EX-99.1 3 dex991.htm PRESS RELEASE DATED JANUARY 15, 2003 Press Release dated January 15, 2003
 
EXHIBIT 99.1
 
EXHIBIT 99.1—Portion of Press Release dated January 15, 2003
 
Redback Networks Announces Fourth Quarter 2002 Operating Results
 
Redback Networks Inc. (Nasdaq: RBAK – news), a leading provider of networking equipment purpose-built for the edge of the network, today announced results for the fourth quarter and fiscal year 2002. Net revenue for the fourth quarter of 2002 was $27.6 million, compared with $17.4 million in the prior quarter. For the fiscal year 2002, net revenue was $125.6 million compared to $227.5 million in fiscal year 2001. The company also announced the restructuring of Redback’s executive team to more appropriately reflect the size and direction of the company.
 
The GAAP net loss for the fourth quarter of 2002 was $ 0.20 per share compared to a net loss of $ 0.30 in the prior quarter. For fiscal year 2002 the GAAP net loss was $ 1.13 per share compared to a $ 28.78 net loss in fiscal 2001. The GAAP net loss in fiscal year 2001 included a write down of goodwill aggregating $ 2.7 billion.
 
Pro-forma net loss for the fourth quarter was $ 0.15 per share compared to a net loss of $0.20 in the prior quarter. Pro forma results continue to exclude certain impairment charges, restructuring charges, stock and other compensation related charges, amortization of intangibles and other items detailed within the attached tables.
 
As a result of a management team restructuring, Redback’s 596 employees will now be aligned under four senior vice presidents who will report directly to the company’s president and CEO, Kevin DeNuccio. As part of the reorganization, Tom Cronan has been promoted to serve as the company’s Senior Vice President of Finance and Administration, and Chief Financial Officer (CFO).
 
The management team structure is as follows:
 
Tom Cronan, Senior Vice President of Finance and Administration and CFO, replaces Dennis Wolf who has served as Redback’s CFO since January 2001. Previously, Cronan

 
served as Vice President, General Counsel and Corporate Secretary for Redback under Wolf.
 
Georges Antoun, Senior Vice President of Engineering and Product Management, retains responsibility for product management and takes over responsibility for Redback’s hardware and software engineering teams. Previously Antoun served as Senior Vice President of Product Management and Marketing.
 
Joel Arnold will serve as the Senior Vice President of Worldwide Field Operations. He now leads a newly combined sales and customer service organization.
 
Ebrahim Abbasi will serve as the Senior Vice President of Operations and Information Technology. Abbasi and his team are responsible for manufacturing, quality, logistics, and now add the information technology organization.
 
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
 
The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding Redback Networks’ expectations, beliefs, intentions or strategies regarding the future. Forward looking statements include statements regarding the company’s leadership position, the future success of the company’s strategy and the anticipated performance and effectiveness of the management team. All forward-looking statements included in this document are based upon information available to Redback Networks as of the date hereof, and Redback Networks assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected. These risks and uncertainties include financial hardships experienced by our customers in the telecommunications industry, continuing or increasing competition, the difficulty of successfully commercializing new products, the limited number or potential customers for our products, increasing reliance on the international market and other risks relating to Redback Networks’ business are set forth in the documents filed by Redback Networks with the Securities and Exchange Commission, specifically the most recent report on Form 10-K, Form 10-Q, and the other reports filed from time to time with the Securities and Exchange Commission.
 
REDBACK is a trademark registered at the U.S. Patent & Trademark Office. SMS and SmartEdge are trademarks or service marks of Redback Networks Inc.

 
Redback Networks, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
 
    
Three Months Ended
     
Year Ended
  
    
December 31, 2002
     
December 31, 2001
     
December 31, 2002
     
December 31, 2001
  
Net revenue
   
$
27,583
 
   
$
40,168
 
   
$
125,629
 
   
$
227,533
 
Cost of revenue
   
 
17,908
 
   
 
25,587
 
   
 
121,298
 
   
 
279,809
 
    
  
  
  
Gross profit (loss)
   
 
9,675
 
   
 
14,581
 
   
 
4,331
 
   
 
(52,276
)
    
  
  
  
Operating expenses:
                                    
Research and development
   
 
18,610
 
   
 
23,490
 
   
 
85,982
 
   
 
107,599
 
Selling, general and administrative
   
 
14,371
 
   
 
18,488
 
   
 
72,220
 
   
 
110,760
 
Impairment of goodwill
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
2,689,857
 
Restructuring charges
   
 
2,009
 
   
 
24,022
 
   
 
3,621
 
   
 
104,551
 
Amortization of intangible assets
   
 
17
 
   
 
50,406
 
   
 
1,103
 
   
 
994,195
 
Stock-based compensation
   
 
1,186
 
   
 
3,795
 
   
 
8,786
 
   
 
54,891
 
    
  
  
  
Total operating expenses
   
 
36,193
 
   
 
120,201
 
   
 
171,712
 
   
 
4,061,853
 
    
  
  
  
Loss from operations
   
 
(26,518
)
   
 
(105,620
)
   
 
(167,381
)
   
 
(4,114,129
)
Other income (expense), net
   
 
(7,714
)
   
 
6,459
 
   
 
(19,543
)
   
 
(3,845
)
    
  
  
  
Net loss
   
$
(34,232
)
   
