Sycamore Networks, Inc. Reports Third Quarter Fiscal Year 2012 Financial Results

Caution Regarding Forward-Looking Statements

We wish to caution you that certain matters discussed in this news 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 Company’s reliance on a limited number of customers; industry pricing pressures; the Company’s decision to focus future development efforts on mobile broadband optimization opportunities; the high cost of product development and keeping pace with evolving features and technologies desired by customers; unexpected difficulties in developing and marketing new mobile broadband optimization products; the inability of new products to achieve market acceptance or to function as expected; the consolidation of both suppliers and customers in the telecommunications marketplace; possible changes to the Company’s business in connection with consideration of strategic options to enhance shareholder value; 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)
				April 28, 2012					July 31, 2011
Assets
Current assets:
Cash and cash equivalents				$	60,683				$	60,765
Short-term investments					290,588					335,847
Accounts receivable, net					6,387					8,764
Inventories					9,316					11,537
Prepaid and other current assets					1,582					1,770
Total current assets					368,556					418,683
Property and equipment, net					5,281					5,978
Long-term investments					88,770					44,786
Other assets					320					290
Total Assets				$	462,927				$	469,737
Liabilities and Stockholders' Equity
Current liabilities:
Deferred revenue				$	8,880				$	9,141
Other current liabilities					6,701					8,325
Total current liabilities					15,581					17,466
Long term deferred revenue					1,451					1,812
Long term liabilities					2,122					1,702
Total liabilities					19,154					20,980
Common stock					29					29
Additional paid-in capital					1,588,440					1,583,124
Accumulated deficit					(1,144,357)					(1,133,958)
Other equity					(339)					(438)
Total stockholders' equity					443,773					448,757
Total Liabilities and Stockholders' Equity				$	462,927				$	469,737

Sycamore Networks, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share data)
				Three Months Ended								Nine Months Ended
				Apr 28, 2012				Apr 30, 2011				Apr 28, 2012				Apr 30, 2011
Revenue				$	11,922			$	11,863			$	40,486			$	35,729
Cost of revenue					5,455				4,881				17,152				16,883
Gross profit					6,467				6,982				23,334				18,846
Operating expenses:
Research and development					7,187				6,434				20,720				19,984
Sales and marketing					2,465				2,898				7,692				8,141
General and administrative					2,066				2,106				6,191				6,262
Restructuring					-				-				(271)				-
Total operating expenses					11,718				11,438				34,332				34,387
Loss from operations					(5,251)				(4,456)				(10,998)				(15,541)
Interest and other income, net					240				400				865				1,638
Loss before income taxes					(5,011)				(4,056)				(10,133)				(13,903)
Income tax expense					80				80				266				277
Net loss				$	(5,091)			$	(4,136)			$	(10,399)			$	(14,180)
Net loss per share:
Basic				$	(0.18)			$	(0.14)			$	(0.36)			$	(0.50)
Diluted				$	(0.18)			$	(0.14)			$	(0.36)			$	(0.50)
Weighted average shares outstanding:
Basic					28,853				28,593				28,783				28,525
Diluted					28,853				28,593				28,783				28,525

Sycamore Networks, Inc.
Reconciliation of Selected GAAP-based Measures to Non-GAAP-based Measures
(in thousands, except per share data)
				Three Months Ended								Nine Months Ended
				Apr 28, 2012				Apr 30, 2011				Apr 28, 2012				Apr 30, 2011
GAAP gross profit				$	6,467			$	6,982			$	23,334			$	18,846
Less:
Restructuring expense					-				-				-				339
Stock-based compensation expense					155				115				466				296
Non-GAAP gross profit				$	6,622			$	7,097			$	23,800			$	19,481
GAAP operating expenses				$	11,718			$	11,438			$	34,332			$	34,387
Less:
Restructuring expense					-				-				(271)				-
Stock-based compensation expense-R&D					392				255				1,156				462
Stock-based compensation expense-S&M					179				185				571				463
Stock-based compensation expense-G&A					225				203				679				459
Non-GAAP operating expenses				$	10,922			$	10,795			$	32,197			$	33,003
GAAP loss from operations				$	(5,251)			$	(4,456)			$	(10,998)			$	(15,541)
Less:
Restructuring expense					-				-				(271)				339
Stock-based compensation expense					951				758				2,872				1,680
Non-GAAP loss from operations				$	(4,300)			$	(3,698)			$	(8,397)			$	(13,522)
GAAP net loss				$	(5,091)			$	(4,136)			$	(10,399)			$	(14,180)
Less:
Restructuring expense					-				-				(271)				339
Stock-based compensation expense					951				758				2,872				1,680
Non-GAAP net loss				$	(4,140)			$	(3,378)			$	(7,798)			$	(12,161)
GAAP net loss per share:
Basic				$	(0.18)			$	(0.14)			$	(0.36)			$	(0.50)
Diluted				$	(0.18)			$	(0.14)			$	(0.36)			$	(0.50)
Less:
Restructuring expense				$	0.00			$	0.00			$	(0.01)			$	0.01
Stock-based compensation expense				$	0.04			$	0.02			$	0.10			$	0.06
Non-GAAP net loss per share:
Basic				$	(0.14)			$	(0.12)			$	(0.27)			$	(0.43)
Diluted				$	(0.14)			$	(0.12)			$	(0.27)			$	(0.43)

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