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CIENA Reports Second Quarter Revenue of $185.7 Million, Net Income of $0.12 per Diluted Share

MultiWave CoreDirector™, CIENA'S Intelligent Optical Core Switch, Now in Seven Trials

Linthicum, MD — 05/18/2000

Ciena Corporation (CIEN) today reported revenue of $185.7 million for its second fiscal quarter ended April 30, 2000. The results represent revenue growth of more than 20 percent over the Company's fiscal first quarter results of $152.2 million, and an increase of more than 66 percent as compared to the same period a year ago when the Company reported revenue of $111.5 million.

Net income for the second quarter was $18.4 million, or $0.12 per diluted share. This compares with net income for the previous quarter of $9.1 million, or $0.06 per diluted share. For the same period in fiscal 1999, the Company reported net income of $0.5 million, exclusive of one-time charges, or breakeven, or $0.00 per diluted share. Consensus of First Call estimates for second quarter fiscal 2000 EPS was $0.10 per diluted share.

"Increased customer demand for rapid delivery of Ciena's industry-leading optical networking equipment and our successful execution on deployment for new customers are the primary reasons behind our robust performance in the second quarter," said Patrick Nettles, Ciena's president and CEO.

For the six months ended April 30, 2000, Ciena reported revenue of $337.9 million, an increase of approximately 60 percent over revenue of $211.9 million for the first half of 1999. For the first six months of 2000, net income totaled $27.5 million, or $0.18 per diluted share. This compares with a net loss of $1.4 million, exclusive of one-time charges, or a loss of $0.01 per diluted share for the same period in 1999.1

Ciena also announced that its MultiWave CoreDirector™, the industry's first intelligent optical core switch, is now in trials with a total of seven service providers. "Our CoreDirector trials are progressing well and indications from customers are that we've got considerable first-mover advantage in this exciting new space," said Nettles. Ciena disclosed that it already has received conditional commitments for CoreDirector purchases from two customers and expects to begin commercial shipments during its fiscal third quarter.

During the quarter, Ciena began volume commercial shipments of its 10-gigabit per second feature set for its MultiWave CoreStream™ long-distance optical transport product. Ciena's CoreStream platform is capable of mixed 2.5 and 10 gigabit per second transmission speeds, includes ultra-long haul transmission features and will scale to carry up to two terabits per second of traffic.

Ciena continues to expand its customer base, recognizing revenue during the second quarter from a total of 22 optical networking customers, an increase of 69 percent over 13 revenue-generating customers in the same period a year ago. In addition to Qwest, Ciena's second quarter included revenue from another new customer which has yet to be announced.

Commenting on Ciena's business outlook, Nettles said, "Our visibility into orders for the third quarter and the balance of the fiscal year is very good. In addition to substantial interest in CoreDirector, we're seeing growing demand for our long-distance transport and metropolitan optical networking equipment. We expect sales of these products to drive strong sequential revenue growth in both our fiscal third and fourth quarters."

"Investment in our business is critical to capitalize on the prospects for strong continued growth," said Nettles. "In addition to scaling our optical manufacturing capacity over the next several quarters, we'll also look to extend our sales, installation and support capabilities worldwide. Provided we do not experience an increase in competitive pricing pressure, we expect earnings per share growth slightly above current consensus expectations for the third and fourth quarters," said Nettles.

"Service providers worldwide are acknowledging the capital and operational savings associated with optical networking - but cost savings are only a part of the story. With products like CoreDirector, our recently announced CoreDirector CI™, the service enablers in our LightWorks ToolKit™ and the optical network and service management capabilities provided by ON-Center™ , Ciena delivers optical-layer network intelligence, enabling new revenue-generating, market-differentiating optical services," concluded Nettles.

1 Past financial results have been restated to reflect the consolidated operating results of Lightera Networks, Inc. and Omnia Communications, Inc., acquired by Ciena in pooling transactions on March 31, 1999 and July 1, 1999, respectively. Net income and earnings per share amounts in the attached consolidated statement of operations are inclusive of the effects of merger-related and other one-time charges. All earnings per share amounts represent diluted earnings per share as defined within Statement of Financial Accounting Standards No. 128 (SFAS 128).

