CIENA Reports Third Quarter Revenue of $128.8 million, Net Income of $0.01 per Diluted Share, Exclusive of Merger Costs
Linthicum, MD — 08/19/1999Ciena Corporation (NASDAQ: CIEN) today reported revenue of $128.8 million for its third fiscal quarter ended July 31, 1999, a sequential increase of 15.5% over the previous quarter’s revenue of $111.5 million. For the same period a year ago, the Company reported revenue of $129.1 million.
Net income for the third quarter, exclusive of merger-related costs of approximately $10.8 million associated with the acquisition of Omnia Communications, Inc. was $1.5 million, or $0.01 per diluted share. This compares witzh pro forma net income for the previous quarter of $0.5 million, or breakeven ($0.00), earnings per share, exclusive of merger-related costs associated with the Company’s acquisition of Lightera Networks.1 Pro forma net income for the same period a year ago totaled $13.8 million, or $0.10 per diluted share, once again, exclusive of merger-related and other one-time costs.1 First Call consensus expectations for the third quarter 1999 were for a loss of $0.01 per diluted share.
"Robust demand from a growing worldwide customer base helped drive Ciena’s sequential revenue growth this quarter," said Patrick Nettles, Ciena’s president and chief executive officer. "We’re pleased to have met our goal of continued gross margin improvement, in part, due to the benefits of product cost cutting efforts launched last year."
For the nine months ended July 31, 1999, Ciena reported revenue of $340.7 million, compared with $416.9 million for the first nine months of 1998. For the first nine months of 1999, pro forma net income totaled $0.1 million, or breakeven ($0.00), earnings per diluted share, exclusive of merger-related costs. This compares to pro forma net income of $82.2 million, or $0.66 per diluted share, for the same period in 1998, again exclusive of merger-related and other one-time costs.1
Ciena continued to broaden its customer base, recognizing revenue during the third quarter from a total of 18 optical transport customers, including recently announced customers Alltel, Intermedia, and RCN. This compares with just 10 revenue-generating customers in the same period a year ago and 14 in the previous quarter. Ciena has now delivered transport systems commercially to a total of 22 customers.
Service-related revenues accounted for approximately 12.4% of the quarter’s total revenue, with the Company recognizing service revenue from its base of more than 50 engineering, furnishing and installation customers.
On July 1, 1999, Ciena added the third dimension to its LightWorks™ architecture with the completion of its acquisition of Omnia Communications, Inc.
"Ciena is positioned to become a key strategic supplier for both new and incumbent carriers faced with growing traffic demands and escalating network operations stress," said Nettles. "Upon commercial availability of MultiWave EdgeDirector™ and MultiWave CoreDirector™, we believe Ciena, with its LightWorks architecture, will be unique in its ability to offer carriers the choice of either a comprehensive next-generation intelligent optical architecture – including transport, switching and service delivery – or the best-of-breed solution in each of these three critical networking areas."
Regarding Ciena’s business outlook Nettles said, "There appears to be a healthy market demand for optical transport equipment and we believe Ciena will win its fair share of that market. During the fourth quarter, we will ramp manufacturing for several significant new feature sets to our optical transport products. There are execution risks inherent in this effort, but we expect to deliver continued revenue growth and modest earnings improvement."
Nettles concluded, "Once we successfully deliver MultiWave EdgeDirector and MultiWave CoreDirector commercially, we believe sales of these new products will contribute to help drive future revenue and earnings growth."
