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Sycamore Networks, Inc. Reports Fourth Quarter and Fiscal Year 2009 Financial Results
Business Wire
Sep 14, 2009
Sycamore Networks, Inc. (NASDAQ: SCMR), a leader in intelligent bandwidth management solutions for fixed line and mobile network operators worldwide, today reported its results for the fourth quarter and fiscal year ended July 31, 2009. Revenue for the fourth quarter of fiscal 2009 was $17.2 million, compared with $15.1 million for the fourth quarter of fiscal 2008. Revenue for fiscal 2009 was $67.4 million compared with $115.5 million for fiscal 2008.
Net loss for the fourth quarter of fiscal 2009, on a generally accepted accounting principles (“GAAP”) basis, was $34.9 million, or $0.12 per share, compared with a GAAP net loss of $14.1 million, or $0.05 per share for the fourth quarter of fiscal 2008. Net loss for fiscal 2009, on a GAAP basis, was $53.6 million or $0.19 per share, compared with a GAAP net loss of $0.1 million or $0.00 per share for fiscal 2008. GAAP results include non-cash charges for asset impairments, stock-based compensation and amortization of intangible assets as well as cash-based restructuring costs.
The impairment charge included in the GAAP net loss for the fourth quarter and fiscal 2009 periods is $24.2 million, of which $23.1 million relates to the total book value of goodwill and other intangible assets and $1.1 million to certain fixed assets. The charge results from an impairment assessment and valuation taking into consideration several market and economic factors. The charge has no impact on the Company’s business operations or on its current or future cash flows.
Non-GAAP net loss for the fourth quarter of fiscal 2009 was $6.5 million, or $0.02 per share, compared with non-GAAP net loss of $7.8 million, or $0.03 per share for the fourth quarter of fiscal 2008. Non-GAAP net loss for fiscal 2009 was $19.5 million, or $0.07 per share, compared with non-GAAP net income of $13.8 million, or $0.05 per fully diluted share for fiscal 2008. A reconciliation between net income (loss) on a GAAP basis and non-GAAP basis is provided in a table immediately following the Unaudited Non-GAAP Consolidated Statements of Operations included with this release.
“Our Q4 and full year results reflect the impact of reduced capital spending by service providers, occurring within the backdrop of a challenging business environment,” said Daniel E. Smith, president and chief executive officer. “We will continue to exercise disciplined expense control, while ensuring our resources are effectively aligned to meet our customer commitments, and continue to demonstrate leadership in customer service and support.”
About Sycamore Networks
Sycamore Networks, Inc. (NASDAQ: SCMR) is a leading provider of intelligent bandwidth management solutions for fixed line and mobile network operators worldwide. From multiservice access networks to the optical core, Sycamore products enable network operators to lower overall network costs, increase operational efficiencies, and rapidly deploy new revenue-generating services. Sycamore's global customer base includes Tier 1 service providers, government agencies, and utility companies. For more information, please visit www.sycamorenet.com.
Use of Non-GAAP Financial Measures
The Company provides non-GAAP financial data in addition to providing financial results in accordance with generally accepted accounting principles (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 the 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. 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 results, cash flows, or other measures of financial performance prepared in accordance with GAAP.
We wish to caution you that certain matters discussed in this news release constitute forward-looking statements regarding future events that involve risks and uncertainties. Readers are cautioned that actual results or events could differ materially from those stated or implied in the forward-looking statements. Other risks and uncertainties include, but are not limited to, actions, inquiries and findings that may result from certain stock option matters, including the restatement of previously issued financial statements and certain purported shareholder derivative actions filed against the Company and certain of its current and former officers and directors; the Company's reliance on a limited number of customers; variation in the Company's quarterly results; industry pricing pressures and the high cost of product development required to remain competitive and keep pace with evolving features and technologies desired by customers; the consolidation of both suppliers and customers in the telecommunications marketplace and general economic conditions. Certain additional risks are set forth in more detail in the section entitled "Risk Factors" in the Company's most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K filed by the Company 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.
