CIENA Announces Resolution of Litigation with Pirelli
Linthicum, MD — 06/01/1998Ciena Corporation (NASDAQ: CIEN) today announced the resolution of all pending litigation with Milan-based Pirelli S.p.A. The agreement to settle all outstanding litigation was reached following discussions between Dr. Giuseppe Morchio, chief executive officer of Pirelli Cables and Systems and Dr. Patrick H. Nettles, president and chief executive officer of Ciena.
The terms of the settlement involve dismissal of Pirelli's three lawsuits against Ciena now pending in Delaware, dismissal of Ciena's legal proceedings against Pirelli in the United States International Trade Commission, payment to Pirelli of $30 million and undisclosed running royalties, a worldwide, non-exclusive cross-license to each party's patent portfolios, and a five-year moratorium on future litigation between the parties. As a result of the settlement, Ciena plans to record a one time charge in its fiscal quarter ended July 31, 1998, of approximately $20 million, or approximately $0.12 per share.
"We're both very pleased to bring this matter to a conclusion," said Dr. Nettles. He added, "The DWDM market continues to grow, and we expect the opportunities for both companies will be enhanced by reason of this settlement."
The litigation between the two companies began in December 1996, when Pirelli brought suit against Ciena in Delaware, alleging infringement of certain Pirelli patents. The legal proceedings were then expanded with Ciena's allegations of patent infringement against Pirelli, brought in separate lawsuits in the Eastern District of Virginia and on two separate occasions in the United States International Trade Commission, and were further expanded by Pirelli with two additional patent infringement lawsuits in Delaware.
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 expectation of growing demand for bandwidth in Europe, as well as spreading acceptance of DWDM as an efficient and economical way to increase network capacity, are 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 risks associated with the recently announced merger with Tellabs may also affect actual results. 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 May 21, 1998.
Nicole Anderson
Ciena Corporation
(877) 857 -7377
pr@ciena.com
Marie Downing
Ciena Corporation
(888) 243-6223
ir@ciena.com
