<PAGE>
EXHIBIT 99.1
REDBACK NETWORKS INC. ANNOUNCES PRO FORMA PROFITABILITY AND RECORD THIRD
QUARTER REVENUE
Q3 2000 net revenues of $80.6 million and 65% growth over Q2 2000; over
50% of revenue from new products
SUNNYVALE, Calif., October 11, 2000 - Redback Networks, Inc., (NASDAQ:
RBAK), a leading provider of advanced networking solutions, today reported
record revenues for the quarter ended September 30, 2000, as well as its first
profit on a pro forma basis since closing its merger with Siara Systems.
Net revenues for the third quarter of 2000 were $80.6 million, compared
with $20.6 million for the same period in the prior year, an increase of 291
percent. Pro forma net income for the third quarter of 2000 was $3.2 million or
$0.02 per share diluted, which excludes acquisition-related and stock
compensation charges. This compares to the third quarter of 1999 pro forma net
loss of $569,000 or $(0.01) per share. Before pro forma adjustments, net loss
for the third quarter of 2000 was $308.1 million or $(2.50) per share compared
to a net loss of $1.6 million or $(0.02) per share for the same period in the
prior year.
"Redback achieved some major milestones during the third quarter," said
Vivek Ragavan, chief executive officer and president of Redback. "The Company
delivered a profitable quarter and achieved record revenue, with over 50% of
that revenue coming from new products." Another key milestone was the Company's
acquisition of Abatis Systems of Vancouver, Canada. A leading developer of
systems for enabling the scalable deployment of value-added services, Abatis'
offerings immediately expand Redback's broadband solution. "Redback acquired
Abatis for its powerful set of IP service management solutions and the benefits
they will provide for customers as they extend their service offerings."
"The Company continued its momentum in the metropolitan optical
networking market with full production shipments of the SmartEdge 800," said
Ragavan. The platform has been well received by Redback customers and prospects,
and the Company continues to receive multi-million dollar orders from both
carriers and service providers, as well as a significant number of system trials
globally. "In the subscriber management market, Redback was buoyed by strong
demand across our complete line of SMS platforms," said Ragavan, "with
particular demand and resulting deployments for the SMS 10000."
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ABOUT REDBACK NETWORKS, INC.
Founded in 1996 and headquartered in Sunnyvale, Calif., Redback Networks,
Inc., is a leading provider of advanced networking solutions that enable
carriers, cable operators, and service providers to rapidly deploy broadband
access and services. The market-leading Redback(R) Subscriber Management Systems
(SMS) connect and manage large numbers of subscribers using any of the major
broadband access technologies such as Digital Subscriber Line (DSL), cable, and
wireless. To deliver integrated transport solutions for metropolitan optical
networks, Redback's SmartEdge multi-service platforms leverage powerful advances
in application-specific integrated circuit, IP, and optical technology. The
Redback Enterprise Service PointTM (ESP) family is a new breed of intelligent
carrier-managed CPE devices for value-added IP services. The Redback Service
Management Family allows service providers to easily publish, activate and
manage IP services and allows their customers to subscribe to these services on
demand. With this product portfolio, Redback Networks is the first equipment
supplier focused exclusively on developing integrated solutions for the New
Access Network.
# # #
Redback is a U.S. Registered Trademark; Subscriber Management System,
SmartEdge and Enterprise Service Point are Trademarks of Redback Networks, Inc.
Other trademarks, service marks, and trade names belong to their respective
owners.
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
future sales to customers and the migration of service providers and carriers to
next-generation products. 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 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 Annual Report on Form 10-K and
quarterly report on Form 10-Q, and the other reports filed from time to time
with the Securities and Exchange Commission.
