CIENA Reports Fourth Quarter Revenue of $141.4 million, Net Income of $0.03 per Diluted Share
Customer Count Increases 28% Over Previous Quarter, 100% Over Previous Year
Linthicum, MD — 12/10/1999Ciena Corporation (NASDAQ: CIEN) today reported revenue of $141.4 million for its fourth fiscal quarter ended October 31, 1999, an increase of 55% as compared to the same period a year ago when the Company reported revenue of $91.2 million.
Net income for the fourth quarter was $4.5 million, or $0.03 per diluted share. This compares with pro forma net income for the previous quarter of $1.5 million, or $0.01, earnings per share, exclusive of merger-related costs associated with the Company's acquisition of Omnia Communications, Inc. For the same period in 1998, excluding the effect of merger-related charges, the Company reported a net loss of $6.8 million, or a loss of $0.05 per diluted share.1 First Call consensus expectations for the fourth quarter 1999 were for earnings of $0.02 per diluted share.
"We've capitalized on our time-to-market leadership and leveraged our growing customer base to deliver continued improvement in our financial results over the last twelve months," said Patrick Nettles, Ciena president and chief executive officer. "Thanks to hard work and a commitment to success that runs throughout our organization, during the past year, Ciena has grown to be a stronger, more diverse company."
"Ciena is competing in one of the most exciting new market spaces to emerge in decades," said Nettles. "The Internet is driving a change in telecommunications networks that can only be compared to the shift from mainframe computers to PCs. Traditional network architectures are struggling to scale effectively and to keep pace with growing customer demands. Optical networking can meet that challenge and Ciena is leading the way toward efficient, intelligent optical communications."
Ciena continues to broaden its customer base, recognizing revenue during the fourth quarter from a total of 23 optical networking customers, including seven customers from which it had not previously recognized revenue. This is an increase of 64% over 14 revenue-generating customers in the same period a year ago and an increase of 28% over the 18 customers contributing to the previous quarter's revenues. The Company's optical networking customer base now totals 29, an increase of more than 100% over its total at the end of fiscal year 1998.
Ciena recognized revenue from a total of seven different optical networking products in the fourth quarter, including initial revenue from shipments of the 10 gigabit per second feature set for its MultiWave CoreStream™ optical transport system and increasingly strong sales from its MultiWave Metro™ systems.
"Through product diversification, we've significantly increased our addressable market opportunity," Nettles reported. "Ciena now offers service providers a next-generation product family that, in a year, has grown from four products in a single market segment to eight products targeting applications in three strategic areas of optical networks - optical transport, switching and service delivery."
For the fiscal year ended October 31, 1999, Ciena reported revenue of $482.1 million, compared with $508.1 million for fiscal year 1998. Pro forma net income for fiscal year 1999 totaled $4.6 million, or $0.03, earnings per diluted share, exclusive of merger-related costs. This compares to pro forma net income of $76.5 million, or $0.60 per diluted share, for the same period in 1998, again exclusive of merger-related and other one-time costs.1
"We believe Ciena is ideally positioned to benefit from the optical networking revolution," concluded Nettles. "Provided we continue to execute as planned, we believe Ciena is capable of achieving better than 50% revenue growth in 2000. In addition, we expect earnings growth will improve as we begin to see meaningful sales contributions from our new products in the second half of the year."
