Redback (NASDAQ:RBAK)
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Redback Networks Inc. (NASDAQ:RBAK), a leading provider
of broadband networking systems, today announced its second quarter
results for the period ended June 30, 2005. Net revenue for the second
quarter of 2005 was $34.6 million, an increase of approximately one
percent from the first quarter of 2005. Net revenue was up $2.2
million, or seven percent, over the second quarter of 2004.
"I am pleased with the mix of strategic and financial results we
achieved in the quarter," said Kevin DeNuccio, president and chief
executive officer, Redback Networks. "The continued selection of our
SmartEdge(R) platform by the world's leading carriers gives me a great
deal of confidence that we will meet or exceed our financial goals for
the year."
GAAP net loss for the second quarter of 2005 was $7.2 million or $
(0.13) per share attributable to common stockholders compared to a
GAAP net loss of $10.7 million or $ (0.20) per share in the second
quarter of 2004. Non-GAAP net loss for the second quarter of 2005 was
$2.9 million or $ (0.05) per share, compared to a non-GAAP net loss of
$2.2 million or $ (0.04) per share for the second quarter of 2004.
Excluded from the non-GAAP results for the second quarter of 2005 were
charges relating to amortization of intangible assets, amortization of
stock-based compensation, amortization of the fair value of warrants
issued in connection with a lease agreement, accretion of a dividend
payable to the preferred stockholders and loss from early retirement
of software assets.
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 1-847-619-6819. A live web cast is also
available from the investor relations portion of the Redback's web
site, www.redback.com/investors. A telephone replay of the conference
call will be available later in the day. Replay information will be
available at 1-630-652-3000, access code: 12160037. Information on
these calls and web cast can also be found on the company's web site.
About Redback Networks
Redback Networks Inc., a leading provider of next-generation IP
broadband networking equipment, enables carriers and service providers
to build Smart Broadband Networks that can deliver simplified,
personalized and portable subscriber services to consumers and
businesses. The company's carrier-class, consumer-scale SmartEdge
Router and Service Gateway platforms combine subscriber management, IP
edge routing and Ethernet aggregation functions. In conjunction with
the NetOp(TM) Element and Policy Manager platforms they provide a
powerful, flexible infrastructure for managing both residential and
business users and deploying a variety of value-added services.
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. For more
information, visit Redback Networks at www.redback.com.
REDBACK and SmartEdge are trademarks registered at the U.S. Patent
and Trademark Office and in other countries. NetOp is a trademark 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
with the Securities and Exchange Commission (SEC), specifically the
most recent report on Form 10-K, Form 10-Q and Form 8-K, 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.
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Redback Networks Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
Successor
-----------------------
June 30, December 31,
2005 2004
---------- ---------
Assets
Assets:
Cash and cash equivalents $ 40,330 $ 42,558
Accounts receivable, net 21,339 21,892
Inventories 10,561 7,420
Property and equipment, net 17,288 16,583
Goodwill 144,394 145,083
Intangibles, net 60,977 66,285
Other assets 7,572 7,614
-------- --------
Total assets $302,461 $307,435
======== ========
Liabilities, Mandatory Redeemable
Convertible Preferred Stock, and
Stockholders' Equity
Liabilities:
Borrowings and capital lease obligations $ 2,499 $ -
Accounts payable and accrued liabilities 40,066 36,633
Deferred revenue 14,593 17,546
Long term liabilities 1,828 2,181
-------- --------
Total liabilities 58,986 56,360
Mandatory redeemable convertible
preferred stock 47,588 47,282
Stockholders' equity 195,887 203,793
-------- --------
