Riverstone Networks Reports Fourth Quarter Fiscal 2003 Results.Business Editors/High-Tech Writers SANTA CLARA Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. , Calif.--(BUSINESS WIRE)--March 27, 2003 Riverstone Networks Riverstone Networks, was a provider of networking switching hardware based in Santa Clara, California. Originally part of Cabletron Systems, and based on an early acquisition of YAGO, it was one of the many Gigabit Ethernet startups in the mid 1990's. , Inc. (Nasdaq:RSTN RSTN Radio Solar Telescope Network RSTN Restricted Securities Trading Network RSTN Royals Sports Television Network (Kansas City Royals) RSTN Reflective Super Twisted Nematic ) today reported results for its fourth quarter and fiscal year ended March 1, 2003. Revenues for the fourth quarter of fiscal 2003 were $15.1 million, an increase of 9.7 percent over revenues of $13.8 million in the prior quarter. Revenues for the fourth quarter of fiscal 2002 were $51.3 million. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net loss for the fourth quarter was $40.6 million or $0.33 per share. This compares to third quarter fiscal 2003 GAAP net loss, before extraordinary gain, of $34.1 million or $0.28 per share and fourth quarter fiscal 2002 GAAP net loss of $28.2 million or $0.23 per share. Fourth quarter fiscal 2003 GAAP net loss includes a $1.3 million stock-based compensation charge, a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $1.2 million, impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges of $7.4 million related to investments in privately-held companies, a $5.1 million inventory charge associated with discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: and excess products, a $4.5 million charge related to a customer lease guarantee, and amortization of intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. related to the purchase of Pipal pipal (pī`pəl): see bo tree. Systems, Inc. of $869,000. Revenues for the year ended March 1, 2003, were $69.6 million, a 67.0 percent decrease compared with revenues of $210.8 million for fiscal 2002. GAAP net loss for the year was $142.4 million or $1.16 per share. Excluding extraordinary gain, net loss for the year was $148.7 million or $1.21 per share. This compares with a GAAP net loss of $30.7 million or $0.27 per share for fiscal 2002. Fiscal 2003 GAAP net loss includes a $3.1 million stock-based compensation charge, restructuring charges of $9.4 million, impairment charges of $42.5 million related to investments in privately-held companies, a $6.6 million inventory charge associated with discontinued and excess products, a $4.5 million charge related to a customer lease guarantee, and amortization of intangibles related to the purchase of Pipal Systems, Inc. of $869,000. "During a challenging year for the industry, Riverstone Riverstone can mean several things:
 ləs), in Roman legend, founder of Rome. When Amulius usurped the throne of his brother Numitor, king of Alba Longa, he forced Numitor's daughter, Rhea Silvia, to Pereira Pereira (pārā`rä), city (1993 pop. 348,023), capital of Risaralda dept., W central Colombia, in the upper Cauca valley. It is a major distribution center for coffee and cattle and has a small textile industry. , president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of
Riverstone Networks. "We are beginning our fiscal 2004 with a
broader, more diversified diversified (di·verˑ·s customer and revenue base, differentiated dif·fer·en·ti·ate v. dif·fer·en·ti·at·ed, dif·fer·en·ti·at·ing, dif·fer·en·ti·ates v.tr. 1. To constitute the distinction between: technology, a stronger financial model and a healthy cash balance." Conference Call Scheduled for March 27 Riverstone Networks will hold a conference call today, March 27, 2003, beginning at 8:30 a.m. Eastern Time/5:30 a.m. Pacific Time. Investors can listen to the conference call on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . To listen to the live call, go to http://ir.riverstonenet.com at least 15 minutes prior to the start time to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install necessary audio software. For those unable to listen to the live broadcast, replay will be available one hour after the conclusion of the call through Monday Monday: see week. , March 31, 2003, at http://ir.riverstonenet.com and at (303) 590-3000, pass code 529324. About Riverstone Networks Riverstone Networks, Inc. (Nasdaq:RSTN - News) provides carrier class solutions for mission critical networks. From