Sycamore Networks, Inc. Reports Fourth Quarter And 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)
		July 31, 2012			July 31, 2011
Assets
Current assets:
Cash and cash equivalents		$	136,654		$	60,765
Short-term investments			234,965			335,847
Accounts receivable, net			7,785			8,764
Inventories			8,469			11,537
Prepaid and other current assets			1,589			1,770
Total current assets			389,462			418,683
Property and equipment, net			4,276			5,978
Long-term investments			67,774			44,786
Other assets			422			290
Total Assets		$	461,934		$	469,737
Liabilities and Stockholders' Equity
Current liabilities:
Deferred revenue		$	7,871		$	9,141
Other current liabilities			8,401			8,325
Total current liabilities			16,272			17,466
Long term deferred revenue			1,469			1,812
Long term liabilities			1,962			1,702
Total liabilities			19,703			20,980
Common stock			29			29
Additional paid-in capital			1,589,357			1,583,124
Accumulated deficit			(1,146,882)			(1,133,958)
Other equity			(273)			(438)
Total stockholders' equity			442,231			448,757
Total Liabilities and Stockholders' Equity		$	461,934		$	469,737

Sycamore Networks, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share data)
		Three Months Ended						Twelve Months Ended
		July 31, 2012			July 31, 2011			July 31, 2012			July 31, 2011
Revenue		$	16,799		$	12,959		$	57,285		$	48,688
Cost of revenue			7,179			5,627			24,331			22,510
Gross profit			9,620			7,332			32,954			26,178
Operating expenses:
Research and development			6,470			6,635			27,190			26,619
Sales and marketing			2,752			2,614			10,444			10,755
General and administrative			2,568			1,932			8,759			8,194
Asset impairment			790			-			790			-
Restructuring			-			-			(271)			-
Total operating expenses			12,580			11,181			46,912			45,568
Loss from operations			(2,960)			(3,849)			(13,958)			(19,390)
Interest and other income, net			233			312			1,098			1,950
Loss before income taxes			(2,727)			(3,537)			(12,860)			(17,440)
Income tax expense (benefit)			(202)			81			64			358
Net loss		$	(2,525)		$	(3,618)		$	(12,924)		$	(17,798)
Net loss per share:
Basic		$	(0.09)		$	(0.13)		$	(0.45)		$	(0.62)
Diluted		$	(0.09)		$	(0.13)		$	(0.45)		$	(0.62)
Weighted average shares outstanding:
Basic			28,879			28,692			28,807			28,567
Diluted			28,879			28,692			28,807			28,567

Sycamore Networks, Inc.
Reconciliation of Selected GAAP-based Measures to Non-GAAP-based Measures
(in thousands, except per share data)
		Three Months Ended						Twelve Months Ended
		July 31, 2012			July 31, 2011			July 31, 2012			July 31, 2011
GAAP gross profit		$	9,620		$	7,332		$	32,954		$	26,178
Less:
Restructuring			-			-			-			339
Stock-based compensation expense			152			170			618			466
Non-GAAP gross profit		$	9,772		$	7,502		$	33,572		$	26,983
GAAP operating expenses		$	12,580		$	11,181		$	46,912		$	45,568
Less:
Restructuring			-			-			(271)			-
Stock-based compensation expense-R&D			363			386			1,519			848
Stock-based compensation expense-S&M			178			256			749			719
Stock-based compensation expense-G&A			224			259			903			718
Asset impairment			790			-			790			-
Non-GAAP operating expenses		$	11,025		$	10,280		$	43,222		$	43,283
GAAP loss from operations		$	(2,960)		$	(3,849)		$	(13,958)		$	(19,390)
Less:
Restructuring			-			-			(271)			339
Stock-based compensation expense			917			1,071			3,789			2,751
Asset impairment			790			-			790			-
Non-GAAP loss from operations		$	(1,253)		$	(2,778)		$	(9,650)		$	(16,300)
GAAP net loss		$	(2,525)		$	(3,618)		$	(12,924)		$	(17,798)
Less:
Restructuring			-			-			(271)			339
Stock-based compensation expense			917			1,071			3,789			2,751
Asset impairment			790			-			790			-
Income tax			(107)			-			(107)			-
Non-GAAP net loss		$	(925)		$	(2,547)		$	(8,723)		$	(14,708)
GAAP net loss per share:
Basic		$	(0.09)		$	(0.13)		$	(0.45)		$	(0.62)
Diluted		$	(0.09)		$	(0.13)		$	(0.45)		$	(0.62)
Less:
Restructuring		$	0.00		$	0.00		$	(0.01)		$	0.01
Stock-based compensation expense		$	0.03		$	0.04		$	0.13		$	0.10
Asset impairment		$	0.03		$	0.00		$	0.03		$	0.00
Income tax		$	0.00		$	0.00		$	0.00		$	0.00
Non-GAAP net loss per share:
Basic		$	(0.03)		$	(0.09)		$	(0.30)		$	(0.51)
Diluted		$	(0.03)		$	(0.09)		$	(0.30)		$	(0.51)

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