EX-99.1 3 f93741exv99w1.txt EXHIBIT 99.1 Exhibit 99.1 [COSINE COMMUNICATIONS LOGO] PRESS RELEASE For additional information contact: Steve Goggiano CoSine Communications President & CEO 1200 Bridge Parkway (650) 637-4777 Redwood City, CA 94065 Web Site: www.cosinecom.com Terry Gibson Phone: 650.637.4777 Executive Vice President Fax: 650.628.4200 and CFO E-mail: 650.637.4777 investorrelations@cosinecom.com CoSine Communications Announces Third Quarter Financial Results REDWOOD CITY, CALIF., OCTOBER 21, 2003 -- CoSine Communications, Inc. (Nasdaq: COSN - News), a leading provider of managed, network-based IP service delivery platforms, today announced revenue for the quarter ended September 30, 2003 of $ 4.0 million, and a net loss of $8.2 million or $0.84 per share as compared to revenue of $5.2 million and a net loss of $9.0 million or $0.93 per share in the quarter ended September 30, 2002. The company ended the quarter with $ 66.9 million in cash and short-term investments. "The market for managed network-based IP services is still in the early stages of growth. As a result, demand can fluctuate. We will continue to develop and expand our product offering to support our customers' efforts to accelerate adoption and revenue growth. As major carriers continue to show interest in CoSine's network-based approach to such services, we must work toward converting that interest into sustainable revenue growth," said Steve Goggiano, CoSine's President and Chief Executive Officer. "To help us achieve that goal, I have hired Jerry Jalaba as our senior vice president of worldwide sales. Jerry has a significant and successful track record in the tier one service provider market, with experience selling to Regional Bell Operating Companies (RBOCs), PTTs and global service providers, including AT&T, BT, Verizon and NTT. Jerry will lead our efforts to accelerate revenue growth." "In the third quarter, CoSine continued to expand its business with KT Corporation by adding a new DSL Network Aggregation (DNA) application," continued Goggiano. "The DNA application is designed to help providers reduce the capital cost of aggregating DSL connections by as much as 50 percent when compared to competing solutions. This is just one example of how some of the world's largest carriers are utilizing CoSine's products to establish strategic network-based IP service offerings." WEBCAST There will be a live webcast of the CoSine Q3 2003 Earnings Conference Call (today, October 21, 2003, at 2 p.m. PT / 5 p.m. ET) at www.cosinecom.com. An archived webcast will also be available several hours after the live call. A replay of the conference call will be available until November 4, 2003. It can be accessed from the company's website or by calling (888) 286-8010 or (617) 801-6888 and entering passcode 52450911. ABOUT COSINE COMMUNICATIONS Founded in 1998 and based in Redwood City, Calif., CoSine delivers carrier-class systems for the network edge that solve the fundamental problem of profitably customizing managed services such as IP VPNs, Managed Routers, Firewalls, MPLS, Denial of Service (DoS) protection and more for the unique needs of individual customers. Specifically, the company's intelligent, fully distributed, virtualized architecture infuses service provider networks with an unmatched capability to integrate, customize and effectively deliver managed services to hundreds of thousands of users. For more information about CoSine Communications, visit the company's website at: www.cosinecom.com. ### "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This release may contain forward-looking statements. The company uses words such as "anticipate," "believe," "plan," "expect," "future," "intend" and similar expressions to identify forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, the continued downturn in the telecommunications industry, failure to achieve revenue growth and profitability, product development, commercialization and technology difficulties, manufacturing costs, the impact of competitive products, pricing, changing customer requirements, timely availability and acceptance of new products, and changes in economic conditions in the various markets CoSine serves, all as may be discussed in more detail on pages 30 through 35 of our Annual Report on Form 10-K for the fiscal year ending December 31, 2002 and on pages 23 through 28 of our Quarterly Report on Form 10-Q for the quarter ending June 30, 2003. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. CoSine Communications, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (In conformity with generally accepted accounting principles) (in thousands)
September 30, 2003 December 31, (unaudited) 2002 (1) -------- -------- ASSETS Current assets: Cash, cash equivalents and short-term investments $ 66,892 $101,467 Accounts receivable, trade 3,487 6,373 Accounts receivable, other 456 679 Inventory 4,026 3,175 Prepaid expenses and other current assets 3,440 4,054 -------- -------- Total current assets 78,301 115,748 Property and equipment, ne t 2,658 2,816 Other assets 737 997 -------- -------- $ 81,696 $119,561 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 7,932 $ 18,666 Deferred revenue 1,647 1,444 Current portion of long-term debt 415 3,770 -------- -------- Total current liabilities 9,994 23,880 Accrued rent and long-term debt 2,061 2,200 Stockholders' equity 69,641 93,481 -------- -------- $ 81,696 $119,561 ======== ========
(1) Amounts are derived from the December 31, 2002 audited financial statements. CoSine Communications, Inc. CONSOLIDATED STATEMENT OF OPERATIONS (In conformity with generally accepted accounting principles) (in thousands, except per share data)
Three months ended Nine months ended September 30, September 30, 2003 2002 2003 2002 (unaudited) (unaudited) (unaudited) (unaudited) ----------- ----------- ----------- ----------- Revenue $ 4,024 $ 5,245 $ 12,244 $ 18,404 Cost of sales 1,798 2,231 5,335 11,586 -------- -------- -------- -------- Gross profit 2,226 3,014 6,909 6,818 Operating expenses: Research and development 5,485 4,050 15,920 27,185 Sales and marketing 3,191 5,721 10,310 24,349 General and administrative 1,817 2,345 5,643 9,405 Restructuring and impairment charges 14 693 351 24,739 -------- -------- -------- -------- Total operating expenses 10,507 12,809 32,224 85,678 -------- -------- -------- -------- Loss from operations (8,281) (9,795) (25,315) (78,860) Interest income, (expense) and other, net 112 863 637 2,524 -------- -------- -------- -------- Loss before income tax provision (8,169) (8,932) (24,678) (76,336) Income tax provision 15 82 86 381 -------- -------- -------- -------- Net loss $ (8,184) $ (9,014) $(24,764) $(76,717) ======== ======== ======== ======== Basic and diluted net loss per common share $ (0.84) $ (0.93) $ (2.54) $ (7.94) Shares used in computing basic and diluted net loss per common share 9,797 9,689 9,753 9,660