Sycamore Networks (SCMR) 8-K Sycamore Networks, Inc. Reports Third Quarter Fiscal Year 2005 Financial Results

Exhibit 99.1

CONTACT:
Press Inquiries	Investor Inquiries
Scott Larson	Terry Adams
Public Relations	Investor Relations
Sycamore Networks, Inc.	Sycamore Networks, Inc.
978-250-3433	978-250-3460
scott.larson@sycamorenet.com	investor.info@sycamorenet.com

SYCAMORE NETWORKS, INC. REPORTS THIRD QUARTER FISCAL YEAR 2005 FINANCIAL RESULTS

CHELMSFORD, Mass., September 19, 2005 – Sycamore Networks, Inc. (NASDAQ: SCMRE), a leader in optical networking, today reported its third quarter results for the period ended April 30, 2005.

Revenue for the third quarter of fiscal 2005 was $17.8 million, compared with $14.7 million for the third quarter of fiscal 2004.

Net loss for the third quarter of fiscal 2005, on a generally accepted accounting principles (GAAP) basis, was $12.0 million or $(0.04) per share, compared with a net loss of $10.6 million, or $(0.04) per share for the third quarter of fiscal 2004. Non-GAAP net loss for the third quarter of fiscal 2005, which excludes stock-based compensation and payroll taxes on stock option exercises, a reserve for contingent liabilities associated with certain claims, disputes and litigation, restructuring charges and related asset impairments, was $0.5 million, or $(0.00) per share, compared with a non-GAAP net loss of $9.3 million, or $(0.03) per share for the third quarter of fiscal 2004. The reconciliation between net loss on a GAAP basis and net loss on a non-GAAP basis is provided in a table immediately following the Unaudited Consolidated Statements of Operations included with this release.

During the third quarter, Sycamore recorded a restructuring charge of $0.9 million attributable to a workforce reduction of approximately 20 people and a reserve for contingent liabilities associated with certain claims, disputes and litigation in the amount of $10.3 million.

Revenue for the first nine months of fiscal 2005 was $46.9 million, compared with $30.0 million for the first nine months of fiscal 2004.

Net loss for the first nine months of fiscal 2005, on a GAAP basis, was $25.2 million or $(0.09) per share, compared with a net loss of $35.7 million, or $(0.13) per share for the first nine months of fiscal 2004. Non-GAAP net loss for the first nine months of fiscal 2005, which excludes stock-based compensation and payroll taxes on stock option exercises, a reserve for contingent liabilities associated with certain claims, disputes and litigation, restructuring charges and related asset impairments, was $12.7 million, or $(0.05) per share, compared with a non-GAAP net loss of $31.0 million, or $(0.11) per share for the first nine months of fiscal 2004. The reconciliation between net loss on a GAAP basis and net loss on a non-GAAP basis is provided in a table immediately following the Unaudited Consolidated Statements of Operations included with this release.

“We were pleased with a number of improvements in our third quarter core operating results, including revenue and margin performance,” stated Daniel E. Smith, Sycamore’s president and chief executive officer.

As reported in Sycamore’s 2004 Annual Report on Form 10-K/A and in its quarterly report on Form 10-Q/A for the quarters ended October 30, 2004 and January 29, 2005, each as filed with the SEC on September 12, 2005, the Company has restated its consolidated financial statements for the years ended July 31, 2004, 2003, 2002, 2001 and 2000 and for the three months ended October 30, 2004 and January 29, 2005.

The Company also said it plans to review its fiscal year 2005 third and fourth quarter and year end results during a conference call to be held in early October. The date of this conference call will be released shortly.

About Sycamore Networks

Sycamore Networks, Inc. (NASDAQ: SCMRE) develops and markets optical networking products for telecommunications service providers worldwide. The Company’s products enable service providers to cost-effectively and easily transition their existing fiber optic network into a network infrastructure that can provision, manage and deliver economic, high-bandwidth services to their customers. For more information, please visitwww.sycamorenet.com.

We wish to caution you that certain matters discussed in this news release constitute forward-looking statements that involve risks and uncertainties. Actual results or events could differ materially from those stated or implied in forward-looking statements. These risks and uncertainties include, but are not limited to, additional actions and findings that may result from the restatement of previously issued financial statements, the possibility that the Company may be unable to regain compliance with Nasdaq listing requirements and the impact of the investigation’s findings on prior and current periods. Certain additional risks are set forth in more detail in the section entitled Factors that May Affect Future Results under Item 2 in Management Discussion and Analysis of Financial Conditions and Results of Operations in the Company’s most recently filed 10-Q and the other reports filed by the Company from time to time with the Securities and Exchange Commission. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.

Use of Non-GAAP Financial Measures

The Company provides non-GAAP financial data in addition to providing financial results in accordance with GAAP. These measures are not in accordance with, or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. The items excluded from non-GAAP results have one or more of the following characteristics: their magnitude and timing is largely outside of the Company’s control; they are unrelated to the ongoing operation of the business in the ordinary course; they are unusual, and the Company does not expect them to occur in the ordinary course of business; or they are non-operational, non-cash expenses involving stock option grants primarily in connection with the Company’s initial public offering and acquisitions.

