Sycamore Networks, Inc. Reports First Quarter Fiscal Year 2013 Financial Results

Board of Directors Approves Special Cash Distribution of $0.50 Per Share

CHELMSFORD, Mass.--()--Sycamore Networks, Inc. (NASDAQ: SCMR), today reported its results for the first quarter ended October 27, 2012. Revenue for the first quarter of fiscal 2013 was $12.1 million, compared with $15.4 million for the first quarter of fiscal 2012.

Net loss for the first quarter of fiscal 2013, on a generally accepted accounting principles (“GAAP”) basis, was $6.8 million, or $0.23 per share, compared with a GAAP net loss of $1.6 million, or $0.06 per share, for the first quarter of fiscal 2012.

Non-GAAP net loss for the first quarter of fiscal 2013 was $3.9 million, or $0.14 per share, compared with a non-GAAP net loss of $0.9 million, or $0.03 per share for the first quarter of fiscal 2012. The reconciliation between net loss on a GAAP basis and net loss on a non-GAAP basis is provided in the table immediately following the Unaudited Condensed Consolidated Statements of Operations included with this press release.

The Company also announced that, on November 27, 2012, its Board of Directors approved a special cash distribution of $0.50 per share of its common stock. The special cash distribution will be paid on December 20, 2012 to stockholders of record as of December 10, 2012. Given the amount of the special cash distribution, the Company expects that the ex-dividend date for the special cash distribution will be December 6, 2012, which is two business days prior to the record date for the special cash distribution.

The Company also announced it will not be holding a conference call with investors regarding its first quarter results.

About Sycamore Networks
Sycamore Networks, Inc. (NASDAQ: SCMR) develops and markets intelligent bandwidth management solutions for fixed line and mobile network operators worldwide. Sycamore products enable network operators to efficiently and cost-effectively provision and manage network capacity to support a wide range of converged services such as voice, video and data. Our 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 are 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.

Caution Regarding Forward-Looking Statements

We wish to caution you that certain matters discussed in this press release may constitute “forward-looking statements,” as defined under the federal securities laws. Risks and uncertainties relating to the Company’s business could cause actual events and results to differ materially from those stated or implied in such statements. Potential risks and uncertainties include, among others, the impact of the announcement of the sale of substantially all of the assets of our Intelligent Bandwidth Management business (the “Asset Sale”) and the dissolution of the Company on the trading price of our common stock and our business and on our relationships with our customers, suppliers and employees; our ability to successfully close the Asset Sale and the timing of such closing; difficulties associated with identifying, analyzing or consummating strategic alternatives with respect to our IQstream® business and our other remaining non-cash assets; our inability to predict the timing, amount or nature of any additional cash distributions to stockholders; the Company’s reliance on a limited number of customers; industry pricing pressures; the consolidation of both suppliers and customers in the telecommunications marketplace; and general economic conditions. More information about potential factors that could affect the Company’s business and financial results is included in the section entitled "Risk Factors" in the Company's reports filed on Forms 10-Q and 10-K 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.

Sycamore Networks, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
       
October 27, 2012 July 31, 2012
Assets
 
Current assets:
Cash and cash equivalents $ 105,608 $ 136,654
Short-term investments 39,938 234,965
Accounts receivable, net 5,720 7,785
Inventories 8,836 8,469
Prepaid and other current assets   828   1,589
Total current assets 160,930 389,462
 
Property and equipment, net 3,705 4,276
Long-term investments 0 67,774
Other assets   348   422
Total Assets $ 164,983 $ 461,934
 
Liabilities and Stockholders' Equity
 
Current liabilities:
Deferred revenue $ 5,296 $ 7,871
Other current liabilities   8,849   8,401
Total current liabilities 14,145 16,272
 
Long term deferred revenue 1,391 1,469
Long term liabilities   1,965   1,962
Total liabilities   17,501   19,703
 
Common stock 29 29
Additional paid-in capital 1,301,414 1,589,357
Accumulated deficit (1,153,638) (1,146,882)
Accumulated other comprehensive loss   (323)   (273)
Total stockholders' equity   147,482   442,231
Total Liabilities and Stockholders' Equity $ 164,983 $ 461,934
 
Sycamore Networks, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share data)
       
Three Months Ended

Oct 27,
2012

Oct 29,
2011

 
Revenue $ 12,064 $ 15,380
Cost of revenue   4,903   6,262
Gross profit   7,161   9,118
 
Operating expenses:
Research and development 6,489 6,485
Sales and marketing 2,381 2,670
General and administrative 3,087 1,985
Asset impairment - -
Restructuring   1,988   (271)
Total operating expenses   13,945   10,869
 
Loss from operations (6,784) (1,751)
 
Interest and other income, net   201   234
Loss before income taxes (6,583) (1,517)
Income tax expense (benefit)   173   97
Net loss $ (6,756) $ (1,614)
 
Net loss per share:
Basic $ (0.23) $ (0.06)
Diluted $ (0.23) $ (0.06)
 
Weighted average shares outstanding:
Basic 28,881 28,741
Diluted 28,881 28,741
 
Sycamore Networks, Inc.
Reconciliation of Selected GAAP-based Measures to Non-GAAP-based Measures
(in thousands, except per share data)
    Three Months Ended

Oct 27,
2012

   

Oct 29,
2011

 
GAAP gross profit $ 7,161 $ 9,118
Less:
Stock-based compensation expense   128   151
Non-GAAP gross profit $ 7,289 $ 9,269
 
GAAP operating expenses $ 13,945 $ 10,869
Less:
Restructuring 1,988 (271)
Stock-based compensation expense-R&D 330 383
Stock-based compensation expense-S&M 165 210
Stock-based compensation expense-G&A   217   230
Non-GAAP operating expenses $ 11,245 $ 10,317
 
GAAP loss from operations $ (6,784) $ (1,751)
Less:
Restructuring 1,988 (271)
Stock-based compensation expense   840   974
Non-GAAP loss from operations $ (3,956) $ (1,048)
 
GAAP net loss $ (6,756) $ (1,614)
Less:
Restructuring 1,988 (271)
Stock-based compensation expense   840   974
Non-GAAP net loss $ (3,928) $ (911)
 
GAAP net loss per share:
Basic $ (0.23) $ (0.06)
Diluted $ (0.23) $ (0.06)
 
Less:
Restructuring $ 0.07 $ (0.01)
Stock-based compensation expense $ 0.03 $ 0.04
 
Non-GAAP net loss per share:
Basic $ (0.14) $ (0.03)
Diluted $ (0.14) $ (0.03)

Contacts

Sycamore Networks, Inc.
Robert Travis, 978-250-3432
Investor Relations
bob.travis@sycamorenet.com
or
Scott Larson, 978-250-3433
Press Inquiries
scott.larson@sycamorenet.com

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Contacts

Sycamore Networks, Inc.
Robert Travis, 978-250-3432
Investor Relations
bob.travis@sycamorenet.com
or
Scott Larson, 978-250-3433
Press Inquiries
scott.larson@sycamorenet.com