Exhibit 99.1
CONTACT: PressInquiries ScottLarson PublicRelations SycamoreNetworks, Inc. 978-250-3433 scott.larson@sycamorenet.com | Investor Inquiries Terry Adams Investor Relations Sycamore Networks, Inc. 978-250-3460 investor.info@sycamorenet.com |
SYCAMORE NETWORKS, INC. REPORTS SECOND QUARTER FISCAL YEAR 2006
FINANCIAL RESULTS
CHELMSFORD, Mass., February 21, 2006 – Sycamore Networks, Inc. (NASDAQ: SCMR), a leader in optical networking, today reported its second quarter results for the period ended January 28, 2006.
Revenue for the second quarter of fiscal 2006 was $20.8 million, compared with $14.9 million for the second quarter of fiscal 2005.
Net income for the second quarter of fiscal 2006, on a generally accepted accounting principles (GAAP) basis, was $5.0 million, or $0.02 per fully diluted share, compared with a net loss of $5.4 million, or $(0.02) per fully diluted share for the second quarter of fiscal 2005. Non-GAAP net income for the second quarter of fiscal 2006, which excludes stock-based compensation expense and a litigation settlement, was $7.1 million, or $0.03 per fully diluted share, compared with a non-GAAP net loss of $5.0 million, or $(0.02) per fully diluted share for the second quarter of fiscal 2005. The reconciliation between net income (loss) on a GAAP basis and net income (loss) on a non-GAAP basis is provided in a table immediately following the Unaudited Consolidated Statements of Operations included with this release.
Revenue for the first six months of fiscal 2006 was $48.1 million, compared with $29.1 million for the first six months of fiscal 2005.
Net income for the first six months of fiscal 2006, on a GAAP basis, was $11.9 million or $0.04 per fully diluted share, compared with a net loss of $13.2 million, or $(0.05) per fully diluted share for the first six months of fiscal 2005. Non-GAAP net income for the first six months of fiscal 2006, which excludes stock-based compensation expense and a litigation settlement, was $15.4 million, or $0.05 per fully diluted share, compared with a non-GAAP net loss of $12.2 million, or $(0.04) per fully diluted share for the first six months of fiscal 2005. The reconciliation between net income (loss) on a GAAP basis and net income (loss) on a non-GAAP basis is provided in a table immediately following the Unaudited Consolidated Statements of Operations included with this release.
“Q2 was another solid quarter for Sycamore. We continue to maintain strong margins, carefully manage our expenses, improve our operating performance and generate cash from operations,” said Daniel E. Smith, president and chief executive officer. “As IP-based voice, video and data applications drive increased demand for reliable and agile bandwidth in backbone networks, our data-optimized optical switching solutions continue to deliver unique value to our customers.”
About Sycamore Networks
Sycamore Networks, Inc. (NASDAQ: SCMR) is a leading provider of intelligent optical switching products for telecommunications service providers worldwide. The Company’s products form the reliable foundation for some of the world’s most respected and innovative communications networks. Sycamore’s fully integrated edge-to-core optical switching solutions enable network operators to efficiently and cost-effectively provision and manage optical network capacity to support a wide range of voice, video and data services. 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. Readers are cautioned that 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 Company’s reliance on a limited number of customers, the significant cost structure required to support the Company’s strategy, variation of the Company’s quarterly results and competition in the telecommunications industry. Certain additional risks are set forth in more detail in the section entitled Factors that May Affect Future Results in Management Discussion and Analysis of Financial Conditions and Results of Operations in the Company’s most recently filed Form 10-K, Form 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 Company believes that 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.
The non-GAAP financial data is provided to enhance the reader’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 a more appropriate indicator of, 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)
Assets | January 28, 2006 | July 31, 2005 | ||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 691,236 | $ | 508,281 | ||||
Short-term investments | 232,666 | 446,258 | ||||||
Accounts receivable, net | 10,490 | 8,384 | ||||||
Inventories | 4,100 | 5,445 | ||||||
Prepaids and other current assets | 4,329 | 3,812 | ||||||
Total current assets | 942,821 | 972,180 | ||||||
Property and equipment, net | 9,103 | 8,437 | ||||||
Long-term investments | 41,877 | 496 | ||||||
Other assets | 885 | 950 | ||||||
Total Assets | $ | 994,686 | $ | 982,063 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Deferred revenue | $ | 3,816 | $ | 8,700 | ||||
Other current liabilities | 18,497 | 23,779 | ||||||
Restructuring liabilities | 6,925 | 8,455 | ||||||
Total current liabilities | 29,238 | 40,934 | ||||||
Long term deferred revenue | 2,350 | 1,584 | ||||||
Total liabilities | 31,588 | 42,518 | ||||||
Common stock | 278 | 276 | ||||||
Additional paid-in capital | 1,790,352 | 1,780,243 | ||||||
Accumulated deficit | (826,673 | ) | (838,533 | ) | ||||
Other equity | (859 | ) | (2,441 | ) | ||||
Total stockholders’ equity | 963,098 | 939,545 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 994,686 | $ | 982,063 | ||||
Sycamore Networks, Inc.