$
(99,161
)
   
$
(186,924
)
   
$
(4,117,974
)
    
  
  
  
Net loss per basic and diluted share
   
$
(0.20
)
   
$
(0.67
)
   
$
(1.13
)
   
$
(28.78
)
    
  
  
  
Shares used in computing per share data
   
 
175,337
 
   
 
148,951
 
   
 
165,854
 
   
 
143,068
 
    
  
  
  

 
Redback Networks, Inc.
Pro Forma Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
 
    
Three Months Ended
     
Year Ended
  
    
December 31, 2002
     
December 31,
2001
     
December 31, 2002
     
December 31, 2001
  
Net revenue
   
$
27,583
 
   
$
40,168
 
   
$
125,629
 
   
$
227,533
 
Cost of revenue
   
 
16,008
 
   
 
24,053
 
   
 
76,051
 
   
 
142,672
 
    
  
  
  
Pro forma gross profit
   
 
11,575
 
   
 
16,115
 
   
 
49,578
 
   
 
84,861
 
    
  
  
  
Operating expenses:
                                    
Research and development
   
 
18,610
 
   
 
23,490
 
   
 
81,746
 
   
 
106,928
 
Selling, general and administrative
   
 
14,923
 
   
 
18,488
 
   
 
68,207
 
   
 
101,182
 
    
  
  
  
Total operating expenses
   
 
33,533
 
   
 
41,978
 
   
 
149,953
 
   
 
208,110
 
    
  
  
  
Pro forma loss from operations
   
 
(21,958
)
   
 
(25,863
)
   
 
(100,375
)
   
 
(123,249
)
Other expense, net
   
 
(4,832
)
   
 
(3,900
)
   
 
(16,661
)
   
 
(2,825
)
    
  
  
  
Pro forma net loss
   
$
(26,790
)
   
$
(29,763
)
   
$
(117,036
)
   
$
(126,074
)
    
  
  
  
Pro forma net loss per basic and diluted share
   
$
(0.15
)
   
$
(0.20
)
   
$
(0.71
)
   
$
(0.88
)
    
  
  
  
Shares used in computing per share data
   
 
175,337
 
   
 
148,951
 
   
 
165,854
 
   
 
143,068
 
    
  
  
  
 
These unaudited pro forma condensed consolidated statements of operations exclude the following items required for presentation in accordance with accounting principles generally accepted in the United States (GAAP), and may not be comparable to pro forma results from other companies. The pro forma results provide additional information. However, pro forma information is not a substitute for financial information prepared in accordance with GAAP.
 
    
Three Months Ended
     
Year Ended
  
    
December 31, 2002
     
December 31, 2001
     
December 31, 2002
     
December 31,
2001
  
Pro forma net loss
   
$
(26,790
)
   
$
(29,763
)
   
$
(117,036
)
   
$
(126,074
)
Impairment of goodwill
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
(2,689,857
)
Amortization of intangible assets
   
 
(1,917
)
   
 
(51,940
)
   
 
(11,975
)
   
 
(1,000,308
)
Stock-based compensation
   
 
(1,186
)
   
 
(3,795
)
   
 
(8,786
)
   
 
(54,891
)
Excess and obsolete inventory charges
   
 
—  
 
   
 
—  
 
   
 
(34,375
)
   
 
(131,024
)
Restructuring charges
   
 
(2,009
)
   
 
(24,022
)
   
 
(3,621
)
   
 
(104,551
)
Investment impairments
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
(11,379
)
Bond redemption
   
 
(2,882
)
   
 
10,359
 
   
 
(2,882
)
   
 
10,359
 
Executive recruitment fees and sign on bonuses
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
(4,283
)
Asset write downs
   
 
(709
)
   
 
—  
 
   
 
(9,510
)
   
 
(1,166
)
Adverse commitments
   
 
1,261
 
   
 
—  
 
   
 
1,261
 
   
 
(4,800
)
    
  
  
  
GAAP net loss
   
$
(34,232
)
   
$
(99,161
)
   
$
(186,924
)
   
$
(4,117,974
)
    
  
  
  

 
Redback Networks, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
    
December 31, 2002
   
December 31, 2001
Assets
              
Assets:
              
Cash, cash equivalents and investments (1)
   
$
117,779
   
$
178,820
Accounts receivable, net
   
 
7,746
   
 
34,924
Inventories
   
 
10,143
   
 
67,954
Property and equipment, net
   
 
61,475
   
 
93,456
Goodwill and other intangibles
   
 
436,100
   
 
447,897
Other assets
   
 
27,501
   
 
43,296
    
  
Total assets
   
$
660,744
   
$
866,347
    
  
Liabilities and Stockholders’ Equity
              
Liabilities:
              
Accounts payable and accrued liabilities
   
$
81,204
   
$
143,477
Deferred revenue
   
 
8,184
   
 
9,539
Other liabilities
   
 
56,024
   
 
82,918
Convertible notes and other borrowings
   
 
501,869
   
 
492,876
Stockholders’ equity
   
 
13,463
   
 
137,537
    
  
Total liabilities and stockholders’ equity
   
$
660,744
   
$
866,347
    
  
 
(1)  Cash, cash equivalents and investments includes restricted amounts totaling $28.3 million and $44 million as of December 31,       2002 and 2001, respectively.