CIENA Reports Fourth Quarter and Fiscal Year 2003 Results.Business Editors LINTHICUM, Md.--(BUSINESS WIRE)--Dec. 11, 2003 CIENA(R) Corporation (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) ), a leading global provider of innovative networking solutions, today reported its fourth quarter results for the period ending October October: see month. 31, 2003. Revenue for the quarter totaled $70.6 million, a 3% sequential One after the other in some consecutive order such as by name or number. increase and an increase of 14% from same period a year ago. On a generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) basis, CIENA's reported net loss for the quarter was $115.0 million, or a net loss of $0.24 per share. Revenue for the fiscal year ending October 31, 2003 totaled $283.1 million, a 22% decrease from fiscal 2002. On a GAAP basis, CIENA's net loss for the fiscal year was $386.5 million, or a net loss of $0.87 per share, compared to the previous year's GAAP net loss of $1.6 billion, or $4.37 per share. "CIENA continues to make strides toward sustained profitability," said Gary Smith Gary Smith may refer to:
The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. by 25%. "Key to the success of CIENA's strategy of continued investment is establishing the foundation for future revenue growth," said Smith. "Overall, we believe we have made solid progress, and we are encouraged by what seems to be a greater level of stability in the telecom industry." Non-GAAP Presentation In evaluating the operating performance of its business, CIENA's management excludes certain charges or credits that are required by GAAP. These items, which are identified in the table below, share one or more of the following characteristics: they are unusual, and CIENA does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of the Company's control.
Fiscal Year
Quarter Ended Ended
October 31, October 31,
2003 2003
Item (in thousands) (in thousands)
---- -------------- --------------
Deferred stock compensation $3,487 $16,777
Amortization of intangible assets 6,416 17,870
In-process research and development 1,300 2,800
Restructuring costs 12,904 31,155
Goodwill and intangible impairment 29,596 29,596
Loss on equity investments, net 4,750 4,760
Loss on extinguishment of debt - 20,606
Nortel settlement - 2,500
Income tax benefit on adjusted net loss 20,031 91,975
-------------- --------------
Total Adjustments $78,484 $218,039
============== ==============
GAAP Net Loss $(115,040) $(386,517)
Adjusted for items above 78,484 218,039
-------------- --------------
Non GAAP Net Loss $(36,556) $(168,478)
============== ==============
Please see Appendix A for additional information about this table. These adjustments are not in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP, and making these adjustments may not permit meaningful comparisons to other companies. As of the quarter ended October 31, 2003, CIENA's weighted average shares outstanding were approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 470,244,000. Adjusting CIENA's quarterly GAAP results as noted would reduce the Company's net loss in its fourth fiscal quarter to $0.08 per share. As of the fiscal year ended October 31, 2003, CIENA's weighted average shares outstanding were approximately 446,696,000. Adjusting CIENA's twelve-month GAAP results as noted would reduce the Company's net loss for the period to $0.38 per share. Fourth Quarter 2003 Performance Highlights -- Recognized revenue from 99 customers. -- Completed the acquisition of Akara Corporation, recognizing initial revenue from Akara's CN platform in the quarter and adding 16 new CN customers. -- Added six additional (non CN) first-time, revenue-generating customers in the quarter. -- Ended the quarter with cash and short- and 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. investments valued at $1.63 billion, using cash of $123 million in the quarter. -- Delivered lower-than-expected research and development, sales and marketing, and general and administrative operating expenses, despite the addition of a full quarter of WaveSmith-related expenses and the addition of Akara-related expenses. Fourth Quarter 2003 Solution and Strategic Highlights -- Entered the extended SONET/SDH-based storage area networking (SAN) market with the acquisition of Akara. -- Integrated Ethernet Ethernet Telecommunications networking protocol introduced by Xerox Corp. in 1979. It was developed as an inexpensive way of sending information quickly between office machines connected together in a single room or building, but it rapidly became a standard computer multiplexing multiplexing, in communication, technique whereby two or more independent messages, or information-bearing signals, are carried by a single common medium, or channel. into ONLINE Edge. -- Entered the service edge router Also called an "access router," it is a router that sits at the periphery of a network. Contrast with "core router," which is a router that resides in the middle of the network. See router and WAN router. See also edge device. market with a worldwide reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. agreement with Laurel Networks Laurel Networks was founded in 1999, and specialized in routers for telecommunications carriers. In 2005, they were purchased by ECI Telecom for $88m, and formally renamed as the Data Networking Division within ECI. . -- Entered the multiservice transport market with a worldwide reseller agreement with Luminous lu·mi·nous adj. Emitting light, especially emitting self-generated light. Networks. -- Reduced the cost of delivering storage extension services by introducing ESCON (Enterprise Systems CONnection) An IBM S/390 fiber-optic channel that transfers 17 Mbytes/sec over distances up to 60 km depending on connection type. ESCON allows peripheral devices to be located across large campuses and metropolitan areas. enhancements to the ONLINE Edge platform. -- Gained 'RUS Acceptance' from USDA's Rural Utilities Service on CIENA's metro networking solutions. Business Outlook "In the last year, we have substantially increased CIENA's addressable Reachable. When something is addressable, it can be identified and manipulated independently of its surroundings. For example, screen pixels and RAM memory are addressable. Each of the screen's picture elements can be individually turned on and off, and each of the memory's bytes can be market and we believe, our future revenue