Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Jan. 25, 2014 | Mar. 03, 2014 | |
Document Information [Line Items] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 25-Jan-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q2 | ' |
Trading Symbol | 'SCMR | ' |
Entity Registrant Name | 'SYCAMORE NETWORKS INC | ' |
Entity Central Index Key | '0001092367 | ' |
Current Fiscal Year End Date | '--07-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 28,882,093 |
Description_of_Business
Description of Business | 6 Months Ended | |
Jan. 25, 2014 | ||
Description of Business | ' | |
1 | Description of Business | |
Prior to February 1, 2013, Sycamore Networks, Inc. (the “Company”) developed and marketed Intelligent Bandwidth Management solutions for fixed line and mobile network operators worldwide and provided services associated with such products (the “Intelligent Bandwidth Management Business”), and, prior to November 1, 2012, the Company also developed and marketed a mobile broadband optimization solution (the “IQstream Business”). As used in these Notes to the Consolidated Financial Statements, “Sycamore,” “we,” “us,” or “our” refers collectively to the Company and its subsidiaries. | ||
On October 23, 2012, the Company entered into an Asset Purchase and Sale Agreement (the “Asset Sale Agreement”) with Sunrise Acquisition Corp. (now known as Coriant America Inc.), a portfolio company of Marlin Equity Partners (“Buyer”), pursuant to which Buyer agreed to acquire substantially all of the assets (the “Asset Sale”) primarily related to the Intelligent Bandwidth Management Business, including inventory, fixed assets, accounts receivable, intellectual property rights (other than patents and patent applications), contracts, certain real estate leases, the Company’s subsidiaries in Shanghai, the Netherlands and Japan, and certain shared facilities and assets for $18.75 million in cash, subject to a working capital adjustment, and the assumption by Buyer of certain liabilities. The Company’s stockholders authorized the Asset Sale at a Special Meeting of Stockholders held on January 29, 2013 (the “Special Meeting”), and the Asset Sale was completed on January 31, 2013 (the transfer of the Company’s equity interests in its Shanghai subsidiary, which was subject to the receipt of government approval, occurred on March 25, 2013). Upon the closing of the Asset Sale, Buyer acquired substantially all of the Company’s operating assets relating to the Intelligent Bandwidth Management Business, including the Company’s accounts receivable, inventories and prepaid and other assets, and assumed most of the Company’s remaining current liabilities, including substantially all of the Company’s deferred revenue and accrued warranty obligations. On April 22, 2013, the Company commenced litigation against Buyer and certain of its affiliates with respect to certain amounts due under the Asset Sale Agreement (the “Delaware Litigation”). In connection with such litigation, on May 28, 2013, the Company and such parties reached an agreement pursuant to which (1) the Company agreed to dismiss the Delaware Litigation without prejudice, (2) Buyer paid certain undisputed amounts of $1.7 million owed to the Company and (3) the parties agreed to submit the remaining issues relating to amounts in dispute of $1,456,747 to arbitration for resolution by a neutral accountant. The matters in dispute have been resolved by the neutral accountant in favor of the Company in the amount of $1,107,736, which includes reimbursement for a portion of the fees and expenses paid to the neutral accountant. On March 5, 2014, the Company received the $1,107,736 payment. Now that all matters set forth in the Delaware Litigation have been finally resolved, it will be dismissed with prejudice. For additional information concerning this matter, see Note 5, “Commitments and Contingencies.” | ||
In conjunction with the approval of the Asset Sale Agreement, the Company’s Board of Directors (the “Board”) also approved the liquidation and dissolution of the Company (the “Dissolution”) pursuant to a Plan of Complete Liquidation and Dissolution (the “Plan of Dissolution”) following the completion of the Asset Sale. The Plan of Dissolution was also approved by the stockholders at the Special Meeting and, following a review of the Company’s strategic alternatives for all of the Company’s assets and available options for providing value to the Company’s stockholders, the Company filed a certificate of dissolution with the Secretary of State of the State of Delaware (the “Certificate of Dissolution”) on March 7, 2013. For additional information regarding the Dissolution, please see the Company’s Definitive Proxy Statement on Schedule 14A filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 28, 2012 and its Current Report on Form 8-K filed with the SEC on March 8, 2013. | ||
