February 16, 2012 at 06:55 AM EST
Sycamore Networks, Inc. Reports Second Quarter Fiscal Year 2012 Financial Results

Sycamore Networks, Inc. (NASDAQ: SCMR), today reported its results for the second quarter ended January 28, 2012. Revenue for the second quarter of fiscal 2012 was $13.2 million, compared with $12.2 million for the second quarter of fiscal 2011.

Net loss for the second quarter of fiscal 2012, on a generally accepted accounting principles (“GAAP”) basis, was $3.7 million, or $0.13 per share, compared with a GAAP net loss of $3.5 million, or $0.12 per share for the second quarter of fiscal 2011. Non-GAAP net loss for the second quarter of fiscal 2012 was $2.7 million, or $0.10 per share, compared with a non-GAAP net loss of $3.1 million, or $0.11 per share for the second quarter of fiscal 2011. The reconciliation between net loss on a GAAP basis and net loss on a non-GAAP basis is provided in a table immediately following the Unaudited Non-GAAP Consolidated Statements of Operations included with this release.

Net loss for the first six months of fiscal 2012, on a GAAP basis, was $5.3 million or $0.18 per share, compared with net loss of $10.0 million or $0.35 per share for the first six months of fiscal 2011. Non-GAAP net loss for the first six months of fiscal 2012 was $3.7 million, or $0.13 per share, compared with non-GAAP net loss of $8.8 million, or $0.31 per share for the first six months of fiscal 2011. The reconciliation between net loss on a GAAP basis and net loss on a non-GAAP basis is provided in a table immediately following the Unaudited Non-GAAP Consolidated Statements of Operations included with this release.

“Our second quarter results continue to reflect our ongoing emphasis on maintaining positive operating contribution from our Bandwidth Management business while investing in IQstream, our mobile broadband optimization initiative,” said Daniel E. Smith, Sycamore’s president and chief executive officer. “During the quarter we made steady progress with our IQstream trial program. Our focus remains on demonstrating compelling bandwidth savings in the radio access network leading to improved service quality for end-users. We believe that IQstream can help mobile operators more effectively utilize existing bandwidth resources and position them to better manage the dynamic growth in mobile data and video that they are experiencing.”

About Sycamore Networks

Sycamore Networks, Inc. (NASDAQ: SCMR) develops and markets intelligent bandwidth management solutions for fixed line and mobile network operators worldwide. We also develop and market a mobile broadband solution designed to help mobile operators reduce congestion in mobile access networks. Sycamore products enable network operators to efficiently and cost-effectively provision and manage network capacity to support a wide range of converged services such as voice, video and data. Our global customer base includes Tier 1 service providers, government agencies, and utility companies. For more information, please visit www.sycamorenet.com.

Use of Non-GAAP Financial Measures

The Company provides non-GAAP financial data in addition to providing financial results in accordance with generally accepted accounting principles (GAAP). These measures are not in accordance with or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. The Company believes that the items excluded from the non-GAAP results have one or more of the following characteristics: their magnitude and timing are largely outside of the Company’s control; they are unrelated to the ongoing operation of the business in the ordinary course; they are unusual, and the Company does not expect them to occur in the ordinary course of business; or they are non-operational, non-cash expenses involving stock option grants.

The non-GAAP financial data is provided to enhance the reader’s overall understanding of the Company’s current financial performance and its prospects for the future. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by excluding certain expense and income items that the Company believes are not indicative of the Company’s core operating results. In addition, since the Company has historically reported non-GAAP results to the investment community, the Company believes the inclusion of non-GAAP numbers provides consistency in its financial reporting. Further, these non-GAAP results are one of the primary indicators management uses for planning and forecasting in future periods. The non-GAAP financial data should be considered in addition to, not as a substitute for or a more appropriate indicator of, operating results, cash flows, or other measures of financial performance prepared in accordance with GAAP.

