CIENA Reports Second Quarter Results.Business Editors LINTHICUM, Md.--(BUSINESS WIRE)--May 23, 2002 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) ) today reported revenue of $87.1 million for its second fiscal quarter ended April 30, 2002. Under GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , CIENA's reported net loss for the period was $612.2 million, or a net loss of $1.86 per share. 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 prior announcements, during the quarter, CIENA took a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $121.4 million, associated with workforce reductions, lease terminations, non-cancelable lease costs and the write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of certain property, equipment and leasehold improvements Leasehold Improvement Improvements on a leased asset that increase the value of the asset. Notes: A leasehold improvement is classified as an asset that must be depreciated over time. . During the quarter, the Company also recorded an income tax provision of $148.0 million. This provision consisted of an income tax benefit of $157.8 million on net loss for the quarter, offset by a $305.8 million non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. to establish a valuation allowance against our gross deferred tax assets. In addition, and as was 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). previously, CIENA recorded a charge of approximately $223.2 million, primarily related to excess inventory associated with its long-haul long haul n. 1. A long distance: It is a long haul from New York to Los Angeles. 2. A long period of time: Over the long haul the candidates performed well. transport products and purchase commitments with suppliers. These charges are reflected in the Company's reported net loss for the quarter. "The 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). efforts we made in February February: see month. and in March dramatically reduced 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. and overhead costs overhead costs see fixed costs. , and we expect to see additional benefit of those actions in our financial results for our fiscal third quarter," said Gary Smith Gary Smith may refer to:
tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. itself with a dramatically changed telecom environment. The unusually large inventory-related charge we've we've Contraction of we have. we've have taken in this quarter was a necessary part of that realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. although it had a significant negative effect on the quarter's results." Revenue from international customers increased sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen from approximately 22% of total revenue in CIENA's first fiscal quarter 2002 to approximately 43% of total revenue in its second fiscal quarter 2002, reflecting strong sequential One after the other in some consecutive order such as by name or number. growth from the Asia/Pacific region. "CIENA's strategy throughout this telecom industry downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. has been to take the steps needed to ensure we are well positioned, both financially and from a product offering standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the , when our carrier customers resume more normal spending levels," continued Smith. "We continue to believe that through a combination of execution, expense management and resource prioritization, we can manage through these difficult times for our industry and emerge as an even stronger competitor to traditional telecom equipment providers." Management also analyzes CIENA's results by excluding 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. -0-
Quarter Ended
April 30, 2002 Per Share
Item (in thousands) Effect
--------------- ---------------
Payroll tax on stock options $ 6 $ 0.00
Deferred stock compensation costs 4,492 0.01
Amortization of intangible asset 1,813 0.01
Restructuring costs 121,348 0.37
Provision for doubtful accounts 16,055 0.05
Loss on equity investments, net 434 0.00
Income tax effect 260,002 0.79
--------- ---------
$ 404,150 $ 1.23
(1) Please see appendix A for additional information about this
table
The total per share effect of the items identified in the table on CIENA's GAAP reported net loss was $1.23. This adjustment is not in accordance with GAAP and making such adjustment may not permit meaningful comparisons to other companies. Business Outlook Regarding the Company's outlook, Smith said, "We're we're Contraction of we are. we're we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that the telecom industry will soon see the worst of this downturn, but continued uncertainty surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. service providers' near-term near-term adj. Of, for, or involving a short period of time in the near future. spending and deployment plans makes it impossible to call a bottom with any certainty CERTAINTY, UNCERTAINTY, contracts. In matters of obligation, a thing is certain, when its essence, quality, and quantity, are described, distinctly set forth, Dig. 12, 1, 6. It is uncertain, when the description is not that of one individual object, but designates only the kind. Louis. . At this point we expect that CIENA's fiscal third quarter revenue, without taking into account any revenues from 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 after we complete the deal, will be flat to down from second quarter levels." Live Web Broadcast of Q2 Fiscal Year 2002 Results In conjunction with this announcement, CIENA will host a discussion of its fiscal second quarter results with investors and financial analysts on Thursday Thursday: see week. , May 23, 2002 at 8:30 AM (Eastern). The live broadcast of the discussion will be available via CIENA's homepage 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. ABOUT CIENA CIENA Corporation's market-leading intelligent optical networking Communications between computers, telephones and other electronic devices using light. An optical network is far more reliable and has far greater potential transmission capacity than networking in the electrical domain. See optical fiber. systems form the core for the new era of networks and services worldwide. CIENA's LightWorks(TM) architecture enables next-generation optical services and changes the fundamental economics of service-provider networks by simplifying the network and reducing the cost to operate it. Additional information about CIENA can be found at www.CIENA.com. 