In connection with the filing of the Certificate of Dissolution, on March 7, 2013, the Company closed its stock transfer books and discontinued recording transfers of its common stock, $0.001 par value per share (the “Common Stock”). The Common Stock, and stock certificates evidencing shares of the Common Stock, are no longer assignable or transferable on the Company’s books, other than transfers by will, intestate succession or operation of law. The Company also submitted a request to The NASDAQ Stock Market (“NASDAQ”) to suspend trading of the Common Stock on The NASDAQ Global Select Market effective as of the close of trading on March 7, 2013 and, on March 15, 2013, the Company filed a Form 25 with the SEC to delist its Common Stock, which became effective prior to the opening of trading on March 25, 2013. Since the suspension of trading of the Common Stock on The NASDAQ Global Select Market, shares of our Common Stock held in street name with brokers have been trading in the over-the-counter market on the Pink Sheets, an electronic bulletin board established for unlisted securities. | ||
As a result of the completion of the Asset Sale and the Company’s previously announced halting of further development and marketing in connection with the IQstream Business, the Company no longer has any operating assets or revenue. Since the filing of the Certificate of Dissolution, the Company has been operating in accordance with the Plan of Dissolution, which contemplates an orderly wind down of the Company’s business, including the disposition of the IQstream Business, the sale or monetization of the Company’s other remaining non-cash assets and the satisfaction or settlement of its liabilities and obligations, including contingent liabilities and claims. | ||
On December 20, 2013, the Board approved the termination of the employment of Alan R. Cormier as Sycamore’s President, Chief Executive Officer and Secretary, effective as of that date. David Guerrera, Sycamore’s former Associate Counsel, was appointed President and General Counsel of Sycamore, effective immediately following Mr. Cormier’s departure as President, Chief Executive Officer and Secretary. Anthony Petrillo continues to serve as Sycamore’s Chief Financial Officer. As of January 25, 2014, Mr. Guerrera and Mr. Petrillo are Sycamore’s only remaining employees. | ||
On January 31, 2014, the Company entered into a Patent Sale Agreement (the “Patent Sale Agreement”) with Dragon Intellectual Property, LLC (“Dragon”), pursuant to which the Company agreed to sell to Dragon for $2.0 million a portfolio of 40 patents and two patent applications, each related to the Intelligent Bandwidth Management Business (the “IBM Patents”). The sale of the IBM Patents was completed on February 28, 2014. None of the IBM Patents are related to the IQstream Business, which has a separate portfolio of three United States patents and five United States patent applications (the “IQstream Patent Portfolio”). | ||
The Company’s remaining primary non-cash assets consist of our real estate holdings in Tyngsborough, Massachusetts, our intellectual property and other assets relating to the IQstream Business, our investments in private companies and certain other assets that were not sold to Buyer in the Asset Sale. | ||
Following the filing of the Certificate of Dissolution, in light of the Board’s views as to the prospects for the IQstream Business, the Board determined to terminate all of the remaining IQstream Employees. The Company continues to pursue available options with respect to the assets of the IQstream Business, including a possible sale of the IQstream Patent Portfolio, equipment and other assets of the IQstream Business. The Company also owns approximately 102 acres of undeveloped land located in Tyngsborough, Massachusetts, which it currently is actively marketing for sale. There can be no assurance as to the amount of consideration the Company may be able to obtain for these assets or as to any time frame within which a potential sale or other disposition of these assets might occur. | ||
During the Dissolution period, the Company will continue to pursue the liquidation to cash of its remaining non-cash assets for possible distribution to our stockholders. Subject to uncertainties inherent in the winding up of the Company’s business, we expect to make one or more additional liquidating distributions as promptly as practicable following the liquidation to cash of our non-cash assets and after payment of, or provision for, outstanding claims in accordance with Delaware law. However, the Dissolution process and the payment of any distribution to stockholders involve substantial risks and uncertainties. Accordingly, it is not possible to predict the timing or aggregate amount which will ultimately be distributed to stockholders, and no assurance can be given that the distributions will equal or exceed our estimate of net assets presented in the Statement of Net Assets. |
Basis_of_Presentation
Basis of Presentation | 6 Months Ended | ||||
Jan. 25, 2014 | |||||
Basis of Presentation | ' | ||||
2 | Basis of Presentation | ||||
The accompanying financial data has been prepared by the Company, without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K as filed with the SEC for the fiscal year ended July 31, 2013. | |||||
In the opinion of management, the accompanying financial data reflect all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of net assets. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements. Actual results could differ from these estimates. | |||||
On March 24, 2013, following the Company’s filing of the Certificate of Dissolution, the Company adopted the liquidation basis of accounting. See “Liquidation Basis of Accounting” below for further information regarding the Company’s adoption of the liquidation basis of accounting. | |||||
Liquidation Basis of Accounting | |||||