The non-GAAP financial data is provided to enhance the user’s overall understanding of the Company’s current financial performance and its prospects for the future. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by excluding certain expense and income items that the Company believes are not indicative of the Company’s core operating results because such charges are associated with past events and are not related to current operations. In addition, since the Company has historically reported non-GAAP results to the investment community, the Company believes the inclusion of non-GAAP numbers provides consistency in its financial reporting. Further, these non-GAAP results are one of the primary indicators management uses for planning and forecasting in future periods. The non-GAAP financial data should be considered in addition to, not as a substitute for or as being superior to, operating losses, cash flows, or other measures of financial performance prepared in accordance with GAAP.

Sycamore Networks, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

	April 30, 2005			July 31, 2004
Assets
Current assets:
Cash and cash equivalents	$	522,244		$	45,430
Short-term investments		351,067			482,274
Accounts receivable, net		14,491			10,605
Inventories		4,709			4,294
Prepaids and other current assets		4,101			3,611
Total current assets		896,612			546,214
Property and equipment, net		7,878			9,419
Long-term investments		75,547			433,621
Other assets		989			1,664
Total Assets	$	981,026		$	990,918
Liabilities and Stockholders’ Equity
Deferred revenue	$	10,419		$	7,226
Other current liabilities		22,890			15,321
Restructuring liabilities		9,820			12,005
Total current liabilities		43,129			34,552
Deferred revenue		1,530			926
Total liabilities		44,659			35,478
Common stock		276			274
Additional paid-in capital		1,779,311			1,774,214
Accumulated deficit		(839,969	)		(814,744	)
Other equity		(3,251	)		(4,304	)
Total stockholders’ equity		936,367			955,440
Total Liabilities and Stockholders’ Equity	$	981,026		$	990,918

Sycamore Networks, Inc.

Unaudited Consolidated Statements of Operations

(in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	April 30, 2005			April 24, 2004			April 30, 2005			April 24, 2004
Revenue	$	17,848		$	14,718		$	46,955		$	30,034
Cost of revenue		8,804			9,723			25,746			19,682
Stock-based compensation and payroll tax on stock option exercises		77			206			279			635
Gross profit		8,967			4,789			20,930			9,717
Operating expenses:
Research and development		10,676			11,256			33,562			34,298
Sales and marketing		2,630			4,894			8,782			13,645
General and administrative		2,013			1,642			6,189			5,092
Stock-based compensation and payroll tax on stock option exercises:
Research and development		191			539			710			2,315
Sales and marketing		28			265			111			827
General and administrative		43			239			305			872
Reserve for contingencies		10,282			—			10,282			—
Restructuring charges and related asset impairments		679			—			679			—
Total operating expenses		26,542			18,835			60,620			57,049
Loss from operations		(17,575	)		(14,046	)		(39,690	)		(47,332	)
Interest and other income, net		5,595			3,485			14,465			11,648
Net loss	$	(11,980	)	$	(10,561	)	$	(25,225	)	$	(35,684	)
Diluted net loss per share	$	(0.04	)	$	(0.04	)	$	(0.09	)	$	(0.13	)
Weighted average shares used in computing diluted net loss per share		275,325			272,652			274,773			271,642

Sycamore Networks, Inc.

Unaudited Non-GAAP Consolidated Statements of Operations (a)

(in thousands, except per share data)

	Three Months Ended April 30, 2005
	GAAP Results			Adjustments			Non-GAAP Results (a)
Revenue	$	17,848		$	—		$	17,848
Cost of revenue		8,804			(204	)		8,600
Stock-based compensation and payroll tax on stock option exercises		77			(77	)		—
Gross profit		8,967			281			9,248
Operating expenses:
Research and development		10,676			—			10,676
Sales and marketing		2,630			—			2,630
General and administrative		2,013			—			2,013
Stock-based compensation and payroll tax on stock option exercises:
Research and development		191			(191	)		—
Sales and marketing		28			(28	)		—
General and administrative		43			(43	)		—
Reserve for contingencies		10,282			(10,282	)		—
Restructuring charges and related asset impairments		679			(679	)		—
Total operating expenses		26,542			(11,223	)		15,319
Loss from operations		(17,575	)		11,504			(6,071	)
Interest and other income, net		5,595			—			5,595
Net loss	$	(11,980	)	$	11,504		$	(476	)
Diluted net loss per share	$	(0.04	)				$	(0.00	)
Weighted average shares used in computing diluted net loss per share		275,325						275,325

(a) These Unaudited non-GAAP Consolidated Statements of Operations are for informational purposes only and are not presented in accordance with GAAP. The adjustments necessary to provide a direct reconciliation of the non-GAAP to the GAAP basis consolidated statements of operations exclude stock-based compensation and payroll taxes on stock option exercises, a reserve for contingent liabilities associated with certain claims, disputes and litigation, restructuring charges and related asset impairments.

