CIENA Reports Second Quarter Revenue of $111.5 million, Net Income of $0.01 per Diluted Share
Linthicum, MD — 05/20/1999Ciena Corporation (NASDAQ: CIEN) today reported revenue of $111.5 million for its second fiscal quarter ended April 30, 1999, as compared to revenue of $100.4 million in the previous quarter and $142.7 million for the same period a year ago.
Net income for the second quarter was $1.6 million, or $0.01 per diluted share, including merger-related costs of $2.3 million associated with the acquisition of Lightera Networks, Inc. This compares with net income of $0.3 million, or break-even ($0.00) earnings per share, reported in the previous quarter and net income of $15.2 million, or $0.14 per diluted share, for the same period in fiscal 1998.1 First Call consensus expectations for the second quarter 1999 were for a loss of $0.03 per diluted share.
"Coming out of fiscal 1998, we felt it was necessary to set some aggressive performance targets for ourselves, and we are pleased to have met those targets for the second straight quarter," said Patrick Nettles, Ciena's president and chief executive officer. "It's our goal to continue to demonstrate measured revenue and margin improvement in this very competitive market environment."
For the six months ended April 30, 1999, Ciena reported revenue of $211.9 million, compared with $287.8 million for the first half of 1998. For the first six months of 1999, net income totaled $1.9 million, or $0.01 per diluted share, as compared with $54.9 million, or $0.50 per diluted share, for the same period in 1998.1
Ciena's revenue during the quarter came from a total of 14 optical transport customers, including recently announced customers IXC and BellSouth, as well as from one customer yet to be named publicly. This compares with just six revenue-generating customers in the same period a year ago. Ciena has now delivered transport systems commercially to a total of 19 customers. In addition, during the quarter, the company recognized revenue from Alta's (its Ciena Services subsidiary) base of more than 50 customers.
On March 15, with its announced acquisitions of Lightera Networks, Inc. and Omnia Communications, Inc., Ciena launched its LightWorks Initiative™, an architectural vision designed to change the fundamental economics of optical service provider networks. By sweeping the functionality and performance of several legacy network elements into dramatically fewer next-generation elements, Ciena's LightWorks architecture will enable service providers to drastically reduce both network equipment and operating costs.
"The addition of Lightera's and Omnia's products to Ciena's product family and the resulting availability of Ciena's LightWorks optical architecture serves as a springboard in our continuing efforts to broaden our market presence and diversify our customer base," said Nettles. "Initial customer reaction to the CoreDirector™ optical core switch and Omnia's AXR 500 edge multi-service delivery platform has been overwhelmingly positive."
Ciena announced the completion of its acquisition of Lightera on March 31, 1999 and continues to expect the Omnia transaction to close in the June/July 1999 timeframe.
Commenting on the business outlook for Ciena, Nettles said: "Ciena has staked its claim to compete for a significant portion of what is likely to be a critical market for telco equipment providers over the next several years. We continue to win business in the face of tough competition from the larger equipment providers, often despite their ability to offer bundled pricing and financing deals."
"Overall, we remain optimistic about the near-term growth of our core MultiWave optical transport business and expect pull-through opportunities to emerge over the longer term across our core transport, switching and edge product offerings as carriers recognize the value inherent in our LightWorks architecture," Nettles concluded.