On March 24, 2013, the beginning of the fiscal month following the filing of the Certificate of Dissolution, the Company began reporting on a liquidation basis of accounting. Under the liquidation basis of accounting, assets are stated at their estimated net realizable values and liabilities are stated at their estimated settlement amounts. Recorded liabilities include estimates of expected costs associated with carrying out the Plan of Dissolution. These estimates will be reviewed periodically and adjusted as appropriate. | |||||
The valuation of assets at their net realizable value and liabilities at their anticipated settlement amounts represent estimates, based on present facts and circumstances, of the net realizable value of the assets and the costs associated with carrying out the Plan of Dissolution. The actual values and costs associated with carrying out the Plan of Dissolution may differ from amounts reflected in the financial statements because of the inherent uncertainty in estimating future events. These differences may be material. In particular, the estimates of costs will vary with the length of time necessary to complete the Dissolution process and to resolve any claims. Accordingly, it is not possible to predict the timing or aggregate amount which will ultimately be distributed to stockholders, and no assurance can be given that the distributions will equal or exceed the estimate of net assets presented in the accompanying Statement of Net Assets. | |||||
For the three and six months ended January 25, 2014, the Company adjusted its estimate of the net realizable value of assets and its estimated settlement amounts of liabilities. The result of these changes was a net increase to net assets of $3.0 million. | |||||
The net realizable value of assets increased by $2.0 million as a result of the entry into the Patent Sale Agreement with respect to the IBM Patents. None of the IBM Patents are related to the IQstream Patent Portfolio, which the Company continues to own. For purposes of the Statement of Net Assets, we determined that we cannot reasonably provide an estimate of the net realizable value of the IQstream Patent Portfolio and, accordingly, have assigned no value to the IQstream Patent Portfolio. In the event the Company is successful in its efforts to sell the IQstream Patent Portfolio, the Company will record the amount of the sale at the time thereof, which may result in a net increase to net assets. | |||||
Additionally, the net realizable value of assets increased by $1.1 million as a result of the determination by a neutral accountant that certain disputed amounts were for the account of the Company under the Asset Sale Agreement. For additional information concerning this matter, see Note 5, “Commitments and Contingencies.” | |||||
The Company also increased its reserve for estimated costs during the Dissolution period by $0.2 million. The increase was primarily related to additional compensation and consulting costs expected to be incurred as a result of certain wind down activities taking longer to complete than originally anticipated. The increase to compensation costs was offset in part by a reduction in estimated professional fees and other expenses associated with wind down activities. | |||||
The Company accrued estimated costs expected to be incurred in carrying out the Plan of Dissolution. Under Delaware law, the Dissolution period will last for a minimum of three years. The Company was required to make certain estimates and exercise judgment in determining the accrued costs of liquidation as of January 25, 2014. | |||||
The table below summarizes the reserve for estimated costs during the Dissolution period as of January 25, 2014 (in thousands): | |||||
Amount | |||||
Compensation | $ | 1,542 | |||
Professional fees | 1,734 | ||||
Other expenses associated with wind down activities | 1,575 | ||||
Insurance | 165 | ||||
$ | 5,016 | ||||
These estimated costs will continue to be reviewed periodically and adjusted as appropriate. | |||||
On January 31, 2014, all surviving representations and warranties under the Asset Sale Agreement expired without Buyer asserting any indemnification claims against the Company. Accordingly, the Company has not recorded, nor does it expect to record, any liability in connection with those obligations. |
Cash_Equivalents_and_Marketabl
Cash Equivalents and Marketable Securities | 6 Months Ended | ||||||||||||||||
Jan. 25, 2014 | |||||||||||||||||
Cash Equivalents and Marketable Securities | ' | ||||||||||||||||
3 | Cash Equivalents and Marketable Securities | ||||||||||||||||
Cash equivalents are short-term, highly liquid investments with original maturity dates of three months or less at the date of acquisition. Cash equivalents are carried at cost plus accrued interest, which approximates fair market value. As of January 25, 2014 and July 31, 2013, the Company did not have any short-term or long-term investments. As of January 25, 2014 and July 31, 2013, aggregate cash and cash equivalents consisted of (in thousands): | |||||||||||||||||
January 25, 2014: | Amortized | Gross | Gross | Fair Market | |||||||||||||
Cost | Unrealized | Unrealized | Value | ||||||||||||||
Gains | Losses | ||||||||||||||||
Cash and cash equivalents | $ | 17,475 | $ | — | $ | — | $ | 17,475 | |||||||||
Total | $ | 17,475 | $ | — | $ | — | $ | 17,475 | |||||||||
July 31, 2013: | Amortized | Gross | Gross | Fair Market | |||||||||||||
Cost | Unrealized | Unrealized | Value | ||||||||||||||