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)
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Ciena CORPORATION | |||||||||||||
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CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
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(in thousands, except per share data) | |||||||||||||
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Three Months Ended |
Year Ended | ||||||||||||
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October 31, |
October 31, | ||||||||||||
|
1998 |
1999 |
1998 |
1999 | ||||||||||
|
Revenue |
$ 91,161 |
$ 141,352 |
$ 508,087 |
$ 482,085 | |||||||||
|
Cost of goods sold |
62,688 |
83,392 |
256,014 |
299,769 | |||||||||
|
Gross profit |
28,473 |
57,960 |
252,073 |
182,316 | |||||||||
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Operating expenses: | |||||||||||||
|
Research and development |
22,560 |
29,927 |
73,756 |
104,641 | |||||||||
|
Selling and marketing |
13,324 |
18,064 |
47,343 |
61,603 | |||||||||
|
General and administrative |
6,347 |
6,668 |
19,274 |
22,986 | |||||||||
|
Purchased research and development |
- |
- |
9,503 |
- | |||||||||
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Pirelli litigation |
- |
- |
30,579 |
- | |||||||||
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Merger related costs |
531 |
- |
2,548 |
13,021 | |||||||||
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Total operating expenses |
42,762 |
54,659 |
183,003 |
202,251 | |||||||||
|
Income (loss) from operations |
(14,289) |
3,301 |
69,070 |
(19,935) | |||||||||
|
Interest and other income (expense), net |
3,085 |
3,662 |
13,143 |
14,448 | |||||||||
|
Interest expense |
(71) |
(94) |
(313) |
(504) | |||||||||
|
Income (loss) before income taxes |
(11,275) |
6,869 |
81,900 |
(5,991) | |||||||||
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Provision (benefit) for income taxes |
(4,137) |
2,370 |
36,200 |
(2,067) | |||||||||
|
Net income (loss) |
$ (7,138) |
$ 4,499 |
$ 45,700 |
$ (3,924) | |||||||||
| Basic net income (loss) per common share |
$ (0.06) |
$ 0.03 |
$ 0.39 |
$ (0.03) | |||||||||
| Diluted net income (loss) per common share and | |||||||||||||
|
$ (0.06) |
$ 0.03 |
$ 0.36 |
$ (0.03) dilutive potential common share | ||||||||||
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Weighted average basic common shares outstanding |
128,384 |
133,808 |
117,990 |
133,521 | |||||||||
| Weighted average basic common and dilutive | |||||||||||||
| potential common shares outstanding |
128,384 |
127,894 |
145,302 | 133,521 | |||||||||
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Ciena CORPORATION | ||||||||||
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CONSOLIDATED BALANCE SHEETS | ||||||||||
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(in thousands, except share and per share data) | ||||||||||
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October 31, | ||||||||||
|
1998 |
1999 | |||||||||
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ASSETS | ||||||||||
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Current assets: | ||||||||||
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Cash and cash equivalents |
$ 250,714 |
$ 143,440 | ||||||||
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Marketable debt securities |
15,993 |
118,956 | ||||||||
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Accounts receivable (net of allowance of $1,528 and $1,703) |
78,791 |
144,348 | ||||||||
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Inventories, net |
70,908 |
79,608 | ||||||||
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Deferred income taxes |
16,421 |
25,385 | ||||||||
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Prepaid income taxes |
11,688 |
- | ||||||||
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Prepaid expenses and other |
11,409 |
21,262 | ||||||||
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Total current assets |
455,924 |
532,999 | ||||||||
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Equipment, furniture and fixtures, net |
125,767 |
125,252 | ||||||||
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Goodwill and other intangible assets, net |
16,270 |
12,635 | ||||||||
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Other assets |
4,848 |
6,949 | ||||||||
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Total assets |
$ 602,809 |
$ 677,835 | ||||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
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Current liabilities: | ||||||||||
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Accounts payable |
$ 27,893 |
$ 34,399 | ||||||||
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Accrued liabilities |
34,437 |
58,486 | ||||||||
|
Income taxes payable |
- |
8,697 | ||||||||
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Deferred revenue |
1,084 |
2,954 | ||||||||
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Other current obligations |
1,205 |
992 | ||||||||
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Total current liabilities |
64,619 |
105,528 | ||||||||
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Deferred income taxes |
34,125 |
36,953 | ||||||||
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Other long-term obligations |
3,029 |
4,881 | ||||||||
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Total liabilities |
101,773 |
147,362 | ||||||||
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Commitments and contingencies | ||||||||||
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Stockholders' equity: | ||||||||||
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Preferred stock - par value $.01; 20,000,000 shares authorized; zero shares | ||||||||||
|
issued and outstanding |
- |
- | ||||||||
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Common stock - par value $.01; 360,000,000 shares authorized; | ||||||||||
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134,605,491 and 138,187,356 shares issued and outstanding |
1,346 |
1,382 | ||||||||
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Additional paid-in capital |
328,821 |
360,082 | ||||||||
|
Notes receivable from stockholders |
(586) |
(210) | ||||||||
|
Accumulated other comprehensive income |
(107) |
(40) | ||||||||
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Retained earnings |
171,562 |
169,259 | ||||||||
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Total stockholders' equity |
501,036 |
530,473 | ||||||||
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Total liabilities and stockholders' equity |
$ 602,809 |
$ 677,835 | ||||||||
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 Ciena's ability to achieve better than 50% revenue growth in 2000, the expectation that earnings growth will improve and that Ciena's new products will make meaningful contributions in the second half of the year, 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-K, as filed with the Securities and Exchange Commission on December 10, 1999.
Nicole Anderson
Ciena Corporation
(877) 857 -7377
pr@ciena.com
Marie Downing
Ciena Corporation
(888) 243-6223
ir@ciena.com
