Exhibit 99.1
[COSINE COMMUNICATIONS LOGO]
PRESS RELEASE
For additional information contact:
Steve Goggiano CoSine Communications
President & CEO 1200 Bridge Parkway
(650) 637-4777 Redwood City, CA 94065
Web Site: www.cosinecom.com
Terry Gibson Phone: 650.637.4777
Executive Vice President Fax: 650.628.4200
and CFO E-mail:
650.637.4777 investorrelations@cosinecom.com
CoSine Communications Announces Third Quarter Financial Results
REDWOOD CITY, CALIF., OCTOBER 21, 2003 -- CoSine Communications, Inc. (Nasdaq:
COSN - News), a leading provider of managed, network-based IP service delivery
platforms, today announced revenue for the quarter ended September 30, 2003 of $
4.0 million, and a net loss of $8.2 million or $0.84 per share as compared to
revenue of $5.2 million and a net loss of $9.0 million or $0.93 per share in the
quarter ended September 30, 2002. The company ended the quarter with $ 66.9
million in cash and short-term investments.
"The market for managed network-based IP services is still in the early stages
of growth. As a result, demand can fluctuate. We will continue to develop
and expand our product offering to support our customers' efforts to accelerate
adoption and revenue growth. As major carriers continue to show interest in
CoSine's network-based approach to such services, we must work toward converting
that interest into sustainable revenue growth," said Steve Goggiano, CoSine's
President and Chief Executive Officer. "To help us achieve that goal, I have
hired Jerry Jalaba as our senior vice president of worldwide sales. Jerry has a
significant and successful track record in the tier one service provider market,
with experience selling to Regional Bell Operating Companies (RBOCs), PTTs and
global service providers, including AT&T, BT, Verizon and NTT. Jerry will lead
our efforts to accelerate revenue growth."
"In the third quarter, CoSine continued to expand its business with KT
Corporation by adding a new DSL Network Aggregation (DNA) application,"
continued Goggiano. "The DNA application is designed to help providers reduce
the capital cost of aggregating DSL connections by as much as 50 percent when
compared to competing solutions. This is just one example of how some of the
world's largest carriers are utilizing CoSine's products to establish strategic
network-based IP service offerings."
WEBCAST
There will be a live webcast of the CoSine Q3 2003 Earnings Conference Call
(today, October 21, 2003, at 2 p.m. PT / 5 p.m. ET) at www.cosinecom.com. An
archived webcast will also be available several hours after the live call. A
replay of the conference call will be available until November 4, 2003. It can
be accessed from the company's website or by calling (888) 286-8010 or (617)
801-6888 and entering passcode 52450911.
ABOUT COSINE COMMUNICATIONS
Founded in 1998 and based in Redwood City, Calif., CoSine delivers carrier-class
systems for the network edge that solve the fundamental problem of profitably
customizing managed services such as IP VPNs, Managed Routers, Firewalls, MPLS,
Denial of Service (DoS) protection and more for the unique needs of individual
customers. Specifically, the company's intelligent, fully distributed,
virtualized architecture infuses service provider networks with an unmatched
capability to integrate, customize and effectively deliver managed services to
hundreds of thousands of users. For more information about CoSine
Communications, visit the company's website at: www.cosinecom.com.
###
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: This release may contain forward-looking statements. The company uses
words such as "anticipate," "believe," "plan," "expect," "future," "intend" and
similar expressions to identify forward-looking statements. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those reflected in the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, the continued downturn in the telecommunications
industry, failure to achieve revenue growth and profitability, product
development, commercialization and technology difficulties, manufacturing costs,
the impact of competitive products, pricing, changing customer requirements,
timely availability and acceptance of new products, and changes in economic
conditions in the various markets CoSine serves, all as may be discussed in more
detail on pages 30 through 35 of our Annual Report on Form 10-K for the fiscal
year ending December 31, 2002 and on pages 23 through 28 of our Quarterly Report
on Form 10-Q for the quarter ending June 30, 2003. Readers are cautioned not to
place undue reliance on these forward-looking statements, which reflect
management's opinions only as of the date hereof. We undertake no obligation to
revise or publicly release the results of any revision to these forward-looking
statements.
CoSine Communications, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In conformity with generally accepted accounting principles)
(in thousands)
September 30,
2003 December 31,
(unaudited) 2002 (1)
-------- --------
ASSETS
Current assets:
Cash, cash equivalents and short-term investments $ 66,892 $101,467
Accounts receivable, trade 3,487 6,373
Accounts receivable, other 456 679
Inventory 4,026 3,175
Prepaid expenses and other current assets 3,440 4,054
-------- --------
Total current assets 78,301 115,748
Property and equipment, ne t 2,658 2,816
Other assets 737 997
-------- --------
$ 81,696 $119,561
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 7,932 $ 18,666
Deferred revenue 1,647 1,444
Current portion of long-term debt 415 3,770
-------- --------
Total current liabilities 9,994 23,880
Accrued rent and long-term debt 2,061 2,200
Stockholders' equity 69,641 93,481
-------- --------
$ 81,696 $119,561
======== ========
(1) Amounts are derived from the December 31, 2002 audited financial statements.
CoSine Communications, Inc.
CONSOLIDATED STATEMENT OF OPERATIONS
(In conformity with generally accepted accounting principles)
(in thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2003 2002 2003 2002
(unaudited) (unaudited) (unaudited) (unaudited)
----------- ----------- ----------- -----------
Revenue $ 4,024 $ 5,245 $ 12,244 $ 18,404
Cost of sales 1,798 2,231 5,335 11,586
-------- -------- -------- --------
Gross profit 2,226 3,014 6,909 6,818
Operating expenses:
Research and development 5,485 4,050 15,920 27,185
Sales and marketing 3,191 5,721 10,310 24,349
General and administrative 1,817 2,345 5,643 9,405
Restructuring and impairment charges 14 693 351 24,739
-------- -------- -------- --------
Total operating expenses 10,507 12,809 32,224 85,678
-------- -------- -------- --------
Loss from operations (8,281) (9,795) (25,315) (78,860)
Interest income, (expense) and other, net 112 863 637 2,524
-------- -------- -------- --------
Loss before income tax provision (8,169) (8,932) (24,678) (76,336)
Income tax provision 15 82 86 381
-------- -------- -------- --------
Net loss $ (8,184) $ (9,014) $(24,764) $(76,717)
======== ======== ======== ========
Basic and diluted net loss per common share $ (0.84) $ (0.93) $ (2.54) $ (7.94)
Shares used in computing basic and diluted net loss per common share 9,797 9,689 9,753 9,660