Gains | Losses | ||||||||||||||||
Cash and cash equivalents | $ | 21,041 | $ | — | $ | — | $ | 21,041 | |||||||||
Total | $ | 21,041 | $ | — | $ | — | $ | 21,041 | |||||||||
Income_Taxes
Income Taxes | 6 Months Ended | |
Jan. 25, 2014 | ||
Income Taxes | ' | |
4 | Income Taxes | |
As of January 25, 2014 and July 31, 2013, the Company had a liability of $1.7 million for taxes, interest and penalties for unrecognized tax benefits related to various foreign income tax matters. If recognized, the entire amount would impact the Company’s effective tax rate. | ||
As of January 25, 2014 and July 31, 2013, the Company had $0.5 million accrued for interest and penalties related to uncertain tax positions. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for federal, international and state income taxes. | ||
The Company is currently open to audit under statutes of limitation by the Internal Revenue Service, various foreign jurisdictions and various state jurisdictions for the fiscal years ended July 31, 2007 through July 31, 2013. However, limited adjustments can be made to federal and state tax returns in earlier years resulting in a reduction of net operating loss carryforwards. | ||
As a result of having substantial net operating losses over recent years and no current operations, the Company determined that it is more likely than not that our deferred tax assets will not be realized. Therefore, we maintain a valuation allowance on the full amount of our net deferred tax assets. If the Company generates future taxable income against which these tax attributes may be applied, the net operating loss carryforwards may be utilized and some or all of the valuation allowance reversed. If the valuation allowance is reversed, portions would be recorded as an increase to paid-in capital and the remainder would be recorded as a reduction in income tax expense. | ||
The occurrence of ownership changes, as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), is not controlled by the Company, and could significantly limit the amount of net operating loss carryforwards and research and development credits that can be utilized annually to offset future taxable income. The Company completed an updated Section 382 study for the period April 2006 through July 31, 2011 and the results of this study showed that no ownership change within the meaning of the Code had occurred from April 2006 through July 31, 2011. |
Commitments_and_Contingencies
Commitments and Contingencies | 6 Months Ended | |
Jan. 25, 2014 | ||
Commitments and Contingencies | ' | |
5 | Commitments and Contingencies | |
Litigation | ||
On April 22, 2013, the Company filed a complaint in the Complex Commercial Litigation Division of the Superior Court of the State of Delaware against Buyer, Marlin Executive Fund III, L.P. and Marlin Equity III, L.P. (collectively with Buyer, the “Marlin Parties”) in connection with the Asset Sale. The complaint asserted claims for breach of contract against the Marlin Parties and for declaratory judgment against Buyer for certain amounts due to the Company under the Asset Sale Agreement and certain agreements related thereto. | ||
The complaint sought (1) judgment in favor of the Company in the amount of $894,598, together with interest accrued, with respect to reimbursement for the Company’s operation of Sycamore Networks (Shanghai) Co. Ltd. (“Sycamore Shanghai”) for the benefit of Buyer during the period from the Asset Sale until the receipt of regulatory approval for the transfer of Sycamore Shanghai to Buyer, (2) declaratory judgment that cash in the amount of $345,932 remaining in the accounts of subsidiaries of the Company transferred to Buyer in the Asset Sale are excluded assets under terms of the Asset Sale Agreement and, accordingly, belong to the Company and (3) declaratory judgment that Buyer’s assertion that a $1.1 million decrease in the calculation of net working capital is necessary was untimely because it was made after the expiration of the forty-five day time period set forth in the Asset Sale Agreement. | ||
In connection with such litigation, on May 28, 2013, the Company, Buyer and the Marlin Parties reached an agreement pursuant to which (1) the Company agreed to dismiss the pending litigation without prejudice, (2) Buyer paid certain undisputed amounts of $1.7 million owed to the Company and (3) the parties agreed to submit the remaining issues relating to amounts in dispute of $1,456,747 to arbitration for resolution by a neutral accountant. The matters in dispute have been resolved by the neutral accountant in favor of the Company in the amount of $1,107,736, which includes reimbursement for a portion of the fees and expenses paid to the neutral accountant. On March 5, 2014, the Company received the $1,107,736 payment. Pending the resolution by the neutral accountant the Delaware Litigation was dismissed without prejudice. Now that all matters set forth in the Delaware Litigation have been finally resolved, it will be dismissed with prejudice. | ||
Guarantees | ||
As of January 25, 2014, the Company’s guarantees requiring disclosure consist of its indemnification obligations as set forth in the Asset Sale Agreement, indemnification for other claims and indemnification for officers and directors. | ||