Total liabilities, mandatory redeemable
convertible preferred stock and
stockholders' equity $302,461 $307,435
======== ========
Redback Networks Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Successor Successor Predecessor
------------------ -------------------- ----------
Three Three Six January 3 January 1
Months Months Months Through Through
Ended Ended Ended June January
June June June 30, 2,
30, 30, 30, 2004 2004
2005 2004 2005
--------- --------- --------- --------- ---------
Net revenue $ 34,555 $ 32,315 $ 68,847 $ 62,481 $ -
Cost of revenue,
excluding
amortization 12,914 11,922 26,470 25,736 -
Amortization 2,722 2,728 5,444 5,456 -
--------- --------- --------- --------- ---------
Total cost of
revenue 15,636 14,650 31,914 31,192 -
--------- --------- --------- --------- ---------
Gross profit 18,919 17,665 36,933 31,289 -
--------- --------- --------- --------- ---------
Operating
expenses:
Research and
development 15,286 12,086 29,374 23,998 -
Selling,
general and
administrative 10,035 10,762 19,991 20,529 -
Reorganization
items - - - 2,787 -
Stock-based
compensation 1,009 5,201 2,041 10,488 -
--------- --------- --------- --------- ---------
Total
operating
expenses 26,330 28,049 51,406 57,802 -
--------- --------- --------- --------- ---------
Loss from
operations (7,411) (10,384) (14,473) (26,513) -
Other income
(expense), net 328 (118) 493 (187) -
Net gain on
discharge of debt - - - - 71,164
Fresh start
adjustments - - - - (218,691)
Induced
conversion
charge - - - - (335,809)
--------- --------- --------- --------- ---------
Loss before
reorganization
items (7,083) (10,502) (13,980) (26,700) (483,336)
Reorganization
items - - - - (1,539)
--------- --------- --------- --------- ---------
Net loss before
deemed dividend
and accretion on
preferred stock (7,083) (10,502) (13,980) (26,700) (484,875)
Deemed dividend
and accretion on
preferred stock (153) (150) (306) (16,971) -
--------- --------- --------- --------- ---------
Net loss
attributable to
common
stockholders $ (7,236) $(10,652) $(14,286) $(43,671) $(484,875)
========= ========= ========= ========= ==========
Net loss
attributable to
common
stockholders per
share - basic and
diluted $ (0.13) $ (0.20) $ (0.27) $ (0.84) $ (2.65)
========= ========= ========= ========= ==========
Shares used in
computing net loss
attributable to
common
stockholders per
share (a) 54,119 52,148 53,795 51,761 183,009
========= ========= ========= ========= ==========
(a) Reflects a change in the capitalization of the Company as a result
of the plan of reorganization effective as of January 2, 2004.
Redback Networks Inc.
Non-GAAP Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Successor
Three Months Ended June 30, 2005
---------------------------------
Non-GAAP Reconciling GAAP
(a) Items (b)
-------- -------- --------
Net revenue $34,555 $ - $34,555
Cost of revenue, excluding
amortization 12,914 - 12,914
Amortization - 2,654 (c) 2,654
- 68 (e) 68
------- --------- -------
Total cost of revenue 12,914 2,722 15,636
-------- ---------- --------
Gross profit (loss) 21,641 (2,722) 18,919
-------- ---------- --------
Operating expenses:
Research and development 14,933 353 (e,g) 15,286
Selling, general and
administrative 9,935 100 (e) 10,035
Stock-based compensation - 1,009 (d) 1,009
-------- ---------- --------
Total operating expenses 24,868 1,462 26,330
-------- ---------- --------
Loss from operations (3,227) (4,184) (7,411)
Other income (expense), net 328 - 328
-------- ---------- --------
Net loss before deemed dividend and
accretion on preferred stock (2,899) (4,184) (7,083)
Deemed dividend and accretion on
preferred stock - (153)(f) (153)
-------- ---------- --------
Net loss attributable to common
stockholders $(2,899) $ (4,337) $(7,236)
======= ========= =======
Net loss attributable to common
stockholders per share
- basic and diluted $ (0.05) $ (0.13)
======= =======
Shares used in computing net loss
attributable to common
stockholders per share (h) 54,119 54,119
======= =======
Successor
Three Months Ended June 30, 2004
-----------------------------------
Non-GAAP Reconciling GAAP
(a) Items (b)
-------- ---------- --------
