SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 21, 2004--Redback Networks Inc. (Nasdaq:RBAK - News), a leading provider of broadband networking systems, today announced its fourth quarter and fiscal year end results for the period ended December 31, 2003. Net revenue for the fourth quarter of 2003 was $28.4 million, compared with $27.4 million for the third quarter of 2003 and $27.6 million for the fourth quarter of 2002. Net revenue for the fiscal year ending December 31, 2003 was $107.5 million, compared with $125.6 million for the fiscal year 2002.
"I am extremely pleased with the results this quarter, especially in light of the high potential for distractions as we worked through the final phase of our financial restructuring process," said Kevin DeNuccio president and chief executive officer of Redback Networks. "We successfully completed the financial restructuring during the first week in January. As we look forward to 2004 our focus will be on execution of our business model, in what appears to an improving business climate."
The financial results for the fourth quarter and fiscal year 2003 reflect the company undergoing the transition of a complete financial restructuring, a process successfully completed January 2, 2004. GAAP net loss for the fourth quarter of 2003 was $ 24.9 million or $ 0.14 per share compared to a GAAP net loss of $34.2 million or $0.20 per share in the fourth quarter of 2002. GAAP net loss for fiscal year 2003 was $ 118.8 million or $ 0.65 per share compared to a GAAP net loss of $186.9 million or $1.13 per share in fiscal year 2002. Non-GAAP net loss for the fourth quarter of 2003 was $24.2 million or $0.13 per share compared to a non-GAAP net loss of $26.8 million or $0.15 per share in the fourth quarter of 2002. Non-GAAP net loss for fiscal year 2003 was $95.1 million or $0.52 per share compared to a non-GAAP net loss of $117.0 million or $0.71 per share in fiscal year 2002. Non-GAAP results exclude impairment charges relating to fixed assets, amortization of intangible assets, restructuring charges, stock-based compensation, write-off of certain investments, certain impairment and inventory charges, the reversal of an accrual for cancellation of an engineering services contract, the sale of previously reserved inventory, partial recovery of previously written down investments, and bond redemption charges.. See the attached table for a reconciliation of our non-GAAP results to GAAP results.
Redback Networks will discuss these quarterly results in an investor conference call today at 1:45 p.m. Pacific Time. The conference telephone number is 1-847-619-6534. A replay of the conference call will be available later in the day. Replay information will be available at 1-630-652-3041, access code: 8246778. Information on these calls can also be found on Redback's Web site, http://www.redback.com, under Investor Center.
As announced January 5, 2004, Redback successfully completed its financial restructuring, eliminating approximately $467 million of its existing debt, resulting in a stronger financial model with an improved balance between revenue and expenses. In addition, Redback Networks received $30 million in equity funding from Technology Crossover Ventures (TCV), a premier provider of growth capital to technology companies. The financial restructuring and new equity funding strengthens the ability of Redback Networks to address the long-term needs of existing and potential customers and to participate fully in new market growth opportunities for strategic broadband infrastructure.
About Redback Networks Inc.
Redback Networks enables carriers and service providers to build profitable next-generation broadband networks. The company's User Intelligent Networks(TM) product portfolio includes the industry-leading SMS(TM) family of subscriber management systems, and the SmartEdge® Router and Service Gateway platforms, as well as a comprehensive User-to-Network operating system software, and a set of network provisioning and management software.
Founded in 1996 and headquartered in San Jose, Calif., with sales and technical support centers located worldwide, Redback Networks maintains a growing and global customer base of more than 500 carriers and service providers, including major local exchange carriers (LECs), inter-exchange carriers (IXCs), PTTs and service providers.
REDBACK and SmartEdge are trademarks registered at the U.S. Patent and Trademark Office and in other countries. SMS and User Intelligent Networks are trademarks or service marks of Redback Networks Inc.
Note Regarding Forward Looking Statements
The statements contained in this press release that are not purely historical are forward-looking statements that involve a number of risks and uncertainties, the outcome of which could materially and/or adversely affect Redback's actual future results . All forward-looking statements included in this document are based upon information available as of the date hereof, and Redback assumes no obligation to update these statements. These risks and other risks relating to Redback's business are set forth in the documents filed by Redback Networks with the Securities and Exchange Commission (SEC), specifically the most recent report on Form 10-K, Form 10-Q, Form 8-K, Redback's Registration Statements on Form S-4 (File Nos. 333-107714 and 333-108170), and amendments thereto, and the other reports filed from time to time with the SEC.