In connection with the closing of the Asset Sale and as set forth in the Asset Sale Agreement, the Company agreed to indemnify Buyer and certain of its related parties for any damages arising out of any breach of any of our representations or warranties or failure to perform any of our covenants or agreements in the Asset Sale Agreement, our failure to fully or timely pay, satisfy or perform any retained liabilities or our failure to pay any taxes associated with the assets and subsidiaries being sold for periods prior to the closing date of the Asset Sale, including any capital gain or corporate income taxes resulting from the transfer of our China subsidiary. The Company’s aggregate indemnification liability for breaches of representations or warranties was limited to $2,812,500. On January 31, 2014, all surviving representations and warranties under the Asset Sale Agreement expired without Buyer asserting any indemnification claims against the Company. Accordingly, the Company has not recorded, nor does it expect to record, any liability in connection with those obligations. | ||
Prior to the Asset Sale and the Dissolution, in the normal course of business, the Company also agreed to indemnify other parties, including customers, lessors and parties to other transactions with the Company with respect to certain matters. Historically, payments made by the Company under these agreements had not had a material impact on the Company’s operating results or financial position. Furthermore, most of these obligations were assumed by Buyer in connection with the Asset Sale. Accordingly, the Company has not recorded a liability for these agreements as of January 25, 2014 or July 31, 2013, as the Company believes the exposure for any related payments is not material. | ||
We have entered into our standard form of indemnification agreement with each of our directors and executive officers, which is in addition to the indemnification provided for in our amended and restated certificate of incorporation, as amended. The Plan of Dissolution also provides that we continue to indemnify our directors and executive officers in accordance with such agreements and our amended and restated certificate of incorporation, as amended. The indemnification agreements, among other things, provide for indemnification of our directors and executive officers for a number of expenses, including attorneys’ fees and other related expenses, as well as certain judgments, fines, penalties and settlement amounts incurred by any such person in any action, suit or proceeding, including any action by or in the right of the Company, arising out of such person’s services as a director or executive officer of the Company or any other company or enterprise to which the person provided services at our request. The Company did not incur any expense under these arrangements during the first six months of fiscal year 2014 or during fiscal year 2013. Due to the Company’s inability to estimate liabilities in connection with these agreements, if and when they might be incurred, the Company has not recorded any liability for these agreements as of January 25, 2014 or July 31, 2013. During the Dissolution period, we intend to continue to indemnify each of our current and former directors and executive officers to the extent permitted under Delaware law, our amended and restated certificate of incorporation, as amended, and the indemnification agreements. The Company has also continued to maintain directors’ and officers’ coverage since the filing of the Certificate of Dissolution, and intends to maintain such coverage through the Dissolution period. |
Fair_Value_Measurements
Fair Value Measurements | 6 Months Ended | ||||||||||||||||
Jan. 25, 2014 | |||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
6. Fair Value Measurements | |||||||||||||||||
The fair value measurement rules establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: | |||||||||||||||||
Level 1 | Quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset and liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. | ||||||||||||||||
Level 2 | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | ||||||||||||||||
Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | ||||||||||||||||
Assets and liabilities of Sycamore measured at fair value on a recurring basis as of January 25, 2014 are summarized as follows (in thousands): | |||||||||||||||||
Fair Value Measurements at Reporting Date Using | |||||||||||||||||
Description | January 25, 2014 | Quoted Prices in | Significant Other | Significant | |||||||||||||
Active Markets | Observable Inputs | Unobservable Inputs | |||||||||||||||
for Identical | (Level 2) | (Level 3) | |||||||||||||||
Assets (Level 1) | |||||||||||||||||
Assets | |||||||||||||||||
Cash and Cash Equivalents | $ | 17,475 | $ | 17,475 | $ | — | $ | — | |||||||||
Total assets | $ | 17,475 | $ | 17,475 | $ | — | $ | — | |||||||||
Cash and Cash Equivalents | |||||||||||||||||
Cash and cash equivalents of $17.5 million consisting of cash and money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. | |||||||||||||||||
Assets and liabilities of Sycamore measured at fair value on a recurring basis as of July 31, 2013 are summarized as follows (in thousands): | |||||||||||||||||
Fair Value Measurements at Reporting Date Using | |||||||||||||||||
Description | July 31, 2013 | Quoted Prices in | Significant Other | Significant | |||||||||||||
Active Markets | Observable Inputs | Unobservable Inputs | |||||||||||||||
for Identical | (Level 2) | (Level 3) | |||||||||||||||