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)

January 28, 2012July 31, 2011
Assets
Current assets:
Cash and cash equivalents $ 53,347 $ 60,765
Short-term investments 311,456 335,847
Accounts receivable, net 12,267 8,764
Inventories 9,575 11,537
Prepaid and other current assets 2,0001,770
Total current assets 388,645 418,683
Property and equipment, net 5,846 5,978
Long-term investments 73,710 44,786
Other assets 294290
Total Assets$468,495$469,737
Liabilities and Stockholders' Equity
Current liabilities:
Deferred revenue $ 11,153 $ 9,141
Other current liabilities 7,3478,325
Total current liabilities 18,500 17,466
Long term deferred revenue 1,607 1,812
Long term liabilities 2,1151,702
Total liabilities 22,22220,980
Common stock 29 29
Additional paid-in capital 1,585,655 1,583,124
Accumulated deficit (1,139,266) (1,133,958)
Other equity (145)(438)
Total stockholders' equity 446,273448,757
Total Liabilities and Stockholders' Equity$468,495$469,737

Sycamore Networks, Inc.

Unaudited Consolidated Statements of Operations

(in thousands, except per share data)

Three Months EndedSix Months Ended

Jan 28,
2012

Jan 29,
2011

Jan 28,
2012

Jan 29,
2011

Revenue $ 13,184 $ 12,157 $ 28,564 $ 23,866
Cost of revenue 5,4355,11711,69712,002
Gross profit 7,7497,04016,86711,864
Operating expenses:
Research and development 7,048 6,239 13,533 13,550
Sales and marketing 2,557 2,643 5,227 5,243
General and administrative 2,140 2,030 4,125 4,156
Restructuring --(271)-
Total operating expenses 11,74510,91222,61422,949
Loss from operations (3,996) (3,872) (5,747) (11,085)
Interest and other income, net 3914706251,238
Loss before income taxes (3,605) (3,402) (5,122) (9,847)
Income tax expense 89103186197
Net loss $(3,694)$(3,505)$(5,308)$(10,044)
Net loss per share:
Basic $ (0.13) $ (0.12) $ (0.18) $ (0.35)
Diluted $ (0.13) $ (0.12) $ (0.18) $ (0.35)
Weighted average shares outstanding:
Basic 28,754 28,531 28,748 28,491
Diluted 28,754 28,531 28,748 28,491

Sycamore Networks, Inc.

Unaudited Non-GAAP Consolidated Statements of Operations

(in thousands, except per share data)

Three Months EndedSix Months Ended

Jan 28,
2012

Jan 29,
2011

Jan 28,
2012

Jan 29,
2011

Revenue $ 13,184 $ 12,157 $ 28,564 $ 23,866
Cost of revenue 5,2755,01611,38611,482
Gross profit 7,9097,14117,17812,384
Operating expenses:
Research and development 6,667 6,179 12,769 13,343
Sales and marketing 2,375 2,534 4,835 4,965
General and administrative 1,9161,9223,6713,900
Total operating expenses 10,95810,63521,27522,208
Loss from operations (3,049) (3,494) (4,097) (9,824)
Interest and other income, net 3914706251,238
Loss before income taxes (2,658) (3,024) (3,472) (8,586)
Income tax expense 89103186197
Net loss $(2,747)$(3,127)$(3,658)$(8,783)
Net loss per share:
Basic $ (0.10) $ (0.11) $ (0.13) $ (0.31)
Diluted $ (0.10) $ (0.11) $ (0.13) $ (0.31)
Weighted average shares outstanding:
Basic 28,754 28,531 28,748 28,491
Diluted 28,754 28,531 28,748 28,491

Sycamore Networks, Inc.

Reconciliation of GAAP to Non-GAAP Net Loss

(in thousands, except per share data)

Three Months EndedSix Months Ended

Jan 28,
2012

Jan 29,
2011

Jan 28,
2012

Jan 29,
2011

GAAP net loss $(3,694)$(3,505)$(5,308)$(10,044)
Stock-based compensation expense:
Cost of revenue 160 101 311 181
Research and development 381 60 764 207
Sales and marketing 182 109 392 278
General and administrative 224108454256
Total stock based compensation expense 947 378 1,921 922
Restructuring expense:
Operating expense - - (271) -
Cost of revenue ---339
Non-GAAP net loss $(2,747)$(3,127)$(3,658)$(8,783)

Contacts:

Sycamore Networks, Inc.
Robert Travis, 978-250-3432
Investor Relations
bob.travis@sycamorenet.com
or
Sycamore Networks, Inc.
Scott Larson, 978-250-3433
Press Inquiries
scott.larson@sycamorenet.com
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