Net revenue $32,315 $ - $ 32,315
Cost of revenue, excluding
amortization 11,922 11,922
Amortization - 2,654 (c) 2,654
- 74 (e) 74
-------- ---------- --------
Total cost of revenue 11,922 2,728 14,650
-------- ---------- --------
Gross profit (loss) 20,393 (2,728) 17,665
-------- ---------- --------
Operating expenses:
Research and development 11,788 298 (e) 12,086
Selling, general and
administrative 10,654 108 (e) 10,762
Stock-based compensation - 5,201 (d) 5,201
-------- ---------- --------
Total operating expenses 22,442 5,607 28,049
-------- ---------- --------
Loss from operations (2,049) (8,335) (10,384)
Other income (expense), net (118) - (118)
-------- ---------- --------
Net loss before deemed dividend and
accretion on preferred stock (2,167) (8,335) (10,502)
Deemed dividend and accretion on
preferred stock - (150)(f) (150)
-------- ---------- --------
Net loss attributable to common
stockholders $(2,167) $(8,485) $(10,652)
======= ======= ========
Net loss attributable to common
stockholders per share - basic and
diluted $ (0.04) $ (0.20)
======= ========
Shares used in computing net loss
attributable to common stockholders
per share (h) 52,148 52,148
======= ========
(a) Non-GAAP amounts exclude certain reconciling items including
amortization of intangible assets, amortization of stock-based
compensation, amortization of the fair value of warrants issued in
connection with a lease agreement, accretion of a dividend payable
to the preferred stockholders, and loss from early retirement of
software license assets.
(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 amortization of stock-based compensation.
(e) Amount represents amortization of the fair value of warrants
issued in connection with a lease agreement.
(f) Amount represents accretion of a dividend payable to the preferred
stockholders.
(g) Amount represents loss from early retirement of software license
assets.
(h) Reflects a change in the capitalization of the Company as a result
of the plan of reorganization effective January 2, 2004.
To supplement our condensed 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 to help
assess 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.
Non-GAAP Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Successor
----------------------------------
Six Months Ended June 30, 2005
----------------------------------
Non-GAAP Reconciling GAAP
(a) Items (b)
-------- ---------- --------
Net revenue $68,847 $ - $ 68,847
Cost of revenue, excluding
amortization 26,470 - 26,470
Amortization - 5,308 (c) 5,308
- 136 (f) 136
-------- ---------- --------
Total cost of revenue 26,470 5,444 31,914
-------- ---------- --------
Gross profit (loss) 42,377 (5,444) 36,933
-------- ---------- --------
Operating expenses:
Research and development 28,687 687 (f,h) 29,374
Selling, general and
administrative 19,814 177 (f) 19,991
Reorganization items - - -
Stock-based compensation - 2,041 (e) 2,041
-------- ---------- --------
Total operating expenses 48,501 2,905 51,406
-------- ---------- --------
Loss from operations (6,124) (8,349) (14,473)
Other income (expense), net 354 139 (i) 493
-------- ---------- --------
Net loss before deemed dividend
and accretion on preferred stock (5,770) (8,210) (13,980)
Deemed dividend and accretion on
preferred stock - (306) (g) (306)
-------- ---------- --------
Net loss attributable to common
stockholders $(5,770) $ (8,516) $(14,286)
======= ========= ========
Net loss attributable to common
stockholders per share - basic
and diluted $ (0.11) $ (0.27)
======= ========
Shares used in computing net loss
attributable to common
stockholders per share (j) 53,795 53,795
======= ========
Successor
-----------------------------------
January 3 Through June 30, 2004
-----------------------------------
Non-GAAP Reconciling GAAP
(a) Items (b)
-------- ---------- --------
Net revenue $ 62,481 $ - $ 62,481
Cost of revenue, excluding
amortization 25,899 (163) (d) 25,736
Amortization - 5,308 (c) 5,308
- 148 (f) 148
-------- -------- --------
Total cost of revenue 25,899 5,293 31,192
-------- -------- --------
Gross profit (loss) 36,582 (5,293) 31,289
-------- -------- --------