Assets (Level 1) | |||||||||||||||||
Assets | |||||||||||||||||
Cash and Cash Equivalents | $ | 21,041 | $ | 21,041 | $ | — | $ | — | |||||||||
Total assets | $ | 21,041 | $ | 21,041 | $ | — | $ | — | |||||||||
Cash and Cash Equivalents | |||||||||||||||||
Cash and cash equivalents of $21.0 million consisting of cash and money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. |
Subsequent_Events
Subsequent Events | 6 Months Ended |
Jan. 25, 2014 | |
Subsequent Events | ' |
7. Subsequent events | |
As noted above, on January 31, 2014, the Company entered into the Patent Sale Agreement with Dragon, pursuant to which the Company agreed to sell the IBM Patents to Dragon for $2.0 million. The sale of the IBM Patents was completed on February 28, 2014. | |
On February 27, 2014, the neutral accountant issued a written determination in connection with the Asset Sale Agreement dispute awarding the Company $1,107,736, which includes reimbursement for a portion of the fees and expenses paid to the neutral accountant. On March 5, 2014, the Company received the $1,107,736 payment. For additional information concerning this matter, see Note 5, “Commitments and Contingencies.” |
Basis_of_Presentation_Policies
Basis of Presentation (Policies) | 6 Months Ended | ||||
Jan. 25, 2014 | |||||
Liquidation Basis of Accounting | ' | ||||
Liquidation Basis of Accounting | |||||
On March 24, 2013, the beginning of the fiscal month following the filing of the Certificate of Dissolution, the Company began reporting on a liquidation basis of accounting. Under the liquidation basis of accounting, assets are stated at their estimated net realizable values and liabilities are stated at their estimated settlement amounts. Recorded liabilities include estimates of expected costs associated with carrying out the Plan of Dissolution. These estimates will be reviewed periodically and adjusted as appropriate. | |||||
The valuation of assets at their net realizable value and liabilities at their anticipated settlement amounts represent estimates, based on present facts and circumstances, of the net realizable value of the assets and the costs associated with carrying out the Plan of Dissolution. The actual values and costs associated with carrying out the Plan of Dissolution may differ from amounts reflected in the financial statements because of the inherent uncertainty in estimating future events. These differences may be material. In particular, the estimates of costs will vary with the length of time necessary to complete the Dissolution process and to resolve any claims. Accordingly, it is not possible to predict the timing or aggregate amount which will ultimately be distributed to stockholders, and no assurance can be given that the distributions will equal or exceed the estimate of net assets presented in the accompanying Statement of Net Assets. | |||||
For the three and six months ended January 25, 2014, the Company adjusted its estimate of the net realizable value of assets and its estimated settlement amounts of liabilities. The result of these changes was a net increase to net assets of $3.0 million. | |||||
The net realizable value of assets increased by $2.0 million as a result of the entry into the Patent Sale Agreement with respect to the IBM Patents. None of the IBM Patents are related to the IQstream Patent Portfolio, which the Company continues to own. For purposes of the Statement of Net Assets, we determined that we cannot reasonably provide an estimate of the net realizable value of the IQstream Patent Portfolio and, accordingly, have assigned no value to the IQstream Patent Portfolio. In the event the Company is successful in its efforts to sell the IQstream Patent Portfolio, the Company will record the amount of the sale at the time thereof, which may result in a net increase to net assets. | |||||
Additionally, the net realizable value of assets increased by $1.1 million as a result of the determination by a neutral accountant that certain disputed amounts were for the account of the Company under the Asset Sale Agreement. For additional information concerning this matter, see Note 5, “Commitments and Contingencies.” | |||||
The Company also increased its reserve for estimated costs during the Dissolution period by $0.2 million. The increase was primarily related to additional compensation and consulting costs expected to be incurred as a result of certain wind down activities taking longer to complete than originally anticipated. The increase to compensation costs was offset in part by a reduction in estimated professional fees and other expenses associated with wind down activities. | |||||
The Company accrued estimated costs expected to be incurred in carrying out the Plan of Dissolution. Under Delaware law, the Dissolution period will last for a minimum of three years. The Company was required to make certain estimates and exercise judgment in determining the accrued costs of liquidation as of January 25, 2014. | |||||
The table below summarizes the reserve for estimated costs during the Dissolution period as of January 25, 2014 (in thousands): | |||||
Amount | |||||
Compensation | $ | 1,542 | |||
Professional fees | 1,734 | ||||
Other expenses associated with wind down activities | 1,575 | ||||
Insurance | 165 | ||||
$ | 5,016 | ||||
These estimated costs will continue to be reviewed periodically and adjusted as appropriate. | |||||