the metropolitan edge to the campus network, Riverstone's advanced technology delivers the control and reliability carriers, government organizations, educational institutions and large corporations require. Worldwide, operators of mission critical networks trust Riverstone. For more information, please visit www.riverstonenet.com. Cautionary Note Regarding Forward-looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. The matters set forth in this press release, including statements as to the Company's expectations regarding the strength of its financial model are forward-looking statements within the meaning of the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" and are subject to risks and uncertainties that may cause actual results to differ materially. Additional risks and uncertainties include, but are not limited to, the Company's ability to integrate successfully and in a timely manner acquired operations; risks associated with the market for network equipment; risks associated with rapid technological change; lack of acceptance of products; introduction of new products by competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ; declines in the average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. of Riverstone Networks' products; and adverse economic conditions in any of the major countries in which Riverstone Networks does business. Further information on potential risk factors that could affect the financial results of Riverstone Networks are included in its quarterly report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended November November: see month. 30, 2002 and other reports it files from time to time with the Securities and Exchange Commission. Riverstone Networks disclaims any intent or obligation to update or revise these forward-looking statements. Riverstone Networks is a trademark of Riverstone Networks, Inc. All other trademarks, service marks, and trade names belong to their respective owners.
RIVERSTONE NETWORKS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
Three months ended Twelve months ended
------------------- -------------------
March 1, March 2, March 1, March 2,
2003 2002 2003 2002
--------- --------- --------- ---------
NET REVENUES $15,107 $51,285 $69,645 $210,758
--------- --------- --------- ---------
Cost of revenues 16,469 21,345 47,710 90,158
--------- --------- --------- ---------
GROSS MARGIN (1,362) 29,940 21,935 120,600
--------- --------- --------- ---------
Operating expenses:
Research and development 13,584 12,373 48,045 51,726
--------- --------- --------- ---------
Sales and marketing 10,055 14,160 48,107 55,951
--------- --------- --------- ---------
General and administrative 7,465 7,247 41,949 25,392
--------- --------- --------- ---------
Restructuring expenses 1,153 3,269 9,447 3,269
--------- --------- --------- ---------
Total operating expenses 32,257 37,049 147,548 136,338
--------- --------- --------- ---------
OPERATING LOSS (33,619) (7,109) (125,613) (15,738)
--------- --------- --------- ---------
Interest income and other
income, net 2,938 3,332 13,734 10,353
--------- --------- --------- ---------
Interest expense (1,984) (1,980) (8,296) (2,652)
--------- --------- --------- ---------
Loss on investments (7,448) (22,130) (42,458) (22,130)
--------- --------- --------- ---------
Gain on settlement of
litigation - - 11,507 -
--------- --------- --------- ---------
NET LOSS BEFORE TAXES (40,113) (27,887) (151,126) (30,167)
--------- --------- --------- ---------
Income tax provision
(benefit) 484 310 (2,430) 520
--------- --------- --------- ---------
LOSS BEFORE EXTRAORDINARY
GAIN (40,597) (28,197) (148,696) (30,687)
--------- --------- --------- ---------
Extraordinary gain on
repurchase of convertible
notes payable, net of income
taxes of $4,184 - - 6,276 -
--------- --------- --------- ---------
NET LOSS $(40,597) $(28,197) $(142,420) $(30,687)
--------- --------- --------- ---------
Basic and diluted per share
data:
Net loss before extraordinary
gain $(0.33) $(0.23) $(1.21) $(0.27)
--------- --------- --------- ---------
Extraordinary gain $ - $ - $0.05 $ -
--------- --------- --------- ---------
Net loss $(0.33) $(0.23) $(1.16) $(0.27)
--------- --------- --------- ---------
Shares used in per-share
calculation--Basic and
diluted 123,927 121,552 123,064 114,384
--------- --------- --------- ---------
RIVERSTONE NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands)
March 1, March 2,
2003 2002
--------- ---------
ASSETS