Operating expenses:
Research and development 23,402 596 (f) 23,998
Selling, general and
administrative 20,313 216 (f) 20,529
Reorganization items 2,787 - 2,787
Stock-based compensation - 10,488 (e) 10,488
-------- -------- --------
Total operating expenses 46,502 11,300 57,802
-------- -------- --------
Loss from operations (9,920) (16,593) (26,513)
Other income (expense), net (187) - (187)
-------- -------- --------
Net loss before deemed dividend and
accretion on preferred stock (10,107) (16,593) (26,700)
Deemed dividend and accretion on
preferred stock - (16,971) (g) (16,971)
-------- -------- --------
Net loss attributable to common
stockholders $(10,107) $(33,564) $(43,671)
======== ======== ========
Net loss attributable to common
stockholders per share - basic and
diluted $ (0.20) $ (0.84)
======== ========
Shares used in computing net loss
attributable to common
stockholders per share (j) 51,761 51,761
======== ========
(a) Non-GAAP amounts exclude certain reconciling items including
amortization of intangible assets, sale of inventory as scrap,
amortization of stock-based compensation, amortization of the fair
value of warrants issued in connection with a lease agreement,
accretion of a dividend payable to the preferred stockholders,
loss from early retirement of software license assets and partial
recovery on certain investments that had been previously written
down.
(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 proceeds from sale of inventory as scrap.
(e) Amount represents amortization of stock-based compensation.
(f) Amount represents amortization of the fair value of warrants
issued in connection with a lease agreement.
(g) Amount represents accretion of a dividend payable to the preferred
stockholders, including a beneficial conversion feature of $16.7M
in the period from January 3 through June 30, 2004.
(h) Amount represents loss from early retirement of software license
assets.
(i) Amount represents partial recovery on certain investments that had
been previously written down.
(j) Reflects a change in the capitalization of the Company as a result
of the plan of reorganization effective January 2, 2004.
To supplement our condensed 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 to help
assess 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.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Successor Successor Predecessor
--------- --------- -----------
Six January 3 January 1
months Through Through
ended June 30, January 2,
June 30, 2004 2004
2005
--------- --------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss before deemed dividend
and accretion on preferred stock $(13,980) $(26,700) $(484,875)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 13,006 11,066 -
Stock-based compensation 2,040 10,488 -
Net gain on discharge of debt,
fresh-start accounting adjustments,
and induced conversion charges - - 483,336
Changes in assets and liabilities:
Accounts receivable, net 553 (4,534) -
Inventories (5,193) (1,782) -
Other assets (1,409) 566 -
Accounts payable and accrued
liabilities 4,799 (2,780) 1,539
Deferred revenue (2,953) 5,240 -
Other long-term liabilities 146 1,947 -
--------- --------- -----------
Net cash used in operating
activities (2,991) (6,489) -
--------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and
equipment (6,057) (1,262) -
Change in restricted cash, net - 478 -
--------- --------- -----------
Net cash used in investing
activities (6,057) (784) -
--------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of stock
and exercise of warrants 4,820 31,440 -
Principal payments on capital
lease obligations and borrowings - (335) -
Proceeds from bank borrowings, net 2,000 - -
--------- --------- -----------
Net cash provided by financing
activities 6,820 31,105 -
--------- --------- -----------
Net increase (decrease) in cash and
cash equivalents (2,228) 23,832 -
Cash and cash equivalents at
beginning of period 42,558 20,519 20,519
--------- --------- -----------
Cash and Cash equivalents at end of
period $40,330 $44,351 $20,519
========= ========= ===========
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