and earnings potential, by entering new markets where we anticipate growth, predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. as a result of the demand for a converged, all-service network," said Smith. "Going forward, we will look for additional opportunities to further expand our solution portfolio and to increase our addressable market through both additional partnerships and acquisitions. "We expect that revenue in our first fiscal quarter will be flat to up as much as ten percent from our fiscal fourth quarter revenue, though as always, these expectations include some risk. We are growing increasingly confident about our position with a number of incumbent carriers See ILEC. and believe that the combination of new wins, our broader solutions offering and our expanding customer base will fuel meaningful revenue growth in fiscal 2004," concluded Smith. Live Web Broadcast of Q4 and Fiscal Year Results Conference Call CIENA will host a discussion of its fourth quarter and fiscal 2003 results with investors and financial analysts today, Thursday Thursday: see week. , December December: see month. 11, 2003 at 8:30 a.m. (Eastern). The live broadcast of the discussion will be available via CIENA's homepage See home page. 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 Investor relations The process by which the corporation communicates with its investors. page of CIENA's website at: www.CIENA.com/investors. NOTE TO CIENA INVESTORS This press release contains certain 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. based on current expectations, forecasts and assumptions of CIENA (the Company) that involve risks and uncertainties. Forward-looking statements in this release, including: CIENA continues to make strides toward sustained profitability; key to the success of CIENA's strategy of continued investment is establishing the foundation for future revenue growth; overall, we believe we have made solid progress, and we are encouraged by what seems to be a greater level of stability in the telecom industry; in the last year, we have substantially increased CIENA's addressable market and we believe, our future revenue and earnings potential, by entering new markets where we anticipate growth, predominantly as a result of the demand for a converged, all-service network; going forward, we will look for additional opportunities to further expand our solution portfolio and to increase our addressable market through both additional partnerships and acquisitions; we expect that revenue in our first fiscal quarter will be flat to up as much as ten percent from our fiscal fourth quarter revenue, though as always, these expectations include some risk; and, we are growing increasingly confident about our position with a number of incumbent carriers and believe that the combination of new wins, our broader solutions offering and our expanding customer base will fuel meaningful revenue growth in fiscal 2004, 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. in such forward-looking statements, due to risks and uncertainties associated with the Company's business, which include the risk factors disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in the Company's Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the Securities and Exchange Commission on December 11, 2003. Forward-looking statements include statements regarding the Company's expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. 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. (Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statements of Operations and Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. follow)
CIENA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Quarter Ended Year Ended
October 31, October 31,
--------------------- ---------------------
2002 2003 2002 2003
---------- ---------- ---------- ----------
Revenue:
Products $49,726 $56,858 $304,155 $240,772
Services 12,192 13,786 57,000 42,364
---------- ---------- ---------- ----------
Total revenue 61,918 70,644 361,155 283,136
---------- ---------- ---------- ----------
Costs:
Products 36,479 35,563 228,074 158,898
Services 15,322 14,189 81,485 56,489
Excess and
obsolete
inventory costs 1,592 (1,138) 286,475 (5,296)
---------- ---------- ---------- ----------
Total cost of goods sold 53,393 48,614 596,034 210,091
---------- ---------- ---------- ----------
Gross profit
(loss) 8,525 22,030 (234,879) 73,045
---------- ---------- ---------- ----------
Operating Expenses
Research and
development 61,355 45,809 239,619 199,699
Selling and
marketing 32,012 26,389 130,276 103,193
General and
administrative 14,883 7,737 52,612 38,478
Deferred stock
compensation
costs
Research and
development 4,396 2,688 15,672 12,824
Selling and
marketing 911 606 3,560 2,728
General and
administrative(1) 433 193 1,092 1,225
Amortization of
intangible
assets 3,003 6,416 8,972 17,870
In-process
research and
development - 1,300 - 2,800
Restructuring
costs 78,691 12,904 225,429 31,155
Goodwill and
intangible
impairment 557,286 29,596 557,286 29,596
Provision for
doubtful
accounts - - 14,813 -
---------- ---------- ---------- ----------
Total operating
expenses 752,970 133,638 1,249,331 439,568
---------- ---------- ---------- ----------
Loss from operations (744,445) (111,608) (1,484,210) (366,523)
Interest and other
income, net 16,370 9,662 61,145 42,959
Interest expense (15,583) (7,997) (45,339) (36,331)
Loss on equity
investments, net (9,937) (4,750) (15,677) (4,760)
Loss on extinguishment
of debt (2,683) - (2,683) (20,606)
---------- ---------- ---------- ----------
Loss before income taxes (756,278) (114,693) (1,486,764) (385,261)
Provision (benefit) for
income taxes (1,508) 347 110,735 1,256
---------- ---------- ---------- ----------
Net loss $(754,770) $(115,040) $(1,597,499) $(386,517)
========== ========== ========== ==========
Basic and diluted net
loss per common share
and dilutive potential
common share $(1.75) $(0.24) $(4.37) $(0.87)
========== ========== ========== ==========
Weighted average basic
common and dilutive
potential common
shares outstanding 431,257 470,244 365,202 446,696
========== ========== ========== ==========
(1) During the quarter and year ended October 31, 2002 general and
administrative costs include $1.8 million related to the settlement of
Pirelli litigation. During the year ended October 31, 2003 general and
administrative costs include $2.5 million related to the settlement of
Nortel litigation.