(Consolidated Statements of Operations and Consolidated Balance Sheets follow)


Ciena CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

Quarter Ended

 

Six Months Ended

 

 

April 30,

 

April 30,

 

April 30,

 

April 30,

 

 

1999

 

2000

 

1999

 

2000

 

 

 

 

 

 

 

 

 

Revenue

 

$ 111,490

 

$ 185,679

 

$ 211,907

 

$ 337,892

Cost of goods sold

 

71,238

 

104,205

 

137,016

 

191,208

Gross profit

 

40,252

 

81,474

 

74,891

 

146,684

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

24,094

 

29,965

 

46,312

 

59,707

Selling and marketing

 

13,092

 

20,331

 

26,700

 

38,453

General and administrative

 

5,849

 

7,176

 

10,885

 

14,047

Merger costs

 

2,253

 

-

 

2,253

 

 

-

Total operating expenses

 

45,288

 

57,472

 

86,150

 

112,207

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

(5,036)

 

24,002

 

(11,259)

 

34,477

 

 

 

 

 

 

 

 

 

Interest and other income (expense), net

 

3,698

 

3,357

 

7,094

 

6,403

 

 

 

 

 

 

 

 

 

Interest expense

 

(115)

 

(89)

 

(210)

 

(185)

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

(1,453)

 

27,270

 

(4,375)

 

40,695

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

(468)

 

8,863

 

(1,509)

 

13,226

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$ (985)

 

$ 18,407

 

$ (2,866)

 

$ 27,469

 

 

 

 

 

 

 

 

 

Basic net income (loss) per common share

 

$ (0.01)

 

$ 0.13

 

$ (0.02)

 

$ 0.20

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per common share

 

 

 

 

 

 

 

 

and dilutive potential common share

 

$ (0.01)

 

$ 0.12

 

$ (0.02)

 

$ 0.18

 

 

 

 

 

 

 

 

 

Weighted average basic common shares

 

 

 

 

 

 

 

 

outstanding

 

132,530

 

140,081

 

132,041

 

139,300

 

 

 

 

 

 

 

 

 

Weighted average basic common and

 

 

 

 

 

 

 

 

dilutive potential common shares

 

 

 

 

 

 

 

 

outstanding

 

132,530

 

149,563

 

132,041

 

148,977

 

 

 

 

 

 

 

 

 

Ciena CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

 

 

 

 

 

 

October 31,

 

April 30,

 

 

 

 

1999

 

2000

ASSETS

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

 

$ 143,440

 

$ 90,004

Marketable debt securities

 

 

118,956

 

147,137

Accounts receivable, net

 

 

144,348

 

197,771

Inventories, net

 

 

 

79,608

 

107,566

Deferred income taxes

 

 

25,385

 

26,605

Prepaid income taxes

 

 

-

 

15,735

Prepaid expenses and other

 

 

21,262

 

31,502

Total current assets

 

 

532,999

 

616,320

Equipment, furniture and fixtures, net

 

125,252

 

146,109

Goodwill and other intangible assets, net

 

12,635

 

10,817

Other assets

 

 

 

6,949

 

7,588

Total assets

 

 

 

$ 677,835

 

$ 780,834

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

 

 

$ 34,399

 

$ 42,629

Accrued liabilities

 

 

 

58,486

 

78,446

Income taxes payable

 

 

8,697

 

-

Deferred revenue

 

 

 

2,954

 

1,294

Other current obligations

 

 

992

 

722

Total current liabilities

 

 

105,528

 

123,091

Deferred income taxes

 

 

36,953

 

36,953

Other long-term obligations

 

 

4,881

 

5,002

Total liabilities

 

 

 

147,362

 

165,046

Commitments and contingencies

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock - par value $0.01; 20,000,000 shares authorized;

 

 

 

zero shares issued and outstanding

 

-

 

-

Common stock - par value $0.01; 460,000,000 shares authorized;

 

 

 

138,187,356 and 141,165,194 shares issued and outstanding

1,382

 

1,412

Additional paid-in capital

 

 

360,082

 

417,855

Notes receivable from stockholders

 

(210)

 

(31)

Accumulated other comprehensive income

(40)

 

(176)

Retained earnings

 

 

 

169,259

 

196,728

Total stockholders' equity

 

 

530,473

 

615,788

Total liabilities and stockholders' equity

 

$ 677,835

 

$ 780,834

 


About Ciena

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.
Note to Investors
Forward-looking statements in this release, including expectations that the Company will ship MultiWave CoreDirector in its fiscal third quarter, expectations that sales of long-distance transport and metropolitan optical networking equipment will drive strong growth in both the Company's fiscal third and fourth quarters, expectations of earnings per share growth slightly above current consensus expectations for the Company's third and fourth quarters, and expectations for future development of its products, 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 in such forward-looking statements, due to risks and uncertainties associated with the Company's business, which include the risk factors disclosed in the Company's Report on Form 10-Q filed with the Securities and Exchange Commission on May 18, 2000.
Press Contacts:
Nicole Anderson
Ciena Corporation
(877) 857 -7377
pr@ciena.com
Investor Contacts:
Marie Downing
Ciena Corporation
(888) 243-6223
ir@ciena.com