Non-GAAP Disclosure
To supplement our consolidated financial statements presented in accordance with GAAP, we use non-GAAP financial results, which are adjusted from results based on GAAP to exclude certain items. These non-GAAP results are provided to enhance the user's overall understanding of our current financial performance and our prospects in the future. Specifically, we believe the non-GAAP results provide useful information to both management and investors by excluding certain items that we believe are not indicative of our core operating results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with United States GAAP.
Redback Networks Inc.
(Debtor-in-Possession)
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Year Ended
December December December December
31, 31, 31, 31,
2003 2002 2003 2002
-------- -------- --------- ---------
Operating expenses:
Research and development 14,726 18,610 65,741 85,982
Selling, general and
administrative 10,982 14,371 47,605 72,220
Restructuring charges - 2,009 23,494 3,621
Amortization of intangible
assets - 17 166 1,103
Stock-based compensation 99 669 949 8,269
-------- -------- --------- ---------
Total operating expenses 25,807 35,676 137,955 171,195
-------- -------- --------- ---------
Loss from operations (11,141) (26,001) (84,727) (166,864)
Interest expense (Excludes
contractual interest of
$3.9 million not recorded
during the reorganization) (1,860) (4,694) (17,653) (19,713)
Other income(expense) (677) (3,537) 1,104 (347)
-------- -------- --------- ---------
Loss before reorganization
items (13,678) (34,232) (101,276) (186,924)
Net loss $(24,866) $(34,232) $(118,849)$(186,924)
======== ======== ========= =========
Net loss per share - basic
and diluted $ (0.14) $ (0.20) $ (0.65)$ (1.13)
======== ======== ========= =========
Shares used in computing net
loss per share 182,967 175,337 181,610 165,854
======== ======== ========= =========
Redback Networks Inc.
(Debtor-in-Possession)
Non-GAAP Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Three Months Ended
December 31, 2003
-------- ----------- ---------
Non-GAAP Reconciling GAAP (b)
(a) Items
Operating expenses:
Research and development 14,726 - 14,726
Selling, general and administrative 10,982 - 10,982
Restructuring charges - - -
Amortization of intangible assets - - -
Stock-based compensation - 99 (e) 99
-------- ----- --------
Total operating expenses 25,708 99 25,807
-------- ----- --------
Loss from operations (10,436) (705) (11,141)
Interest expense
(Excludes contractual interest of
$3.9 million not recorded
during the reorganization) (1,860) - (1,860)
Other income(expense) (677) - (677)
--------- ------- ---------
Loss before reorganization items (12,973) - (13,678)
Net loss $(24,161) $(705) $(24,866)
======== ===== ========
Net loss per share - basic and
diluted $ (0.13) $ (0.14)
======== ========
Shares used in computing net
loss per share 182,967 182,967
======== ========
(a) Non-GAAP amounts exclude certain reconciling items including
amortization of intangible assets, restructuring charges, stock- based
compensation, write-off of certain investments, bond redemption costs,
and asset writedowns, net of reversal of adverse commitments.
(b) Reflects operating results based upon accounting principles
generally accepted in the United States (GAAP).
(c) Amount represents amortization of intangible assets.
(d) Amount represents bond redemption costs.
(e) Amount represents stock-based compensation.
(f) Amount represents asset writedowns, net of reversal adverse
commitments of $1.3 million.
(g) Amount represents restructuring charges
(h) Amount represents the write-off of certain investments
To supplement our consolidated financial statements presented in
accordance with GAAP, we use non-GAAP financial results, which are
adjusted from results based on GAAP to exclude certain items. These
non-GAAP results are provided to enhance the user's overall
understanding of out current financial performance and our prospects
in the future. Specifically, we believe the non-GAAP results provide
useful information to both management and investors by excluding
certain items that we believe are not indicative of our core operating
results. The presentation of this additional information is not meant
to be considered in isolation or as a substitute for results prepared
in accordance with United States GAAP.
Redback Networks Inc.
