UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended January 25, 2003
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For The Transition Period From to
Commission File Number 000-27273
SYCAMORE NETWORKS, INC.
(Exact name of registrant as specified in its charter)
| Delaware |
04-3410558 | |
| (State or other jurisdiction |
(I.R.S. Employer | |
| of incorporation or organization) |
Identification No.) |
220 Mill Road
Chelmsford, MA 01824
(Address of principal executive offices)
(Zip code)
(978) 250-2900
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨.
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ¨.
The number of shares outstanding of the Registrant’s Common Stock as of February 28, 2003 was 271,564,510.
Index
Part I. Financial Information
| Page No. | ||||
| Item 1. |
Financial Statements |
|||
| Consolidated Balance Sheets as of January 25, 2003 and July 31, 2002 |
3 | |||
| 4 | ||||
| Consolidated Statements of Cash Flows for the six months ended January 25, 2003 and January 26, 2002 |
5 | |||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12 | ||
| Item 3. |
34 | |||
| Item 4. |
34 | |||
| Part II. |
35 | |||
| Item 1. |
35 | |||
| Item 4. |
36 | |||
| Item 6. |
37 | |||
| 38 | ||||
| 39 | ||||
| 41 |
2
Part I. Financial Information
Item 1. Financial Statements
Sycamore Networks, Inc.
(in thousands, except par value)
| January 25, 2003 |
July 31, 2002 |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
349,425 |
|
$ |
172,658 |
| ||
| Short-term investments |
|
381,208 |
|
|
509,350 |
| ||
| Accounts receivable, net of allowance for doubtful accounts of $4,684 at January 25, 2003 and July 31, 2002 |
|
15,061 |
|
|
18,187 |
| ||
| Inventories |
|
9,761 |
|
|
12,940 |
| ||
| Prepaids and other current assets |
|
5,911 |
|
|
3,447 |
| ||
| Total current assets |
|
761,366 |
|
|
716,582 |
| ||
| Property and equipment, net |
|
22,655 |
|
|
32,696 |
| ||
| Long-term investments |
|
276,146 |
|
|
361,537 |
| ||
| Other assets |
|
3,866 |
|
|
7,760 |
| ||
| Total assets |
$ |
1,064,033 |
|
$ |
1,118,575 |
| ||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
4,536 |
|
$ |
6,104 |
| ||
| Accrued compensation |
|
3,359 |
|
|
3,896 |
| ||
| Accrued expenses |
|
9,412 |
|
|
13,148 |
| ||
| Accrued restructuring costs |
|
30,476 |
|
|
48,167 |
| ||
| Deferred revenue |
|
1,929 |
|
|
4,978 |
| ||
| Other current liabilities |
|
2,864 |
|
|
3,759 |
| ||
| Total current liabilities |
|
52,576 |
|
|
80,052 |
| ||
| Stockholders’ equity: |
||||||||
| Preferred stock, $.01 par value, 5,000 shares authorized; none issued or outstanding |
|
— |
|
|
— |
| ||
| Common stock, $.001 par value; 2,500,000 shares authorized; 272,070 and 273,681 shares issued at January 25, 2003 and July 31, 2002, respectively |
|
272 |
|
|
274 |
| ||
| Additional paid-in capital |
|
1,733,874 |
|
|
1,732,846 |
| ||
| Accumulated deficit |
|
(714,565 |
) |
|
(681,086 |
) | ||
| Deferred compensation |
|
(12,700 |
) |
|
(17,910 |
) | ||
| Treasury stock, at cost, 537 and 1,933 shares held at January 25, 2003 and July 31, 2002, respectively |
|
(60 |
) |
|
(158 |
) | ||
| Accumulated other comprehensive income |
|
4,636 |
|
|
4,557 |
| ||
| Total stockholders’ equity |
|
1,011,457 |
|
|
1,038,523 |
| ||
| Total liabilities and stockholders’ equity |
$ |
1,064,033 |
|
$ |
1,118,575 |
| ||
The accompanying notes are an integral part of the consolidated financial statements.
3
Consolidated Statements of Operations
(in thousands, except per share amounts)
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| January 25, 2003 |
January 26, 2002 |
January 25, 2003 |
January 26, 2002 |
|||||||||||||
| Revenue: |
||||||||||||||||
| Product |
$ |
7,453 |
|
$ |
17,123 |
|
$ |
10,301 |
|
$ |
32,897 |
| ||||
| Service |
|
3,372 |
|
|
4,677 |
|
|
6,462 |
|
|
10,146 |
| ||||
| Total revenue |
|
10,825 |
|
|
21,800 |
|
|
16,763 |
|
|
43,043 |
| ||||
| Cost of revenue: |
||||||||||||||||
| Product (exclusive of non-cash stock compensation expense of $169, $219, $338 and $507) |
|
6,414 |
|
|
12,535 |
|
|
10,715 |
|
|
126,808 |
| ||||
| Service (exclusive of non-cash stock compensation expense of $188, $217, $375 and $446) |
|
4,173 |
|
|
6,867 |
|
|
7,015 |
|
|
15,209 |
| ||||
| Stock compensation |
|
357 |
|
|
436 |
|
|
713 |
|
|
953 |
| ||||
| Total cost of revenue |
|
10,944 |
|
|
19,838 |
|
|
18,443 |
|
|
142,970 |
| ||||
| Gross profit (loss) |
|
(119 |
) |
|
1,962 |
|
|
(1,680 |
) |
|
(99,927 |
) | ||||
| Operating expenses: |
||||||||||||||||
| Research and development (exclusive of non-cash stock compensation expense of $844, $2,339, $1,718 and $5,064) |
|
13,432 |
|
|
25,985 |
|
|
27,359 |
|
|
62,500 |
| ||||
| Sales and marketing (exclusive of non-cash stock compensation expense of $516, $4,100, $1,128 and $6,567) |
|
5,070 |
|
|
11,379 |
|
|
10,012 |
|
|
25,083 |
| ||||
| General and administrative (exclusive of non-cash stock compensation expense of $387, $702, $918 and $1,277) |
|
1,751 |
|
|
2,614 |
|
|
3,409 |
|
|
5,804 |
| ||||
| Stock compensation |
|
1,747 |
|
|
7,141 |
|
|
3,764 |
|
|
12,908 |
| ||||
| Restructuring charges and related asset impairments |
|
— |
|
|
— |
|
|
— |
|
|
77,306 |
| ||||
| Total operating expenses |
|
22,000 |
|
|
47,119 |
|
|
44,544 |
|
|
183,601 |
| ||||
| Loss from operations |
|
(22,119 |
) |
|
(45,157 |
) |
|
(46,224 |
) |
|
(283,528 |
) | ||||
| Losses on investments |
|
— |
|
|
— |
|
|
— |
|
|
(22,737 |
) | ||||
| Interest and other income, net |
|
6,002 |
|
|
9,808 |
|
|
12,745 |
|
|
22,981 |
| ||||
| Loss before income taxes |
|
(16,117 |
) |
|
(35,349 |
) |
|
(33,479 |
) |
|
(283,284 |
) | ||||
| Provision for income taxes |
|
— |
|
|
— |
|
|
— |
|
|
— |
| ||||
| Net loss |
$ |
(16,117 |
) |
$ |
||||||||||||