CIENA Reports First Quarter Revenue of $352.0 Million, Adjusted Net Income
Level 3 Announced as New MultiWave CoreDirector™ Customer
Linthicum, MD — 02/15/2001Ciena Corporation (CIEN) today reported revenue of $352.0 million for its first fiscal quarter ended January 31, 2001. Ciena's first quarter sales represent sequential revenue growth of more than 22 percent over the Company's fiscal fourth quarter revenue of $287.6 million, and an increase of more than 130 percent as compared to the same period a year ago when the Company reported revenue of $152.2 million.
Adjusted net income for the first quarter, exclusive of payroll tax on stock option exercises, was $54.1 million, or $0.18, earnings per diluted share. This represents an increase of approximately 31 percent compared with adjusted net income for the previous quarter, exclusive of payroll tax on stock option exercises and provision for doubtful accounts, of $41.3 million, or $0.14, earnings per diluted share. For the same period in the previous year, the Company reported adjusted net income of $9.1 million, or $0.03, earnings per diluted share.1 Consensus of First Call estimates for Ciena's first quarter fiscal 2001 was $0.15 earnings per diluted share.
"Ciena continues to see robust growth opportunities across its family of next-generation intelligent optical networking products," said Ciena Chairman and CEO, Patrick Nettles. "We believe Ciena's strong growth and good order visibility in an otherwise uncertain carrier spending environment results from our exclusive focus on next-generation optical networking equipment and our position as a strategic supplier to leading service providers."
"There is no question that economic factors are causing service providers to more carefully scrutinize where they spend their budget dollars," said Gary Smith, Ciena's president and chief operating officer. "It is just this sort of dynamic that we believe is benefiting Ciena by accelerating the shift from cumbersome, legacy network architectures to less costly, more efficient, intelligent next-generation optical network architectures."
Ciena continues to diversify its customer base, adding three new customers in the first quarter, one of which, MetroRed, has been named publicly. In addition, Ciena also made initial optical networking equipment shipments to Level 3, a significant new MultiWave CoreDirector™ customer, during its fiscal first quarter. The Company's total revenue-generating optical networking equipment customer base now totals 43, of which, 30 contributed to Ciena's revenues during the most recent quarter.
The first quarter marked the third sequential quarter in which Ciena recognized revenues from sales of CoreDirector, its next-generation, intelligent optical core switch and the first quarter where CoreDirector sales surpassed ten percent of total revenue. The Company believes that it has lengthened its industry lead in this critical product area, meeting its stated goal of achieving ten commercial customers for CoreDirector by the end of the fiscal first quarter.
"We believe Ciena is positioned to successfully navigate and grow our business through the recent concerns about carrier spending," said Ciena's Smith. "Our exclusive focus on next-generation equipment means that we stand to be a primary beneficiary as carriers shift spending away from legacy equipment to intelligent optical networks that will enable them to lower capital and operating costs while delivering new, revenue-generating high-bandwidth services. Among next-generation equipment providers, only Ciena has both the breadth of products and the critical mass required to install and support these new optical networks on a global basis."
Business Outlook
Commenting on Ciena's business outlook Nettles said: "We expect our business will continue to grow faster than the overall market, provided we execute successfully. As a result, we are raising our revenue guidance from the 75 to 85 percent growth over fiscal year 2000 we offered last quarter. Based on current visibility, and factoring in the expected completion of our announced acquisition of Cyras Systems, Inc. by the end of the first calendar quarter of 2001, we now believe we will be able to achieve 2001 revenue growth of between 95 to 105 percent over last year, which translates into a revenue range of between $1.67 to $1.76 billion for fiscal year 2001."
Live Web Broadcast of Q1 Results Discussion
In conjunction with this announcement, as previously announced, Ciena will host a discussion of its first fiscal quarter results with investors and financial analysts on Thursday, February 15, 2001 at 8:30 AM (Eastern). The live broadcast of the discussion will be available via Ciena's homepage at www.Ciena.com. An archived version of the discussion will be available shortly following the conclusion of the live broadcast on the Investor Relations page of Ciena's website at: www.Ciena.com/investors.
1 All earnings per share amounts represent diluted earnings per share as defined within Statement of Financial Accounting Standards No. 128 (SFAS 128).