On January 31, 2014, all surviving representations and warranties under the Asset Sale Agreement expired without Buyer asserting any indemnification claims against the Company. Accordingly, the Company has not recorded, nor does it expect to record, any liability in connection with those obligations. |
Basis_of_Presentation_Tables
Basis of Presentation (Tables) | 6 Months Ended | ||||
Jan. 25, 2014 | |||||
Reserve for Estimated Costs | ' | ||||
The table below summarizes the reserve for estimated costs during the Dissolution period as of January 25, 2014 (in thousands): | |||||
Amount | |||||
Compensation | $ | 1,542 | |||
Professional fees | 1,734 | ||||
Other expenses associated with wind down activities | 1,575 | ||||
Insurance | 165 | ||||
$ | 5,016 | ||||
Cash_Equivalents_and_Marketabl1
Cash Equivalents and Marketable Securities (Tables) | 6 Months Ended | ||||||||||||||||
Jan. 25, 2014 | |||||||||||||||||
Aggregate Cash and Cash Equivalents | ' | ||||||||||||||||
As of January 25, 2014 and July 31, 2013, aggregate cash and cash equivalents consisted of (in thousands): | |||||||||||||||||
January 25, 2014: | Amortized | Gross | Gross | Fair Market | |||||||||||||
Cost | Unrealized | Unrealized | Value | ||||||||||||||
Gains | Losses | ||||||||||||||||
Cash and cash equivalents | $ | 17,475 | $ | — | $ | — | $ | 17,475 | |||||||||
Total | $ | 17,475 | $ | — | $ | — | $ | 17,475 | |||||||||
July 31, 2013: | Amortized | Gross | Gross | Fair Market | |||||||||||||
Cost | Unrealized | Unrealized | Value | ||||||||||||||
Gains | Losses | ||||||||||||||||
Cash and cash equivalents | $ | 21,041 | $ | — | $ | — | $ | 21,041 | |||||||||
Total | $ | 21,041 | $ | — | $ | — | $ | 21,041 | |||||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 6 Months Ended | ||||||||||||||||
Jan. 25, 2014 | |||||||||||||||||
Assets and Liabilities Fair Value Measurements on Recurring Basis | ' | ||||||||||||||||
Assets and liabilities of Sycamore measured at fair value on a recurring basis as of January 25, 2014 are summarized as follows (in thousands): | |||||||||||||||||
Fair Value Measurements at Reporting Date Using | |||||||||||||||||
Description | January 25, 2014 | Quoted Prices in | Significant Other | Significant | |||||||||||||
Active Markets | Observable Inputs | Unobservable Inputs | |||||||||||||||
for Identical | (Level 2) | (Level 3) | |||||||||||||||
Assets (Level 1) | |||||||||||||||||
Assets | |||||||||||||||||
Cash and Cash Equivalents | $ | 17,475 | $ | 17,475 | $ | — | $ | — | |||||||||
Total assets | $ | 17,475 | $ | 17,475 | $ | — | $ | — | |||||||||
Cash and Cash Equivalents | |||||||||||||||||
Cash and cash equivalents of $17.5 million consisting of cash and money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. | |||||||||||||||||
Assets and liabilities of Sycamore measured at fair value on a recurring basis as of July 31, 2013 are summarized as follows (in thousands): | |||||||||||||||||
Fair Value Measurements at Reporting Date Using | |||||||||||||||||
Description | July 31, 2013 | Quoted Prices in | Significant Other | Significant | |||||||||||||
Active Markets | Observable Inputs | Unobservable Inputs | |||||||||||||||
for Identical | (Level 2) | (Level 3) | |||||||||||||||
Assets (Level 1) | |||||||||||||||||
Assets | |||||||||||||||||
Cash and Cash Equivalents | $ | 21,041 | $ | 21,041 | $ | — | $ | — | |||||||||
Total assets | $ | 21,041 | $ | 21,041 | $ | — | $ | — | |||||||||
Consolidated_Statement_of_Net_
Consolidated Statement of Net Assets (Liquidation Basis) (Detail) (USD $) | Jan. 25, 2014 | Jul. 31, 2013 |
In Thousands, except Per Share data, unless otherwise specified | ||
Liabilities and Net Assets | ' | ' |
Reserve for estimated costs during the Dissolution period | $5,016 | ' |
Corporate Liquidity | ' | ' |
Assets | ' | ' |
Cash and cash equivalents | 17,475 | 21,041 |
Land | 2,948 | 2,948 |
Patents | 2,000 | ' |
Other receivable | 1,107 | ' |
Other assets | 124 | 100 |
Total assets | 23,654 | 24,089 |
Liabilities and Net Assets | ' | ' |
Accrued expenses | 52 | 133 |
Reserve for estimated costs during the Dissolution period | 5,016 | 8,336 |
Other liabilities | 1,979 | 1,983 |
Total liabilities | 7,047 | 10,452 |
Net assets in liquidation | $16,607 | $13,637 |
Shares outstanding | 28,882,093 | 28,882,093 |
Net assets in liquidation per share | $0.57 | $0.47 |
Consolidated_Statement_of_Chan
Consolidated Statement of Changes in Net Assets (Liquidation Basis) (Detail) (USD $) | 3 Months Ended | 6 Months Ended |
In Thousands, unless otherwise specified | Jan. 25, 2014 | Jan. 25, 2014 |
Increase in estimated net realizable value for other assets | ' | $1,100 |
Corporate Liquidity | ' | ' |
Net assets in liquidation at beginning of period | 13,637 | 13,637 |
Increase in estimated costs during the Dissolution period | -184 | -184 |
Increase in estimated net realizable value for other assets | 47 | 47 |
Increase in estimated net realizable value for other receivable | 1,107 | 1,107 |
Increase in estimated net realizable value for patents | 2,000 | 2,000 |
liabilities | $16,607 | $16,607 |
Description_of_Business_Additi
Description of Business - Additional Information (Detail) (USD $) | Mar. 07, 2013 | 28-May-13 | Jan. 25, 2014 | Jan. 31, 2013 | Mar. 05, 2014 | Feb. 27, 2014 | Jan. 31, 2014 | Feb. 28, 2014 |
Asset Sale Agreement | Tyngsborough Massachusetts | Assets (the "Asset Sale") primarily related to the Intelligent Bandwidth Management Business | Subsequent Event | Subsequent Event | Subsequent Event | Subsequent Event | ||