Unaudited Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended | Six Months Ended | |||||||||||||||
January 28, | January 29, | January 28, | January 29, | |||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenue | $ | 20,835 | $ | 14,892 | $ | 48,133 | $ | 29,107 | ||||||||
Cost of revenue | 10,397 | 8,402 | 23,338 | 16,942 | ||||||||||||
Stock-based compensation | 332 | 78 | 655 | 202 | ||||||||||||
Gross profit | 10,106 | 6,412 | 24,140 | 11,963 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 7,377 | 11,217 | 15,090 | 22,889 | ||||||||||||
Sales and marketing | 2,401 | 3,011 | 5,038 | 6,155 | ||||||||||||
General and administrative | 2,122 | 1,932 | 5,020 | 4,180 | ||||||||||||
Stock-based compensation: | ||||||||||||||||
Research and development | 511 | 229 | 1,136 | 516 | ||||||||||||
Sales and marketing | 251 | 32 | 493 | 81 | ||||||||||||
General and administrative | 303 | 45 | 579 | 257 | ||||||||||||
Litigation settlement | 750 | — | 750 | — | ||||||||||||
Total operating expenses | 13,715 | 16,466 | 28,106 | 34,078 | ||||||||||||
Loss from operations | (3,609 | ) | (10,054 | ) | (3,966 | ) | (22,115 | ) | ||||||||
Interest and other income, net | 8,726 | 4,672 | 16,156 | 8,870 | ||||||||||||
Income (loss) before income taxes | 5,117 | (5,382 | ) | 12,190 | (13,245 | ) | ||||||||||
Income tax expense | 111 | — | 330 | — | ||||||||||||
Net income (loss) | $ | 5,006 | $ | (5,382 | ) | $ | 11,860 | $ | (13,245 | ) | ||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | 0.02 | $ | (0.02 | ) | $ | 0.04 | $ | (0.05 | ) | ||||||
Diluted | $ | 0.02 | $ | (0.02 | ) | $ | 0.04 | $ | (0.05 | ) | ||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 277,435 | 274,963 | 276,854 | 274,497 | ||||||||||||
Diluted | 281,036 | 274,963 | 280,084 | 274,497 |
Sycamore Networks, Inc.
Unaudited Non-GAAP Consolidated Statements of Operations (a)
(in thousands, except per share data)
Three Months Ended January 28, 2006 | ||||||||||||
GAAP Results | Adjustments | Non-GAAP Results (a) | ||||||||||
Revenue | $ | 20,835 | $ | — | $ | 20,835 | ||||||
Cost of revenue | 10,397 | — | 10,397 | |||||||||
Stock-based compensation | 332 | (332 | ) | — | ||||||||
Gross profit | 10,106 | 332 | 10,438 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 7,377 | — | 7,377 | |||||||||
Sales and marketing | 2,401 | — | 2,401 | |||||||||
General and administrative | 2,122 | — | 2,122 | |||||||||
Stock-based compensation: | ||||||||||||
Research and development | 511 | (511 | ) | — | ||||||||
Sales and marketing | 251 | (251 | ) | — | ||||||||
General and administrative | 303 | (303 | ) | — | ||||||||
Litigation settlement | 750 | (750 | ) | — | ||||||||
Total operating expenses | 13,715 | (1,815 | ) | 11,900 | ||||||||
Loss from operations | (3,609 | ) | 2,147 | (1,462 | ) | |||||||
Interest and other income, net | 8,726 | — | 8,726 | |||||||||
Income before income taxes | 5,117 | 2,147 | 7,264 | |||||||||
Income tax expense | 111 | 47 | 158 | |||||||||
Net income | $ | 5,006 | $ | 2,100 | $ | 7,106 | ||||||
Net income per share: | ||||||||||||
Basic | $ | 0.02 | $ | 0.03 | ||||||||
Diluted | $ | 0.02 | $ | 0.03 | ||||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 277,435 | 277,435 | ||||||||||
Diluted | 281,036 | 281,036 |
(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 expense and a litigation settlement.
Sycamore Networks, Inc.
