CIENA Reports Third Quarter Results; CEO and CFO Certify Current and Historic Financial Reports.Business Editors/Hi-Tech Writers LINTHICUM, Md.--(BUSINESS WIRE)--Aug. 22, 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 $50.0 million for its third fiscal quarter ended July July: see month. 31, 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 $160.0 million, or a net loss of $0.42 per share. CIENA completed its acquisition of 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 Systems Corp. on June June: see month. 21, 2002. As a result, the Company's third quarter results include approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. six weeks of combined CIENA and ONI financial results. 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 $18.6 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. . The Company also recorded a credit to doubtful accounts of $1.2 million. In addition, CIENA recorded a charge of approximately $41.2 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 non-cancelable purchase commitments with suppliers. "In the face of the pronounced 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. in telecom spending, CIENA continues to strive for a balance between sustained, strategic investment that will drive future revenues and prudent cost management that will help return us to 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. even with the inclusion of approximately six weeks of ONI-related expenses." Despite the difficult telecom environment, CIENA continued to broaden its customer base, adding 19 new customers in the quarter, including 14 customers as a result of its acquisition of ONI. In addition to GAAP results, 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.
Quarter Ended
July 31, 2002 Per Share
Item (in thousands) Effect
------------- ---------
Payroll tax on stock options $ 3 $ 0.00
Deferred stock compensation
costs 4,958 0.01
Amortization of intangible
asset 2,343 0.01
Restructuring costs 18,562 0.05
Provision for doubtful
accounts (1,242) (0.01)
Income tax effect 47,164 0.13
------- ------
$71,788 $ 0.19
Please see appendix A for additional information about this table.
The total per share effect of the items identified in the table above on CIENA's GAAP reported net loss was $0.19. Adjusting CIENA's quarterly GAAP results by this per share effect would reduce the Company's net loss in the quarter to $0.23 per share. In addition, adjusting further to account for the approximately $0.07 after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. per share effect of the $41.2 million excess and obsolete inventory Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. charge in the quarter would further reduce the Company's net loss in the quarter to $0.16 per share. 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 such adjustments may not permit meaningful comparisons to other companies. Business Outlook "Service providers' re-evaluation of their networks and their business models has resulted in uncertainty and volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the in the telecom equipment industry, but we believe longer-term, this process will provide the opportunity for new leaders to emerge," said Smith. "We firmly believe CIENA's ability to offer carriers identifiable, measurable economic benefits from next-generation solutions that are proven in large, distributed network environments uniquely positions us to capture capex dollars that, in a more complacent com·pla·cent adj. 1. Contented to a fault; self-satisfied and unconcerned: He had become complacent after years of success. 2. Eager to please; complaisant. environment, might have gone to legacy solutions." "CIENA's 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. goals are focused on increasing our presence with incumbent carriers See ILEC. and preserving our strong cash balance. As demonstrated by our recent Telmex win and other positive indicators we've we've Contraction of we have. we've have received from incumbents, we believe we are making solid progress in this market. We also are taking steps across the company to minimize In a graphical environment, to hide an application that is currently displayed on screen. For example, in Windows and Mac, the application's window is removed from the screen and represented by an icon on the Windows Taskbar. In the Mac, the icon is placed in the Dock. See Win Minimize windows. our quarterly cash burn rate and to lower our break-even revenue point," continued Smith. "Our ongoing deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. at an incumbent carrier combined with the general level of activity we see entering our fiscal fourth quarter leads us to believe that CIENA's fiscal fourth quarter revenue could be flat to slightly up from our fiscal third quarter results. In addition, we are guardedly guard·ed adj. 1. Protected; defended. 2. Watched over; supervised. 3. Cautious; restrained: We view these changes with guarded optimism. optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about opportunities we are currently pursuing that should we be successful, could restore revenue stability and growth over the course of 2003," concluded Smith. Certification of Financial Statements CIENA's President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , Gary Smith and Senior Vice President, Finance and CFO See Chief Financial Officer. , Joseph Chinnici, in accordance with SEC Order No. 4-460 and Section 906 of the Sarbanes-Oxley Act See SOX. , today will sign and submit to the U.S. Securities and Exchange Commission (SEC) statements affirming the accuracy of CIENA's current and historic financial reports. Live Web Broadcast of Q3 Fiscal Year 2002 Results In conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with this announcement, CIENA will host a discussion of its fiscal third quarter results with investors and financial analysts on Thursday Thursday: see week. , August 22, 2002 at 8:30 AM (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 in the face of the pronounced downturn in telecom spending, CIENA continues to strive for a balance between sustained, strategic investment that will drive future revenues and prudent cost management that will help return us to profitability, achieving that balance means making tough decisions and prioritizing our resources based on market opportunity, service providers' re-evaluation of their networks and their business models has resulted in uncertainty and volatility in the telecom equipment industry, but we believe longer-term, this process will provide the opportunity for new leaders to