CIENA Reports First Quarter Revenue of $134.3 Million, Earnings Per Share of $0.37.LINTHICUM, MD--(BUSINESS WIRE)--February 19, 1998-- Completes Alta ALTA Alberta (Canada) ALTA AltaVista (stock symbol) ALTA American Land Title Association ALTA American Literary Translators Association ALTA Atlanta Lawn Tennis Association Acquisition, Issues Guidance Toward Second Quarter and Fiscal Year 1998 Expectations CIENA Corporation Ciena Corporation NASDAQ: CIEN develops and markets communications network platforms and software, and offers professional services. The Company's broadband access, data and optical networking platforms, software tools, and global network services support worldwide telecom (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CIEN CIEN Ciena Corporation (stock symbol) ), today reported revenue of $134.3 million for its first fiscal quarter ended January January: see month. 31, 1998. This compares with $53.9 million in revenue reported for the first fiscal quarter of 1997 and $121 million for the previous quarter ended October 31, 1997. Net income for the quarter increased to $39.8 million, or $0.37 per share, compared with net income of $13.1 million, or $0.13 per share, for the same period in 1996 and $37.3 million, or $0.35 per share, for the fiscal fourth quarter 1997. All earnings per share amounts represent diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of as defined within Statement of Financial Accounting Standards No. 128 (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 128). "We are particularly pleased with the quarter's results given the fact that we are currently in the process of transitioning from being a single product manufacturer to a Company with a broader product family," said Patrick Nettles net·tle n. 1. Any of numerous plants of the genus Urtica, having toothed leaves, unisexual apetalous flowers, and stinging hairs that cause skin irritation on contact. 2. Any of various hairy, stinging, or prickly plants. , CIENA's president and chief executive officer. "It takes more than research and development to actually build and deliver industry-leading DWDM (Dense WDM) The term given to wavelength division multiplexing (WDM) when significantly more channels were being added. Since WDM is increasingly more "dense" all the time, both terms are used synonymously. See WDM. DWDM - wavelength division multiplexing products; it requires engineering for manufacturability and an organization that is absolutely committed to delivering on its promises to its customers. CIENA has proven that we can do just that." Demonstrating its ability to deliver, CIENA expects to begin commercial shipments of its 40-channel, 100 gigabit per second capacity MultiWave(R) 4000 during the second fiscal quarter as scheduled. CIENA will be demonstrating the MultiWave 4000 system, running 40 channels at 50 GHz spacing, at booth #515 at the upcoming OFC OFC Office OFC Officer OFC Of Course OFC Oxygen Free Copper OFC Oceania Football Confederation (soccer) OFC Optical Fiber Cable OFC Optical Fiber Communications OFC Optical Fiber Conference trade show in San Jose San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , February 24 to 26, 1998. Commenting about the Company's income statement for the quarter, Joseph Chinnici, CIENA's senior vice president, finance and chief financial officer said, "As expected, CIENA's operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. continue to increase, both in real dollars and as a percentage of total revenue. We believe that investors should view this growth as evidence of our commitment to building our infrastructure and growing our R&D effort: critical steps toward sustaining the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. potential of the Company." The Company also disclosed that it has recently received a material update from WorldCom The former name of MCI. Based in Jackson, MS, WorldCom, Inc. was a major, international telecommunications carrier. It was founded in 1983 by Bernard Ebbers as Long Distance Discount Service (LDDS), a reseller of AT&T WATS lines to small businesses. . Earlier in the week, WorldCom apprised CIENA of a change in its deployment policy which will result in a substantial reduction in system requirements To be used efficiently, all computer software needs certain hardware components or other software resources to be present on a computer system. These pre-requisites are known as (computer) system requirements and are often used as a guideline as opposed to an absolute rule. from CIENA during fiscal 1998 as compared to the prior year. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. information shared with CIENA earlier this week, WorldCom purchased equipment during 1997 based on a policy designed to meet an estimated two years' worth of anticipated network capacity requirements. WorldCom's new policy calls for purchasing activity and bandwidth deployment to transition to more closely coincide with just-in-time bandwidth deployment, which, according to WorldCom, means significant purchasing from CIENA may resume in the latter part of calendar 1998. "CIENA has been and remains our DWDM supplier of choice," said John Sidgmore, WorldCom's vice chairman and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "During 1997, CIENA delivered more capacity and at a faster rate than we frankly thought was possible. As a result, our long-distance capacity deployment is ahead of schedule." "While there may be a short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in WorldCom's order rate to CIENA, WorldCom has not changed its commitment to being the bandwidth leader and intends to continue to aggressively provision the capacity afforded by CIENA's DWDM systems throughout our growing network," concluded Sidgmore. With respect to its relationship with AT&T, CIENA reported that it has made important progress in AT&T's testing and evaluation process, although volume, duration and timing of any purchases which might ensue en·sue intr.v. en·sued, en·su·ing, en·sues 1. To follow as a consequence or result. See Synonyms at follow. 