CIENA Acquires Terabit Technology, Inc.
Company's In-process Development Efforts Expected to Contribute to Next Generation of Optical Transmission Gear
Linthicum, MD — 04/22/1998Ciena Corporation (Nasdaq: CIEN) today announced that it has acquired privately held Terabit Technology, Inc., in exchange for approximately 134,000 shares of Ciena common stock, as well as approximately $1.1 million cash and the assumption of certain Terabit stock options.
Prior to the acquisition, Ciena had been a 20% owner of Terabit, a developer of optical components known as photodetectors or optical receivers. Based on the closing price of Ciena's stock on Tuesday, April 21, 1998, the transaction is valued at approximately $11.7 million excluding shares of Terabit already owned by Ciena.
The transaction will be accounted for as a purchase. Of the total purchase price, approximately, $9.5 million will be accounted for as in-process research and development, resulting in a one-time charge which is expected to be dilutive to the Company's second quarter fiscal 1998 earnings in the range of $0.08 to $0.10.
"As was the case when we decided to produce our own in-fiber Bragg gratings for optical filters, we believe the proprietary technology being pioneered by Terabit can provide Ciena with a considerable competitive advantage, ultimately enabling us to reduce equipment costs and improve network performance," said Patrick Nettles, Ciena's president and chief executive officer. "While Ciena is not interested in pursuing downward integration to the point of becoming an optical component supplier, we will continue to evaluate innovative component-level technologies that enable us to further extend our technology lead in transport systems."
Terabit was founded in June 1995. Following completion of the transaction, the Company's key employees, including founder Aaron Hawkins, will immediately join Ciena's research and development organization, reporting to Ciena's senior vice president, products and technologies, Steve Chaddick. Terabit's office is expected to remain at its current location in Santa Barbara, California.
Ciena specializes in network transition. We provide the flexible platforms, intelligent software and professional services to build converged networks for enhanced services and applications. With a growing global presence, Ciena leverages its heritage of practical innovation to deliver maximum performance and economic value in communications networks worldwide. For more information, visit www.ciena.com.
Forward-looking statements in this release, including statements regarding the expected timing of general deployment of Ciena's equipment in the Bell Atlantic network during the second half of 1998, subject to completion of ongoing testing is based on information available to the Company as of the date hereof. The Company's actual results could differ materially from those stated or implied by such forward-looking statements, due to risks and uncertainties associated with the Company's dependence on its major customers and their spending patterns, including specifically the impact on the Company's near term operating results of WorldCom's recently announced change in purchasing practices, the challenge of transitioning to the manufacture of multiple product lines in fiscal 1998, and the overall management of its expansion. The forward-looking statements should be considered in the context of these and other risk factors disclosed in the Company's Form 10-Q, filed with the Securities and Exchange Commission on February 19, 1998.
Nicole Anderson
Ciena Corporation
(877) 857 -7377
pr@ciena.com
Marie Downing
Ciena Corporation
(888) 243-6223
ir@ciena.com
