Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - SYCAMORE NETWORKS INC | d481987d8k.htm |
Exhibit 99.1
SYCAMORE NETWORKS, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
On January 31, 2013, Sycamore Networks, Inc. (“Sycamore” or the “Company”) completed the sale of substantially all of Sycamore’s assets primarily related to Sycamore’s Intelligent Bandwidth Management business, including inventory, fixed assets, intellectual property rights (other than patents and patent applications), contracts, certain real estate leases, Sycamore’s subsidiaries in Shanghai (subject to the receipt of government approval), the Netherlands and Japan, and certain shared facilities and assets (together, the “Intelligent Bandwidth Management Business”) to a portfolio company of Marlin Equity Partners (“Buyer”) pursuant to the previously disclosed Asset Purchase and Sale Agreement dated October 23, 2012 by and between Sycamore and Buyer (the “Asset Sale Agreement”), for a total purchase price of $18.75 million in cash (subject to a working capital adjustment as provided in the Asset Sale Agreement) and the assumption by Buyer of certain related liabilities (the “Asset Sale”).
The following Unaudited Pro Forma Consolidated Financial Information of the Company has been derived from the historical financial statements of the Company, as adjusted, to give effect to the Asset Sale. The historical financial information of the Company set forth below has been derived from the historical consolidated financial statements included in its Annual Report on Form 10-K for the year ended July 31, 2012 and its Quarterly Report on Form 10-Q for the quarter ended October 27, 2012. The Unaudited Pro Forma Consolidated Balance Sheet as of October 27, 2012 includes pro forma adjustments giving effect to the Asset Sale as if it had occurred on that date. The Unaudited Pro Forma Consolidated Statements of Operations for the three months ended October 27, 2012 and October 29, 2011 and for the years ended July 31, 2012, 2011 and 2010 include pro forma adjustments giving effect to the Asset Sale as if it had occurred on August 1, 2009.
The Unaudited Pro Forma Consolidated Financial Information is presented to comply with the rules and regulations of the Securities and Exchange Commission governing the disclosure of pro forma information. The Unaudited Pro Forma Consolidated Financial Information has been provided for informational purposes only and should not be considered indicative of the financial condition or results of operations that would have been achieved had the Asset Sale occurred as of the dates presented. Furthermore, the Unaudited Pro Forma Consolidated Financial Information does not give effect to any restructuring costs, operational savings or financial conditions that may have impacted the retained business since October 27, 2012. The Unaudited Pro Forma Consolidated Financial Information also does not address any distributions to the Company’s stockholders since October 27, 2012, nor does it address that following the completion of the Asset Sale the Company has no operating assets. Accordingly, the Unaudited Pro Forma Consolidated Financial Information should not be read to be indicative of the Company’s financial condition or results of operations that might be achieved as of any future date or for any future period. The Unaudited Pro Forma Consolidated Financial Information, including the notes thereto, should be read in conjunction with the historical financial statements of Sycamore included in its Annual Report on Form 10-K for the year ended July 31, 2012 and its Quarterly Report on Form 10-Q for the quarter ended October 27, 2012.
SYCAMORE NETWORKS, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except par value)
(Unaudited)
| As of October 27, 2012 | ||||||||||||
| Historical | Adjustments | Pro forma | ||||||||||
| Assets |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 105,608 | $ | 18,750 | (A) | $ | 124,358 | |||||
| Short-term investments |
39,938 | — | 39,938 | |||||||||
| Accounts receivable, net of allowance for doubtful accounts of $42 |
5,720 | (5,720 | ) (B) | — | ||||||||
| Inventories |
8,836 | (8,836 | ) (B) | — | ||||||||
| Prepaid and other current assets |
828 | (460 | ) (B) | 368 | ||||||||
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|||||||
| Total current assets |
160,930 | 3,734 | 164,664 | |||||||||
| Property and equipment, net |
3,705 | (373 | ) (B) | 3,332 | ||||||||
| Other assets |
348 | (330 | ) (B) | 18 | ||||||||
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| Total assets |
$ | 164,983 | $ | 3,031 | $ | 168,014 | ||||||
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| Liabilities and Stockholders’ Equity |
||||||||||||
| Current liabilities: |
||||||||||||
| Accounts payable |
$ | 777 | $ | (670 | ) (B) | $ | 107 | |||||
| Accrued compensation |
1,861 | (1,121 | ) (B) | 740 | ||||||||
| Accrued warranty |
1,082 | (1,082 | ) (B) | — | ||||||||
| Accrued expenses |
2,256 | (867 | ) (B) | 1,389 | ||||||||
| Accrued restructuring costs |
1,988 | — | 1,988 | |||||||||
| Deferred revenue |
5,296 | (5,296 | ) (B) | — | ||||||||
| Other current liabilities |
885 | (453 | ) (B) | 432 | ||||||||
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| Total current liabilities |
14,145 | (9,489 | ) | 4,656 | ||||||||
| Long-term deferred revenue |
1,391 | (1,391 | ) (B) | — | ||||||||
| Other long-term liabilities |
1,965 | (260 | ) (B) | 1,705 | ||||||||
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| Total liabilities |
17,501 | (11,140 | ) | 6,361 | ||||||||
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| Total stockholders’ equity |
147,482 | 14,171 | (C) | 161,653 | ||||||||
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| Total liabilities and stockholders’ equity |
$ | 164,983 | $ | 3,031 | $ | 168,014 | ||||||
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The accompanying notes are an integral part of the Unaudited Pro Forma Consolidated Financial Information.