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, | |||||||
|
1998 |
1999 |
1998 |
1999 | |||||||
|
Revenue |
$142,718 |
$111,490 |
$287,810 |
$211,907 | ||||||
|
Cost of goods sold |
63,915 |
71,238 |
122,895 |
137,016 | ||||||
|
Gross profit |
78,803 |
40,252 |
164,915 |
74,891 | ||||||
|
Operating expenses: | ||||||||||
|
Research and development |
16,706 |
21,167 |
26,909 |
40,950 | ||||||
|
Selling and marketing |
11,063 |
12,427 |
21,031 |
25,301 | ||||||
|
General and administrative |
4,519 |
5,467 |
8,311 |
10,229 | ||||||
|
Merger costs |
- |
2,253 |
- |
2,253 | ||||||
|
Purchased research and development |
9,503 |
- |
9,503 |
- | ||||||
|
Pirelli litigation |
10,000 |
- |
10,000 |
- | ||||||
|
Total operating expenses |
51,791 |
41,314 |
75,754 |
78,733 | ||||||
|
Income (loss) from operations |
27,012 |
(1,062) |
89,161 |
(3,842) | ||||||
|
Interest and other income (expense), net |
3,433 |
3,614 |
7,208 |
6,876 | ||||||
|
Interest expense |
(81) |
(94) |
(165) |
(168) | ||||||
|
Income before income taxes |
30,364 |
2,458 |
96,204 |
2,866 | ||||||
|
Provision for income taxes |
15,154 |
864 |
41,296 |
989 | ||||||
|
Net income |
$15,210 |
$1,594 |
$54,908 |
$1,877 | ||||||
|
Basic net income per common share |
$0.14 |
$0.01 |
$0.53 |
$0.02 | ||||||
|
Diluted net income per common share and dilutive | ||||||||||
|
potential common share |
$0.14 |
$0.01 |
$0.50 |
$0.01 | ||||||
|
Weighted average basic common shares outstanding |
106,245 |
121,135 |
103,443 |
120,646 | ||||||
|
Weighted average basic common and dilutive | ||||||||||
|
potential common shares outstanding |
112,455 |
128,910 |
110,045 |
127,824 | ||||||
Ciena Corporation
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
|
|
October 31, |
April 30, |
|
|
1998 |
1999 |
|
ASSETS | ||
|
Current assets: | ||
|
Cash and cash equivalents |
$ 239,780 |
$ 194,920 |
|
Marketable debt securities |
15,993 |
100,021 |
|
Accounts receivable, net |
85,472 |
96,448 |
|
Inventories, net |
70,908 |
54,062 |
|
Deferred income taxes |
16,421 |
13,514 |
|
Prepaid income taxes |
8,558 |
- |
|
Prepaid expenses and other |
4,524 |
9,615 |
|
Total current assets |
441,656 |
468,580 |
|
Equipment, furniture and fixtures, net |
124,792 |
127,085 |
|
Goodwill and other intangible assets, net |
16,270 |
14,446 |
|
Other assets |
4,848 |
4,737 |
|
Total assets |
$ 587,566 |
$ 614,848 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
|
Current liabilities: | ||
|
Accounts payable |
$ 25,925 |
$ 24,144 |
|
Accrued liabilities |
34,437 |
40,773 |
|
Income taxes payable |
- |
9,216 |
|
Deferred revenue |
1,084 |
719 |
|
Other current obligations |
953 |
1,276 |
|
Total current liabilities |
62,399 |
76,128 |
|
Deferred income taxes |
34,125 |
36,580 |
|
Other long-term obligations |
2,257 |
3,703 |
|
Total liabilities |
98,781 |
116,411 |
|
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; 360,000,000 shares authorized; | ||
|
119,817,209 and 121,330,173 shares issued and outstanding |
1,198 |
1,213 |
|
Additional paid-in capital |
310,888 |
319,268 |
|
Unearned compensation |
- |
(687) |
|
Notes receivable from stockholders |
(568) |
(629) |
|
Cumulative translation adjustment |
(107) |
21 |
|
Retained earnings |
177,374 |
179,251 |
|
Total stockholders' equity |
488,785 |
498,437 |
|
Total liabilities and stockholders' equity |
$ 587,566 |
$ 614,848 |
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 potential benefits of Ciena's LightWorks Initiative, as well as optimism about near-term growth in the core optical transport business and the value inherent in the Company's LightWorks architecture 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 business. The forward-looking statements should be considered in the context of these and other risk factors disclosed in the Company's report on Form 10-Q, as filed with the Securities and Exchange Commission on May 21, 1999.
Nicole Anderson
Ciena Corporation
(877) 857 -7377
pr@ciena.com
Marie Downing
Ciena Corporation
(888) 243-6223
ir@ciena.com