(Consolidated Statements of Operations and Consolidated Balance Sheets)
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
|
Quarter Ended |
Nine Months Ended | |||
|
July 31, |
July 31, |
July 31, |
July 31, | |
|
1998 |
1999 |
1998 |
1999 | |
|
Revenue |
$ 129,116 |
$ 128,826 |
$ 416,926 |
$ 340,733 |
|
Cost of goods sold |
70,431 |
79,361 |
193,326 |
216,377 |
|
Gross profit |
58,685 |
49,465 |
223,600 |
124,356 |
|
Operating expenses: | ||||
|
Research and development |
21,965 |
28,402 |
51,196 |
74,714 |
|
Selling and marketing |
12,937 |
16,839 |
34,019 |
43,539 |
|
General and administrative |
4,186 |
5,433 |
12,927 |
16,318 |
|
Purchased research and development |
- |
- |
9,503 |
- |
|
Pirelli litigation |
20,579 |
- |
30,579 |
- |
|
Merger related costs |
2,017 |
10,768 |
2,017 9,50 |
13,021 |
|
Total operating expenses |
61,684 |
61,442 |
140,241 |
147,592 |
|
Income (loss) from operations |
(2,999) |
(11,977) |
83,359 |
(23,236) |
|
Interest and other income, net |
2,840 |
3,692 |
10,058 |
10,786 |
|
Interest expense |
(71) |
(200) |
(242) |
(410) |
|
Income (loss) before income taxes |
(230) |
(8,485) |
93,175 |
(12,860) |
|
Provision (benefit) for income taxes |
20 |
(2,928) |
40,337 |
(4,437) |
|
Net income (loss) |
$ (250) |
$ (5,557) |
$ 52,838 |
$ (8,423) |
|
Basic net income (loss) per common share |
$ (0.00) |
$ (0.04) |
$ 0.47 |
$ (0.06) |
|
Diluted net income (loss) per common share and dilutive | ||||
|
potential common share |
$ (0.00) |
$ (0.04) |
$ 0.43 |
$ (0.06) |
|
Weighted average basic common shares outstanding |
121,820 |
133,016 |
113,602 |
132,712 |
|
Weighted average basic common and dilutive potential | ||||
|
potential common shares outstanding |
121,820 |
133,016 |
124,130 |
132,712 |
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
|
October 31, |
July 31, | ||
|
1998 |
1999 | ||
|
ASSETS | |||
|
Current assets: | |||
|
Cash and cash equivalents |
$ 250,714 |
$ 142,599 | |
|
Marketable debt securities |
15,993 |
155,657 | |
|
Accounts receivable, net |
85,472 |
103,156 | |
|
Inventories, net |
70,908 |
64,638 | |
|
Deferred income taxes |
16,421 |
19,324 | |
|
Prepaid income taxes |
11,688 |
- | |
|
Prepaid expenses and other |
4,728 |
11,804 | |
|
Total current assets |
455,924 |
497,178 | |
|
Equipment, furniture and fixtures, net |
125,767 |
128,333 | |
|
Goodwill and other intangible assets, net |
16,270 |
13,544 | |
|
Other assets |
4,848 |
5,842 | |
|
Total assets |
$ 602,809 |
$ 644,897 | |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||
|
Current liabilities: | |||
|
Accounts payable |
$ 27,893 |
$ 30,467 | |
|
Accrued liabilities |
34,437 |
48,786 | |
|
Income taxes payable |
- |
4,661 | |
|
Deferred revenue |
1,084 |
3,697 | |
|
Other current obligations |
1,205 |
1,164 | |
|
Total current liabilities |
64,619 |
88,775 | |
|
Deferred income taxes |
34,125 |
36,766 | |
|
Other long-term obligations |
3,029 |
3,962 | |
|
Total liabilities |
101,773 |
129,503 | |
|
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; | |||
|
134,605,491 and 137,263,120 shares issued and outstanding |
1,346 |
1,373 | |
|
Additional paid-in capital |
328,821 |
351,029 | |
|
Notes receivable from stockholders |
(586) |
(280) | |
|
Cumulative translation adjustment |
(107) |
133 | |
|
Retained earnings |
171,562 |
163,139 | |
|
Total stockholders' equity |
501,036 |
515,394 | |
|
Total liabilities and stockholders' equity |
$ 602,809 |
$ 644,897 | |
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 the appearance of healthy market demand for optical transport equipment and the expectation that Ciena will win its fair share of that market, expectations of continued revenue growth and modest earnings improvement, successful commercial delivery of MultiWave EdgeDirectorª and MultiWave CoreDirectorª, as well as sales from MultiWave EdgeDirector and MultiWave CoreDirector contributing to help drive future revenue and earnings growth, 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 August 19, 1999.
Nicole Anderson
Ciena Corporation
(877) 857 -7377
pr@ciena.com
Marie Downing
Ciena Corporation
(888) 243-6223
ir@ciena.com