<PAGE>
REDBACK NETWORKS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30,
2000 1999 2000 1999
-------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Net revenues......................................... $ 80,558 $ 20,590 $ 163,449 $ 38,194
Cost of revenues..................................... 32,030 6,260 54,098 11,522
-------------- ------------- ------------- --------------
Gross margin......................................... 48,528 14,330 109,351 26,672
-------------- ------------- ------------- --------------
Operating expenses:
Research and development.......................... 22,639 7,019 58,561 14,257
Selling, general and administrative............... 23,732 8,637 53,664 19,294
-------------- ------------- ------------- --------------
Total operating expenses...................... 46,371 15,656 112,225 33,551
-------------- ------------- ------------- --------------
Pro forma income (loss) from operations
excluding acquisition-related and stock
compensation charges.............................. 2,157 (1,326) (2,874) (6,879)
Other income (expense), net.......................... 1,071 757 1,869 989
-------------- ------------- ------------- --------------
Pro forma income (loss) excluding
acquisition-related and stock compensation charges $ 3,228 $ (569) $ (1,005) $ (5,890)
============== ============= ============= ==============
Pro forma basic net income (loss) per share.......... $ 0.03 $ (0.01) $ (0.01) $ (0.13)
============== ============= ============= ==============
Pro forma diluted net income (loss) per share........ $ 0.02 $ (0.01) $ (0.01) $ (0.13)
============== ============= ============= ==============
Shares used in computing pro forma basic net income
(loss) per share.................................. 123,478 74,656 110,403 45,478
============== ============= ============= ==============
Shares used in computing pro forma diluted net
income (loss) per share........................... 162,689 74,656 110,403 45,478
============== ============= ============= ==============
</TABLE>
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Note 1: The above pro forma condensed consolidated statements of operations is
not a presentation in accordance with generally accepted accounting
principles as it excludes the effects of the following (in thousands):
During the three and nine months ended September 30, 2000, amortization
of developed technology related to cost of revenues was $894 and $1,975,
respectively, as a result of the merger with Siara Systems, Inc. and
acquisition of Abatis Systems.
During the three and nine months ended September 30, 2000, amortization
of deferred stock compensation related to operating expenses was $4,835
and $5,884, respectively. During the three and nine months ended
September 30, 1999, amortization of deferred stock compensation related
to operating expenses was $1,053 and $3,270, respectively.
During the three and nine months ended September 30, 2000, amortization
of intangible assets totaling $280,493 and $630,727, respectively, as a
result of the merger with Siara Systems, Inc. and acquisition of Abatis
Systems.
During the three and nine months ended September 30, 2000, in-process
research and development was $25,100 as a result of the Abatis
acquisition and $40,400, of which $15,300 resulted from the merger with
Siara Systems, Inc., respectively.
Note 2: The above share and per share data reflect the Company's 2-for-1 stock
split effective April 3, 2000.
<PAGE>
REDBACK NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net revenues......................................... $ 80,558 $ 20,590 $ 163,449 $ 38,194
Cost of revenues..................................... 32,924 6,260 56,073 11,522
------------- ------------- ------------- -------------
Gross margin......................................... 47,634 14,330 107,376 26,672
------------- ------------- ------------- -------------
Operating expenses:
Research and development........................ 22,639 7,019 58,561 14,257
Selling, general and administrative............. 23,732 8,637 53,664 19,294
Amortization of intangible assets............... 280,493 -- 630,727 --
In-process research and development............. 25,100 -- 40,400 --
Amortization of deferred stock compensation..... 4,835 1,053 5,884 3,270
------------- ------------- ------------- -------------
Total operating expenses...................... 356,799 16,709 789,236 36,821
------------- ------------- ------------- -------------
Loss from operations................................. (309,165) (2,379) (681,860) (10,149)
Other income (expense), net.......................... 1,071 757 1,869 989
------------- ------------- ------------- -------------
Net loss............................................. $ (308,094) $ (1,622) $ (679,991) $ (9,160)
============= ============= ============= =============
Basic and diluted net loss per share................. $ (2.50) $ (0.02) $ (6.16) $ (0.20)
============= ============= ============= =============
Shares used in computing net loss per share.......... 123,478 74,656 110,403 45,478
============= ============= ============= =============
</TABLE>
--------------
Note: The above share and per share data reflect the Company's
2-for-1 stock split effective April 3, 2000.
<PAGE>
REDBACK NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
----------------- -----------------
ASSETS
<S> <C> <C>
Current assets:
Cash, cash equivalents and investments in marketable debt 473,780 56,960
securities....................................................... $ $
Accounts receivable, net........................................... 59,278 15,429
Inventories........................................................ 11,005 3,960
Other current assets............................................... 18,288 1,374
----------------- -----------------
Total current assets............................................. 562,351 77,723
Property and equipment, net............................................. 47,832 10,150
Other long-term assets, principally goodwill............................ 4,456,221 6,957
----------------- -----------------
Total assets..................................................... $ 5,066,404 $ 94,830
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowings, current................................................ $ 2,518 $ 878
Accounts payable and accrued liabilities........................... 93,049 17,102
Deferred revenue................................................... 18,776 9,945
----------------- -----------------
Total current liabilities........................................ 114,343 27,925
Borrowings, noncurrent.................................................. 507,176 1,012
----------------- -----------------
Stockholders' equity.................................................... 4,444,885 65,893
----------------- -----------------
Total liabilities and stockholders' equity....................... $ 5,066,404 $ 94,830
================= =================
</TABLE>