SYCAMORE NETWORKS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
| Three months ended October 27, 2012 | ||||||||||||
| Historical | Adjustments (D) | Pro forma (E) | ||||||||||
| Revenue: |
||||||||||||
| Product |
$ | 7,184 | $ | (7,184 | ) | $ | — | |||||
| Service |
4,880 | (4,880 | ) | — | ||||||||
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| Total revenue |
12,064 | (12,064 | ) | — | ||||||||
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| Cost of revenue: |
||||||||||||
| Product |
3,157 | (2,964 | ) | 193 | ||||||||
| Service |
1,746 | (1,746 | ) | — | ||||||||
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| Total cost of revenue |
4,903 | (4,710 | ) | 193 | ||||||||
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| Gross profit |
7,161 | (7,354 | ) | (193 | ) | |||||||
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| Operating expenses: |
||||||||||||
| Research and development |
6,489 | (3,340 | ) | 3,149 | ||||||||
| Sales and marketing |
2,381 | (1,519 | ) | 862 | ||||||||
| General and administrative |
3,087 | (2,071 | )(F) | 1,016 | ||||||||
| Restructuring |
1,988 | — | 1,988 | |||||||||
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| Total operating expenses |
13,945 | (6,930 | ) | 7,015 | ||||||||
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| Loss from continuing operations |
(6,784 | ) | (424 | ) | (7,208 | ) | ||||||
| Interest and other income, net |
201 | — | 201 | |||||||||
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| Loss before income taxes |
(6,583 | ) | (424 | ) | (7,007 | ) | ||||||
| Income tax expense |
173 | (132 | ) | 41 | ||||||||
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| Net loss from continuing operations |
$ | (6,756 | ) | $ | (292 | ) | $ | (7,048 | ) | |||
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| Net loss per share: |
||||||||||||
| Basic |
$ | (0.23 | ) | — | $ | (0.24 | ) | |||||
| Diluted |
$ | (0.23 | ) | — | $ | (0.24 | ) | |||||
| Weighted average shares outstanding: |
||||||||||||
| Basic |
28,881 | — | 28,881 | |||||||||
| Diluted |
28,881 | — | 28,881 | |||||||||
| Cash distribution paid per common share |
$ | 10.00 | — | $ | 10.00 | |||||||
The accompanying notes are an integral part of the Unaudited Pro Forma Consolidated Financial Information.
SYCAMORE NETWORKS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
| Three months ended October 29, 2011 | ||||||||||||
| Historical | Adjustments (D) | Pro forma (E) | ||||||||||
| Revenue: |
||||||||||||
| Product |
$ | 9,898 | $ | (9,898 | ) | $ | — | |||||
| Service |
5,482 | (5,482 | ) | — | ||||||||
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| Total revenue |
15,380 | (15,380 | ) | — | ||||||||
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| Cost of revenue: |
||||||||||||
| Product |
4,368 | (4,368 | ) | — | ||||||||
| Service |
1,894 | (1,894 | ) | — | ||||||||
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| Total cost of revenue |
6,262 | (6,262 | ) | — | ||||||||
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| Gross profit |
9,118 | (9,118 | ) | — | ||||||||
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| Operating expenses: |
||||||||||||
| Research and development |
6,485 | (3,384 | ) | 3,101 | ||||||||
| Sales and marketing |
2,670 | (1,762 | ) | 908 | ||||||||
| General and administrative |
1,985 | (908 | ) | 1,077 | ||||||||
| Restructuring |
(271 | ) | 271 | — | ||||||||
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| Total operating expenses |
10,869 | (5,783 | ) | 5,086 | ||||||||
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| Loss from continuing operations |
(1,751 | ) | (3,335 | ) | (5,086 | ) | ||||||
| Interest and other income, net |
234 | — | 234 | |||||||||
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| Loss before income taxes |
(1,517 | ) | (3,335 | ) | (4,852 | ) | ||||||
| Income tax expense |
97 | (55 | ) | 42 | ||||||||
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| Net loss from continuing operations |
$ | (1,614 | ) | $ | (3,280 | ) | $ | (4,894 | ) | |||
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| Net loss per share: |
||||||||||||
| Basic |
$ | (0.06 | ) | — | $ | (0.17 | ) | |||||
| Diluted |
$ | (0.06 | ) | — | $ | (0.17 | ) | |||||
| Weighted average shares outstanding: |
||||||||||||
| Basic |
28,741 | — | 28,741 | |||||||||
| Diluted |
28,741 | — | 28,741 | |||||||||
The accompanying notes are an integral part of the Unaudited Pro Forma Consolidated Financial Information.
