Larscom Incorporated Reports Third Quarter 2003 Results

Larscom Incorporated Reports Third Quarter 2003 Results
Company Announces Post-Merger Restructuring and Increased Revenues 


NEWARK, Calif., Oct. 27  /PRNewswire-FirstCall/ -- Larscom Incorporated , a
leading provider of WAN connectivity and network access equipment, today
announced third-quarter financial results for the period ended September 30,
2003.

The Company reported revenues of $6,248,000 for the third quarter of 2003
compared to $5,342,000 for the third quarter of 2002 and compared to $5,271,000
for the second quarter of 2003.  The Company's net loss for the third quarter of
2003 was $(6,883,000) or $(1.35) per share, compared to a net loss of
$(1,520,000) or $(0.56) per share for the third quarter of 2002. For the full
nine months of 2003, the Company reported revenues of $15,744,000 and a net loss
of $(12,273,000) or $(3.29) per share.  That compares to $18,887,000 in revenues
and a net loss of $(2,656,000) or $(0.99) per share for the first nine months of
2002.  Results for this quarter included a restructuring charge of $(2,301,000)
or $(0.45) per share for post-merger consolidation of the workforce and
elimination of excess facilities including Larscom's former Milpitas
headquarters as well as asset impairment charges of $(2,132,000) or $(0.42) per
share.  The asset impairment charges are primarily associated with the decision
to rationalize product lines following the merger of Larscom and VINA
Technologies.

"The majority of our consolidation programs, resulting from the merger with VINA
Technologies on June 5, 2003, have now been completed, positioning the company
to achieve significant cost savings moving forward," said Daniel Scharre,
president and chief executive officer of Larscom.  "Specific cost savings
initiatives included closure of the former Larscom headquarters in Milpitas and
a move to Newark, which reduced the size of our facilities by approximately
60,000 square feet.  We also have rationalized our product lines after a
detailed profitability review.  Moving forward, our focus is on three key
product lines including:  our optical edge access multiplexers with the new
Orion 7400, integrated access devices (IADs) represented by our newly improved
eLink series and Integrator products, and Larscom's well-known suite of inverse
multiplexers."

Scharre added, "With the bulk of our consolidation and product rationalization
programs behind us, we can focus on new product development and keeping the
Company on track to reach profitability by June 2004."

  Highlights for the Company during the third quarter of 2003 included:

  -- initial shipment of our new Orion 7400 optical customer premise product
     to customers for evaluations, lab testing, and trials;
  -- shipment of our newest integrated access device, the eLink-300 series,
     to customers for general deployment;
  -- a co-marketing agreement with TANDBERG Television (Oslo: TAT) that
     allows them to bundle their MPEG-2 Encoders and Integrated Receiver
     Decoders with Larscom's Orion 2000 Inverse Multiplexing solution over
     ATM to economically transport high-definition MPEG contribution video
     from remote sites to network distribution hubs;
  -- consolidation of our manufacturing operations with a single contract
     manufacturer, and;
  -- hiring of Larscom's new Vice President of Worldwide Sales,
     Peter Moulds.



There will be a conference call today at 1:30 p.m. (PST) to discuss these
highlights as well as the third quarter 2003 financial results.  To listen to
the webcast of this conference call, visit http://www.larscom.com/press
approximately 10 minutes before the start of the call and click on the
conference call link provided.  As indicated in our press release of October 14,
2003, an online audio replay of the webcast of the conference call will also be
available on our website at http://www.larscom.com/press .

About Larscom

Larscom enables high-speed access by providing cost-effective, highly reliable
(carrier-class), and easy-to-use network access equipment.  In June 2003,
Larscom merged with VINA Technologies to create a worldwide leader in enterprise
WAN access for the delivery of high-speed data, and integrated voice and data
services with the deployment of more than 350,000 systems worldwide.  Larscom's
customers include major carriers, Internet service providers, Fortune 500
companies, small and medium enterprises, and government agencies worldwide. 
Larscom's headquarters are in Newark, California. Additional information can be
found at http://www.larscom.com/.