(Debtor-in-Possession)
Non-GAAP Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Three Months Ended
December 31, 2002
-------- ------------ ---------
Non-GAAP Reconciling GAAP (b)
(a) Items
Operating expenses:
Research and development 18,610 - 18,610
Selling, general and administrative 14,923 (552) (f) 14,371
Restructuring charges - 2,009 (g) 2,009
Amortization of intangible assets - 17 (c) 17
Stock-based compensation - 669 (e) 669
-------- ------- --------
Total operating expenses 33,533 2,143 35,676
-------- ------- --------
Loss from operations (21,958) (4,043) (26,001)
Interest expense
(Excludes contractual interest of
$3.9 million not recorded
during the reorganization) (4,694) - (4,694)
Other income(expense) (138) (2,882) (d) (3,537)
(517) (h)
--------- ---------------------
Loss before reorganization items (26,790) (7,442) (34,232)
Net loss $(26,790) $(7,442) $(34,232)
======== ======= ========
Net loss per share - basic and
diluted $ (0.15) $ (0.20)
======== ========
Shares used in computing net loss
per share 175,337 175,337
======== ========
(a) Non-GAAP amounts exclude certain reconciling items including
amortization of intangible assets, restructuring charges, stock- based
compensation, write-off of certain investments, bond redemption costs,
and asset writedowns, net of reversal of adverse commitments.
(b) Reflects operating results based upon accounting principles
generally accepted in the United States (GAAP).
(c) Amount represents amortization of intangible assets.
(d) Amount represents bond redemption costs.
(e) Amount represents stock-based compensation.
(f) Amount represents asset writedowns, net of reversal adverse
commitments of $1.3 million.
(g) Amount represents restructuring charges
(h) Amount represents the write-off of certain investments
To supplement our consolidated financial statements presented in
accordance with GAAP, we use non-GAAP financial results, which are
adjusted from results based on GAAP to exclude certain items. These
non-GAAP results are provided to enhance the user's overall
understanding of out current financial performance and our prospects
in the future. Specifically, we believe the non-GAAP results provide
useful information to both management and investors by excluding
certain items that we believe are not indicative of our core operating
results. The presentation of this additional information is not meant
to be considered in isolation or as a substitute for results prepared
in accordance with United States GAAP.
Redback Networks Inc.
(Debtor-in-Possession)
Non-GAAP Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Year Ended
December 31, 2003
-------- --------------- ----------
Non-GAAP Reconciling GAAP (b)
(a) Items
Operating expenses:
Research and development 65,741 - 65,741
Selling, general and
administrative 47,605 - 47,605
Restructuring charges - 23,494 (d) 23,494
Amortization of intangible (c)
assets - 166 166
Stock-based compensation - 949 (e) 949
-------- -------- ---------
Total operating expenses 113,346 24,609 137,955
-------- -------- ---------
Loss from operations (60,711) (24,016) (84,727)
Interest expense
(Excludes contractual interest
of $3.9 million not recorded
during the reorganization) (17,653) - (17,653)
Other income(expense) 879 225 (f,j) 1,104
--------- --------- ----------
Loss before reorganization
items (77,485) (23,791) (101,276)
Net loss $(95,058) $(23,791) $(118,849)
======== ======== =========
Net loss per share - basic and
diluted $ (0.52) $ (0.65)
======== =========
Shares used in computing net
loss per share 181,610 181,610
======== =========
(a) Non-GAAP amounts exclude certain reconciling items including
amortization of intangible assets, restructuring charges, stock- based
compensation, realized gain and write-off of certain investments,
certain impairment and inventory charges, reversal of accruals for an
engineering services contract, accretion of interest, and bond
redemption costs.
(b) Reflects operating results based upon accounting principles
generally accepted in the United States (GAAP).
(c) Amount represents amortization of intangible assets.
(d) Amount represents restructuring charges.
(e) Amount represents stock-based compensation.
(f) Amount represents realized gain and write-down of certain
investments, and partial recovery on certain investments that had been
previously written down.
(g) Amount represents asset write-downs (principally Optical
Transport), net of reversal of adverse commitments of $1.3 million.
(h) Amount represents provision for certain excess and obsolete
inventory and the sale of inventory that had been fully reserved in a
prior period.
(i) Amount represents the reversal of an accrual for an
engineering services contract that was cancelled.
(j) Amount represents the accretion of interest in conjunction
with restructuring accruals.
(k) Amount represents bond redemption costs.
To supplement our consolidated financial statements presented in
accordance with GAAP, we use non-GAAP financial results, which are
adjusted from results based on GAAP to exclude certain items. These
non-GAAP results are provided to enhance the user's overall
understanding of out current financial performance and our prospects
in the future. Specifically, we believe the non-GAAP results provide
useful information to both management and investors by excluding
certain items that we believe are not indicative of our core operating
results. The presentation of this additional information is not meant
to be considered in isolation or as a substitute for results prepared
in accordance with United States GAAP.
Redback Networks Inc.