SYCAMORE NETWORKS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
| Year Ended July 31, 2012 | ||||||||||||
| Historical | Adjustments (D) | Pro forma (E) | ||||||||||
| Revenue: |
||||||||||||
| Product |
$ | 34,096 | $ | (34,096 | ) | $ | — | |||||
| Service |
23,189 | (23,189 | ) | — | ||||||||
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| Total revenue |
57,285 | (57,285 | ) | — | ||||||||
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| Cost of revenue: |
||||||||||||
| Product |
16,601 | (16,376 | ) | 225 | ||||||||
| Service |
7,730 | (7,730 | ) | — | ||||||||
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| Total cost of revenue |
24,331 | (24,106 | ) | 225 | ||||||||
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| Gross profit |
32,954 | (33,179 | ) | (225 | ) | |||||||
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| Operating expenses: |
||||||||||||
| Research and development |
27,190 | (13,924 | ) | 13,266 | ||||||||
| Sales and marketing |
10,444 | (7,149 | ) | 3,295 | ||||||||
| General and administrative |
8,759 | (4,270 | )(F) | 4,489 | ||||||||
| Asset impairments |
790 | — | 790 | |||||||||
| Restructuring |
(271 | ) | 271 | — | ||||||||
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| Total operating expenses |
46,912 | (25,072 | ) | 21,840 | ||||||||
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| Loss from continuing operations |
(13,958 | ) | (8,107 | ) | (22,065 | ) | ||||||
| Interest and other income, net |
1,098 | — | 1,098 | |||||||||
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| Loss before income taxes |
(12,860 | ) | (8,107 | ) | (20,967 | ) | ||||||
| Income tax expense |
64 | (76 | ) | (12 | ) | |||||||
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| Net loss from continuing operations |
$ | (12,924 | ) | $ | (8,031 | ) | $ | (20,955 | ) | |||
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| Net loss per share: |
||||||||||||
| Basic |
$ | (0.45 | ) | — | $ | (0.73 | ) | |||||
| Diluted |
$ | (0.45 | ) | — | $ | (0.73 | ) | |||||
| Weighted average shares outstanding: |
||||||||||||
| Basic |
28,807 | — | 28,807 | |||||||||
| Diluted |
28,807 | — | 28,807 | |||||||||
The accompanying notes are an integral part of the Unaudited Pro Forma Consolidated Financial Information.