Current Assets:
Cash and cash equivalents $112,629 $123,095
--------- ---------
Short-term investments 107,247 160,779
--------- ---------
Accounts receivable, net 10,285 42,535
--------- ---------
Inventories 8,516 20,155
--------- ---------
Prepaid expenses and other
current assets 4,620 13,173
--------- ---------
Total current assets 243,297 359,737
--------- ---------
Property and equipment, net 13,877 22,508
--------- ---------
Intangible and other
long-term assets, net 37,067 27,414
--------- ---------
Long-term investments 132,437 201,962
--------- ---------
TOTAL ASSETS $426,678 $611,621
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $11,272 $34,873
--------- ---------
Deferred revenue 8,196 9,012
--------- ---------
Accrued compensation 7,378 9,166
--------- ---------
Other accrued expenses 11,506 8,475
--------- ---------
Total current liabilities 38,352 61,526
--------- ---------
Convertible subordinated
notes 147,000 175,000
--------- ---------
Stockholders' equity 241,326 375,095
--------- ---------
LIABILITIES AND STOCKHOLDERS'
EQUITY $426,678 $611,621
--------- ---------
RIVERSTONE NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Twelve months ended Twelve months ended
March 1, 2003 March 2, 2002
------------------- -------------------
Cash flows from operating
activities:
Net loss $(142,420) $(30,687)
------------------- -------------------
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation and
amortization 10,866 9,445
------------------- -------------------
Amortization of
intangibles 1,369 1,801
------------------- -------------------
Provision for losses on
accounts receivable 24,993 8,613
------------------- -------------------
Provision for inventory 6,589 9,207
------------------- -------------------
Stock-based compensation 3,140 3,484
------------------- -------------------
Loss on investments 42,458 22,130
------------------- -------------------
Extraordinary gain (10,460) -
------------------- -------------------
Realized gains on
short-term investments (2,334) -
------------------- -------------------
Non-cash restructuring
costs 4,382 2,812
------------------- -------------------
Other non-cash items 5,212 (2,500)
------------------- -------------------
Changes in assets and
liabilities:
Accounts receivable 7,257 (20,957)
------------------- -------------------
Inventories 3,399 (16,908)
------------------- -------------------
Prepaid expenses and
other current assets 7,936 (2,174)
------------------- -------------------
Long-term assets (19) (1,753)
------------------- -------------------
Accounts payable and
other accrued expenses (27,351) 19,578
------------------- -------------------
Deferred revenue 2,659 734
------------------- -------------------
Net cash provided by
(used in) operating
activities (62,324) 2,825
------------------- -------------------
Cash flows from investing
activities:
Acquisition of business,
net of cash (8,332) -
------------------- -------------------
Capital expenditures (5,622) (17,736)
------------------- -------------------
Proceeds from sales and
maturities of short and
long-term investments 647,781 358,015
------------------- -------------------
Purchases of short-term
and long-term
investments (552,151) (658,135)
------------------- -------------------
Net purchases of other
long-term investments (12,675) (60,686)
------------------- -------------------
Net cash provided by
(used in) investing
activities 69,001 (378,542)
------------------- -------------------
Cash flows from financing
activities:
Proceeds from issuance of
common stock 1,750 159,336
------------------- -------------------
Adjustment to transfers
from former parent (2,500) 1,299
------------------- -------------------
Net proceeds from
issuance of convertible
subordinated notes - 170,024
------------------- -------------------
Repurchase of
convertible subordinated
notes (16,890) -
------------------- -------------------
Net cash provided by
(used in) financing
activities (17,640) 330,659
------------------- -------------------
Effect of foreign exchange
rate changes on cash 497 204
------------------- -------------------
Net increase (decrease) in
cash and cash equivalents (10,466) (44,854)
------------------- -------------------
Cash and cash equivalents
at the beginning of period 123,095 167,949
------------------- -------------------
Cash and cash equivalents
at the end of period $112,629 $123,095
------------------- -------------------
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