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Sycamore Networks, Inc. |
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Unaudited Condensed Consolidated Balance Sheets |
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(in thousands) |
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| July 31, 2009 | July 31, 2008 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 347,696 | $ | 499,922 | ||
| Short-term investments | 273,387 | 321,173 | ||||
| Accounts receivable, net | 12,860 | 8,779 | ||||
| Inventories | 16,058 | 23,750 | ||||
| Prepaids and other current assets | 2,388 | 2,847 | ||||
| Total current assets | 652,389 | 856,471 | ||||
| Property and equipment, net | 13,342 | 20,437 | ||||
| Long-term investments | 305,725 | 120,739 | ||||
| Purchased intangibles, net | -- | 4,000 | ||||
| Goodwill | -- | 20,334 | ||||
| Other assets | 357 | 482 | ||||
| Total Assets | $ | 971,813 | $ | 1,022,463 | ||
| Liabilities and Stockholders' Equity | ||||||
| Current liabilities: | ||||||
| Deferred revenue | $ | 11,003 | $ | 14,300 | ||
| Other current liabilities | 14,034 | 14,043 | ||||
| Total current liabilities | 25,037 | 28,343 | ||||
| Long term deferred revenue | 4,530 | 4,841 | ||||
| Long term liability | 1,821 | 1,904 | ||||
| Total liabilities | 31,388 | 35,088 | ||||
| Common stock | 284 | 284 | ||||
| Additional paid-in capital | 2,040,061 | 2,034,818 | ||||
| Accumulated deficit | (1,101,355) | (1,047,783) | ||||
| Other equity | 1,435 | 56 | ||||
| Total stockholders' equity | 940,425 | 987,375 | ||||
| Total Liabilities and Stockholders' Equity | $ | 971,813 | $ | 1,022,463 | ||
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Sycamore Networks, Inc. |
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Unaudited Consolidated Statements of Operations |
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(in thousands, except per share data) |
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| Three Months Ended | Year Ended | |||||||||||
| July 31, 2009 | July 31, 2008 | July 31, 2009 | July 31, 2008 | |||||||||
| Revenue | $ | 17,245 | $ | 15,093 | $ | 67,357 | $ | 115,496 | ||||
| Cost of revenue | 10,194 | 10,940 | 38,469 | 62,565 | ||||||||
| Gross profit | 7,051 | 4,153 | 28,888 | 52,931 | ||||||||
| Operating expenses: | ||||||||||||
| Research and development | 12,725 | 12,911 | 50,134 | 47,397 | ||||||||
| Sales and marketing | 3,185 | 5,552 | 14,551 | 21,041 | ||||||||
| General and administrative | 2,625 | 3,613 | 8,198 | 15,980 | ||||||||
| Restructuring expense | 2,783 | -- | 3,600 | 2,368 | ||||||||
| Asset impairment | 24,209 | 4,446 | 24,209 | 4,446 | ||||||||
| Total operating expenses | 45,527 | 26,522 | 100,692 | 91,232 | ||||||||
| Loss from operations | (38,476) | (22,369) | (71,804) | (38,301) | ||||||||
| Interest and other income, net | 3,149 | 7,876 | 18,000 | 38,784 | ||||||||
| Income (loss) before income taxes | (35,327) | (14,493) | (53,804) | 483 | ||||||||
| Income tax expense (benefit) | (397) | (415) | (232) | 597 | ||||||||
| Net loss | $ | (34,930) | $ | (14,078) | $ | (53,572) | $ | (114) | ||||
| Net loss per share: | ||||||||||||
| Basic | $ | (0.12) | $ | (0.05) | $ | (0.19) | $ | (0.00) | ||||
| Diluted | $ | (0.12) | $ | (0.05) | $ | (0.19) | $ | (0.00) | ||||