Ciena CORPORATION
ADJUSTED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Quarter ended January 31,
--------------------------
2000 2001
--------- ---------
Revenue $ 152,213 $ 351,989
Cost of goods sold 87,003 191,837
--------- ---------
Gross profit 65,210 160,152
--------- ---------
Operating expenses:
Research and development 29,742 42,980
Selling and marketing 18,122 29,489
General and administrative 6,871 10,541
--------- ---------
Total operating expenses 54,735 83,010
--------- ---------
Income from operations 10,475 77,142
Interest and other income
(expense), net 3,046 4,296
Interest expense (96) (87)
--------- ---------
Income before income taxes 13,425 81,351
Provision for income taxes 4,363 27,253
--------- ---------
Net income $ 9,062 $ 54,098
========= =========
Basic net income per common
share $ 0.03 $ 0.19
========= =========
Diluted net income per common
share and dilutive potential $ 0.03 $ 0.18
common share ========= =========
Weighted average basic common
shares outstanding 276,182 287,001
========= =========
Weighted average basic common
and dilutive potential 295,806 300,956
common shares outstanding ========= =========
The above adjusted results
exclude the following items:
Quarter ended January 31,
--------------------------
2000 2001
--------- ---------
Payroll tax on stock option
exercises $ - $ 1,282
--------- ---------
Net effect on adjusted net
income $ - $ 852
========= =========
Ciena CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Quarter ended January 31,
--------------------------
2000 2001
--------- ---------
Revenue $ 152,213 $ 351,989
Cost of goods sold 87,003 191,837
--------- ---------
Gross profit 65,210 160,152
--------- ---------
Operating expenses:
Research and development 29,742 43,511
Selling and marketing 18,122 29,636
General and administrative 6,871 11,145
--------- ---------
Total operating expenses 54,735 84,292
--------- ---------
Income from operations 10,475 75,860
Interest and other income
(expense), net 3,046 4,296
Interest expense (96) (87)
--------- ---------
Income before income taxes 13,425 80,069
Provision for income taxes 4,363 26,823
--------- ---------
Net income $ 9,062 $ 53,246
========= =========
Basic net income per common
share $ 0.03 $ 0.19
========= =========
Diluted net income per common
share and dilutive potential $ 0.03 $ 0.18
common share ========= =========
Weighted average basic common
shares outstanding 276,182 287,001
========= =========
Weighted average basic common
and dilutive potential
common shares outstanding 295,806 300,956
========= =========
Ciena CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
October 31, January 31,
2000 2001
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 143,187 $ 176,725
Marketable debt securities 95,131 82,958
Accounts receivable, net 248,950 250,996
Inventories, net 141,279 207,221
Deferred income taxes 143,029 166,273
Prepaid expenses and other 41,438 41,012
----------- -----------
Total current assets 813,014 925,185
Equipment, furniture and
fixtures, net 189,231 212,376
Goodwill and other intangible
assets, net 9,049 8,851
Other assets 15,907 20,740
----------- -----------
Total assets $ 1,027,201 $ 1,167,152
=========== ===========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 70,250 $ 82,477
Accrued liabilities 84,163 90,412
Income taxes payable 7,483 7,266
Deferred revenue 10,731 19,923
Other current obligations 712 1,082
----------- -----------
Total current
liabilities 173,339 201,160
Deferred income taxes 39,145 39,145
Other long-term obligations 4,882 4,986
----------- -----------
Total liabilities 217,366 245,291
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred stock - par value
$.01; 20,000,000 shares
authorized; zero shares
issued and outstanding -- --
Common stock - par value
$.01; 460,000,000 shares
authorized; 286,530,631
and 288,115,246 shares
issued and outstanding 2,865 2,881
Additional paid-in capital 557,257 615,898
Notes receivable from
stockholders (30) --
Accumulated other
comprehensive income (903) (810)
Retained earnings 250,646 303,892
----------- -----------
Total stockholders'
equity 809,835 921,861
----------- -----------
Total liabilities and
stockholders' equity $ 1,027,201 $ 1,167,152
=========== ===========
Ciena specializes in practical network transition. We offer leading network infrastructure solutions, intelligent software and a comprehensive services practice to help our customers use their networks to fundamentally change the way they compete. 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.
This press release contains certain forward-looking statements based on current expectations, forecasts and assumptions of Ciena (the Company) that involve risks and uncertainties. Forward-looking statements in this release, including our belief that Ciena's strong growth and good order visibility in an otherwise uncertain carrier spending environment results from our exclusive focus on next-generation optical networking equipment and our position as a strategic supplier to leading service providers, that economic factors are causing service providers to more carefully scrutinize where they spend their budget dollars, that these factors are benefiting Ciena by accelerating the shift from cumbersome, legacy network architectures to less costly, more efficient, intelligent next-generation optical network architectures, that the Company believes that it has lengthened its industry lead in the CoreDirector product area, meeting its stated goal of achieving ten commercial customers for CoreDirector by the end of the fiscal first quarter, that Ciena is positioned to successfully navigate and grow its business through recent concerns about carrier spending, that Ciena's exclusive focus on next-generation equipment means that it stands to be a primary beneficiary as carriers shift spending away from legacy equipment to intelligent optical networks that will enable them to lower capital and operating costs while delivering new, revenue-generating, high-bandwidth services, that among next-generation equipment providers, only Ciena has both the breadth of products and the critical mass required to install and support these new optical networks on a global basis, that Ciena expects its business will continue to grow faster than the overall market and that the Company will be able to achieve fiscal year 2001 revenue growth of between 95 to 105 percent over fiscal year 2000, 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 February 15, 2001. Forward looking statements include statements regarding the Company's expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. The Company assumes no obligation to update the information included in this press release, whether as a result of new information, future events or otherwise.
Nicole Anderson
Ciena Corporation
(877) 857 -7377
pr@ciena.com
