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 29, 2005
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 of incorporation or organization) |
(I.R.S. Employer Identification No.) |
220 Mill Road
Chelmsford, Massachusetts 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 x No ¨.
The number of shares outstanding of the Registrant’s Common Stock as of February 14, 2005 was 275,326,704.
| Index |
Page No. | |||
| Part I. |
3 | |||
| Item 1. |
3 | |||
| Consolidated Balance Sheets as of January 29, 2005 and July 31, 2004 |
3 | |||
| 4 | ||||
| Consolidated Statements of Cash Flows for the six months ended January 29, 2005 and January 24, 2004 |
5 | |||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 | ||
| Item 3. |
33 | |||
| Item 4. |
33 | |||
| Part II. |
34 | |||
| Item 1. |
34 | |||
| Item 2. |
35 | |||
| Item 4. |
36 | |||
| Item 6. |
37 | |||
| 38 | ||||
2
Consolidated Balance Sheets
(in thousands, except par value)
(unaudited)
| January 29, 2005 |
July 31, 2004 |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 373,172 | $ | 45,430 | ||||
| Short-term investments |
396,187 | 482,274 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $4,132 at January 29, 2005 and July 31, 2004 |
10,074 | 10,605 | ||||||
| Inventories |
4,148 | 4,294 | ||||||
| Prepaids and other current assets |
4,686 | 3,611 | ||||||
| Total current assets |
788,267 | 546,214 | ||||||
| Property and equipment, net |
8,412 | 9,419 | ||||||
| Long-term investments |
179,613 | 433,621 | ||||||
| Other assets |
1,585 | 1,664 | ||||||
| Total assets |
$ | 977,877 | $ | 990,918 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 5,140 | $ | 5,602 | ||||
| Accrued compensation |
2,254 | 2,071 | ||||||
| Accrued warranty |
2,086 | 2,017 | ||||||
| Accrued expenses |
3,600 | 3,077 | ||||||
| Accrued restructuring costs |
10,276 | 12,005 | ||||||
| Deferred revenue |
3,721 | 7,226 | ||||||
| Other current liabilities |
2,637 | 2,554 | ||||||
| Total current liabilities |
29,714 | 34,552 | ||||||
| Deferred revenue |
1,427 | 926 | ||||||
| Total liabilities |
31,141 | 35,478 | ||||||
| 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; 275,312 and 273,887 shares issued at January 29, 2005 and July 31, 2004, respectively |
275 | 274 | ||||||
| Additional paid-in capital |
1,744,327 | 1,740,293 | ||||||
| Accumulated deficit |
(794,207 | ) | (781,104 | ) | ||||
| Deferred compensation |
(456 | ) | (1,279 | ) | ||||
| Accumulated other comprehensive loss |
(3,203 | ) | (2,744 | ) | ||||
| Total stockholders’ equity |
946,736 | 955,440 | ||||||
| Total liabilities and stockholders’ equity |
$ | 977,877 | $ | 990,918 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
3
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| January 29, 2005 |
January 24, 2004 |
January 29, 2005 |
January 24, 2004 |
|||||||||||||
| Revenue: |
||||||||||||||||
| Product |
$ | 11,225 | $ | 3,673 | $ | 22,164 | $ | 9,829 | ||||||||
| Service |
3,667 | 3,202 | 6,943 | 5,487 | ||||||||||||
| Total revenue |
14,892 | 6,875 | 29,107 | 15,316 | ||||||||||||
| Cost of revenue: |
||||||||||||||||
| Product |
6,565 | 2,152 | 13,188 | 5,760 | ||||||||||||
| Service |
1,837 | 2,094 | 3,754 | 4,210 | ||||||||||||
| Stock-based compensation: |
||||||||||||||||
| Product |
30 | 77 | 87 | 157 | ||||||||||||
| Service |
17 | 100 | 53 | 200 | ||||||||||||
| Total cost of revenue |
8,449 | 4,423 | 17,082 | 10,327 | ||||||||||||
| Gross profit |
6,443 | 2,452 | 12,025 | 4,989 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
11,217 | 11,751 | 22,889 | 23,049 | ||||||||||||
| Sales and marketing |
3,011 | 4,345 | 6,155 | 8,756 | ||||||||||||
| General and administrative |
1,932 | 1,482 | 4,180 | 3,450 | ||||||||||||
| Stock-based compensation: |
||||||||||||||||
| Research and development |
212 | 1,106 | 482 | 1,790 | ||||||||||||
| Sales and marketing |
23 | 263 | 61 | 537 | ||||||||||||
| General and administrative |
31 | 399 | 231 | 746 | ||||||||||||
| Total operating expenses |
16,426 | 19,346 | 33,998 | 38,328 | ||||||||||||
| Loss from operations |
(9,983 | ) | (16,894 | ) | (21,973 | ) | (33,339 | ) | ||||||||
| Interest and other income, net |
4,672 | 3,895 | 8,870 | 8,163 | ||||||||||||
| Loss before income taxes |
(5,311 | ) | (12,999 | ) | (13,103 | ) | (25,176 | ) | ||||||||
| Provision for income taxes |
— | — | — | — | ||||||||||||
| Net loss |
$ | (5,311 | ) | $ | (12,999 | ) | $ | (13,103 | ) | $ | (25,176 | ) | ||||
| Basic and diluted net loss per share |
$ | (0.02 | ) | $ | (0.05 | ) | $ | (0.05 | ) | $ | (0.09 | ) | ||||
| Weighted-average shares used in computing basic and diluted net loss per share |
274,963 | 271,801 | 274,497 | 271,138 | ||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
4
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Six Months Ended |
||||||||
| January 29, 2005 |
January 24, 2004 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (13,103 | ) | $ | (25,176 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
2,522 | 5,982 | ||||||
| Stock-based compensation |
914 | 3,430 | ||||||
| Provision for doubtful accounts |
— | (52 | ) | |||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
531 | 6,827 | ||||||
| Inventories |
146 | (5,593 | ) | |||||
| Prepaids and other current assets |
(1,075 | ) | (709 | ) | ||||
| Deferred revenue |
(3,004 | ) | (310 | ) | ||||
| Accounts payable |
(462 | ) | 871 | |||||
| Accrued expenses and other current liabilities |
858 | (1,127 | ) | |||||
| Accrued restructuring costs |
(1,729 | ) | (3,465 | ) | ||||
| Net cash used in operating activities |
(14,402 | ) | (19,322 | ) | ||||
| Cash flows from investing activities: |
||||||||
| Purchases of property and equipment |
(1,515 | ) | (2,702 | ) | ||||
| Purchases of investments |
(102,779 | ) | (395,211 | ) | ||||
| Maturities of investments |
442,415 | 461,817 | ||||||
| Decrease in other assets |
79 | 354 | ||||||
| Net cash provided by investing activities |
338,200 | 64,258 | ||||||
| Cash flows from financing activities: |
||||||||
| Proceeds from issuance of common stock |
3,944 | 4,112 | ||||||
| Purchase of treasury stock |
— | (23 | ) | |||||
| Net cash provided by financing activities |
3,944 | 4,089 | ||||||
| Net increase in cash and cash equivalents |
327,742 | 49,025 | ||||||
| Cash and cash equivalents, beginning of period |
45,430 | |||||||