2. To take place subsequently. from AT&T remain unpredictable. The Company also announced it completed its acquisition of ATI (ATI Technologies Inc., Markham Ontario, http://ati.amd.com) A leading manufacturer of graphics chips and display adapters. Founded in 1985 by K. Y. Ho, Benny Lau and Lee Lau, ATI chips and boards are widely used by OEMs. Telecom International, Ltd. (Alta), a provider of telecommunications engineering Telecommunications Engineers or Telecom Engineers come in a variety of different types from basic circuit designers to strategic mass developments. A Telecom Engineer is responsible for designing and overseeing the installation of telecommunications equipment and facilities, such , furnishing and installation services. "We continue to believe we have the best product at the best price for AT&T and we are confident the testing and evaluation process is confirming this view," stated Patrick Nettles. "We remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the revenue potential of this relationship for fiscal 1998 and beyond and will continue to focus our efforts on obtaining the majority share of the total opportunity. The addition of Alta provides CIENA with the installation experience and extensive field support capability required to assist a customer like AT&T with expeditious ex·pe·di·tious adj. Acting or done with speed and efficiency. See Synonyms at fast1. ex equipment deployment." The Company issued the following guidance regarding its fiscal second quarter and the remainder of fiscal year 1998: "In the past, we have cautioned investors about the potential for fluctuations in quarterly results as a result of our highly concentrated customer base," said Nettles. "The uncertainty resulting from the recent news from WorldCom combined with our planned continued re-investment in the business is likely to result in sequentially lower net income for the second quarter." "As it is still early on in the quarter, it is difficult to assess the impact the WorldCom news will have on our top-line," continued Nettles. "We intend to move aggressively to offset the majority of the revenue shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. from WorldCom, both in the second quarter and for the remainder of fiscal 1998, with additional revenue from existing and potential customers. However, at present, it appears likely that revenue in the second quarter of fiscal 1998 will be sequentially flat or possibly lower than that reported in the first quarter," said Nettles. "There is no doubt we have our work cut out for us, but it is very early in the year, and based on the significant increase in proposal activity we're experiencing in the U.S. and internationally, market demand for DWDM systems appears to us to be accelerating," concluded Nettles. "I am very optimistic we have a realistic opportunity to achieve the consensus revenue expectations for fiscal 1998, which at approximately $600 million, would represent a solid achievement in year-to-year growth. More importantly, over the long-term, our product line expansion and diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. will lead to a broader customer base and a stronger, more robust revenue stream." NOTE TO INVESTORS: Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. in this release, including statements regarding (1) expected commercial shipments of the MultiWave 4000, (2) optimism about the revenue potential of the AT&T relationship for 1998 and beyond, (3) the possibility that second quarter revenues will be flat or possibly lower than the first quarter revenues, and (4) optimism about achieving consensus revenue estimates for fiscal 1998 are based on information available to the Company as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . 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, which include, among others, its dependence on its major customers and their spending patterns, the recent introduction of its products, and the overall management of its expansion. The forward-looking statements should be considered in the context of these and other risk factors disclosed in the Company's Quarterly Report on Form 10-Q Form 10-Q See 10-Q. , as filed with the Securities and Exchange Commission on February 19, 1998. About CIENA Based in Linthicum, Maryland Linthicum is a census-designated place (CDP) and an unincorporated community in Anne Arundel County, Maryland, United States. The population was 7,539 at the 2000 census. It is the approximate location of Baltimore-Washington International Thurgood Marshall Airport (BWI). , CIENA Corporation is a worldwide market leader of open architecture, dense wavelength division multiplexing See WDM. (DWDM) systems for long-distance and local exchange carriers. CIENA's DWDM solutions include the MultiWave(R) 1600 long-haul transport system, WaveWatcher(R) network management software, the MultiWave Optical Add/Drop Multiplexer A device installed at an intermediate point on a transmission line that enables new signals to come in and existing signals to go out. In a typical example, most signals pass through the device, but some would be "dropped" by splitting