| Weighted average shares outstanding: | ||||||||||||
| Basic | 283,796 | 283,346 | 283,589 | 282,484 | ||||||||
| Diluted | 283,796 | 283,346 | 283,589 | 282,484 | ||||||||
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Sycamore Networks, Inc. |
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Unaudited Non-GAAP Consolidated Statements of Operations |
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(in thousands, except per share data) |
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| Three Months Ended | Year Ended | |||||||||||
| July 31, 2009 | July 31, 2008 | July 31, 2009 | July 31, 2008 | |||||||||
| Revenue | $ | 17,245 | $ | 15,093 | $ | 67,357 | $ | 115,496 | ||||
| Cost of revenue | 9,982 | 10,760 | 37,489 | 61,940 | ||||||||
| Gross profit | 7,263 | 4,333 | 29,868 | 53,556 | ||||||||
| Operating expenses: | ||||||||||||
| Research and development | 12,235 | 12,396 | 48,127 | 45,630 | ||||||||
| Sales and marketing | 2,919 | 5,239 | 13,362 | 19,917 | ||||||||
| General and administrative | 2,182 | 2,583 | 6,113 | 12,041 | ||||||||
| Total operating expenses | 17,336 | 20,218 | 67,602 | 77,588 | ||||||||
| Loss from operations | (10,073) | (15,885) | (37,734) | (24,032) | ||||||||
| Interest and other income, net | 3,149 | 7,876 | 18,000 | 38,784 | ||||||||
| Income (loss) before income taxes | (6,924) | (8,009) | (19,734) | 14,752 | ||||||||
| Income tax expense (benefit) | (397) | (217) | (232) | 970 | ||||||||
| Net income (loss) | $ | (6,527) | $ | (7,792) | $ | (19,502) | $ | 13,782 | ||||
| Net income (loss) per share: | ||||||||||||
| Basic | $ | (0.02) | $ | (0.03) | $ | (0.07) | $ | 0.05 | ||||
| Diluted | $ | (0.02) | $ | (0.03) | $ | (0.07) | $ | 0.05 | ||||
| Weighted average shares outstanding: | ||||||||||||
| Basic | 283,796 | 283,346 | 283,589 | 282,484 | ||||||||
| Diluted | 283,796 | 283,346 | 283,589 | 284,214 | ||||||||
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Sycamore Networks, Inc. |
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Reconciliation of GAAP to Non-GAAP Net Income |
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(in thousands, except per share data) |
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| Three Months Ended | Year Ended | |||||||||||
| July 31, 2009 | July 31, 2008 | July 31, 2009 | July 31, 2008 | |||||||||
| GAAP net loss | $ | (34,930) | $ | (14,078) | $ | (53,572) | $ | (114) | ||||
| Stock-based compensation expense: | ||||||||||||
| Cost of revenue | 142 | 180 | 594 | 625 | ||||||||
| Research and development | 490 | 515 | 2,007 | 1,767 | ||||||||
| Sales and marketing | 266 | 313 | 1,189 | 1,124 | ||||||||
| General and administrative | 239 | 263 | 902 | 975 | ||||||||
| Total stock based compensation expense | 1,137 | 1,271 | 4,692 | 4,491 | ||||||||
| Asset impairment charge: | ||||||||||||
| Operating expense | 24,209 | 4,446 | 24,209 | 4,446 | ||||||||
| Amortization of purchased intangible assets | 204 | 767 | 1,183 | 2,964 | ||||||||
| Restructuring: | ||||||||||||
| Operating expense | 2,783 | -- | 3,600 | 2,368 | ||||||||
| Cost of revenue | 70 | -- | 386 | -- | ||||||||
| Tax effect | -- | (198) | -- | (373) | ||||||||
| Non-GAAP net income (loss) | $ | (6,527) | $ | (7,792) | $ | (19,502) | $ | 13,782 | ||||
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