Unaudited Non-GAAP Consolidated Statements of Operations (a)
(in thousands, except per share data)
Three Months Ended January 29, 2005 | ||||||||||||
GAAP Results | Adjustments | Non-GAAP Results (a) | ||||||||||
Revenue | $ | 14,892 | $ | — | $ | 14,892 | ||||||
Cost of revenue | 8,402 | — | 8,402 | |||||||||
Stock-based compensation | 78 | (78 | ) | — | ||||||||
Gross profit | 6,412 | 78 | 6,490 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 11,217 | — | 11,217 | |||||||||
Sales and marketing | 3,011 | — | 3,011 | |||||||||
General and administrative | 1,932 | — | 1,932 | |||||||||
Stock-based compensation: | ||||||||||||
Research and development | 229 | (229 | ) | — | ||||||||
Sales and marketing | 32 | (32 | ) | — | ||||||||
General and administrative | 45 | (45 | ) | — | ||||||||
Total operating expenses | 16,466 | (306 | ) | 16,160 | ||||||||
Loss from operations | (10,054 | ) | 384 | (9,670 | ) | |||||||
Interest and other income, net | 4,672 | — | 4,672 | |||||||||
Net loss | $ | (5,382 | ) | $ | 384 | $ | (4,998 | ) | ||||
Net loss per share: | ||||||||||||
Basic | $ | (0.02 | ) | $ | (0.02 | ) | ||||||
Diluted | $ | (0.02 | ) | $ | (0.02 | ) | ||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 274,963 | 274,963 | ||||||||||
Diluted | 274,963 | 274,963 |
(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 expense.
Sycamore Networks, Inc.
Unaudited Non-GAAP Consolidated Statements of Operations (a)
(in thousands, except per share data)
Six Months Ended January 28, 2006 | ||||||||||||
GAAP Results | Adjustments | Non-GAAP Results (a) | ||||||||||
Revenue | $ | 48,133 | $ | — | $ | 48,133 | ||||||
Cost of revenue | 23,338 | — | 23,338 | |||||||||
Stock-based compensation | 655 | (655 | ) | — | ||||||||
Gross profit | 24,140 | 655 | 24,795 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 15,090 | — | 15,090 | |||||||||
Sales and marketing | 5,038 | — | 5,038 | |||||||||
General and administrative | 5,020 | — | 5,020 | |||||||||
Stock-based compensation: | ||||||||||||
Research and development | 1,136 | (1,136 | ) | — | ||||||||
Sales and marketing | 493 | (493 | ) | — | ||||||||
General and administrative | 579 | (579 | ) | — | ||||||||
Litigation settlement | 750 | (750 | ) | — | ||||||||
Total operating expenses | 28,106 | (2,958 | ) | 25,148 | ||||||||
Loss from operations | (3,966 | ) | 3,613 | (353 | ) | |||||||
Interest and other income, net | 16,156 | — | 16,156 | |||||||||
Income before income taxes | 12,190 | 3,613 | 15,803 | |||||||||
Income tax expense | 330 | 98 | 428 | |||||||||
Net income | $ | 11,860 | $ | 3,515 | $ | 15,375 | ||||||
Net income per share: | ||||||||||||
Basic | $ | 0.04 | $ | 0.06 | ||||||||
Diluted | $ | 0.04 | $ | 0.05 | ||||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 276,854 | 276,854 | ||||||||||
Diluted | 280,084 | 280,084 |
(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 expense and a litigation settlement.
Sycamore Networks, Inc.
Unaudited Non-GAAP Consolidated Statements of Operations (a)
(in thousands, except per share data)
Six Months Ended January 29, 2005 | ||||||||||||
GAAP Results | Adjustments | Non-GAAP Results (a) | ||||||||||
Revenue | $ | 29,107 | $ | — | $ | 29,107 | ||||||
Cost of revenue | 16,942 | — | 16,942 | |||||||||
Stock-based compensation | 202 | (202 | ) | — | ||||||||
Gross profit | 11,963 | 202 | 12,165 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 22,889 | — | 22,889 | |||||||||
Sales and marketing | 6,155 | — | 6,155 | |||||||||
General and administrative | 4,180 | — | 4,180 | |||||||||
Stock-based compensation: | ||||||||||||
Research and development | 516 | (516 | ) | — | ||||||||
Sales and marketing | 81 | (81 | ) | — | ||||||||
General and administrative | 257 | (257 | ) | — | ||||||||
Total operating expenses | 34,078 | (854 | ) | 33,224 | ||||||||
Loss from operations | (22,115 | ) | 1,056 | (21,059 | ) | |||||||
Interest and other income, net | 8,870 | — | 8,870 | |||||||||
Net loss | $ | (13,245 | ) | $ | 1,056 | $ | (12,189 | ) | ||||
Net loss per share: | ||||||||||||
Basic | $ | (0.05 | ) | $ | (0.04 | ) | ||||||
Diluted | $ | (0.05 | ) | $ | (0.04 | ) | ||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 274,497 | 274,497 | ||||||||||
Diluted | 274,497 | 274,497 |
(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 expense.