Termination of Restated Purchase and Sale Agreement with Tyngsborough Commons, LLC | Asset Sale Agreement | Asset Sale Agreement | Asset Sale Agreement | Patent Sale Agreement with Dragon Intellectual Property, LLC | IBM Patent Sale Agreement | |||
acre | Patent | Patent | ||||||
Entity Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Sale of facilities and assets, value | ' | ' | ' | $18,750,000 | ' | ' | ' | ' |
Total dispute amount under asset sale agreement | ' | 1,456,747 | ' | ' | ' | ' | ' | ' |
Amount received from total dispute amount under asset sale agreement | ' | ' | ' | ' | ' | 1,107,736 | ' | ' |
Total amount awarded to company | ' | ' | ' | ' | 1,107,736 | ' | ' | ' |
Undisputed amounts paid | ' | 1,700,000 | ' | ' | ' | ' | ' | ' |
Common stock, par value | $0.00 | ' | ' | ' | ' | ' | ' | ' |
Patent sale agreement, number of patents | ' | ' | ' | ' | ' | ' | 40 | 3 |
Patent sale agreement, number of patent applications | ' | ' | ' | ' | ' | ' | 2 | 5 |
Amount received from sale of patents | ' | ' | ' | ' | ' | ' | $2,000,000 | ' |
Ownership of land | ' | ' | 102 | ' | ' | ' | ' | ' |
Basis_of_Presentation_Addition
Basis of Presentation - Additional Information (Detail) (USD $) | 3 Months Ended | 6 Months Ended | |
Jan. 25, 2014 | Jan. 25, 2014 | Jan. 25, 2013 | |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' |
Increase in net assets | $3,000,000 | $3,000,000 | ' |
Increase in net realizable value of assets | ' | 1,100,000 | ' |
Increase in reserve for estimated costs | ' | ' | 200,000 |
Patent Sale Agreement | ' | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' |
Net realizable value of assets | ' | $2,000,000 | ' |
Reserve_for_Estimated_Costs_De
Reserve for Estimated Costs (Detail) (USD $) | Jan. 25, 2014 |
In Thousands, unless otherwise specified | |
Accrued Expenses [Line Items] | ' |
Compensation | $1,542 |
Professional fees | 1,734 |
Other expenses associated with wind down activities | 1,575 |
Insurance | 165 |
Reserve for estimated costs during the Dissolution period | $5,016 |
Aggregate_Cash_and_Cash_Equiva
Aggregate Cash and Cash Equivalents (Detail) (USD $) | Jan. 25, 2014 | Jul. 31, 2013 |
In Thousands, unless otherwise specified | ||
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Amortized Cost | $17,475 | $21,041 |
Gross Unrealized Gains | ' | ' |
Gross Unrealized Losses | ' | ' |
Fair Market Value | 17,475 | 21,041 |
Cash and cash equivalents | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Amortized Cost | 17,475 | 21,041 |
Gross Unrealized Gains | ' | ' |
Gross Unrealized Losses | ' | ' |
Fair Market Value | $17,475 | $21,041 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | Jan. 25, 2014 | Jul. 31, 2013 |
In Millions, unless otherwise specified | ||
Schedule Of Income Taxes [Line Items] | ' | ' |
Total unrecognized tax benefit | $1.70 | $1.70 |
Unrecognized tax benefit uncertain tax position | $0.50 | $0.50 |
Commitments_and_Contingencies_
Commitments and Contingencies - Additional Information (Detail) (USD $) | 6 Months Ended | 0 Months Ended | ||
Jan. 25, 2014 | 28-May-13 | Mar. 05, 2014 | Feb. 27, 2014 | |
Asset Sale Agreement | Subsequent Event | Subsequent Event | ||
Asset Sale Agreement | Asset Sale Agreement | |||
Commitment And Contingencies [Line Items] | ' | ' | ' | ' |
Damages sought by the plaintiff | $894,598 | ' | ' | ' |
Cash amount to be excluded from assets Sale under the terms of the agreement | 345,932 | ' | ' | ' |
Decrease in the calculation of net working capital | 1,100,000 | ' | ' | ' |
Asset purchase and sale agreement expiration period | '45 days | ' | ' | ' |
Collection from Marlin Parties with respect to subsidiary in Sycamore Shanghai's operation and working capital | ' | 1,700,000 | ' | ' |
Total dispute amount under asset sale agreement | ' | 1,456,747 | ' | ' |
Amount received from total dispute amount under asset sale agreement | ' | ' | ' | 1,107,736 |
Total amount awarded to company | ' | ' | 1,107,736 | ' |
Asset sale agreement, maximum indemnification liability | $2,812,500 | ' | ' | ' |
Assets_and_Liabilities_Fair_Va
Assets and Liabilities Fair Value Measurements on Recurring Basis (Detail) (USD $) | Jan. 25, 2014 | Jul. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair Value, Measurements, Recurring | ' | ' |
Assets | ' | ' |
Cash and Cash Equivalents | $17,475 | $21,041 |
Total assets | 17,475 | 21,041 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ' | ' |
Assets | ' | ' |
Cash and Cash Equivalents | 17,475 | 21,041 |
Total assets | $17,475 | $21,041 |
Fair_Value_Measurements_Additi
Fair Value Measurements - Additional Information (Detail) (Quoted Prices in Active Markets for Identical Assets (Level 1), USD $) | Jan. 25, 2014 | Jul. 31, 2013 |
In Thousands, unless otherwise specified | ||
Quoted Prices in Active Markets for Identical Assets (Level 1) | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Cash Equivalents | $17,475 | $21,041 |
Subsequent_Events_Additional_I
Subsequent Events - Additional Information (Detail) (Subsequent Event, USD $) | 0 Months Ended | ||
Jan. 31, 2014 | Mar. 05, 2014 | Feb. 27, 2014 | |
Asset Sale Agreement | Asset Sale Agreement | ||
Subsequent Event [Line Items] | ' | ' | ' |
Patent purchase agreement amount | $2 | ' | ' |
LitigationSettlementAmount | ' | ' | 1,107,736 |
Total amount awarded to company | ' | $1,107,736 | ' |