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 the restructuring efforts made in February and in March dramatically reduced CIENA's operating expenses and overhead costs and we expect to see additional benefit of those actions in our financial results for our fiscal third quarter, in the last several quarters, CIENA has taken steps to realign itself with a dramatically changed telecom environment, the unusually large inventory-related charge we've taken in this quarter was a necessary part of that realignment although it had a significant negative effect on the quarter's results, CIENA's strategy throughout this telecom industry downturn has been to take the steps needed to ensure we are well positioned, both financially and from a product offering standpoint, when our carrier customers resume more normal spending levels, we continue to believe that through a combination of execution, expense management and resource prioritization, we can manage through these difficult times for our industry and emerge as an even stronger competitor to traditional telecom equipment providers, we are optimistic that the telecom industry has seen the worst of this downturn, but continued uncertainty surrounding service providers' near-term spending and deployment plans makes it impossible to call a bottom with any certainty, at this point we expect that CIENA's fiscal third quarter revenue, prior to completing our proposed merger with ONI, will be flat to down from second quarter levels 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 in the Company's Report on Form 10-Q Form 10-Q See 10-Q. filed with the Securities and Exchange Commission on May 23, 2002. 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. (Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. 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 follow)
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,
2001 2002 2001 2002
--------- --------- --------- ---------
Revenue $425,396 $87,053 $777,385 $249,209
Excess and
obsolete
inventory costs 8,357 223,277 14,058 243,691
Cost of goods
sold 223,152 87,525 409,288 206,798
--------- --------- --------- ---------
Gross profit
(loss) 193,887 (223,749) 354,039 (201,280)
--------- --------- --------- ---------
Operating
expenses:
Research and
development
(exclusive of
$1,672,
$3,465,
$1,672, $7,417
deferred stock
compensation
costs) 54,344 59,558 96,848 124,314
Selling and
marketing
(exclusive of
$491,$851,
$491, $1,807
deferred
stock
compensation
costs) 38,782 29,835 68,418 67,435
General and
administrative
(exclusive of
$572, $176,
$572, $402
deferred
stock
compensation
costs) 16,787 13,276 27,932 26,931
Deferred stock
compensation
costs 2,735 4,492 2,735 9,626
Amortization of
goodwill 25,373 -- 26,271 --
Amortization of
intangible
assets 1,000 1,813 1,109 3,626
In-process
research and
development 45,900 -- 45,900 --
Restructuring
costs -- 121,348 -- 128,176
Provision for
doubtful
accounts -- 16,055 -- 16,055
--------- --------- --------- ---------
Total
operating
expenses 184,921 246,377 269,213 376,163
--------- --------- --------- ---------
Income (loss)
from operations 8,966 (470,126) 84,826 (577,443)
Interest and
other income
(expense), net 20,707 15,045 25,003 31,217
Interest expense (7,128) (8,637) (7,215) (19,142)
Loss on equity
investments,
net -- (434) -- (5,740)
--------- --------- --------- ---------
Income (loss)
before income
taxes 22,545 (464,152) 102,614 (571,108)
Provision for
income taxes 73,225 148,001 100,048 111,636
--------- --------- --------- ---------
Net income
(loss) $(50,680) $(612,153) $2,566 $(682,744)
========= ========= ========= =========
Basic net income
(loss) per
common share $(0.17) $(1.86) $0.01 $(2.08)
========= ========= ========= =========
Diluted net
income (loss)
per common share
and dilutive
potential common
share $(0.17) $(1.86) $0.01 $(2.08)
========= ========= ========= =========
Weighted average
basic common
shares
outstanding 306,329 328,764 296,758 328,312
========= ========= ========= =========
Weighted average
basic common and
dilutive
potential common
shares outstanding 306,329 328,764 310,164 328,312
========= ========= ========= =========
CIENA CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
October 31, April 30,
2001 2002
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $397,890 $514,731
Short-term investments 902,594 853,994
Accounts receivable, net of
allowance of $1,491 and $14,517 395,063 61,194
Inventories, net 254,968 75,573
Deferred income taxes, net 186,861 21,167
Prepaid expenses and other 53,713 35,084
----------- -----------
Total current assets 2,191,089 1,561,743
Long-term investments 494,657 348,942
Equipment, furniture and
fixtures, net 331,490 214,880
Goodwill 178,891 178,891
Other intangible assets, net 47,874 44,248
Deferred income taxes, net -- 52,551
Other long-term assets 73,300 71,999
----------- -----------
Total assets $3,317,301 $2,473,254
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $68,735 $48,068
Accrued liabilities 148,523 164,811
Income taxes payable 6,649 6,250
Deferred revenue 29,480 21,284
Other current obligations 995 1,219
----------- -----------
Total current liabilities 254,382 241,632
Deferred income taxes 64,072 58,318
Long-term deferred revenue -- 11,008
Other long-term obligations 5,982 5,612
Convertible notes payable 863,883 690,000
----------- -----------
Total liabilities 1,188,319 1,006,570
----------- -----------
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; 328,022,264 and
329,812,705 shares issued
and outstanding 3,280 3,298
Additional paid-in capital 3,667,512 3,688,253
Notes receivable from
stockholders (3,236) (2,273)
Accumulated other comprehensive
income 4,842 3,566
Accumulated deficit (1,543,416) (2,226,160)
----------- -----------
Total stockholders'
equity 2,128,982 1,466,684
----------- -----------
Total liabilities and
stockholders' equity $3,317,301 $2,473,254
=========== ===========
Appendix A The items excluded in management's analysis of CIENA's second quarter GAAP results are as follows: -- Payroll tax on stock options - an uncontrollable expense, largely unrelated to normal operations, that fluctuates significantly depending largely on the price of our stock and the magnitude of option exercises in a given period. -- Deferred stock compensation costs - a non-cash expense largely unrelated to normal operations, and which arises under GAAP accounting from the assumption of unvested stock options issued by any companies we acquire, including Cyras. -- Amortization of intangible asset - a non-cash expense unrelated to normal operations arising from acquisitions of intangible assets, principally developed technology acquired in the Cyras acquisition which CIENA is required to amortize over its expected useful life. -- Restructuring costs - non-recurring charges, unrelated to normal operations, incurred as a result of reducing the size of the Company's operations to align its resources with the reduced size of the telecommunications market. -- Provision for doubtful accounts - non-recurring charges that are outside of the Company's control that arise when our customers' ability to pay is in doubt, in recent periods primarily related to the financial health of service provider customers. -- Gain (or loss) on equity investments, net - non-recurring income (or charges) not related to ongoing operations that arise from the fluctuation in value of investments in other companies. -- Income tax effect - the income tax charge or benefit of the foregoing items, which is a necessary adjustment for consistency. |
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