them from the line. , the MultiWave Sentry enhanced long-distance transport system and the new MultiWave Firefly firefly or lightning bug, small, luminescent, carnivorous beetle of the family Lampyridae. Fireflies are well represented in temperate regions, although the majority of species are tropical and subtropical. and MultiWave Metro short-haul systems. Through it's Alta subsidiary, based in Norcross, GA, CIENA provide a range of engineering, furnishing and installation (EF&I) for telecommunications service providers A Telecommunications Service Provider or TSP is a type of Communications Service Provider that has traditionally provided telephone and similar services. This category includes ILECs, CLECs, and mobile wireless companies. in the areas of transport, switching and wireless communications wireless communications System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. . CIENA's DWDM equipment expands the carrying capacity carrying capacity the number of animal units that a farm or area will carry on a year round basis, including that needed for conservation of winter feed. Usually stated as dry cows or dry sheep equivalents per hectare. of fiber optic networks by dividing the optical signal into several separate optical channels or wavelengths. An optical fiber without DWDM technology carries a single color of laser light, or a single wavelength, on which travels approximately 32,000 voice or data transmissions. CIENA's DWDM technology divides the single wavelength into multiple colors, or channels, thereby multiplying mul·ti·ply 1 v. mul·ti·plied, mul·ti·ply·ing, mul·ti·plies v.tr. 1. To increase the amount, number, or degree of. 2. Mathematics To perform multiplication on. the capacity of the fiber by the number of channels and enabling service providers to expand bandwidth without the expensive process of adding more fibers. Additional information about CIENA can be found on its World Wide Website: http://www.ciena.com. -0-
CIENA Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data) (unaudited)
Quarter Ended January 31,
1997 1998
--------------- --------
Revenue $ 53,933 $ 134,267
Cost of goods sold 20,832 50,575
--------- -----------
Gross profit 33,101 83,692
--------- -----------
Operating expenses:
Research and development 3,050 10,203
Selling and marketing 2,598 9,350
General and administrative 6,295 3,186
--------- -----------
Total operating expenses 11,943 22,739
--------- -----------
Income from operations 21,158 60,953
Interest and other income (expense), net 392 3,786
Interest expense (102)
--------- -----------
Income before income taxes 21,448 64,663
Provision for income taxes 8,365 24,895
--------- -----------
Net income $ 13,083 $ 39,768
========= ===========
Basic net income per common
share $ 0.99 $ 0.40
========= ===========
Diluted net income per common
share and dilutive
potential common share $ 0.13 $ 0.37
========= ===========
Weighted average basic
common shares outstanding 13,216 99,641
========= ===========
Weighted average basic common
and dilutive potential
common shares outstanding 99,128 106,552
========= ===========
CONSOLIDATED STATEMENTS OF OPERATIONS
Percentage of Revenue Analysis (unaudited)
Quarter Ended
January 31, January 31,
1998 1997(1)
---- ----
Revenue 100% 100%
Cost of goods sold 37.7% 38.6%
----------- ------------
Gross profit 62.3% 61.4%
Operating expenses
R&D 7.6% 5.7%
S&M 7.0% 4.8%
G&A 2.4% 11.7%
----------- ------------
Total operating expenses 16.9% 22.1%
----------- ------------
Income (loss) from operations 45.4% 39.2%
Other Income (expense) net 2.8% 0.7%
----------- ------------
Income (loss) before income taxes 48.2% 39.8%
Provision (benefit) for income taxes 18.5% 15.5%
----------- ------------
Net income 29.6% 24.3%
=========== ============
(1) Comparison includes a $5 million dollar charge taken in Q1
1997 due to an accrual of estimated legal and related costs associated
with pending litigation.
CIENA Corporation
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
October 31, January 31,
1997 1998
-------------- ------------
(Audited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 263,085 $ 251,919
Marketable debt securities - 31,089
Accounts receivable, net 63,227 79,258
Inventories, net 41,109 61,388
Deferred income taxes 9,006 9,556
Prepaid expenses and other 2,220 3,734
----------- --------------
Total current assets 378,647 436,944
Equipment, furniture and fixtures, net 67,412 83,356
Goodwill and other intangible assets, net - 10,978
Other assets 1,169 2,227
----------- --------------
Total assets $ 447,228 $ 533,505
=========== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 20,373 $ 28,687
Accrued liabilities 31,463 34,754
Income taxes payable - 16,322
Deferred revenue 776 -
Other current obligations 985 988
----------- --------------
Total current liabilities 53,597 80,751
Deferred income taxes 28,167 29,146
Other long-term obligations 1,880 1,942
----------- --------------
Total liabilities 83,644 111,839
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;
180,000,000 shares authorized;
99,287,653 and 100,093,109 shares
issued and outstanding 993 1,001
Additional paid-in capital 245,151 263,509
Notes receivable from stockholders (64) (116)
Retained earnings 117,504 157,272
----------- --------------
Total stockholders' equity 363,584 421,666
----------- --------------
Total liabilities and stockholders'
equity $ 447,228 $ 533,505
=========== ==============
CONTACT: Investor: Suzanne DuLong CIENA Corporation (888) 243-6223 email: ir@CIENA.com Press: Denny Bilter CIENA Corporation (800) 921-1144 |
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