(Debtor-in-Possession)
Non-GAAP Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Year Ended
December 31, 2002
--------- ------------- ----------
Non-GAAP Reconciling GAAP (b)
(a) Items
Net revenue $ 125,629 $ - $ 125,629
Cost of revenue 76,051 10,872 (c) 121,298
34,375 (h)
Operating expenses:
Research and development 81,746 4,236 (g) 85,982
Selling, general and (g)
administrative 68,207 4,013 72,220
Restructuring charges - 3,621 (d) 3,621
Amortization of intangible (c)
assets - 1,103 1,103
Stock-based compensation - 8,269 (e) 8,269
--------- -------- ---------
Total operating expenses 149,953 21,242 171,195
--------- -------- ---------
Loss from operations (100,375) (66,489) (166,864)
Interest expense
(Excludes contractual interest of
$3.9 million not recorded
during the reorganization) (19,713) - (19,713)
Other income(expense) 3,052 (2,882) (k) (347)
(517) (f)
---------- -------- ----------
Loss before reorganization items (117,036) (69,888) (186,924)
Net loss $(117,036) $(69,888) $(186,924)
========= ======== =========
Net loss per share - basic and
diluted $ (0.71) $ (1.13)
========= =========
Shares used in computing net
loss per share 165,854 165,854
========= =========
(a) Non-GAAP amounts exclude certain reconciling items including
amortization of intangible assets, restructuring charges, stock- based
compensation, realized gain and write-off of certain investments,
certain impairment and inventory charges, reversal of accruals for an
engineering services contract, accretion of interest, and bond
redemption costs.
(b) Reflects operating results based upon accounting principles
generally accepted in the United States (GAAP).
(c) Amount represents amortization of intangible assets.
(d) Amount represents restructuring charges.
(e) Amount represents stock-based compensation.
(f) Amount represents realized gain and write-down of certain
investments, and partial recovery on certain investments that had been
previously written down.
(g) Amount represents asset write-downs (principally Optical
Transport), net of reversal of adverse commitments of $1.3 million.
(h) Amount represents provision for certain excess and obsolete
inventory and the sale of inventory that had been fully reserved in a
prior period.
(i) Amount represents the reversal of an accrual for an
engineering services contract that was cancelled.
(j) Amount represents the accretion of interest in conjunction
with restructuring accruals.
(k) Amount represents bond redemption costs.
To supplement our consolidated financial statements presented in
accordance with GAAP, we use non-GAAP financial results, which are
adjusted from results based on GAAP to exclude certain items. These
non-GAAP results are provided to enhance the user's overall
understanding of out current financial performance and our prospects
in the future. Specifically, we believe the non-GAAP results provide
useful information to both management and investors by excluding
certain items that we believe are not indicative of our core operating
results. The presentation of this additional information is not meant
to be considered in isolation or as a substitute for results prepared
in accordance with United States GAAP.
Redback Networks Inc.
(Debtor-in-Possession) (1)
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
December December
31, 31,
2003 2002
----------- ----------
Assets
Assets:
Cash, cash equivalents, and short term
investments $ 20,519 $ 89,501
Restricted cash 955 28,278
----------- ----------
Cash, cash equivalents and investments 21,474 117,779
Accounts receivable, net 12,529 7,746
Inventories 6,376 10,143
Property and equipment, net 28,149 61,475
Goodwill and other intangibles, net 432,205 436,100
Other assets 8,859 27,501
----------- ----------
Total assets $ 509,592 $ 660,744
=========== ==========
Liabilities and Stockholders' Equity (Deficit)
Liabilities:
Accounts payable and accrued
liabilities $ 41,860 $ 81,204
Deferred revenue 7,167 8,184
Other liabilities 335 56,024
Convertible notes and other borrowings - 501,869
----------- ----------
Total liabilities not subject
to compromise 49,362 647,281
Liabilities subject to compromise (2,3) 564,336 -
----------- ----------
Total liabilities 613,698 647,281
Stockholders' equity (deficit) (104,106) 13,463
----------- ----------
Total liabilities and
stockholders' equity
(deficit) $ 509,592 $ 660,744
=========== ==========
(1) Balance sheet as of December 31, 2003 is shown as a
"Debtor-in-Possession." This balance sheet will be recast to reflect
the completion of the prepackaged plan of reorganization and our
adoption of "fresh-start" accounting as of January 2, 2004.
(2) Liabilities subject to compromise will be adjusted to reflect
the completion of the prepackaged plan of reorganization and our
adoption of "fresh-start" accounting as of January 2, 2004.
(3) Liabilities subject to compromise is net of restricted cash
totaling $1.4 million as of December 31, 2003 relating to lease
deposits.
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