CIENA CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
October 31,
----------------------
2002 2003
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $377,189 $309,665
Short-term investments 1,130,414 796,809
Accounts receivable, net 28,680 43,600
Inventories, net 47,023 44,995
Prepaid expenses and other 54,351 34,334
---------- ----------
Total current assets 1,637,657 1,229,403
Long-term investments 570,861 519,744
Equipment, furniture and fixtures, net 196,951 114,930
Goodwill 212,500 336,039
Other intangible assets, net 62,457 108,408
Other long-term assets 70,596 69,641
---------- ----------
Total assets $2,751,022 $2,378,165
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $39,841 $44,402
Accrued liabilities 132,588 98,926
Restructuring liabilities 27,423 14,378
Unfavorable lease commitments 7,630 9,380
Income taxes payable - 4,640
Deferred revenue 15,388 14,473
Other current obligations 948 -
---------- ----------
Total current liabilities 223,818 186,199
Long-term deferred revenue 15,444 14,547
Long-term restructuring liabilities 65,742 52,164
Long-term unfavorable lease commitments 70,124 61,312
Other long-term obligations 5,009 2,698
Convertible notes payable 843,616 730,428
---------- ----------
Total liabilities 1,223,753 1,047,348
---------- ----------
Commitments and contingencies
Stockholders' equity:
Preferred stock - par value $0.01; 20,000,000
shares authorized; zero shares issued
and outstanding - -
Common stock - par value $0.01; 980,000,000
shares authorized; 432,842,481 and
473,214,856 shares issued and outstanding 4,328 4,732
Additional paid-in capital 4,683,865 4,861,182
Deferred stock compensation (24,983) (9,664)
Notes receivable from stockholders (3,866) (448)
Accumulated other comprehensive income 8,840 2,447
Accumulated deficit (3,140,915) (3,527,432)
---------- ----------
Total stockholders' equity 1,527,269 1,330,817
---------- ----------
Total liabilities and stockholders' equity $2,751,022 $2,378,165
========== ==========
Appendix A
The adjustments management makes in analyzing CIENA's fourth quarter and fiscal 2003 GAAP results are as follows: -- Deferred stock compensation costs - a non-cash expense Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) largely unrelated to normal operations Generally and collectively, the broad functions that a combatant commander undertakes when assigned responsibility for a given geographic or functional area. Except as otherwise qualified in certain unified command plan paragraphs that relate to particular commands, "normal operations" of , and which arises under GAAP accounting from the assumption of unvested stock options issued by any companies we acquire, including Cyras, ONI ONI abbr. Office of Naval Intelligence Noun 1. ONI - the military intelligence agency that provides for the intelligence and counterintelligence and investigative and security requirements of the United States Navy and WaveSmith. -- Amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. - a non-cash expense unrelated to normal operations arising from acquisitions of intangible assets, principally developed technology acquired in the Cyras, ONI, WaveSmith and Akara acquisitions which CIENA is required to amortize amortize To write off gradually and systematically a given amount of money within a specific number of time periods. For example, an accountant amortizes the cost of a long-term asset by deducting a portion of that cost against income in each period. over its expected useful life. -- In-process research and development - a non-recurring expense related to acquired technology. -- Restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs - non-recurring charges, unrelated to normal operations, incurred as the result of reducing the size of the Company's operations to align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. its resources with the reduced size of the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. market as well as the result of targeting new segment opportunities within the overall market. -- Goodwill and intangible impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. - a non-cash expense unrelated to normal operations. -- Loss on equity investments, net - a decline in the fair market value of an equity investment that is determined to be other-than-temporary. -- Loss on extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt - a non-recurring expense, unrelated to normal operations. -- Nortel See Nortel Networks. litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. - a non-recurring expense, unrelated to normal operations incurred in the first quarter fiscal 2003 and included in general and administrative expense for fiscal 2003. -- Income tax benefit on adjusted net loss - the income tax charge or benefit on the adjusted net loss, which is a necessary adjustment for consistency. The Company currently has a full valuation allowance for GAAP reporting purposes and accordingly does not recognize a tax benefit for losses generated. ABOUT CIENA 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 delivers innovative network solutions to the world's largest service providers and enterprises, increasing the cost-efficiency of current services while enabling the creation of new carrier-class data services built upon the existing network infrastructure. Additional information about CIENA can be found at www.ciena.com. |
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