrative 2,062 2,513 2,848 9,591 7,392 Total operating expenses 19,139 21,055 15,201 75,947 46,738 Operating income (loss) (535) 2,328 (3,213) 5,295 (21,056) Interest and other, net ,509 3,544 3,836 Loss on long-term investments (990) - Income (loss) before income taxes 80 3,158 (1,704) 7,849 (17,220) Provision for (benefit from) income taxes (120) Pro forma net income (loss) $ 200 $ 2,872 $ (1,712) $ 7,449 $ (17,228) Pro forma diluted earnings (loss) per common share (a) $ 0.01 $ 0.08 $ (0.05) $ 0.20 $ (0.59) Weighted average common shares outstanding, assuming dilution 35,243 35,899 31,738 36,411 29,071 (a) Pro forma net loss per share does not consider the impact of common stock equivalents and assumes the conversion of convertible preferred stock into common stock. The pro forma Consolidated Statements of Operations exclude purchased in-process research and development, recurring deferred stock compensation, certain other stock compensation and the amortization of acquisition related intangibles. In addition, the fourth quarter 2001 pro forma net income excludes a non-recurring charge for inventory obsolescence and a non-recurring charge related to a reduction in force completed in October This pro forma information is not prepared in accordance with generally accepted accounting principles.

4 Page 4 Reconciliation of Pro Forma Adjustments Unaudited (In Thousands, Except Per Share Data) For the Three Months Ended For the Twelve Months Ended 12/31/01 9/30/01 12/31/00 12/31/01 12/31/00 Pro forma net income (loss) $ 200 $ 2,872 $ (1,712) $ 7,449 $ (17,228) Amortization of deferred stock compensation 2,587 3,326 6,258 15,346 25,610 Amortization of goodwill and other acquisition related intangibles , Purchased in-process research and development ,422 - Stock based compensation and related payroll tax expense on option exercises (158) 183 2,333 Excess and obsolete inventory Reduction in force GAAP net loss $ (4,195) $ (1,286) $ (8,225) $ (19,693) $ (45,998)

5 Page 5 Condensed Consolidated Statements of Operations Unaudited (In Thousands, Except Per Share Data) For the Three Months Ended For the Twelve Months Ended 12/31/01 9/30/01 12/31/00 12/31/01 12/31/00 Net revenues $ 34,477 $ 46,804 $ 24,341 $ 159,507 $ 56,474 Cost of revenues 16,716 23,579 12,748 79,781 32,251 Gross Profit 17,761 23,225 11,593 79,726 24,223 Operating expenses: Research and development 14,979 16,038 11,729 59,034 41,879 Sales and marketing 4,107 4,763 4,193 17,953 15,497 General and administrative 2,784 3,432 4,984 13,879 15,846 Amortization of goodwill and other acquisition related intangibles , In-process research and development ,422 - Total operating expenses 22,691 25,055 21, ,573 74,049 Operating loss (4,930) (1,830) (9,726) (21,847) (49,826) Interest and other, net ,509 3,544 3,836 Loss on long-term investments (990) - Loss before income taxes (4,315) (1,000) (8,217) (19,293) (45,990) Provision for (benefit from) income taxes (120) Net loss $ (4,195) $ (1,286) $ (8,225) $ (19,693) $ (45,998) Basic and diluted net loss per share $ (0.12) $ (0.04) $ (0.26) $ (0.59) $ (2.00) Weighted average shares of common stock outstanding used in computing basic and diluted net loss per share 33,995 33,782 31,738 33,495 22,950

6 Page 6 Summary Financial Data Unaudited (In Thousands) December 31, Balance Sheet Data: Cash, cash equivalents and short-term investments $ 110,853 $ 87,684 Accounts receivable, net 4,042 16,883 Inventories, net 9,356 9,183 Other assets 19,957 14,193 Total assets $ 144,208 $ 127,943 Accounts payable $ 7,854 $ 13,133 Accruals and other current liabilities 14,881 7,430 Long-term debt and other long-term liabilities Total liabilities 23,050 21,073 Total stockholders' equity 121, ,870 Total liabilities and stockholders' equity $ 144,208 $ 127,943