Safe Harbor Statement

Any forward-looking statements in this news release are based on our current
expectations and beliefs and are subject to known and unknown risks and
uncertainties that could cause the actual results to differ materially from
those suggested.  Factors that could cause actual results to differ materially
include (but are not limited to) risks associated with customer concentration
that include MCI (formerly WorldCom) and Lucent Technologies, the ability to
successfully integrate VINA Technologies into Larscom and to achieve expected
synergies, the effect of the general downturn in the telecommunications
equipment industry, the ability to develop successful new products, dependence
on recently introduced new products and products under development, the
acquisition of other businesses or technologies, dependence on component
availability from key suppliers, rapid technological change and fluctuations in
quarterly operating results, as well as additional risk factors as discussed in
the "Risk Factors" section of  our annual report on Form 10-K and quarterly
reports on Form 10-Q filed with the U.S. Securities and Exchange Commission. 
For additional risks relating to the combined company resulting from the merger
with VINA Technologies, see the Registration Statement on Form S-4 as amended. 
These forward-looking statements represent our judgment as of the date of this
news release.  We disclaim, however, any intent or obligation to update these
forward-looking statements.

   Larscom
   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
   (In thousands except for per share data)

                           Three months ended          Nine months ended
                               September 30,              September 30,
                            2003          2002         2003          2002

  Revenues                $6,248        $5,342      $15,744       $18,887
  Cost of revenues         5,199         2,128        9,869         8,047
  Gross profit             1,049         3,214        5,875        10,840
  Operating expenses:
   Research and
    development            1,502         1,036        3,840         3,073
   Selling, general
    and administrative     3,744         3,844       11,341        12,390
   Amortization of
    acquisition
    intangibles              155            --          248            --
   Restructuring           2,301          (61)        2,391           192
   Impairment of Assets      364            --          364            --
   In-process R&D             --            --          155            --

  Total operating
   expenses                8,066         4,819       18,339        15,655
  Loss from operations   (7,017)       (1,605)     (12,464)       (4,815)
  Interest and
   other income,
   net of expense            148            90          229           308
  Loss before
   income taxes          (6,869)       (1,515)     (12,235)       (4,507)
  Income tax
   provision (benefit)        14             5           38       (1,851)
  Net loss              $(6,883)      $(1,520)    $(12,273)      $(2,656)
   Basic & diluted
    loss per share       $(1.35)       $(0.56)      $(3.29)       $(0.99)
   Basic & diluted
    weighted
    average shares         5,097         2,694        3,729         2,693



   CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
   (In thousands)

                                              September 30, December 31,
                                                  2003          2002

  Assets
  Current assets:
   Cash and cash equivalents                    $11,103       $15,643
   Restricted cash                                  333            --
   Short-term investments                            --         2,014
   Accounts receivable, net                       3,423         3,079
   Inventories                                    3,982         3,816
   Other current assets                           2,049         1,382
    Total current assets                         20,890        25,934
  Property and equipment, net                     1,620         1,918
  Other non-current assets, net                   3,135           208
    Total assets                                $25,645       $28,060
  Liabilities and Stockholders' Equity
  Current liabilities:
   Accounts payable                              $3,709        $1,898
   Accrued expenses and other
    current liabilities                           6,000         4,510
   Deferred revenue                               2,234         2,102
   Due to Axel Johnson                              192            25
    Total current liabilities                    12,135         8,535
   Other non-current liabilities                  1,744         1,618
    Total liabilities                            13,879        10,153
  Stockholders' equity                           11,766        17,907
    Total liabilities and
     stockholders' equity                       $25,645       $28,060


DATASOURCE: Larscom Incorporated



CONTACT:  Donald W. Morgan, Vice President and CFO of Larscom

Incorporated, [phone]



Web site:  http://www.larscom.com/ 

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