SYCAMORE NETWORKS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
| Year Ended July 31, 2011 | ||||||||||||
| Historical | Adjustments (D) | Pro forma (E) | ||||||||||
| Revenue: |
||||||||||||
| Product |
$ | 24,486 | $ | (24,486 | ) | $ | — | |||||
| Service |
24,202 | (24,202 | ) | — | ||||||||
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| Total revenue |
48,688 | (48,688 | ) | — | ||||||||
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| Cost of revenue: |
||||||||||||
| Product |
14,408 | (14,408 | ) | — | ||||||||
| Service |
8,102 | (8,102 | ) | — | ||||||||
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| Total cost of revenue |
22,510 | (22,510 | ) | — | ||||||||
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| Gross profit |
26,178 | (26,178 | ) | — | ||||||||
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| Operating expenses: |
||||||||||||
| Research and development |
26,619 | (15,144 | ) | 11,475 | ||||||||
| Sales and marketing |
10,755 | (7,147 | ) | 3,608 | ||||||||
| General and administrative |
8,194 | (3,873 | ) | 4,321 | ||||||||
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| Total operating expenses |
45,568 | (26,164 | ) | 19,404 | ||||||||
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| Loss from continuing operations |
(19,390 | ) | (14 | ) | (19,404 | ) | ||||||
| Interest and other income, net |
1,950 | — | 1,950 | |||||||||
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| Loss before income taxes |
(17,440 | ) | (14 | ) | (17,454 | ) | ||||||
| Income tax expense |
358 | (193 | ) | 165 | ||||||||
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| Net loss from continuing operations |
$ | (17,798 | ) | $ | 179 | $ | (17,619 | ) | ||||
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| Net loss per share: |
||||||||||||
| Basic |
$ | (0.62 | ) | — | $ | (0.62 | ) | |||||
| Diluted |
$ | (0.62 | ) | — | $ | (0.62 | ) | |||||
| Weighted average shares outstanding: |
||||||||||||
| Basic |
28,567 | — | 28,567 | |||||||||
| Diluted |
28,567 | — | 28,567 | |||||||||
| Cash distribution paid per common share |
$ | 6.50 | $ | 6.50 | ||||||||
The accompanying notes are an integral part of the Unaudited Pro Forma Consolidated Financial Information.
SYCAMORE NETWORKS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
| Year Ended July 31, 2010 | ||||||||||||
| Historical | Adjustments (D) | Pro forma (E) | ||||||||||
| Revenue: |
||||||||||||
| Product |
$ | 44,655 | $ | (44,655 | ) | $ | — | |||||
| Service |
23,962 | (23,962 | ) | — | ||||||||
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| Total revenue |
68,617 | (68,617 | ) | — | ||||||||
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| Cost of revenue: |
||||||||||||
| Product |
21,955 | (21,955 | ) | — | ||||||||
| Service |
8,999 | (8,999 | ) | — | ||||||||
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| Total cost of revenue |
30,954 | (30,954 | ) | — | ||||||||
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| Gross profit |
37,663 | (37,663 | ) | — | ||||||||
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| Operating expenses: |
||||||||||||
| Research and development |
31,685 | (21,627 | ) | 10,058 | ||||||||
| Sales and marketing |
10,942 | (8,247 | ) | 2,695 | ||||||||
| General and administrative |
9,098 | (4,133 | ) | 4,965 | ||||||||
| Asset impairments |
1,076 | (1,076 | ) | — | ||||||||
| Restructuring |
5,625 | (5,625 | ) | — | ||||||||
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| Total operating expenses |
58,426 | (40,708 | ) | 17,718 | ||||||||
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| Loss from continuing operations |
(20,763 | ) | 3,045 | (17,718 | ) | |||||||
| Interest and other income, net |
5,592 | — | 5,592 | |||||||||
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| Loss before income taxes |
(15,171 | ) | 3,045 | (12,126 | ) | |||||||
| Income tax expense |
(366 | ) | (312 | ) | (678 | ) | ||||||
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| Net loss from continuing operations |
$ | (14,805 | ) | $ | 3,357 | $ | (11,448 | ) | ||||
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| Net loss per share: |
||||||||||||
| Basic |
$ | (0.52 | ) | — | $ | (0.40 | ) | |||||
| Diluted |
$ | (0.52 | ) | — | $ | (0.40 | ) | |||||
| Weighted average shares outstanding: |
||||||||||||
| Basic |
28,422 | — | 28,422 | |||||||||
| Diluted |
28,422 | — | 28,422 | |||||||||
| Cash distribution paid per common share |
$ | 10.00 | — | $ | 10.00 | |||||||
The accompanying notes are an integral part of the Unaudited Pro Forma Consolidated Financial Information.
SYCAMORE NETWORKS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
| (A) | Reflects proceeds of $18.75 million from the Asset Sale. |
| (B) | Reflects adjustments to eliminate the assets sold, and liabilities assumed, in the Asset Sale. |
| (C) | Reflects adjustment for gain on the Asset Sale. |
| (D) | To eliminate the results of operations for the Intelligent Bandwidth Management Business. |
| (E) | Includes costs related to the Company’s IQstream mobile broadband optimization products (the “IQstream Business”). As previously reported, subsequent to the periods presented above, the Company halted further development and marketing of the IQstream Business, including the termination of all trials with prospective customers, and initiated various cost reduction actions associated with the IQstream Business. |
| (F) | Includes transaction costs related to the Asset Sale of $1.2 million for the three months ended October 27, 2012 and $0.5 million for the twelve months ended July 31, 2012. |