emerge, we firmly believe CIENA's ability to offer carriers identifiable, measurable economic benefits from next-generation solutions that are proven in large, distributed network environments uniquely positions us to capture capex dollars that, in a more complacent environment, might have gone to legacy solutions, CIENA's short-term goals are focused on increasing our presence with incumbent carriers and preserving our strong cash balance, as demonstrated by our recent Telmex win and other positive indicators we've received from incumbents, we believe we are making solid progress in this market, we also are taking steps across the company to minimize our quarterly cash burn rate and to lower our break-even revenue point, our ongoing deployment at an incumbent carrier combined with the general level of activity we see entering our fiscal fourth quarter leads us to believe that CIENA's fiscal fourth quarter revenue could be flat to slightly up from our fiscal third quarter results, we are guardedly optimistic about opportunities we are currently pursuing that should we be successful, could restore revenue stability and growth over the course of 2003, CIENA's President and CEO, Gary Smith and Senior Vice President, Finance and CFO, Joseph Chinnici, in accordance with SEC Order No. 4-460 and Section 906 of the Sarbanes-Oxley Act, today will sign and submit to the U.S. Securities and Exchange Commission (SEC) statements affirming the accuracy of CIENA's current and historic financial reports, 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-Q Form 10-Q See 10-Q. filed with the Securities and Exchange Commission on August 22, 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 Nine Months Ended
--------------------- ------------------------
July 31, July 31, July 31, July 31,
2001 2002 2001 2002
-------- --------- ----------- ---------
Revenue $458,070 $ 50,028 $ 1,235,455 $ 299,237
Excess and
obsolete
inventory
costs 37,767 41,192 51,825 284,883
Cost of
goods sold 221,882 50,960 631,170 257,758
-------- --------- ----------- ---------
Gross
profit
(loss) 198,421 (42,124) 552,460 (243,404)
-------- --------- ----------- ---------
Operating
expenses:
Research and
development
(exclusive of
$6,464, $3,860,
$8,136, $11,277
deferred stock
compensation
costs) 65,788 53,950 162,636 178,264
Selling and
marketing
(exclusive of
$6,928, $842,
$7,419, $2,649
deferred stock
compensation
costs) 39,622 30,829 108,040 98,264
General and
administrative
(exclusive of
$8,839, $256,
$9,411, $658
deferred stock
compensation
costs) 14,790 10,798 42,722 37,729
Deferred stock
compensation
costs 22,231 4,958 24,966 14,584
Amortization
of goodwill 75,642 -- 101,913 --
Amortization
of intangible
assets 1,382 2,343 2,491 5,969
In-process
research and
development -- -- 45,900 --
Restructuring
costs -- 18,562 -- 146,738
Provision for
doubtful
accounts (6,579) (1,242) (6,579) 14,813
-------- --------- ----------- ---------
Total
operating
expenses 212,876 120,198 482,089 496,361
-------- --------- ----------- ---------
Income (loss)
from operations (14,455) (162,322) 70,371 (739,765)
Interest and
other income,
net 19,820 13,558 44,823 44,775
Interest
expense (11,278) (10,614) (18,493) (29,756)
Loss on
equity
investments,
net -- -- -- (5,740)
-------- --------- ----------- ---------
Income (loss)
before income
taxes (5,913) (159,378) 96,701 (730,486)
Provision
(benefit) for
income taxes (11,567) 607 88,481 112,243
-------- --------- ----------- ---------
Net income
(loss) $ 5,654 $(159,985) $ 8,220 $(842,729)
======== ========= =========== =========
Basic net
income (loss)
per common
share $ 0.02 $ (0.42) $ 0.03 $ (2.45)
======== ========= =========== =========
Diluted net
income (loss)
per common
share and
dilutive
potential
common share $ 0.02 $ (0.42) $ 0.03 $ (2.45)
======== ========= =========== =========
Weighted
average basic
common shares
outstanding 324,368 376,548 305,965 344,242
======== ========= =========== =========
Weighted
average basic
common and
dilutive
potential
common shares
outstanding 337,877 376,548 319,722 344,242
======== ========= =========== =========
CIENA CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
October 31, July 31,
2001 2002
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 397,890 $ 715,180
Short-term investments 902,594 971,762
Accounts receivable, net of
allowance of $1,491 and $16,331 395,063 43,289
Inventories, net 254,968 65,478
Deferred income taxes, net 186,861 19,324
Prepaid expenses and other 53,713 45,476
------------ ------------
Total current assets 2,191,089 1,860,509
Long-term investments 494,657 566,535
Equipment, furniture and fixtures, net 331,490 248,135
Goodwill 178,891 765,913
Other intangible assets, net 47,874 57,005
Deferred income taxes, net - 54,479
Other long-term assets 73,300 77,455
------------ ------------
Total assets $ 3,317,301 $ 3,630,031
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 68,735 $ 53,143
Accrued liabilities 133,084 156,310
Restructuring liabilities 15,439 17,845
Unfavorable lease commitments - 8,112
Income taxes payable 6,649 7,271
Deferred revenue 29,480 20,174
Other current obligations 995 1,239
------------ ------------
Total current liabilities 254,382 264,094
Deferred income taxes 64,072 58,318
Long-term deferred revenue - 15,333
Other long-term obligations 5,982 5,436
Long-term restructuring liabilities - 35,840
Long-term unfavorable lease commitments - 70,200
Convertible notes payable 863,883 910,591
------------ ------------
Total liabilities $ 1,188,319 $ 1,359,812
------------ ------------
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 431,507,332
shares issued and outstanding 3,280 4,315
Additional paid-in capital 3,667,512 4,649,754
Notes receivable from stockholders (3,236) (6,595)
Accumulated other comprehensive income 4,842 8,890
Accumulated deficit (1,543,416) (2,386,145)
------------ ------------
Total stockholders' equity 2,128,982 2,270,219
------------ ------------
Total liabilities and stockholders' equity $ 3,317,301 $ 3,630,031
============ ============
Appendix appendix, small, worm-shaped blind tube, about 3 in. (7.6 cm) long and 1-4 in. to 1 in. (.64–2.54 cm) thick, projecting from the cecum (part of the large intestine) on the right side of the lower abdominal cavity. A The adjustments management makes in analyzing CIENA's third 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. -- Income tax effect - the income tax charge or benefit on the adjusted net loss, which is a necessary adjustment for consistency. 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. |
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