Sycamore Networks, Inc.

Unaudited Non-GAAP Consolidated Statements of Operations (a)

(in thousands, except per share data)

	Three Months Ended April 24, 2004
	GAAP Results			Adjustments			Non-GAAP Results (a)
Revenue	$	14,718		$	—		$	14,718
Cost of revenue		9,723			—			9,723
Stock-based compensation and payroll tax on stock option exercises		206			(206	)		—
Gross profit		4,789			206			4,995
Operating expenses:
Research and development		11,256			—			11,256
Sales and marketing		4,894			—			4,894
General and administrative		1,642			—			1,642
Stock-based compensation and payroll tax on stock option exercises:
Research and development		539			(539	)		—
Sales and marketing		265			(265	)		—
General and administrative		239			(239	)		—
Total operating expenses		18,835			(1,043	)		17,792
Loss from operations		(14,046	)		1,249			(12,797	)
Interest and other income, net		3,485			—			3,485
Net loss	$	(10,561	)	$	1,249		$	(9,312	)
Diluted net loss per share	$	(0.04	)				$	(0.03	)
Weighted average shares used in computing diluted net loss per share		272,652						272,652

(a) These Unaudited non-GAAP Consolidated Statements of Operations are for informational purposes only and are not presented in accordance with GAAP. The adjustments necessary to provide a direct reconciliation of the non-GAAP to the GAAP basis consolidated statements of operations exclude stock-based compensation and payroll taxes on stock option exercises, a reserve for contingent liabilities associated with certain claims, disputes and litigation, restructuring charges and related asset impairments.

Sycamore Networks, Inc.

Unaudited Non-GAAP Consolidated Statements of Operations (a)

(in thousands, except per share data)

	Nine Months Ended April 30, 2005
	GAAP Results			Adjustments			Non-GAAP Results (a)
Revenue	$	46,955		$	—		$	46,955
Cost of revenue		25,746			(204	)		25,542
Stock-based compensation and payroll tax on stock option exercises		279			(279	)		—
Gross profit		20,930			483			21,413
Operating expenses:
Research and development		33,562			—			33,562
Sales and marketing		8,782			—			8,782
General and administrative		6,189			—			6,189
Stock-based compensation and payroll tax on stock option exercises:
Research and development		710			(710	)		—
Sales and marketing		111			(111	)		—
General and administrative		305			(305	)		—
Reserve for contingencies		10,282			(10,282	)		—
Restructuring charges and related asset impairments		679			(679	)		—
Total operating expenses		60,620			(12,087	)		48,533
Loss from operations		(39,690	)		12,570			(27,120	)
Interest and other income, net		14,465			—			14,465
Net loss	$	(25,225	)	$	12,570		$	(12,655	)
Diluted net loss per share	$	(0.09	)				$	(0.05	)
Weighted average shares used in computing diluted net loss per share		274,773						274,773

(a) These Unaudited non-GAAP Consolidated Statements of Operations are for informational purposes only and are not presented in accordance with GAAP. The adjustments necessary to provide a direct reconciliation of the non-GAAP to the GAAP basis consolidated statements of operations exclude stock-based compensation and payroll taxes on stock option exercises, a reserve for contingent liabilities associated with certain claims, disputes and litigation, restructuring charges and related asset impairments.

Sycamore Networks, Inc.

Unaudited Non-GAAP Consolidated Statements of Operations (a)

(in thousands, except per share data)

	Nine Months Ended April 24, 2004
	GAAP Results			Adjustments			Non-GAAP Results (a)
Revenue	$	30,034		$	—		$	30,034
Cost of revenue		19,682			—			19,682
Stock-based compensation and payroll tax on stock option exercises		635			(635	)		—
Gross profit		9,717			635			10,352
Operating expenses:
Research and development		34,298			—			34,298
Sales and marketing		13,645			—			13,645
General and administrative		5,092			—			5,092
Stock-based compensation and payroll tax on stock option exercises:
Research and development		2,315			(2,315	)		—
Sales and marketing		827			(827	)		—
General and administrative		872			(872	)		—
Total operating expenses		57,049			(4,014	)		53,035
Loss from operations		(47,332	)		4,649			(42,683	)
Interest and other income, net		11,648			—			11,648
Net loss	$	(35,684	)	$	4,649		$	(31,035	)
Diluted net loss per share	$	(0.13	)				$	(0.11	)
Weighted average shares used in computing diluted net loss per share		271,642						271,642

(a) These Unaudited non-GAAP Consolidated Statements of Operations are for informational purposes only and are not presented in accordance with GAAP. The adjustments necessary to provide a direct reconciliation of the non-GAAP to the GAAP basis consolidated statements of operations exclude stock-based compensation and payroll taxes on stock option exercises, a reserve for contingent liabilities associated with certain claims, disputes and litigation, restructuring charges and related asset impairments.